Green Building Codes and Redevelopment

by Jong Sook Nee on December 7, 2010

Green building codes and standards are receiving a lot of attention lately.  Many public officials, developers and members of the public are passionate about “going green” and for good reason.  Alternative and renewable energy sources make headlines for their reported ability to lower individual energy costs while reducing our dependency on fossil fuels.  Green building standards such as the U.S. Green Building Council’s Leadership in Energy and Environmental Design or “LEED” claim to provide third-party verification of energy savings, water efficiency, CO2 emissions reduction and improved indoor environmental quality.  Instilling a mindset to reduce energy consumption, reduce construction waste, incentivize alternative energy usage and encourage recycling are excellent goals from a municipal perspective, as well as a more global perspective.  We are often asked whether municipalities can and should impose green building standards in redevelopment areas.

Redevelopment areas provide an opportunity for particular development standards, since the redevelopment designation allows the municipality the chance to redefine the zoning standards for a discrete area.  To this end, redevelopment areas could be the perfect breeding ground to test a new green building policy for private development.  Municipalities, however, should consider the full implications of imposing green building standards in a redevelopment context.

  • Cost. This refers to the cost not just to the developer but also to the municipality.  Not every developer will be sophisticated in utilizing green building techniques in a cost-effective manner.  To this end, new standards can raise the cost for a project that is already in an area deemed blighted and risky for the market.  Further, not all municipalities have staff on hand that are trained and certified in green building codes and standards to determine compliance with the new standards.  Training and certification for staff could be an added cost that would have to be included in the municipal budget.
  • Scale. Redevelopment is typically an inclusive concept that addresses large-format development of shopping malls, hotels and residential projects, as well as individual smaller-scale projects.  Some projects may not have the appropriate size to warrant the additional cost to meet certain green building standards.  To this end, the municipality might want to provide a scale for when certain rehabilitation or construction projects must meet the green building standards.  Further, the municipality might want to provide itself with a chance to waive the requirements altogether, based on certain considerations, such as the percentage of the incremental cost to build green compared to the total project costs.
  • Negotiation Position. Unlike typical development under the Municipal Land Use Law, N.J.S.A. 40:55D-1 et seq., the redevelopment process provides the municipality with a seat at the table to determine what will be built, to what standards and within what timeframe.  The redevelopment plan establishes the framework for the development, but the redevelopment agreement provides the details and the mechanism for enforcement. There are many factors and variables that go into negotiating a redevelopment agreement, but the goal is for the municipality to secure an economically-feasible development project that maximizes community benefits while meeting the community’s needs.  Imposing green building standards as part of a redevelopment plan can reduce some of the municipality’s leverage, as it sets the bar higher in the redevelopment area than in any other area of the municipality.  The purpose of the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. (the “LRHL”), is to allow the municipality the tools to incentivize development in an area where private development cannot or will not thrive on its own.  The LRHL specifically gives municipalities additional tools to assist them in attracting development in these blighted areas.  While the redevelopment tools include the ability to craft development standards, municipalities should be mindful that setting a higher development standard in these areas can limit the municipality’s ability to attract redevelopers and negotiate and implement redevelopment agreements that suit their needs.

This is not to say that no municipality should ever consider adopting a green building standard. On the contrary, some municipalities have adopted such standards as part of a municipal green building policy.  As a policy that is part of the redevelopment plan, the municipalities state their goals for green building and provide developers with options on how to meet those goals.  In this way, developers are made aware that the municipality favors redevelopers who are sophisticated in green building techniques, while not tying the hands of the municipality in the event some projects cannot feasibly or economically meet the green building standards.  The municipality can incentivize its policy by expressing a preference for proposals by redevelopers who have experience with and will utilize green building practices, offering waivers of certain municipal fees (water/sewer connection, planning board application, etc.) for green developments or offering financial assistance.  By including green building standards as a municipal policy and incentivizing compliance to the standards under a redevelopment plan, a municipality can continue to promote its green building agenda without limiting its redevelopment potential.

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