Builders and Developers Must Understand Risks as Beantown Transforms into Greentown!

Green Space Today
Ari J. Scharg, Querrey & Harrow
Courtesy of Querrey & Harrow

Boston, one of America’s oldest and most historic cities, has taken significant steps to improve its environmental health and sustainability. Under the leadership of Mayor Thomas Menino, Boston has implemented a comprehensive municipal program that has garnered national attention. The initiatives are unique and comprise a wide range of opportunities for Boston residents and businesses. While residents enjoy unfettered benefits, Boston’s construction industry must be aware of specific dangers posed by the new construction standards to fully realize their economic benefit.

Green Space Today

Boston Mayor Thomas M. Menino

Boston Mayor Thomas M. Menino: "As a densely developed historic city it's not surprising that buildings account for 76% of greenhouse gas emissions in Boston. That is why I made green building development the cornerstone of our effort to turn Beantown into Greentown."

Residential Programs

Boston’s program focuses heavily on delivering solutions that offer measurable benefits. For instance, residents can walk into any public library and freely rent a device known as the Kill-A-Watt. The Kill-A-Watt allows residents to track their appliances’ electricity consumption in order to lower utility bills. The free rentals represent an example of Boston’s unique strategy aimed at decreasing energy consumption while providing quantifiable proof that environmental practice saves money.

Boston also capitalizes on homegrown resources found in its own backyard. The municipality helps homeowners recycle their leaves by providing heavily subsidized compost bins and kitchen scrap buckets. Within a year, residents can convert ordinary yard waste into hundreds of pounds of highly nutritious dirt. Even when residents choose not to purchase a compost bin, the Boston Public Works Department will pick up their bags of leaves (free of charge) and use it as natural fertilizer for Boston’s community gardens. The public has quickly discovered that composting is a convenient, beneficial and inexpensive way to recycle organic waste and beautify the city.

Green Construction Standards

Developers operating in Boston must be familiar with the new green construction standards. All new construction projects over 50,000 square feet must be LEED certifiable (more on LEED in a moment). Not surprisingly, builders and developers who have shied away from the green arena in the past are now quickly organizing green construction teams. But the new standards also mean new legal issues that could devastate any potential success. Therefore, it is imperative for all parties involved in the construction process to understand the Boston Zoning Code and to plan for every step of their venture.

Jim Hunt, Chief of Environment and Energy Services for the City of Boston: "Boston was the first city in the nation to incorporate the USGBC's LEED standards into its zoning review process. Article 37 of Boston's Zoning Code requires all projects above 50,000 s.f. to adherence to the relevant LEED standards, from LEED New Construction to LEED for Healthcare.

While Boston requires adherence to the relevant LEED checklist, it is city staff who ensure compliance and projects are not required to gain actual certification from the USGBC. The rationale behind this provision was twofold: first, the city felt it needed to retain control of all zoning approvals, and second, the post construction timing of LEED certification didn't neatly align with our permitting and building inspection approvals in Boston, which the development community felt could effect occupancy certification and financing.

To ensure rigorous compliance with our green building zoning, we included a requirement that a LEED Accredited Professional sign off on all project submissions before the city. We also formed an interdisciplinary, city-staffed group called the Interagency Green Building Committee that reviews all filings for compliance with green building standards. Furthermore, we still encourage project proponents to go through actual LEED certification and the overwhelming majority of projects have done so.

While we encountered some resistance to our green building requirements when first proposed in 2004, what we are now finding that the development community is fully embracing LEED and even reaching for higher LEED Silver and Gold certifications. This is the transformation we envisioned when we started Boston down this path in 2004. Today, Mayor Menino is demonstrating in Boston that sustainable development is not only good for the environment, but it's good for the bottom line."

Boston’s new green construction standards are derived from the U.S. Green Building Council’s Leadership in Energy in Environmental Design (LEED) rating system. Boston now requires all new construction projects over 50,000 square feet, both public and private, to achieve a minimum “Certified” certification level of LEED compliance.

It is vital for builders and developers to understand that the pursuit of LEED certification entails several steps that go above and beyond the requirements of the Boston Zoning Code. There is an entirely separate process that is governed by the U.S. Green Building Council to actually achieve LEED certification and qualify for state and federal incentives.

The Boston Zoning Code also provides builders with additional opportunities to earn points toward a LEED certifiable building that are not available when seeking LEED certification. The “Boston Green Building Credits” allow builders to add one point for each of the following four categories:

  1. Modern Grid-Proposed Project includes an on-site combined electrical power and heat generation system that provides for 10% or more of the total building energy use.
     
  2. Historic Preservation-Proposed Project involves the historic renovation of an existing structure and complies with the applicable historic preservation regulations and design guidelines.
     
  3. Groundwater Recharge-Proposed Project must provide measures that result in on-site infiltration of rainwater including landscape irrigation.
     
  4. Modern Mobility-Proposed Projects meet all of the Transportation Demand Management directives such as posting information about public transportation, providing preferred parking spaces for a car-sharing service, etc.

Legal Implications

Recognizing the distinction between certification under LEED and certifiability under the Boston Zoning Code is critical. The real dangers arise where a builder or developer agrees to build a LEED certified building in Boston. In that case, all parties must be cognizant of the fact that they need to meet two different building standards to satisfy their contractual obligations.

One of the more stringent requirements of LEED certification is the reporting process. The Boston Zoning Code only requires brief explanations of adherence while the U.S. Green Building Council provides an online submittal process for projects seeking LEED certification that requires extensive documentation of design and construction activities.

Therefore, when seeking actual LEED certification, contracts must be drafted to clearly reflect each project stakeholder’s role. These contracts must clarify which parties will be responsible for tracking, collecting, assembling and submitting support documentation and which parties will be responsible if a project fails to meet a desired sustainability rating. Of course, a thorough contract will not solve all problems, but it is a critical starting point.

The LEED certification process, unlike the Boston Zoning certification, also poses significant timing issues. Often times, the inspection process associated with certification can be arduous. Consequently, budgeting extra time for completion becomes essential. In addition, the timing of the receipt of certification can have major implications for green building tax credits. An owner may expect certification to be awarded during a certain tax year and a delay may have disastrous consequences.

Developers must also consider the possibility that LEED certification may be denied when the project is complete. In addition to breach of contract claims between owner/developers and contractors, purchasers (e.g., buyers of condominium units) who bought in reliance on the LEED representations may also have claims, such as for consumer fraud.

The Bottom Line

Even though legal issues loom, developers simply cannot build in Boston without adhering to the Zoning Code. Therefore, Boston builders and developers must be prepared to deal with the separate challenges posed by both the Boston Zoning Code and LEED. Experienced legal counsel should be engaged from the very beginning of any green project to ensure that all available green building incentives are realized and that all legal hurdles are minimized. Developers and builders must be proactive and address potential issues before they arise.

Legal issues aside, Boston’s comprehensive environmental program encourages environmental consciousness and growth from the ground up.

Ari J Scharg, Attorney, Querrey & Harrow can be reached via email at ascharg@querrey.com.