A class action lawsuit against the USGBC has just been filed in Federal Court for the Southern District of New York (Gifford v. U.S. Green Building Council, docket number 10 CIV 7747).  Stephen Del Percio who does a great job publishing the Green Real Estate Law Journal and Green Buildings NYC broke this story (at least to me), and it’s going to have reverberations throughout the sustainable development community.

The complaint is brought on behalf of Henry Gifford, Gifford Fuel Saving, Inc., and others similarly situated.  In a nutshell, the plaintiffs allege the USGBC has engaged in deceptive trade practices, false advertising and anti-trust (among other things) by promoting the LEED system.  Plaintiffs further allege that because the LEED system does not live up to predicted and advertised energy savings, the USGBC defrauded municipalities and private entities.

The basis for the class action has been mentioned more than a few times in this blog and many others (including Mr. Del Percio’s).  Essentially, many green buildings are not performing as touted.  In some situations they are performing WORSE than buildings built to code.  The plaintiffs allege that because of these performance shortcomings, the USGBC commits anti-trust violations when it convinces municipalities to align their building codes to the USGBC’s LEED system.

While some LEED buildings are underperforming, the lawsuit is no slam-dunk for the Plaintiffs.  From a personal perspective, I find plaintiff’s complaint is a bit overly dramatic.  An effective complaint acknowledges and then refutes the defense’s potential arguments.  Here the plaintiffs’ complaint seems almost melodramatic in its representation of big bad USGBC.  In my opinion they lose some credibility there.

One of the biggest issues plaintiff will face is that occupants are often the primary reason green buildings underperform.  Many occupants don’t understand the new technology used in green buildings.  However, occupant “sabotage” is not the exclusive reason green buildings underperform.  Often it is also because the technology itself doesn’t work.  The USGBC is working on this issue, and Post-Occupancy Performance is a cornerstone of LEED 3.0.

No doubt there is a valid lawsuit here, and I anticipate this lawsuit will grow if more members of plaintiffs’ class sign on.   We’ll keep you updated as the lawsuit progresses.

Click here for a copy of the complaint.

As always, it’s great to have Sarah Grilli contribute.  Here is her latest post:

Last week San Francisco Mayor Gavin Newsom proposed new legislation with co-sponsor City Supervisor Bevan Dufty focused on reducing the energy use of existing commercial buildings over 5,000 square feet. This new law is expected to be passed next month by San Francisco supervisors. San Francisco is currently subject to a strict green building code which was described in detail on a prior blog post. If this new measure passes, it will assist in making San Francisco’s green building legislation one of the most comprehensive of any city nationwide.

In May, we mentioned that the Mayor was planning this legislation, and, as predicted by pundits, it does go far beyond the statewide energy reporting required by AB 1103.  The program proposed by Mayor Newsom implements many of the recommendations suggested by the Task Force on Existing Commercial Buildings. (For our discussion of AB 1103 and our series on the Report from the Mayor’s Task Force On Existing Commercial Buildings, click here).  The legislation is modeled on similar programs in California and Boulder, Colorado, and requires the use of free software from the US EPA.

The cornerstone of the legislation is that it requires building owners to conduct a comprehensive energy audit every five years and an updated audit every year. This emphasis on energy efficiency will provide an additional layer of measurement and verification that is often missed in building codes and third party rating system such as the USGBC’s LEED. However, the newest version, LEED 3.0, does require measurement and verification through a post occupancy audit process. See our prior blog post on this issue here.

The city’s efforts in this regard will provide an important catchall for non-LEED buildings, and even more importantly will focus on existing buildings, not new construction. In theory, once the building owners and managers receive an audit report they will embrace the resulting proposed energy-saving renovations.   Most, if not all, of the available energy-saving renovations are subsidized by Federal and State programs, thus assisting implementation.  Stay tuned to the California Green Building Blog for a comprehensive review of the ordinance if this legislation passes.

UPDATE: This legislation is on the way to passage.  Click here for coverage

In Part One of our analysis of the report from the Mayor’s Task Force on Existing Commercial Buildings, we discussed the task force’s four themed approach to improving the energy efficiency of existing commercial buildings: 1) “maximize transparency,” 2) partner with the private sector, 3) attract game-changing capital, and 4) lead by example.  We now turn to theme two, “partner with the private sector.”

As discussed in Part One of this post, the transparency mandates suggested by the task force, and/or mandated under AB 1103 will force private industry to report energy use.  These reporting requirements will generate market forces that push buildings to higher energy efficiency.  But, will developers, owners, and tenants really compete in a race to the top of efficiency based on AB 1103 alone? The answer is “probably not,” or maybe I should say, “probably not quickly enough.”

Sure, required energy reporting will occur, but the desired reduction in energy use will not manifest rapidly.   Without government mandate and assistance for developers, owners, and tenants, the measures suggested by the task force, including mandatory energy audits, will create resentment and real hardship for businesses.  Also, the local taxpayers might not be happy with the incentives and rebates suggested to assist in deferring the cost (though some of the underwriting will come from state and federal grants).

The task force suggests two low-cost “tools” to rapidly generate efficiency results and ease the private burden of implementing energy efficiency.  The first suggestion is a “no-brainer,” but the second might not be as simple.

The first tool is the “Green Tenant Toolkit” (“GTT”).  Rather than simply mandating energy efficiency, the GTT proposes a “toolkit” with suggestions for developers, owners, and tenants regarding “best practice recommendations, a model green lease, [and] a standardized checklist to identify green features of spaces for lease.”  Also, as a part of the “partner with the private sector” theme, the task force suggests a public/private (dare I say) task force to come up with the language and suggestions for the GTT.  The proposed GTT is a quick and easy resource, and one that will ease the burden of implementing energy efficiency measures.

The second tool suggested by the task force is “unilateral submetering.”  This strategy proposes allowing tenants or landlords to implement submetering at the requester’s expense.  This is risky, and not completely thought out. First, this option likely already exists for a majority of tenants and landlords, and second the suggestion ignores the issues that arise from such a policy.

For example, unlike other tenant-level capital improvements, submetering affects the operating costs of other tenants.  Generally, a building’s utility costs are averaged, and then allocated to tenants based on square feet.  If a large tenant has a significant amount of space that is below the average energy use in a building, and that space is removed from the building energy calculation, the average cost will rise for other tenants.  Conversely, a landlord, at the bequest of other tenants, may submeter a power-sucking data center.  This action will lower rent for a majority of other tenants, but send operating costs for the data center through the proverbial roof.  It’s not quite that simple, but the example above is closer to the reality than the task force lets on.

To achieve the equity the task force seeks, unilateral submetering will need further analysis, or testing before city-wide implementation.  Perhaps if a tenant submeters, a landlord could be forced for one year to keep the submetered tenant in as part of the calculation for the building’s energy use averages until other tenants can take action to either lower energy costs or also submeter?  Or perhaps the city will limit the amount a landlord can raise an energy charge thus encouraging energy efficiency?  Perhaps other tenants will just have to “get with the program,” submeter, and increase their efficiency to realize ROI.  There are no easy solutions to this question, but submetering is an effective tool to reducing energy use, and is required for any effective energy efficiency policy.

The task force’s next suggestions – including the suggestion of a government fund to cover expenses for implementation of energy efficient technologies – will be covered in part three of our analysis.  Stay tuned…

In December, 2009, a task force convened by San Francisco Mayor, Gavin Newsom, issued a report on the steps necessary to make existing commercial buildings more efficient.  (Click here for the full report) It’s not as comprehensive or technical as reports one expects from the specialists and experts that comprise the task force, but it is a good policy report. Why am I slightly “cool” on the report?  It’s no fault of the task force.

The reason is because it’s a policy report, and until the policies are enacted, the report is just hot air blowing in December. (Cue sly grin for “hot air” pun).  The reason this post is coming up now, however, is not only the fact that I’m finally getting around to it, but also the fact that Mayor Newsom seems to be as well…(getting around to the report, that is).

San Francisco has arguably the best green building track record of any city in the United States, so if anyone can enact the recommendations, San Francisco can. As you will read below, Mayor Newsom is reportedly going to propose enacting one of the recommendations into law.  Before addressing the proposed law, let’s look at how the task force recommends we fix the existing commercial buildings.

Rather than reinvent the wheel, the task force recommends following the California Long Term Energy Efficiency Strategic Plan (CEESP).  CEESP sets a goal of zero net energy for new (and some existing) residential buildings by 2020 and commercial buildings by 2030. Regarding existing buildings in San Francisco, the task force believes the CEESP goal could be achieved with a 50% reduction in all existing building energy use by 2030.  That amounts to a 2.5 % reduction in energy use every year . . . daunting, but doable.

The task force report uses four general “themes” to suggest meeting and exceeding CEESP:  1) maximize transparency, 2) partner with the private sector, 3) attract game-changing capital, 4) lead by example.  I will address each of these in turn, but don’t worry, I only address number 1 in this post. The rest will wait for Part 2.

1) Maximize Transparency:  The task force recommends the disclosure of energy performance for all existing commercial buildings.  Sounds pretty good, right?  Well, the requirement to disclose energy efficiency in commercial buildings has been law for some time now.  AB 1103, enacted in 2007, with requirements set to trigger in 2009 (delayed until July 2010), requires “electric and gas utilities . . . to maintain records of the energy consumption data of all nonresidential buildings to which they provide service.”  And the utilities must provide those records to property buyers, tenants, or investors.

According to the San Francisco Examiner, the mayor will propose a similar requirement shortly, but with the added bonus that the energy consumption data would be available to the general public.

This idea sets off a slew of potential legal issues, and here’s one: From a transaction side, a lease now has new potential incentives and benchmarks.  If a tenant reduces energy consumption over a series of years, that could be worth a bonus from the landlord because it makes the property more valuable from a public relations standpoint and also from a re-sale re-lease perspective.  On the contrary, a landlord may simply require that a tenant improve energy efficiency every year, and set penalties if they fail to meet the benchmarks.  A successful business relationship will find a middle ground, but these are certainly new bargaining chips.  Just think we haven’t even entered the world of cap and trade…

Lets also remember there is no current penalty for failing to increase efficiency.  The rest of the task force recommendations rely on private help and public leadership.  Is that enough? I’m not so sure…

Stay tuned for Part 2….

(Editor’s Note: check out the Institute for Market Transformation – a great resource I found in researching some of this post.)

As discussed in Part I of this post, LEED version 3.0, first implemented in June 2009 includes enhancements that place greater emphasis on closing the gap between performance expectations and actual performance.  These measures were likely included partially in response to studies focusing on performance of LEED buildings that illustrated a potential for large fluctuations in meeting projected performance levels. Performance is primarily based on energy and systems modeling, and one study of existing LEED buildings found that although LEED buildings are higher performing than regular buildings, the actual performance measurements deviate as much as 25% from projected levels.

Version 3.0 introduces several new elements which will work to close the gap between expected and actual performance. Buildings can now gain more points under both the LEED energy efficiency credits and measurement and verification credits, which include greater emphasis on commissioning, post occupancy monitoring and validation of energy use.

One key component to performance monitoring is that the USGBC now mandates that buildings provide post occupancy data on all LEED-certified structures. Buildings must provide the USGBC with post-occupancy water and energy bills, even if the building changes owners. The USGBC plans to collect and analyze this data to determine areas which need the most improvement and in turn to address these areas in subsequent LEED versions. Data collection is taken seriously, the USGBC has posted the following statement on its website:

“CERTIFICATION MAY BE REVOKED FROM ANY LEED PROJECT UPON GAINING KNOWLEDGE OF NON-COMPLIANCE WITH ANY APPLICABLE MPR.  IF SUCH A CIRCUMSTANCE OCCURS, REGISTRATION AND/OR CERTIFICATION FEES WILL NOT BE REFUNDED.”

MPRs, minimum project requirements, were newly introduced with version 3.0 and require each project to meet certain specified criteria including compliance with environmental laws and providing the energy and water use data referenced above.  If a building’s owner fails to provide this data to the USGBC, the building’s LEED certification MAY be revoked.

The USGBC has not stated that once the building’s data is received and analyzed, if it is not meeting performance criteria, its certification will be revoked. As written, it seems that certification can only be revoked by failing to provide the data itself. We will need to wait to see how this new element plays out upon completion of more 3.0 projects. Maybe in the future the USGBC will take the more drastic step of de-certification for failure to meet projected performance if confirmed by data collection.

Obviously, green building will never be as prolific as it seems destined to be if buildings fail to perform.  The USGBC’s recent changes, along with the actions taken by the BSC and ASHRAE (discussed in Part I of this article) are huge steps in the right direction. This nascent emphasis on actual building performance is a trend that will increase significantly as green building continues to gain traction and a larger percentage of LEED buildings’ post-occupancy performance can be tracked and analyzed.

Stay tuned to the California Green Building Blog for new information on this topic.

It seems that green building made it to primetime in 2009. Not only are individual projects embracing third party rating systems, the past few years has also seen a meteoric rise in popularity of codifying green as hundreds of cities and towns across the country adopted green elements into their building codes. And, just this January, California became the first state to mandate a state wide green building code.

Despite the hype about the use of sustainable building methods, actual systems performance of green buildings is sometimes neglected and often overlooked. This is because much of the energy and building systems post-occupancy performance evaluations are based on pre and mid construction modeling and calculations. People have finally seriously begun to ask the question: are green buildings meeting their performance expectations?

If a building does not perform as promised, it not only fails to deliver, it could lose its marketing edge, lose its tax or government incentives, and could even be faced with a lawsuit over these failed expectations. Thankfully, this was also the year that these concerns began to be concretely addressed. California’s Building Standards Commission (BSC), the American Society of Heating, Refrigerating and Air-Conditioning Engineer’s (ASHRAE), and the US Green Building Counsel (USGBC) all placed greater emphasis on building performance by including heightened commissioning and mandatory post-occupancy performance evaluations in their rating systems or mandates.

California’s new “CALGreen” building codes place emphasis on the typical areas such as site sustainability, water use efficiency, energy efficiency, indoor environmental quality, air pollution, and materials and resources, but also include the often under emphasized requirement of commissioning. Commissioning is added assurance that all the building’s subsystems for HVAC, plumbing, electrical, fire/life safety, and building security are operating as intended by the owner and as intended by the building architects and engineers. It is a key element in achieving reduced energy levels and ensuring a high performance green building. The BSC recognized this and included in the CALGreen building codes a requirement for a pre-construction commissioning plan as well as the mandatory preparation of a commissioning report recommending post occupancy commissioning and systems operation training.

Another major recent development is ASHRAE’s newly released Standard 189.1, published in conjunction with the Illuminating Engineering Society of North America and the USGBC. The ASHRAE standard was developed with the intention that it will be adopted and incorporated into building codes. Standard 189.1 increases energy savings over the prior commonly used Standard 90.1. It requires that measurement devices with remote communication capability be installed to collect energy consumption data. Energy subsystems like the building’s HVAC system, or elevators are also required to collect and store data if the subsystems collective load exceeds specified thresholds.  Data must be collected daily with hourly energy use profiles and must be retained for at least 3 years. This will assist building owners and operators as well as local jurisdictions meet their sustainability targets and is intended to complement LEED and other existing green building rating standards.

Finally, the leading market based rating system developed by the USGBC, LEED, released a new version 3.0 last June which includes enhanced commissioning requirements placing further emphasis on building performance… Stay tuned for part II of this post for more information.

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