In late September, New York became the latest state to give the green light to “green building,” after Gov. David Paterson signed two bills introducing green building performance standards for construction and renovation of New York state government buildings, and a Grants Program for green residential builds. The new laws aim to encourage and incentivize the construction of energy-efficient, sustainable buildings, using recyclable and environmentally friendly materials, and are in line with the governor’s “15 x 15” plan to reduce energy use by 15 percent of expected levels by 2015. New York’s new laws highlight the fact that buildings account for nearly 40 percent of the nation’s greenhouse gas emissions and more than 70 percent of its electricity consumption, and that these impacts can be reduced by regulations governing design and construction.

The State Green Building Construction Act (A. 2005) (State Building Act) will require all new state-owned buildings, and substantial renovations of existing state-owned buildings, to comply with green construction principles set forth in standards to be developed by the Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority (NYSERDA). State agencies will also be required to prepare annual building performance reports containing information on their green credentials, including energy consumption, waste reduction, and how indoor air quality compares with set benchmarks. The State Building Act takes effect 180 days after signature, on or about March 25, 2009.

The second law, referred to as the Green Residential Building Program (S. 8134) (Residential Program Act), is of immediate effect. It authorizes NYSERDA to create and administer guidelines and criteria for the design and building techniques used in the residential sector. NYSERDA will have discretion as to what such guidelines will encompass, including the freedom to decide on eligibility criteria, application procedures, award determinations, inspection procedures and documentation requirements. Those intended to fall under the Residential Program Act will be builders and renovators of single- and multi-family homes with fewer than 12 dwelling units. The Residential Program Act also offers grants to builders of environmentally smart residences, an incentive already in place in the commercial sector. Grants will be paid out to owners who fulfill the required standards and who produce a certificate of occupancy for their buildings on or after Jan. 1, 2010, and before Oct. 31, 2013. All grants will be subject to a cap, based on a number of considerations, including the size and type of the residential structure, and whether the owner is eligible for any other type of financial assistance from any other source. The cap on incentive payments will operate as follows:

  • Grants for residential buildings with two or fewer dwelling units may not exceed $7,500
  • Grants for residential buildings with three to five dwelling units may not exceed $11,250
  • Grants for residential buildings with at least six dwelling units may not exceed $15,000

No single owner may receive more than $120,000 in grants under the Residential Program Act in any one calendar year.

In enacting these two green building laws, New York follows California, which was the first state to implement green building standards by adopting the California Green Building Standards Code (California Code) in July 2008. The California Code seeks to accomplish benefits similar to those of New York’s State Building and Residential Program Acts, with an emphasis on improving energy-efficiency, reducing greenhouse gas emissions and water conservation. Unlike the New York laws, however, the California Code is all encompassing, applying to construction of residential, commercial and state buildings – from hospitals to schools, and from homes to businesses. Also unlike the New York initiatives, compliance with the California Code is currently optional, and will only become mandatory in 2010.

Compared with New York’s two new green building laws, the California Code has arguably set more stringent energy efficiency standards, with the latter demanding compliance with firm and more detailed objectives, including the need for developers to obtain a 15 percent reduction in energy use compared with current standards, construction waste reduction of 50 percent, and a 50 percent reduction in landscape water conservation beyond current mandated levels. The California Code also requires new buildings to be dual-plumbed for potable and recyclable water systems, use Energy Star appliances, and use eco-friendly flooring, carpeting, paint, coatings, thermal insulation, and acoustical wall and ceiling panels. The California Building Standards Commission compares the measures under the California Code to a “silver rating” under the Leadership in Energy and Environmental Design (LEED) standards. The New York laws require DEC and NYSERDA to consult the LEED standards and the American National Standards Institute in the development of their guidelines and criteria, but it is unclear at this stage how stringent those requirements will be. However, New York’s laws go farther than the California Code by offering clear, though very limited, incentive payments for construction or renovation of green buildings.

A related development that will give builders some comfort as they calculate the cost of going green is that last month, Congress approved the extension and expansion of the various tax benefits for renewable energy businesses and investments. In particular, the Energy Improvement and Extension Act of 2008 (part of the massive federal economic rescue plan) extends the investment tax credit for eight years, and the renewable energy production tax credit for either one or two years, depending on the type of facility.