Building Performance Standards and Certifications
As renters walk through the streets of New York, displayed publicly on apartment buildings all over the city are the Building’s Green Certification along with the building’s current grade assigned by Building Performance Standard Local Law 97. Surprisingly, the grade for performance for the building is not an “A” but a “C.” You might be wondering how that is even possible. The score and the certification might be correct; but it is more complicated than you might think.
First, Building Performance Standards (BPS) and a Green Building Certification could be measuring different things. A Green Building appointed at Construction typically looks at multiple facets of the property such as the materials used to construct the project, location (access to public transportation and services) and types of equipment installed. Many of these construction certification programs are certifying that the project was built to be Green, but do not speak to the actual performance of the property. Building Performance Standards consistently focus on the ongoing operation and performance of that property. This means you can have LED lighting for your exterior parking lot but if you don’t plan the system to turn off during daylight hours, you might not meet the performance standard. The keyword is Performance.
Depending on the location of the property, some Building Performance Standards do not factor in performance criteria that might qualify a property for a Certification. For example, having high efficiency gas heated hot water system in a cold climate like Colorado might earn points for a Green Designation, but will be counter productive with respect to the Green House Gas (GHG) targets outlined in this BPS. Additionally solar, which adds value on a Green Certification, might not aid an owner with a BPS target if the jurisdiction is looking at total Energy Use Intensity (EUI) and not permitting the solar to be considered as an offset to total energy consumption (Net Metered). The EPA has published guidelines on including solar energy in the EUI for BPS requirements. Some jurisdictions, like Denver allow the owner to count the solar toward their targets while other jurisdictions may not.
It is also important to note that having a Green Certification that has a performance target such as EnergyStar Certification or a LEED O&M typically will not exempt a building from following the performance requirements. There are Benchmarking markets, like the City of Los Angeles, California where an EnergyStar certification will exempt a Building from the EBEWE audit requirement, yet no such exemptions for any kind of certification exist currently in the thirteen markets with BPS targets. Additionally, if the BPS focuses on Carbon, while the efficient operations might assist the project in achieving an alternative compliance pathway, the designation itself will not.
That said, there can still be design standards that owners may want to look at when constructing in a BPS market. Passive House is a design and construction standard which focuses on a tight building envelope and insulation. which if done correctly means that the building will have little to no need for heating or cooling. Since 40% of all energy attributed to a building is conditioning the air (heating and cooling), by designing to this standard it is highly likely that the building will perform in compliance with the PBS Targets. Additionally Net Zero buildings (which qualify for LEED Zero certifications) have lower GHG emissions since they must be fully electrified and must be efficient in order for its onsite renewable systems to produce enough energy to offset its total consumption. The Charrette practices outlined in a LEED certification are aligned with BPS in the sense that a charette is tasked with looking at the project holistically, which includes local requirements like BPS in addition to ownership goals (most likely of complying with BPS).
Green Building designations still have value to our industry. Beyond BPS requirements, there is consistent data being delivered from various government agencies like the DOE and the private sector like Cushman and Wakefield in which Green Certified Multifamily projects yield higher rents than uncertified Class A properties. The Global Real Estate Sustainability Benchmark (GRESB) recently released their new scoring on green certifications, which offers points to certifications but gives a greater value to performance-based certification targets. Green Building designations also qualify for Green Loans through Fannie Mae and Freddie Mac in which the loans have preferred loan terms.
A Green Certification does not prevent a property from complying with a BPS requirement. Both compliance and certification have tremendous value to an owner. Our focus merely needs to shift to integrate added factors into our decisioning when we think about “how” we are going to improve our properties.
At GreenT, we help owners and operators of Multifamily properties navigate the complexities of regulation, and how green certifications can assist in this process.
