Commercial Building ConstructionAs reported by my land use partner, Elizabeth Watson, a LEED accredited professional (click here and here), on January 1, 2011, the long-awaited statewide green building code for new commercial and residential construction in California went into effect. Referred to as the California Green Building Standards Code or CALGreen, the new code sets forth a series of mandatory requirements and voluntary measures for public and privately constructed commercial and residential buildings.

To avoid undue stress, even distress, coming to grips with these new sustainability requirements, consider the following:
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Gas StationSince 1989, one bright spot for owners of property in California contaminated by petroleum releases from underground storage tanks has been monies available from the State of California Petroleum Underground Storage Tank (“UST”) Cleanup Fund (the “Fund”). Monies in the Fund are provided by a storage fee paid by petroleum UST owners through the permit process based upon the volume of throughput.

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On September 23, 2010, the California Air Resources Board (CARB) adopted targets throughout the State for reducing greenhouse gas emissions from passenger vehicles (including automobiles and light trucks). The targets vary by region. In the Greater Los Angeles area, comprising approximately 18 million people, CARB set reduction targets of 8% by 2020 and 13% by 2035. This despite the September 2 vote of the regional council of the Southern California Association of Governments (SCAG) urging CARB to require more modest targets of 6% by 2020 and 8% by 2035.
Cars and Trucks in trafic.
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On August 9, 2010, the California Air Resources Board (CARB) issued its long-awaited draft report implementing SB 375. Passed in 2008 (and recently favorably reviewed by the Urban Land Institute), SB 375 requires targeted reductions of greenhouse gas emissions by 2020 and 2035 throughout the State. The targets link climate change concerns to reductions in single-occupancy vehicle usage to new housing development and funding of transportation projects through coordinated regional and local planning, an ambitious effort without precedent here or elsewhere.Cars on Street

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After much thrashing about and hesitancy to act by air quality regulators throughout California and the nation, on June 2, 2010, the Bay Area Air Quality Management District (BAAQMD), which has jurisdiction over the nine counties of the San Francisco Bay area, became the first air quality regulator to adopt guidelines for numerical thresholds of significance for greenhouse gas (GHG) emissionsfor development projects of all types.The BAAQMD action creates

quantifiable GHG thresholds to determine levels of significance in a GHG emissions analysis. A threshold of significance is an identifiable quantitative, qualitative or performance level of an air quality effect used to determine the environmental impacts from a project. This action will lead the way for other regulators in California to control GHG emissions indirectly through the environmental review portion of the project approval process under the California Environmental Quality Act or CEQA.Bay Area

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The Urban Land Institute (ULI), a nationally recognized organization which encourages sustainable development practices, has favorably reviewed SB 375 in its June 2010 report, “SB 375, Impact Analysis Report.” Adopted in 2008 by the California Legislature, SB 375 for the first time links land use decisions to funding of transportation infrastructure.
Urban Sprawl
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A story from the New York Times, published March 3rd underscores what we have been saying for over a year: green leases — or commercial leases that draw on the benefits of sustainability — are attracting the attention of both tenants and investors.

Green LeasesThe story, “Seeing the Investor Value in Being Green,” reports that a German real estate investment company, Jamestown Properties, has proclaimed that it will go “green” in its entire $4 billion portfolio of buildings here in the U.S. According to the New York Times, Jamestown will overhaul its existing properties by installing low-flow water fixtures and better lighting, by revamping heating, ventilation and air conditioning systems, and even by adding bike-share stations to some of its buildings. Jamestown expects to spend between $3 million and $10 million to retrofit its properties, the Times reported. (Click here to read the article.)
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Despite a troubled economy, developers are exploring the opportunity for new Leadership in Energy and Environmental Design (LEED) certified energy efficient buildings. Likewise, many tenants are also bent on reducing their carbon footprints and meeting emerging corporate sustainability requirements demanded by their customers and encouraged by their employees. As a result, many tenants today desire to be in buildings that truly manage their energy, water and resource consumption. The bottom line is this: Building “green” requirements into commercial leases can result in growing dollars in your pocket.

But what are “green” leases? Under one definition, green leases encourage sustainability in the construction, renovation and operation of commercial buildings. Sustainability is best viewed as a journey — a process of continued improvement to achieve higher efficiencies in water and energy usage, as well as recycled materials, waste minimization, healthier indoor air, and ever more efficient transportation options for the tenant’s employees and customers.
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The South Coast Air Quality Management District (SCAQMD) is considering a new rule that would create an unprecedented, additional new hurdle for real estate development in Southern California. In addition to the already cumbersome and protracted local land use permitting process every major development must navigate, the District’s proposed SCAQMD Rule 2301 would impose a new, required approval process that has the potential to constrain the size of new real estate projects and further prolong the project approval process. (Click here to read.)

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