Speeding Through the ‘Green’ Light: PART TWO - The Municipality as a Land Use Regulator

Municipalities are like people. At times, we all are tempted by things that promise to take care of our worst problems with the least amount of toil and drudgery. Municipalities are in the business of protecting and promoting the public health, safety and general welfare (collectively, the “public good"). It is a difficult business, especially the private land use regulation end of it. There has been a growing siren call for municipalities to mandate that private development and construction be “green" or, more commonly, meet one of the Leadership in Energy and Environmental Design (LEED) standards promulgated by the U.S. Green Building Council (USGBC). This call, logically, began soon after people realized that LEED buildings, quite often, are an all-around superior real estate product. So, if a municipality can mandate it with a couple of public hearings, some magic words and the stroke of a pen, then why would it not? The reasons to resist this would-be silver bullet are of both a practical and a legal nature.

How It All Began

First, it is helpful to understand that the genesis of the debate over how municipalities can best harness the promise and success of LEED is the inability, by choice or by chance, of our base level building codes and land use regulations to accomplish compelling 21st century environmental and public health objectives. These codes and regulations, as we know them, took hold in the early 20th century in the name of protecting and promoting the public good. For the most part, they have kept us safe and they have kept the “pig out of the parlor." They have kept us from tripping down flights of stairs and they have kept the barroom away from the elementary school. In the early 21st century, is that enough? The business of protecting and promoting the public good is different now. Green building codes, zoning ordinances, site plan review regulations, subdivision regulations and other innovative green land use controls reflect this reality.

Enter the USGBC in the late 1990s and its family of LEED ratings systems for different genres of construction to fill the gap between the codes and regulations we have, and the codes and regulations we need. The LEED ratings systems, at their core, address the five critical environmental and public health issues of (1) site selection, (2) water consumption, (3) energy efficiency, (4) building materials and (5) indoor air quality. The popularity of LEED is well-earned and the USGBC is rapidly growing and evolving. But, it is the five metrics, not actual LEED certification, that fill the gap and make for a better built environment.

Practically Speaking: Administrative Feasibility and Advancing the Public Good

The incongruity between the typical municipal land use permitting process and the typical LEED certification process is the core reason why mandatory LEED certification for private development presents administrative feasibility issues. The municipality is usually ready to grant the certificate of occupancy (CO) weeks or months before the USGBC is ready to grant LEED certification. Verification of compliance with certain LEED credits often cannot occur until the structure is occupied and operating. It is not possible for a developer to apply for a building permit with LEED certification in hand, or even a good faith guarantee that LEED certification will be achieved, as it is dependent on many variables out of the developer’s control. Municipal land use permitting and the LEED certification process are two different worlds that operate in different time frames and under the auspices of different decision-makers.

The municipality that wants to mandate LEED certification for private development must be prepared to withhold COs for building projects that are otherwise ready to be occupied, or create a system for granting temporary COs and then engage in the monitoring and enforcement activities that system would require. If a project is only one point short, the question becomes whether this otherwise green project should be delayed over one point that is preventing full LEED certification. The municipality that mandates LEED certification for private development must also realize that its land use boards will be presented with a slew of requests for relief and waivers coming from bona fide green projects that, for some legitimate financial or construction-related reason, cannot achieve a LEED rating at that time.

Legally Speaking: Concerns about Preemption and Due Process

The practical and administrative feasibility issues provide a glimpse into the legal issues presented by mandating LEED certification for private development. In areas of the country where municipalities are aggressively mandating LEED certification for private development, practitioners are predicting that litigation in this realm will be marked by constitutional issues like due process takings claims and federal or state preemption of local codes and ordinances that seek to regulate subject matter already regulated by the federal or state government but which are part of LEED.

For example, penalizing developers and builders with monetary fines or revoking a CO for a structure that fails to achieve a certain level of LEED certification, but otherwise complies with local and state codes and regulations, may be an invitation for a lawsuit based on a “regulatory" takings claim. As municipalities push the envelope of their power to regulate land use, property owners and developers, or any other party that can demonstrate standing to sue, may push back. Courts may not be as willing to give the deference to this new brand of land use regulation that they typically give to local land use regulations and decisions.

Also, by way of example, a municipality that mandates LEED certification may unwittingly mandate compliance with a privately developed industry code or standard that either conflicts with existing state- or locally-adopted regulations or is preempted by federal regulations. One of LEED’s many strengths is its reliance on a variety of widely-accepted, but voluntary, industry standards and best practices. They are often significantly different than existing codes or regulations. That difference may present adoption or jurisdictional issues that a municipality cannot easily gloss over with a green building ordinance.

In New Mexico, a federal district court, on preemption grounds, recently granted a preliminary injunction to stop the City of Albuquerque from enforcing a new ordinance that would raise the minimum standards for HVAC equipment beyond established federal standards (see The Air Conditioning, Heating and Refrigeration Institute, et al. v. City of Albuquerque, U.S. District Court, District of New Mexico, Civ. No. 08-633 MV/RLP). The plaintiffs, local and regional distributors of HVAC products, and three national trade associations that represent the manufacturers, contractors and distributors of these products, asserted that certain portions of three city ordinances that impose minimum energy efficiency standards for commercial and residential buildings are preempted by federal energy laws.

In light of the administrative feasibility issues and the prospect of costly litigation over tricky legal issues, municipalities should ask, “If the legal authority already exists to regulate much of the subject matter addressed by LEED, through building codes and land use regulations, then why mandate actual LEED certification and incur these administrative and potential legal complications?" Even if a municipality defended a mandatory LEED certification ordinance and prevailed in court, the issue remains of whether the public good is really that much better for it. The answer may be to improve the underlying codes and regulations, through legally defensible methods, in a way that integrates the best of the LEED standards. More open space, fewer and smaller impervious surfaces, proximity to town centers and essential services, better R-values, less light pollution—these are just a few of the hallmarks of LEED projects, and they go a long way toward protecting and promoting the public good and addressing modern day environmental objectives. Of course, in areas of building design and construction that may present preemption issues, a municipality may still craft appropriate incentives that endeavor to reward improved performance in those areas.

Building Better Building Codes and Land Use Regulations

The New Hampshire Revised Statutes Annotated present several grounds of potential statutory authority for a municipality, as a land use regulator, to adopt land use regulations or building code amendments that either encourage or mandate some element of green building. Statutory authority may derive from, among other sources, RSA 155-D (Energy Conservation in New Building Construction), RSA 674:17 (Purposes of Zoning Ordinances), RSA 674:21 (Innovative Land Use Controls), RSA 674:36 (Subdivision Regulations) or RSA 674:51 (Power to Amend State Building Code). A likely scenario in New Hampshire is for a municipality to use some combination of all of the above to craft local green building codes and land use regulations.

In the Town of Epping, the innovative “Article 22" ordinance presents a point score system based on a building’s area in square feet. Larger buildings must achieve more points. The point system focuses on energy efficiency and, in some respects, mirrors LEED. The point system emphasizes distributed generation, whereas many other green ordinances do not focus on distributed generation. Distributed generation, also called on-site generation, generates electricity from many small energy sources. Article 22 passed in a 700 to 606 vote at the 2007 Town Meeting.

Codes and regulations based on the LEED standards “front load" the burden on a developer to ensure, early on, that the proposal complies. It is far better to iron out details and expectations during the period of application for the building permit, for example, than later during the CO process. The front loading reduces the amount of risk and uncertainty as the project proceeds. The risk reduction and regulatory predictability will ease the anxieties of risk-averse lenders, investors and surety companies who provide the critical and complex financing and safety nets for these projects to break ground and succeed. Mandating LEED certification, by tying it to the CO, places the ambiguity and the risk at the back end of the project.

Concerns about retraining building inspectors and zoning enforcement officers in these new areas of green construction, coupled with concerns about the legality of mandatory LEED certification at the other end of the spectrum, have led some municipalities, such as the City of Boston, to mandate that all new construction of a certain size must be LEED “certifiable." LEED certifiable is a term of art that holds owners accountable for designing and building a structure that would likely achieve LEED certification, while stopping short of requiring the owner to incur the costs of actual certification and requiring added inspectional duties and review from municipal officials and employees. LEED certifiable, when narrowly and clearly defined by the municipality invoking the term, may present a more practical and legally defensible approach than mandatory LEED certification.

While this approach may appear to be a mere “honor system" without adequate safeguards, it would, in fact, be similar to the building inspection process used with larger buildings, where there is little actual inspection relative to the size and scale of typical buildings. There is a “construction control" process in which architects and engineers, with their professional credentials at stake, stamp and certify construction in accordance with the relevant plans and specifications. Developer applicants are also generally bound to the material representations they make to municipal planning officials. This “honor system" approach is not naive. It is rooted in reality and practical concerns of administrative feasibility.

Appropriate incentives may include expedited review of applications, area waivers or density bonuses. The City of Portsmouth offers a density bonus for LEED construction in a certain commercial district. Municipalities can also help projects achieve certain LEED credits through relaxed parking requirements or innovative parking arrangements. The land consumed by parking lots and the impervious surfaces of parking lots are related to many aspects of LEED. It is no surprise, then, that parking issues can complicate LEED projects as readily as they complicate traditional projects. New Hampshire’s Renewable Energy Property Tax Exemption (RSA 72:61-72) permits municipalities to offer exemptions from local property taxes for certain renewable energy installations. These include solar thermal, solar photovoltaic, wind and central wood-fired heating systems. LEED projects can achieve several different points through the use of renewable energies, either on-site or through contracts with energy providers. Lastly, pending House Bill 487 (an act allowing municipalities to adopt a property tax exemption for compliance with green building standards) holds promise for municipalities that wish to incentivize green building even more. Many states are crafting green-building tax credit programs.

Conclusion

Municipalities that appropriately exercise their building, planning and zoning authority to address today’s compelling environmental and public health issues should be applauded and encouraged. Other municipalities’ ordinances are always examples, not models from which to copy. Municipalities should resist the temptation to copy popular green ordinances from Boulder, CO, Babylon, NY or Boston, MA. New Hampshire’s municipalities operate in different legal systems and economic markets and have different planning needs. Municipalities should tailor their green building initiatives to their present and future land use goals, their administrative capabilities, what the market will bear and what their voters want. But, by mandating LEED certification for private development, and linking building permits or COs to a decision of the USGBC, municipalities may turn LEED certification into a high stakes process that has potential to invite confusion and litigation and, ultimately, not do right by the public good.

Attorney John McGowan is an associate at Donahue, Tucker & Ciandella PLLC in Exeter and Portsmouth, NH. He practices in the firm’s municipal, land use, real estate and litigation practice groups. He is certified through the U.S. Green Building Council as a LEED Accredited Professional (LEED AP).

For a complete list of LEED certified and LEED registered projects in New Hampshire, visit www.usgbc.org > Directories > LEED Projects.