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Baltimore City Green Building Standards: New Regulations Pose Unanswered Questions

Baltimore City has been in the vanguard of jurisdictions implementing mandatory Green building standards for new construction and renovations. In 2007, the City Council passed a green building law requiring all newly constructed or extensively modified non-residential or specified multi-family buildings of at least 10,000 gross square feet of floor area achieve either LEED Silver Certification or certification under an equivalent energy and environmental design standard. After a long wait, on September 16th, 2010 the City’s Department of Housing and Community Development issued its “equivalent” design alternative to LEED, and although significant issues remain the result may be that compliance with the City’s green building design requirements is now faster and cheaper.

The LEED (Leadership in Energy and Environmental Design) Green Building Rating System was developed by the U.S. Green Building Council (USGBC), a non-profit located in Washington, D.C. LEED’s Rating System is a nationally accepted benchmark for high performance green buildings. Under the LEED rating system, projects can earn points for meeting certain criteria relating to the design, construction, and operation of a building. Certified, Silver, Gold, and Platinum levels of certification are awarded based upon the total number of points earned. Although there is some regional variation in the Green Building Rating System through Regional Credits, the LEED standard is generally national in scope.

While LEED is a standard recognized nationally, the Baltimore City Green Building Standards (the "City Standards") were developed to match the City’s geographically specific environmental priorities, and are maintained and updated independently by Baltimore City. They were designed explicitly to complement the new Baltimore City Zoning Ordinance, and to integrate the newly-adopted Baltimore City Sustainability Plan.

Though customized for local conditions, about 70% of the City Standards are based on LEED. A LEED Silver Certification is achieved upon earning 50 LEED credit points (out of a maximum of 110 points), and meeting certain mandatory prerequisites addressing sustainable sites, water efficiency, energy conservation, interior air qualities, and material resource efficiencies and recycling. The City Standards also have a point system, with 150 points total. One to 5 “Green Stars” signify the level of compliance with the City Standards. The minimum level necessary to comply with the City Standards is 65, which will qualify for 2 Green Stars. Until September 16th, the only available path had been to follow the LEED design standards and to achieve a Silver Certification. Now, with the issuance of the City Standards, developers and owners of covered buildings have a choice. The two offered pathways each have distinct advantages and disadvantages. For developers and owners weighing the two compliance pathways, a number of considerations must be balanced.

Advantages of the New City Standards

On the plus side, the City Standards are generally anticipated to require less time and expense to achieve. In order to get a building permit under the City Standards, an applicant must complete a City Standards Verification Package, which includes all of the necessary documentation of how the applicant will meet the City Standards, along with a building permit application and the requisite plan sets. Once the plans examining reviewers have determined that the project is in compliance with the City Standards and all other Code components, the building permit is issued.

By contrast, under the LEED pathway, the applicant must submit documentation to the USGBC and then present confirmation paperwork to the City that the project is properly registered with LEED. The City's plans examining staff then reviews the design submittal credit documentation and performs a summary review of the applicant's LEED submittal documentation to verify that the project is likely to achieve a LEED Silver Certification. Only after the plans examining staff has determined that the project is likely to receive an actual LEED Silver rating will a building permit is issued.

As to certificates of occupancy, compliance under the City Standards pathway is confirmed upon the Certificate of Occupancy. That is, when the Certificate of Occupancy is issued, the project is considered complete and in compliance with the City Standards and the project is issued the City Green Building Rating Certificate. Under the LEED pathway, a building owner must present documentation that its project has been certified to a LEED Silver level within 180 calendar days after the issuance of the certificate of occupancy. Extensions are available for a fee, but if proof of LEED Silver Certification isn’t submitted within a total of 540 days from the date of the certificate of occupancy the applicant will be held in non-compliance with the City's Green Building Law. Penalties for non-compliance can be stiff, including fines of up to $1,000 a day.

An additional plus for the City Standards is a measure of built-in flexibility that is absent from the LEED pathway. For example, the drafters of the City Standards recognized that certain kinds of construction projects, even with the best of intentions, may not be able to achieve the 65 points necessary to gain the two Green Stars under the City Standards rating system. Development projects that are otherwise unable to stack up the necessary 65 points may be able to reach that minimum number by adding "Pledge Points." Pledge Points are a future commitment to the City by the applicant to maintain and operate a green facility, and include green cleaning and green landscape management. If the addition of Pledge Points is still insufficient to secure the necessary 65 points, the City Standards provide a waiver mechanism. Waivers are to be issued by the Department of Housing and Community Development if compliance would be unduly burdensome or impractical, and if the public interest would be served. Importantly, a waiver mechanism is not available for the LEED pathway.

A further advantage to the City’s Standards is that once the City Green Building Rating Certificate has been issued to an applicant, there is no risk of de-certification. There has been much discussion recently in green building circles about potential risks associated with third party challenges to LEED certification. The USGBC is currently struggling to develop practices and procedures to govern such “de-certification” challenges – raising the specter that building owners could involuntarily lose a valuable LEED certification. It is unclear under the City’s Green Building Law whether losing a previously awarded LEED certification would result in non-compliance, with consequent fines and penalties. With the City Standards, there is currently no such challenge procedure, and therefore presumably no risk of de-certification.

Drawbacks and Open Issues

On the minus side, since the City Standards have just been issued they have no “branding” status. By contrast, the LEED Rating System has begun to achieve value in the real estate marketplace. A number of credible studies have shown that, at least in some markets, green buildings are achieving higher rental rates, greater rental stability, and better sales prices than their non-green counterparts. Some building owners are now looking to LEED certification as a seal of approval to differentiate their buildings from competitors in a crowded and competitive market. It is as yet an open question as to whether the new City Standards will offer the same marketing or branding advantage.

In addition, there are federal standards requiring LEED Certification of buildings in which federal agencies are tenants. Since 2008, all build-to-suit leases over 10,000 square feet and in which the federal government will be the sole tenant are required to achieve LEED Silver certification. To date, the Government Services Administration hasn’t recognized the City Standards as being equivalent to the similar LEED Certification. Without some clarification as to whether it would recognize the City Standards, any covered building being built to accommodate a federal tenant in the City might be required to build using the LEED pathway, without the City Standards as a potentially cheaper and faster alternative.

City officials responsible for the development and promulgation of the City Standards have indicated a willingness to help work through the inevitable growing pains associated with the adoption of the City Standards. Pre-development conferences are offered by the City at no charge to the applicant. In addition, for a fee an applicant can also meet with plans examining reviewers for a preliminary meeting and green conference session to review more specific aspects of their project and proposed compliance with the two pathways.

While there are a number of open questions posed by the adoption of the City's Green Building Standards, they do appear to be tailored specifically with an eye towards making green development in Baltimore City as efficient and economic as possible. However, until actual projects successfully make their way through the City Standards compliance pathway, owners and developers of covered buildings in the City will have to wait to see whether this goal has been achieved.

Matthew L. Kimball is Chair of the Real Estate Department of the Baltimore law firm of Niles, Barton & Wilmer, LLP, and is a LEED Accredited Professional.

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