by Cynthia Price
Legal News
It should come as no surprise that Grand Rapidians were instrumental in fashioning and promoting a recently-introduced package of state bills that incentivize green building.
For several years, Grand Rapids has held its position as the city in the United States with the most LEED (Leadership in Energy and Environmental Design) certified buildings. First reported in 2006, when LEED was a less-well-known third-party certification, the most recent report designating the city as such was put out by the American Institute of Architects in late 2009.
Mayor George Heartwell has worked to institute policies for Grand Rapids that support broad-based sustainability as well as specific initiatives for green building. He has set a policy in place mandating that all municipal newly-constructed or renovated buildings over 10,000 square feet and $1,000,000 will be LEED-certified. The Grand Rapids School District has followed suit, with a series of its buildings receiving LEED honors.
Now, those advocating for Senate Bills 1111-1114 say that one of the challenges they face in passage may be the inclusion of LEED certification to the exclusion of other certifications.
LEED is a product of the United States Green Building Council (www.usgbc.org), which rates the environmental responsibility and energy efficiency of new and existing buildings. LEED Accredited Professionals investigate a building’s status on a checklist of factors, and accord it either basic, silver, gold or platinum certification.
The problem is obtaining LEED certification costs a lot of money; however, there are not a lot of other credible third party certifiers in existence. A close competitor might be the ASHRAE (American Society of Heating, Refrigerating and Air-conditioning Engineers) standards, on which portions of LEED are based — but these standards only cover the energy aspects of a building, whereas LEED looks at siting and other factors, such as stormwater runoff recapture, with
a broader lens of environmental
sustainability.
It is, in part, up-front certification costs along with more expensive building techniques that creators of the bills wanted to address. Long-term savings incurred particularly by energy efficiency are realized by those who buy the building, not by those who build it. This means developers have difficulty financing building “green.”
At a presentation held by Warner Norcross and Judd LLC (WNJ) on March 15, attorney John Byl talked about the process which generated the bills. Byl is chair of WNJ’s environmental practice group and co-chair of its economic development incentives group.
In late 2007, the board of the National Brownfield Association (NBA) Michigan chapter, then chaired by Heartwell, began discussing how great it would be to incentivize, rather than mandate, more green building. In the spring of 2008, the NBA brought together a large group of interested parties to see what could be done to encourage green building.
Involved were banks, builders and developers, the Michigan Municipal League, Michigan legislators’ staff members, the U.S. Green Building Council, and Michigan departments of Environmental Quality (now Natural Resources and Environment) and Energy, Labor and Economic Growth.
The result of the group’s six meetings was a consensus to generate incentive bills for introduction in the Michigan legislature. Jason Allen, the senator from the Grand Traverse-Charlevoix area who chairs the Senate Commerce and Tourism Committee, stepped up as a champion. He is currently sponsoring SB 1111; Sen. Hansen Clarke is sponsoring SB 1112, Sen. Patty Birkholz SB 1113, and Jim Barcia SB 1114. A bipartisan list of co-sponsors is attached to each bill.
The suite of bills provides for two types of incentives. The first is a tax abatement along the lines of the Industrial Facilities Tax Exemptions (IFTEs) granted by municipalities across Michigan. The abatement would require amending the 1978 Commercial Redevelopment Act. As with IFTEs, cities, villages and townships would decide whether to grant the abatements or not, and they would apply only to the increase in taxable value. The proposal, currently tied to LEED certification, would allow a 20% abatement for basic certification, 30% for silver, 40% for gold, and 50% for platinum certifications.
The second would be to allow the capture of tax increment increase to reimburse activities on a project. Based on brownfield laws and in fact amending the Brownfield Redevelopment Financing Act of 1996, the project would cover the increased property tax revenue resulting from a project only; the incentives do not cut into existing tax revenues. To qualify for the second incentive, projects must be on brownfield sites, that is, those that are contaminated, or have “functionally obsolete buildings” or blighted conditions.
As local green developer Guy Bazzani, who was part of the NBA stakeholder group, stated at the information session, the incentives would be given only after the third party certification was complete and points awarded. At times developers intend to build in an environmentally-friendly way, but circumstances prevent it. This would address that problem.
Troy Cumings, WNJ lobbyist in Lansing, addressed the crowd concerning possible impediments to passage. There was apparently an error in the legislative language which went contrary to the sponsors’ wishes: the scope of the jurisdiction is captured as statewide, which the Michigan Municipal League (MML) opposes. That should be an easy fix, according to Cumings.
The Department of Treasury reports that the bills will have a negligible effect on school revenues, but there will be some.
As noted above, the strongest concerns center around the certification, whether LEED should be specified or not. Cumings is working with Allen and others on that issue.
Cumings says MML underscores the contribution green building may make to reduced local government costs in addressing environmental problems such as stormwater runoff. The bills also foster redevelopment, appealing to older cities.
The bills have been introduced and sit in Allen’s own committee, Senate Commerce and Tourism. Movement on the bills is not expected until after the legislative session break, at least until early April.
An initial committee hearing held March 10 brought up most of the concerns Cumings reported. According to Ken Osborne, Legislative Director for Senator Allen, “I don’t think anything was insurmountable, but it’s just a matter of finding a way to address those concerns raised in testimony.”
People in support of the bills should contact their legislators during this time period, especially if they come into contact with them over the break. For detailed information visit http://www.legislature.mi.
gov, and type the bill number in the search box.
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