Green Issues in Commercial Office Leases

Part One of a Two-Part Series

Tenants are beginning to address green issues in leases for many reasons, including reduced operating costs over the term of the lease and increased productivity among employees. In addition to corporate green policies or shareholder green initiatives, cities and localities such as Washington, DC; Montgomery County, MD; and Boston have passed green legislation of various kinds. Other cities such as Kansas City, MO are considering similar legislation. Many public entities such as the state of California and the city of Chicago have required compliance with green standards for their public buildings and offices for some time. The difference today with the new green legislation being passed in Washington, DC; Montgomery County, MD; and Boston is that the private sector both for commercial and residential projects of a certain scale, not just the public sector, will be required to comply with green standards. This will be especially true if a private development is receiving taxpayer funds. It is very likely that lawyers, real estate brokers, contractors, and other real estate professionals may need to address green issues when looking at space options, reviewing a lease, and constructing leasehold improvements ' not only for a client but also for their own office space.

The U.S. Green Building Council's ('USGBC') (www.usgbc.org) Leadership in Energy and Environmental Design 'LEED Program' has become one standard used to measure sustainability in legislation and local regulations. The USGBC was founded in 1993 and is headquartered in Washington, DC. It is a voluntary, consensus-driven organization whose membership consists of all branches of the real estate and construction industries: architects; engineers; educational institutions; contractors; brokers; attorneys; representatives of federal, state and local government agencies; professional firms and societies; retail; insurance companies; financial institutions; and product manufacturers.

The mission of the LEED Program is to encourage and accelerate global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted standards, tools, and performance criteria. LEED has become a certification standard that distinguishes green buildings from the rest of the market. Due to its emphasis on third-party certification, LEED has become a recognized benchmark known for its credibility and integrity. The LEED Program is a point-based system with prerequisites that rate projects in six categories depending on the amount of points obtained: Certified, Silver, Gold, and Platinum. The original LEED Program introduced in 2000 is now called LEED New Construction ('NC') and has become oriented toward a build-to-suit project.

The USGBC has developed several different LEED Programs for other aspects of construction: LEED Existing Buildings ('EB') was developed to improve the operations and maintenance of existing buildings; LEED Core & Shell ('CS') and LEED Commercial Interiors ('CI') were added to encompass new base building construction and the subsequent tenant fit-out work. The LEED CS Program certifies only the core and shell items of a typical speculative commercial office building. The LEED CI Program is meant to be a follow-on program that addresses the interior work a tenant may perform in these buildings.

LEED CI is the LEED Program that a real estate lawyer or broker dealing with commercial office space on a daily basis most likely will encounter, and thus the remainder of this article focuses on the credits involved with a lease for office space where the client wants to pursue LEED CI Certification.

Please note that if one or one's client is leasing space in a building that has participated in the NC or CS Program, the LEED spreadsheet used to obtain the building's LEED certification from the USGBC and the green strategies required of the tenant may be incorporated into the lease. (The National Association of Realtors Building in Washington, DC is the first LEED Certified building in the U.S. capital with a Silver rating in the LEED NC V2.1 Program.) A prospective tenant is given the building's LEED Spreadsheet as a lease attachment, and it lists compliance items for the tenant build-out so that the building may maintain its LEED rating.

For a space to be certified (lowest level available) the Tenant needs to achieve between 21-26 out of 57 points in the LEED CI program. Tenants whose culture, mission, and/or people feel that sustainability is important typically will push for LEED certification.

The following section addresses the LEED CI credits one needs to be aware of, by category, with a discussion of the intent behind each credit. All of the LEED programs have the same six categories in common: Sustainable Sites; Water Efficiency; Energy & Atmosphere; Materials & Resources; Indoor Environmental Quality; and Innovation & Design Process. The Sustainable Sites and Energy & Atmosphere categories are the ones on which the broker can have the most influence in the acquisition stage. The Indoor Environmental Quality category will follow if these first two are properly acquired. The Materials & Resources and Innovation & Design process categories are heavily influenced by the design decisions made by the team ' tenant, architect, MEP (mechanical, electrical, and plumbing) engineer ' during the design and documentation process. The broker and attorney should be aware that the team will have additional consultants such as a lighting designer, a third-party testing and commissioning agent, and, potentially, a LEED Consultant. Due to the similarity of the categories in the various LEED Programs, the issues discussed herein for LEED CI will be similar in the other LEED Programs. The word 'tenant' also may be substituted for owner occupied space.

LEED CI Lease Issues

Sustainable Sites ' 7 Points Out of 57 Points

Credit 1: Select a LEED Certified Building Or Meet Other Similar Characteristics ' Up to Three Points

The intent of this credit is to create a market for buildings that have participated in the LEED NC, CS, or EB programs or that have taken several other sustainable steps such as installing a green or high reflectance roof, and/or use minimal or no irrigation for exterior landscaping. It is also meant to favor newly built or newly renovated buildings with efficient HVAC and lighting, as well as efficient building management systems.

Credit 2: Development Density & Community Connectivity ' 1 Point

Locate in a Two-Story Downtown Development Or Within 1/2 mile to Residential Development

AND

Offer Pedestrian Access to 10 Basic Services Such As: Bank, Place of Worship, Day Care, Hair Care, Hardware, Laundry Cleaners, Pharmacy, Post Office, Restaurant, Convenience Grocery, and Other Recognized Services Evaluated on Their Merit.

This credit is meant to encourage locating in areas of high density, with existing infrastructure and retail services within walking distance. Many professional service firms will locate in an urban center, which makes this an easy credit to obtain in many urban areas.

Credit 3.1: Alternate Transportation, Public Transportation ' 1 Point ' 1/2 Mile to Rail Line Station, 1/4 Mile to Bus Line.

This credit's intention is to encourage the use of public transportation. Locations near public transportation may also be considered a potential employee recruitment and retention tool, as well as provide easy access for the tenant's client base.

Credit 3.2: Alternate Transportation, Bicycle Storage ' 1 Point

Bicycle Storage for 5% of Occupants AND Changing/Shower Facilities Within 200 Yards of the Building.

Many Class A office buildings in an urban or suburban location are likely to provide a fitness facility within the building or may be located close to a gym. Many buildings also will offer bicycle storage in the parking garage, if a tenant so requests.

Credit 3.3: Alternate Transportation, Parking Availability ' 1 Point

Case A ' Occupying Less Than 75% of Gross Building SF

Parking Space Allotment Will Not Exceed Minimum Required By Zoning OR No Parking Provided Or Subsidized for Tenant

Case B ' Occupying More Than 75% of Gross Building SF

Parking Space Allotment Will Not Exceed Local Minimum Required By Zoning OR No New Parking Added for Rehabilitation Projects

AND

Preferred Parking for Car Or Van Pools Serving 5% of the Building Occupants in All Cases

This is a credit that must be discussed with the tenant and needs to be a part of the lease negotiations. The amount of parking allowed by zoning varies by jurisdiction. Many professional service firms wish to ensure that there is sufficient parking for their professionals, which may make this credit one that will not be pursued. This credit may also be difficult to document in an office park environment that offers free on-site parking.

Water Efficiency ' 2 Points Out of 57 Points

Credits 1 & 2: 20%/30% Tenant Water Use Reduction

These are the credits least influenced by the broker in LEED CI. These credits are for items within the tenant's space. However, depending on its size, a tenant may ask for replacement of the core restroom items in order to obtain additional water efficiency.

Energy & Atmosphere ' 12 Points Out of 57 Points

Prerequisite 1 ' Fundamental Commissioning ' Third Party

Credit 2: Enhanced Commissioning ' 1 Point

These credits entail verifying that certain HVAC and electrical components are functioning as specified. They are cost items, and the commissioning must be conducted by an independent third party that needs to join the team early in the design process in order to meet the prerequisite. The prerequisite focuses on including, at a minimum, the following energy related systems: HVAC and associated controls; lighting and daylighting controls; domestic hot water systems; and renewable energy systems. Credit 2 requires that the commissioning agent return to the space eight to 10 months later to ensure that the impacted items are still operating properly. Both commissioning processes can lead to the discovery of issues that were not properly addressed in the initial work or punch list. Both the enhanced and fundamental commissioning addressed in the prerequisite have the benefit of extending equipment life and may minimize lawsuits relating to indoor air quality. This credit can lead to increased productivity of employees since it ensures that the HVAC equipment is operating as designed and specified. For additional information on building commissioning go to the Building Commissioning Authority's Web site (http://www.bcxa.org/).

Prerequisite 2 ' Minimum Energy Performance ' Comply with ASHRAE/IESNA (American Society of Heating, Refrigerating and Air-Conditioning Engineers/Illuminating Engineering Society of North America) Standard 90.1-2004

Prerequisite 3 ' CFC Reduction in HVAC & Refrigeration Equipment ' No Chlorofluorocarbons (CFCs) in Tenant Space

Compliance with these two prerequisites should be confirmed with all potential landlords prior to presenting a building to the tenant.

Credit 1.4: Optimize Energy Performance, Equipment & Appliances ' Up to 2 Points ' ENERGY STAR Appliances & Equipment for 70 Or 90% of Rated Power

This is meant to reduce energy use by using approved equipment and appliances. This credit requires 'buy-in' by the tenant upfront and coordination with the tenant, architect, and MEP engineer during the design process. This credit works to the tenants' benefit especially well if they are pursuing the following two Energy & Atmosphere credits.

Credit 3: Energy Use, Measurement & Payment Accountability ' Up to 2 Points

Case A ' Occupying Less Than 75% of Gross Building SF

Install Sub-Metering Equipment to Measure and Record Energy Uses Within the Tenant Space (1 Point)

Negotiate a Lease Where Energy Costs Are Paid for By the Tenant and Not Included in the Base Rent (1 Point)

Case B ' Occupying More Than 75% of Gross Building SF

Install Continuous Metering for 10 End-Uses and Develop a Measurement & Verification Plan for These End-Uses. (2 Points)

This item needs to be addressed in the lease.

Credit 4: Green Power ' 1 Point ' 50% Or More for Two Years

This credit is meant to encourage the growth of green power resources. This is an operational budget item. The cost is $0.02 – $0.06 per Kwh (10% ' 30% more depending on local market conditions). This is an item that companies will purchase for many reasons including the public relations value. Some corporate examples include Whole Foods, which has purchased wind power to offset 100% of its electrical energy use for all of its facilities. However, this credit will not be available in a full service lease.

Materials & Resources ' 14 Points Out of 57 Points

Prerequisite 1 ' Storage and Collection of Recyclables

A tenant should ask each potential landlord whether the building will comply with this prerequisite. The Landlord will have to produce a letter certifying this condition as part of the LEED application process.

Credit 1.1: Tenant Space Long-Term Commitment ' 1 Point ' 10-Year Lease Renewal in Current Location

Credit 1.2: Building Reuse, Maintain 40% of Interior Non-Structural Components ' 1 Point

Credit 1.3: Building Reuse, Maintain 60% of Interior Non-Structural Components ' 1 Point

Sometimes the best green solution may be to do as little as possible to the space, and these credits reward that green strategy. Credit 1.1 is applicable only in a lease renewal situation. Credits 1.2 and 1.3 are potentially applicable in a lease renewal or when taking second-generation space. The design team would work to minimize the amount of demolition of partitions and doors and other existing built-in items while doing cosmetic renovations such as repainting and re-carpeting.

Credit 2.1: Construction Waste Management, Divert 50% from Landfill ' 1 Point

Credit 2.2: Construction Waste Management, Divert 75% From Landfill ' 1 Point

This is a cost issue that should be addressed in the work letter negotiations. Whether or not this credit is obtainable will depend on the amount of construction envisioned for the space, especially in a renovation or lease renewal.

Indoor Environmental Quality ' 17 Points Out of 57 Points

Prerequisite 1 ' Minimum IAQ Performance ' ASHRAE Standard 62-2004

Prerequisite 2 ' Environmental Tobacco Smoke ('ETS') Control ' No Smoking Within Building for All and Within 25 Feet of Entrances, Outdoor Louvers and Operable Windows Or Limit Smoking to Specific Rooms Mechanically Ventilated.

A tenant should ask each potential landlord whether the building will comply with this prerequisite. The landlord will be asked to provide a letter stating the no-smoking policy as part of the LEED application process.

Credit 1: Outdoor Air Delivery Monitoring ' 1 Point

Install a Carbon Dioxide (CO2) monitoring system using sensors and alarms that ensure that the ventilation system is operating as designed. This requirement needs to be addressed when negotiating the work letter.

Credit 3.1: Construction IAQ Man- agement Plan, During Construction ' 1 Point

Credit 3.2: Construction IAQ Man- agement Plan, After Construction ' 1 Point

These two credits attempt to minimize potential indoor air quality issues by preventing moisture and particulate infiltration to the site, wrapped ducts, and ductwork. One visible application is that metal ducts are typically delivered to the site wrapped in plastic so to prevent construction dust infiltrating the duct system. Some contractors believe that from a field application standpoint this is a 'best practice.' Another strategy is to make saw cuts within tents so as to minimize construction dust. All HVAC filters are replaced upon completion of construction. For the second credit (3.2) either a flushout period or an Indoor Air Quality ('IAQ') test by a third-party group is required. The flushout period has schedule implications, and the IAQ testing has cost implications for the tenant.

Another benefit of this credit is that it maintains clean indoor air during construction by limiting the creation of dust particulates and keeping materials dry, thus inhibiting mold growth, which is a potential liability issue. The post-construction testing or flushout by a third party allows any IAQ issues to be addressed before occupancy.

Credit 7.1: Thermal Comfort Compliance ' 1 Point ' ASHRAE Standard 55-2004

Credit 7.2 ' Monitoring ' 1 Point ' ASHRAE Standard 55-2004 Paragraph 7

Compliance with the first of these two credits is one of the basic questions that should be asked of a prospective landlord. The installation of this monitoring system is a cost item that needs to be addressed when negotiating the work letter.

Credit 8.1 ' Daylight & Views, Daylight 75% of Spaces ' 1 Point

Credit 8.2 ' Daylight & Views, Daylight 90% of Spaces ' 1 Point

Credit 8.3 ' Daylight & Views, Views for 90% of Seated Spaces ' 1 Point

In addition to the space plan, the building's shape, solar orientation, surrounding buildings, and location (including the floors involved) are important to obtaining this credit. A higher floor with access to more daylight may also have a higher rent. Knowledge of future potential nearby development is another insight the broker can provide the team.

Design & Innovation ' 5 Points Out of 57 Points

This is the most elastic of the categories. The team gets one point for having a LEED Accredited Professional ('AP'), which is mandatory anyway. Many architectural firms will have a team member that meets this criterion. Also, points have been given for exceeding one or more standards, and/or providing documentation or outreach to outside groups focusing on the green aspects of the space or the organization. The use of green cleaning products may also be counted as a Design & Innovation point.

Since it is always recommended that the entire team start early to think about green issues, the tenant's broker should be aware of the tenant's interest in participating in the LEED CI program as early as possible, hopefully prior to development of a market survey and definitely prior to a tour of building/space options. The broker should address the relevant questions with the tenant and all prospective landlords as early as possible in the leasing process. Some of these items may require additional landlord fees in the work letter or early discussion and adoption among the tenant's management team.

Next month's installment will discuss the questions that should be asked of the tenant and landlord.

Elizabeth L. Cooper is Senior Vice President and counsel and Frank Mobilio is an architect and construction manager with The Staubach Company, in Washington, DC.

Part One of a Two-Part Series

Tenants are beginning to address green issues in leases for many reasons, including reduced operating costs over the term of the lease and increased productivity among employees. In addition to corporate green policies or shareholder green initiatives, cities and localities such as Washington, DC; Montgomery County, MD; and Boston have passed green legislation of various kinds. Other cities such as Kansas City, MO are considering similar legislation. Many public entities such as the state of California and the city of Chicago have required compliance with green standards for their public buildings and offices for some time. The difference today with the new green legislation being passed in Washington, DC; Montgomery County, MD; and Boston is that the private sector both for commercial and residential projects of a certain scale, not just the public sector, will be required to comply with green standards. This will be especially true if a private development is receiving taxpayer funds. It is very likely that lawyers, real estate brokers, contractors, and other real estate professionals may need to address green issues when looking at space options, reviewing a lease, and constructing leasehold improvements ' not only for a client but also for their own office space.

The U.S. Green Building Council's ('USGBC') (www.usgbc.org) Leadership in Energy and Environmental Design 'LEED Program' has become one standard used to measure sustainability in legislation and local regulations. The USGBC was founded in 1993 and is headquartered in Washington, DC. It is a voluntary, consensus-driven organization whose membership consists of all branches of the real estate and construction industries: architects; engineers; educational institutions; contractors; brokers; attorneys; representatives of federal, state and local government agencies; professional firms and societies; retail; insurance companies; financial institutions; and product manufacturers.

The mission of the LEED Program is to encourage and accelerate global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted standards, tools, and performance criteria. LEED has become a certification standard that distinguishes green buildings from the rest of the market. Due to its emphasis on third-party certification, LEED has become a recognized benchmark known for its credibility and integrity. The LEED Program is a point-based system with prerequisites that rate projects in six categories depending on the amount of points obtained: Certified, Silver, Gold, and Platinum. The original LEED Program introduced in 2000 is now called LEED New Construction ('NC') and has become oriented toward a build-to-suit project.

The USGBC has developed several different LEED Programs for other aspects of construction: LEED Existing Buildings ('EB') was developed to improve the operations and maintenance of existing buildings; LEED Core & Shell ('CS') and LEED Commercial Interiors ('CI') were added to encompass new base building construction and the subsequent tenant fit-out work. The LEED CS Program certifies only the core and shell items of a typical speculative commercial office building. The LEED CI Program is meant to be a follow-on program that addresses the interior work a tenant may perform in these buildings.

LEED CI is the LEED Program that a real estate lawyer or broker dealing with commercial office space on a daily basis most likely will encounter, and thus the remainder of this article focuses on the credits involved with a lease for office space where the client wants to pursue LEED CI Certification.

Please note that if one or one's client is leasing space in a building that has participated in the NC or CS Program, the LEED spreadsheet used to obtain the building's LEED certification from the USGBC and the green strategies required of the tenant may be incorporated into the lease. (The National Association of Realtors Building in Washington, DC is the first LEED Certified building in the U.S. capital with a Silver rating in the LEED NC V2.1 Program.) A prospective tenant is given the building's LEED Spreadsheet as a lease attachment, and it lists compliance items for the tenant build-out so that the building may maintain its LEED rating.

For a space to be certified (lowest level available) the Tenant needs to achieve between 21-26 out of 57 points in the LEED CI program. Tenants whose culture, mission, and/or people feel that sustainability is important typically will push for LEED certification.

The following section addresses the LEED CI credits one needs to be aware of, by category, with a discussion of the intent behind each credit. All of the LEED programs have the same six categories in common: Sustainable Sites; Water Efficiency; Energy & Atmosphere; Materials & Resources; Indoor Environmental Quality; and Innovation & Design Process. The Sustainable Sites and Energy & Atmosphere categories are the ones on which the broker can have the most influence in the acquisition stage. The Indoor Environmental Quality category will follow if these first two are properly acquired. The Materials & Resources and Innovation & Design process categories are heavily influenced by the design decisions made by the team ' tenant, architect, MEP (mechanical, electrical, and plumbing) engineer ' during the design and documentation process. The broker and attorney should be aware that the team will have additional consultants such as a lighting designer, a third-party testing and commissioning agent, and, potentially, a LEED Consultant. Due to the similarity of the categories in the various LEED Programs, the issues discussed herein for LEED CI will be similar in the other LEED Programs. The word 'tenant' also may be substituted for owner occupied space.

LEED CI Lease Issues

Sustainable Sites ' 7 Points Out of 57 Points

Credit 1: Select a LEED Certified Building Or Meet Other Similar Characteristics ' Up to Three Points

The intent of this credit is to create a market for buildings that have participated in the LEED NC, CS, or EB programs or that have taken several other sustainable steps such as installing a green or high reflectance roof, and/or use minimal or no irrigation for exterior landscaping. It is also meant to favor newly built or newly renovated buildings with efficient HVAC and lighting, as well as efficient building management systems.

Credit 2: Development Density & Community Connectivity ' 1 Point

Locate in a Two-Story Downtown Development Or Within 1/2 mile to Residential Development

AND

Offer Pedestrian Access to 10 Basic Services Such As: Bank, Place of Worship, Day Care, Hair Care, Hardware, Laundry Cleaners, Pharmacy, Post Office, Restaurant, Convenience Grocery, and Other Recognized Services Evaluated on Their Merit.

This credit is meant to encourage locating in areas of high density, with existing infrastructure and retail services within walking distance. Many professional service firms will locate in an urban center, which makes this an easy credit to obtain in many urban areas.

Credit 3.1: Alternate Transportation, Public Transportation ' 1 Point ' 1/2 Mile to Rail Line Station, 1/4 Mile to Bus Line.

This credit's intention is to encourage the use of public transportation. Locations near public transportation may also be considered a potential employee recruitment and retention tool, as well as provide easy access for the tenant's client base.

Credit 3.2: Alternate Transportation, Bicycle Storage ' 1 Point

Bicycle Storage for 5% of Occupants AND Changing/Shower Facilities Within 200 Yards of the Building.

Many Class A office buildings in an urban or suburban location are likely to provide a fitness facility within the building or may be located close to a gym. Many buildings also will offer bicycle storage in the parking garage, if a tenant so requests.

Credit 3.3: Alternate Transportation, Parking Availability ' 1 Point

Case A ' Occupying Less Than 75% of Gross Building SF

Parking Space Allotment Will Not Exceed Minimum Required By Zoning OR No Parking Provided Or Subsidized for Tenant

Case B ' Occupying More Than 75% of Gross Building SF

Parking Space Allotment Will Not Exceed Local Minimum Required By Zoning OR No New Parking Added for Rehabilitation Projects

AND

Preferred Parking for Car Or Van Pools Serving 5% of the Building Occupants in All Cases

This is a credit that must be discussed with the tenant and needs to be a part of the lease negotiations. The amount of parking allowed by zoning varies by jurisdiction. Many professional service firms wish to ensure that there is sufficient parking for their professionals, which may make this credit one that will not be pursued. This credit may also be difficult to document in an office park environment that offers free on-site parking.

Water Efficiency ' 2 Points Out of 57 Points

Credits 1 & 2: 20%/30% Tenant Water Use Reduction

These are the credits least influenced by the broker in LEED CI. These credits are for items within the tenant's space. However, depending on its size, a tenant may ask for replacement of the core restroom items in order to obtain additional water efficiency.

Energy & Atmosphere ' 12 Points Out of 57 Points

Prerequisite 1 ' Fundamental Commissioning ' Third Party

Credit 2: Enhanced Commissioning ' 1 Point

These credits entail verifying that certain HVAC and electrical components are functioning as specified. They are cost items, and the commissioning must be conducted by an independent third party that needs to join the team early in the design process in order to meet the prerequisite. The prerequisite focuses on including, at a minimum, the following energy related systems: HVAC and associated controls; lighting and daylighting controls; domestic hot water systems; and renewable energy systems. Credit 2 requires that the commissioning agent return to the space eight to 10 months later to ensure that the impacted items are still operating properly. Both commissioning processes can lead to the discovery of issues that were not properly addressed in the initial work or punch list. Both the enhanced and fundamental commissioning addressed in the prerequisite have the benefit of extending equipment life and may minimize lawsuits relating to indoor air quality. This credit can lead to increased productivity of employees since it ensures that the HVAC equipment is operating as designed and specified. For additional information on building commissioning go to the Building Commissioning Authority's Web site (http://www.bcxa.org/).

Prerequisite 2 ' Minimum Energy Performance ' Comply with ASHRAE/IESNA (American Society of Heating, Refrigerating and Air-Conditioning Engineers/Illuminating Engineering Society of North America) Standard 90.1-2004

Prerequisite 3 ' CFC Reduction in HVAC & Refrigeration Equipment ' No Chlorofluorocarbons (CFCs) in Tenant Space

Compliance with these two prerequisites should be confirmed with all potential landlords prior to presenting a building to the tenant.

Credit 1.4: Optimize Energy Performance, Equipment & Appliances ' Up to 2 Points ' ENERGY STAR Appliances & Equipment for 70 Or 90% of Rated Power

This is meant to reduce energy use by using approved equipment and appliances. This credit requires 'buy-in' by the tenant upfront and coordination with the tenant, architect, and MEP engineer during the design process. This credit works to the tenants' benefit especially well if they are pursuing the following two Energy & Atmosphere credits.

Credit 3: Energy Use, Measurement & Payment Accountability ' Up to 2 Points

Case A ' Occupying Less Than 75% of Gross Building SF

Install Sub-Metering Equipment to Measure and Record Energy Uses Within the Tenant Space (1 Point)

Negotiate a Lease Where Energy Costs Are Paid for By the Tenant and Not Included in the Base Rent (1 Point)

Case B ' Occupying More Than 75% of Gross Building SF

Install Continuous Metering for 10 End-Uses and Develop a Measurement & Verification Plan for These End-Uses. (2 Points)

This item needs to be addressed in the lease.

Credit 4: Green Power ' 1 Point ' 50% Or More for Two Years

This credit is meant to encourage the growth of green power resources. This is an operational budget item. The cost is $0.02 – $0.06 per Kwh (10% ' 30% more depending on local market conditions). This is an item that companies will purchase for many reasons including the public relations value. Some corporate examples include Whole Foods, which has purchased wind power to offset 100% of its electrical energy use for all of its facilities. However, this credit will not be available in a full service lease.

Materials & Resources ' 14 Points Out of 57 Points

Prerequisite 1 ' Storage and Collection of Recyclables

A tenant should ask each potential landlord whether the building will comply with this prerequisite. The Landlord will have to produce a letter certifying this condition as part of the LEED application process.

Credit 1.1: Tenant Space Long-Term Commitment ' 1 Point ' 10-Year Lease Renewal in Current Location

Credit 1.2: Building Reuse, Maintain 40% of Interior Non-Structural Components ' 1 Point

Credit 1.3: Building Reuse, Maintain 60% of Interior Non-Structural Components ' 1 Point

Sometimes the best green solution may be to do as little as possible to the space, and these credits reward that green strategy. Credit 1.1 is applicable only in a lease renewal situation. Credits 1.2 and 1.3 are potentially applicable in a lease renewal or when taking second-generation space. The design team would work to minimize the amount of demolition of partitions and doors and other existing built-in items while doing cosmetic renovations such as repainting and re-carpeting.

Credit 2.1: Construction Waste Management, Divert 50% from Landfill ' 1 Point

Credit 2.2: Construction Waste Management, Divert 75% From Landfill ' 1 Point

This is a cost issue that should be addressed in the work letter negotiations. Whether or not this credit is obtainable will depend on the amount of construction envisioned for the space, especially in a renovation or lease renewal.

Indoor Environmental Quality ' 17 Points Out of 57 Points

Prerequisite 1 ' Minimum IAQ Performance ' ASHRAE Standard 62-2004

Prerequisite 2 ' Environmental Tobacco Smoke ('ETS') Control ' No Smoking Within Building for All and Within 25 Feet of Entrances, Outdoor Louvers and Operable Windows Or Limit Smoking to Specific Rooms Mechanically Ventilated.

A tenant should ask each potential landlord whether the building will comply with this prerequisite. The landlord will be asked to provide a letter stating the no-smoking policy as part of the LEED application process.

Credit 1: Outdoor Air Delivery Monitoring ' 1 Point

Install a Carbon Dioxide (CO2) monitoring system using sensors and alarms that ensure that the ventilation system is operating as designed. This requirement needs to be addressed when negotiating the work letter.

Credit 3.1: Construction IAQ Man- agement Plan, During Construction ' 1 Point

Credit 3.2: Construction IAQ Man- agement Plan, After Construction ' 1 Point

These two credits attempt to minimize potential indoor air quality issues by preventing moisture and particulate infiltration to the site, wrapped ducts, and ductwork. One visible application is that metal ducts are typically delivered to the site wrapped in plastic so to prevent construction dust infiltrating the duct system. Some contractors believe that from a field application standpoint this is a 'best practice.' Another strategy is to make saw cuts within tents so as to minimize construction dust. All HVAC filters are replaced upon completion of construction. For the second credit (3.2) either a flushout period or an Indoor Air Quality ('IAQ') test by a third-party group is required. The flushout period has schedule implications, and the IAQ testing has cost implications for the tenant.

Another benefit of this credit is that it maintains clean indoor air during construction by limiting the creation of dust particulates and keeping materials dry, thus inhibiting mold growth, which is a potential liability issue. The post-construction testing or flushout by a third party allows any IAQ issues to be addressed before occupancy.

Credit 7.1: Thermal Comfort Compliance ' 1 Point ' ASHRAE Standard 55-2004

Credit 7.2 ' Monitoring ' 1 Point ' ASHRAE Standard 55-2004 Paragraph 7

Compliance with the first of these two credits is one of the basic questions that should be asked of a prospective landlord. The installation of this monitoring system is a cost item that needs to be addressed when negotiating the work letter.

Credit 8.1 ' Daylight & Views, Daylight 75% of Spaces ' 1 Point

Credit 8.2 ' Daylight & Views, Daylight 90% of Spaces ' 1 Point

Credit 8.3 ' Daylight & Views, Views for 90% of Seated Spaces ' 1 Point

In addition to the space plan, the building's shape, solar orientation, surrounding buildings, and location (including the floors involved) are important to obtaining this credit. A higher floor with access to more daylight may also have a higher rent. Knowledge of future potential nearby development is another insight the broker can provide the team.

Design & Innovation ' 5 Points Out of 57 Points

This is the most elastic of the categories. The team gets one point for having a LEED Accredited Professional ('AP'), which is mandatory anyway. Many architectural firms will have a team member that meets this criterion. Also, points have been given for exceeding one or more standards, and/or providing documentation or outreach to outside groups focusing on the green aspects of the space or the organization. The use of green cleaning products may also be counted as a Design & Innovation point.

Since it is always recommended that the entire team start early to think about green issues, the tenant's broker should be aware of the tenant's interest in participating in the LEED CI program as early as possible, hopefully prior to development of a market survey and definitely prior to a tour of building/space options. The broker should address the relevant questions with the tenant and all prospective landlords as early as possible in the leasing process. Some of these items may require additional landlord fees in the work letter or early discussion and adoption among the tenant's management team.

Next month's installment will discuss the questions that should be asked of the tenant and landlord.

Elizabeth L. Cooper is Senior Vice President and counsel and Frank Mobilio is an architect and construction manager with The Staubach Company, in Washington, DC.