Developers Going Green But Foregoing LEED Certification

Posted by Victoria L. Hellmer on September 10, 2012

Attendees at the Office & Industrial Market Update and 2013 Forecast Summit presented by The Colorado Real Estate Journal and Otten, Johnson, Robinson, Neff & Ragonetti on September 6 heard from a panel of general contractors who reported that developers of industrial properties frequently choose to meet LEED standards without seeking the official LEED certification, because the certification process adds $50,000 to $100,000 to the cost of the building.

Along those same lines, a September 5 Wall Street Journal article focused on a new apartment building to be built in Manhattan by a developer who was one of the first to build a LEED-certified skyscraper a decade ago. For its new building, the developer, the Durst Organization, plans to incorporate “green” features, but will not seek LEED certification. The developer says it wants the chance to be more innovative and not be bound by LEED’s checklist of features.

LEED has been criticized by others for being too lax in its standards, and for certifying buildings before they are actually in operation.

Meanwhile, the U.S. Green Building Council, which oversees LEED standards and certification, has said it is working on updated standards (LEED v4). Members of the Council are currently scheduled to vote on the updated standards in June 2013. According to the Council, “LEED v4 focuses on increasing technical stringency from past versions and developing new requirements for project types such as data centers, warehouse & distribution centers, hotels/motels, existing schools, existing retail, and mid-rise residential.”

It remains to be seen whether changes to the LEED standards will bring developers back into the LEED fold.

Connected Urban Development - Rocky Mountain Land Use Institute

Posted by James Johnson on March 11, 2011

Last week I attended the 20th annual Rocky Mountain Land Land Use Institute conference at the University of Denver Sturm College of Law.  Nicola Villa with Cisco was the Keynote Speaker on Friday morning.  Mr. Villa works with the Connected Urban Development ("CUD") program across the world in cities like Amsterdam, San Francisco and Seoul.

Launched in 2006, CUD was born out of the the Clinton Global initiative intended to help lower carbon emissions across the world.  CUD's goal of reduced carbon emission is achieved through high connectivity - broadband, wireless and "smart urban structures."  CUD works by changing how cities deliver services, how residents work and commute and how real estate resources are used and managed.

CUD continues to evolve.  Last year, the next phase of the CUD was announced at the Shanghai World Expo.  It's called SMART 2020: Cities and Regions.  The program is administered by a non-governmental organization and seeks to help cities collaborate with each other and the business community to develop a global industry platform for information technology in the sustainable city.

At least 12 successful pilot projects in participating cities have demonstrated CUD's potential.  One important pilot project that could have far reaching implications for urban development is called the Smart Work Center ("SWC").  SWCs are structures located in residential areas that offer a highly connected professional work environment.  These centers are equipped with networking technology and collaboration tools, which allow users to connect to colleagues and customers.  Users from many different organizations share the SWC's resources.  This type of office sharing arrangement could reduce the need for centralized offices and other development in the heart of downtown areas in participating CUD cities.

Wind Turbines Provide Unexpected Benefits for Farmers

Posted by Dimitri Adloff on December 30, 2010

wind farm m.jpgA few months ago I wrote about how wind turbines could constitute a nuisance to adjoining landowners.  While that may be the case for residential neighbors, recent studies have shown that wind turbines might actually provide unexpected benefits to farmers.  The Denver Business Journal recently reported that wind turbines help plants grow by cooling them by day and warming them by night.  Organic farmers in particular stand to benefit from adjacent wind turbines because the wind from the turbines helps dry the plants thereby preventing the growth of harmful fungi and mold without the need for spraying. 

Teams of researchers in Iowa and Colorado are working to corroborate these initial findings.  If they do, there could be a rush by farmers to lease their land to energy companies to set up wind farms.

Photo by contemplative imaging (Flickr)

Developing Green in Berthoud

Posted by John Mosesso on November 22, 2010

Last month the Town of Berthoud, Colorado approved a mixed use development known as PrairieStar.  The development is anticipated to contain residential housing, a school, a research and development facility, an equestrian center, retail and business components, and, most notably, a 25 acre solar farm.  Developers of the project, Scott Sarbaugh and partner Richard McCabe, anticipate that PrairieStar will ultimately reach “net-zero energy consumption” status as a result of the large solar component. solar.jpg

In addition to the solar farm, the PrairieStar development includes many additional green touches including a community garden, an irrigation system using nonpotable water and an energy center for recharging electric cars.

In negotiations between developers and local municipalities, this type of sustainable (and sustainably marketed) project is likely to shed a different light on the developer.  Not only does it appear that sustainable developments like PrairieStar are particularly marketable to the end user, but in the current green climate they should be appealing to the local jurisdiction for entitlement approval.

Photo by Foreign and Commonwealth Office (Flickr)

Noise from Wind Farms May Create Nuisance

Posted by Dimitri Adloff on October 27, 2010

Several weeks ago The New York Times ran an article about noise and vibrations caused by wind turbines.  The article noted that excessive noise has led to complaints and even lawsuits from neighboring landowners.  This shows that while new wind turbine designs are quieter and safer than earlier models, operators of wind turbines (as well as those who lease land to them) still need to remain cognizant of possible nuisance claims that can be brought by neighboring landowners.

Wind Turbine small.jpgTo prevail on a nuisance claim, a neighboring landowner needs to show that the wind turbines substantially interfere with the use and enjoyment of his or her property.  This can be a difficult and fact intensive proposition, especially since courts tend to consider the social utility of the complained of use. 

However, the risks are substantial: a prevailing landowner may be entitled to recover money damages for dimunition of property values or even an injunction that restricts the continued operation of the wind turbines.

Developers and landowners might consider the following ways to avoid potential nuisance claims:

  • Carefully compare potential wind farm sites.  Rural and open spaces far away from residential developments are best.
  • Examine the feasibility of negotiating and obtaining advance waivers from adjoining landowners before beginning construction.  Maybe a neighbor would be willing to waive a nuisance claim for something as simple as having a say in the color or placement of the wind turbines.
  • Assess the cost-effectiveness of operating the wind turbines at a slower rate or only during certain hours of the day.
  • Inquire about insurance plans that cover nuisance claims.

Wind energy is important, both for the economy and the environment.  Care needs to be taken to minimize the risk of nuisance claims derailing the industry's continued growth.

Photo by the russians are here (Flickr)

Capital Expenses in Green Leases

Posted by Chris Toll on September 08, 2010

green-brick.jpgI recently attended a webinar in which Jacob Bart of Stroock & Stroock & Lavan LLP spoke about how the costs of going “green” can conflict with the provisions in many existing leases.  It is common for landlords to “pass through” operating expenses to their tenants, but those expenses are usually limited to non-capital expenditures.  However, any changes to make a building more energy efficient or to reduce carbon emissions will likely be capital in nature.  Therefore, it is difficult for a landlord to make those green changes because the landlord will not be reimbursed for the cost from the tenants.  One way to address this is to allow the landlord to pass through capital expenses if they result in a savings of operating expenses.  

But what if the new equipment is better for the environment, but won’t save much money?  I recently had a chance to speak with Lee Johnson and Michael Noyes from the Greenwood Village office of the accounting firm Clifton Gunderson LLP about a tax deduction for energy saving improvements in commercial buildings under Section 179D of the Internal Revenue Code.  This may provide an incentive for Landlord’s to make cost-saving capital improvements even if the landlord cannot pass them through to its tenants. 

As tenants desire green buildings, not only for cost savings, but also for prestige and marketing purposes, it will be interesting to see if there are changes in the traditional allocation in leases of capital and operating costs between landlord and tenant.