In recent years, environmental regulations have begun to emerge as a municipal responsibility more than ever before.  Storm-water pollution, toxic mold and lead paint legislation are the most current examples.  Because the State has already adopted a sustainable building policy for its governmental buildings, it is reasonable to assume that many of these requirements will, before long, begin to filter down to the local level.  Expanded requirements for controlling pollution run-off and reducing the flow of debris to landfills are already anticipated in the near future. 

It is this trend, as well as the current direction of the design community toward an increased emphasis on sustainable building practices, that has contributed to the development of the Green Building and Construction Debris Ordinances.  Within the City, the Blue Ribbon Task Force for Affordable Housing has also noted sustainability as a goal for its future programs.

Sustainable Program Background

Both the Green Building Ordinance and the Construction Waste Ordinance are being proposed as voluntary measures.  Feedback from the building and development community emphasized the importance of this feature of the programs.  The majority of those responding were supportive of the programs and what they are intended to achieve, but they also believed that time was required to begin to adjust design and construction practices, identify cost-effective materials, and incorporate appropriate recycling standards into construction projects.  Voluntary programs will also allow the City to refine its requirements by evaluating results from program participants and modifying the sections that are unclear, ineffective, or cumbersome.    

The majority of programs offered through other city and county jurisdictions are, at this time, voluntary for private developers.  Most cities that have adopted sustainable building policies have done so for public buildings, libraries, and schools.  In addition, most privately-owned LEED (Leadership in Energy and Environmental Design) structures have been corporate buildings as opposed to speculative office or retail developments.   

The Green Building Ordinance followed the introduction of the Debris Diversion Ordinance.  Both ordinances were introduced to the Board of Building and Fire Code Appeals, distributed to all City departments for comment, and finally sent to the State�s �Sustainable Building Task Force�, private developers, builders, and contractors.  Both ordinances were again recently discussed at a public hearing of the Building and Fire Code Appeals Board prior to the initial City Council Report.

Sustainable Program Organization

There are three parts to the proposed program:

1. State mandated storm-water pollution prevention requirements,

2. California Integrated Waste Management Board�s (CIWMB) landfill diversion requirements, and

3. LEED, and the LEED Supplement for California State Facilities. 

Because each part can be affected independently by state action, each has been developed separately, while remaining as a part of the overall programmatic goal.

1.  Storm-Water Pollution Prevention

The storm-water pollution prevention measures are already mandated by the Regional Water Quality Control Board under the City�s NPDES (National Pollution Discharge Elimination System) permit for specific types of projects.  These are not voluntary requirements, and if they do apply to a project, the requirements must be met.  The intent for their inclusion as a part of the green building program is to encourage pollution prevention measures that exceed the minimums established by the Water Quality Board, and to encourage the incorporation of pollution controls into projects where specific post-construction requirements do not currently apply.

For example, a surface parking lot of less than 25 cars may not be required to install treatment devices.  By including storm-water controls into this program, we hope to encourage projects such as this to include treatment control measures, whether it is a catch basin filter, or simply diverting surface flow to landscaped areas for infiltration.

2.  Construction and Demolition Debris Diversion

The Construction and Demolition Debris Diversion Ordinance was developed by both the Public Works Department and the Building Division as a proactive measure anticipating possible increases in the landfill diversion requirements by the California Integrated Waste Management Board.  While the City of Burbank has met its current state mandated goals, other cities have been unable to meet their prescribed diversion rate and have been forced to implement stricter mandatory waste control ordinances.  By establishing the debris diversion program in advance of any new, or additional, state mandated requirements, the City will have the opportunity to implement a pilot program, and collect and distribute information to the community in order to reduce the impact of any future diversion requirements.

The intent of the Diversion Ordinance is to promote recycling of construction and demolition debris and divert the waste from landfills.  The U.S. EPA (Environmental Protection Agency) estimates that there is approximately 136 million tons of construction and demolition debris generated in the U.S. annually, or 2.8 lbs/person/day.  Using these numbers, we can estimate approximately about 54,000 tons of construction waste being generated annually in Burbank.  Recently representatives from Public Works and Building visited Downtown Diversion, a new recycling facility in Los Angeles, which accepts and sorts construction debris.  They estimate that their recycling rate is about 80%.  This could translate into as much as 43,000 tons of the construction debris in Burbank being diverted from landfills. 

3.  Green Building and Sustainable Architecture

The development of the Green Building Program is a companion project to the Construction and Waste Debris Ordinance.  Research for the Green Building Program included reviews of the U.S. Green Building Council standards, the Sacramento Cool Community Program, the Department of Energy�s Smart Community Network, and existing ordinances adopted by the State of California, the cities of Seattle, WA, Austin, TX, San Jose, Los Angeles, Santa Monica, Long Beach, and San Diego, as well as by the County of Alameda. 

This program, based on the U.S. Green Building Council�s (USGBC) LEED rating system, establishes energy efficiency and sustainability standards for developers and builders to incorporate into their projects.  The LEED system is considered to be a holistic approach to building design.  That is, it incorporates not only energy efficiency and water conservation, but site selection and site redevelopment, recycled content building materials, alternative transportation, landscape design, exterior light pollution, indoor air quality, and building operations. 

The USGBC currently offers LEED rating systems in the following categories:

• New Commercial and Industrial Buildings,

• Existing Buildings,

• Core and Shell Development (Pilot Program), and

• Commercial Interiors (Pilot Program)

• A rating system is beginning to be developed for housing.

While sustainable buildings generally exceed average construction costs, the primary benefits are seen over the lifetime of the building.  In general, LEED buildings are 25%-30% more efficient, and worker productivity is estimated to save approximately $600-$1,000/ employee/year.  The premium for construction of a LEED building is, however, estimated to be about $3 - $5/ sf, which can substantially increase the initial costs for a speculative developer.  This premium is also why LEED buildings tend to be corporate projects where lifetime cost savings can be realized.    

As with the other parts of this program- storm-water pollution prevention and debris diversion- the implementation of this ordinance is in anticipation of efficiency requirements that have already been adopted for State-owned buildings.  Within the past several months, the Building Division was contacted by the State Sustainability Task Force¹ concerning implementation of green building policies within the City of Burbank.  Their effort is to gather data about current programs, and, again, we would anticipate that this may result in future state mandated building requirements.

¹The following are the results of the Sustainability Task Force survey:

Government: Local Sustainable Building Initiatives

LEED Adoption;  City and County of San Francisco; City and County of Los Angeles (certified); City of Calabasas; City of Long Beach; City of Sacramento; City of San Diego (silver); City of San Jose; LAUSD (certified); Los Angeles Community College District (certified); San Mateo County, California

LEED Adoption Proposed, Planned or Under Development: City of Burbank

Other Green Building Policy/Standard:  Alameda County; City of Berkeley; City of Oakland; City of Santa Monica; County of Santa Barbara

The Building Division is also a member of the U.S. Green Building Council (USGBC).  This provides us with direct access to the latest information and standards available, and allows us to be in contact with others in the green building community.  The Building Division is on the Sustainability Task Force contact list, and we receive regular updates from the CIWMB. 

Program Procedures

The Green Building Program establishes three levels of sustainability compliance:

• Level I:   Meeting or exceeding stormwater and debris diversion goals

• Level II:  Meeting a minimum 50% LEED goal, as well as stormwater and diversion goals, and

• Level III: Achieving LEED certification in addition to meeting stormwater and debris diversion goals.

The program applicant first selects the level of sustainability most applicable to their individual project and incorporates the information and requirements into the construction documents.  Both the Green Building Ordinance and the Construction Debris Ordinance outline specific requirements for construction document submittals and report documentation.  To qualify for program incentives, all initial information must be provided, including details of stormwater best management practices, a list of recyclers, an inventory of recycled content materials, and LEED registration.  It is expected that the initial documentation requirement is detailed enough to insure commitment to the program.

To encourage developer participation in projects in which the City is involved, the Redevelopment Agency will be distributing sustainable building and LEED publications as a part of its project negotiations.  The Building Division has purchased two USGBC publications, Making The Business Case For High Performance Green Buildings and  LEED, Green Building rating System for use as public education and information tools. 

Prior to the final inspection and issuance of the certificate of occupancy, all documentation for debris diversion, recycled-content building materials, stormwater controls, or LEED submittal must be submitted to the City for review.  At that time, if the applicant has failed to meet their obligation, the amount of the fee reduction incentive will be required to be returned to the City.  

Program Incentives

Incentives offered to private developers for participation in other jurisdictions tend to be somewhat scarce and focus primarily on the lifetime benefits of reduced energy costs and worker productivity to promote participation.  When incentives are offered they include:

• Energy and water conservation programs.  These are similar to the Residential Rebate Programs and the Business Rebate Programs already offered by Burbank Water and Power;

• Rebates offered by other utilities such as The Gas Company;

• Grant programs for green building projects.  The City of Portland, Oregon offers this type of incentive system;

• �Process-based� incentives that include expedited plan check, zoning incentives (i.e. density bonuses), and consideration of technologies that are not currently allowed by the building code.  Cities such as Long Beach have focused on these types of incentives; and

• Fee waivers.  Some jurisdictions, such as the City of Santa Monica, waive permit fees for photovoltaic and solar heating systems.

Not all of these incentive types, however, are readily adaptable to this program.

Burbank Water and Power already has Business Rebate and Residential Rebate Programs in effect that reward energy efficient projects, the installation of photovoltaic systems, cool roofs, water-saving and Energy Star appliances and fixtures.  In our discussions with the development community, they stated that because these programs were already available to them that additional incentives would be required in order for them to consider the increased construction costs that are inherent in a sustainable building project.   

Rebates by utility companies such as The Gas Company are outside the control of the City, with no ability to specify when and how the rebate may apply, or when a program may be discontinued.  This type of program is beneficial as a supplemental incentive only.  

Grant programs, such as Portland�s, require an annual financial investment by the City.  Portland has committed several hundred thousand dollars each year as a financial incentive for sustainable projects.  The funds are distributed based on the size of the project and the degree of sustainability.

Processed-based incentives are the easiest incentives to initiate, but in many cases, they may also be the most problematic.  To properly offer such an incentive, all departments must commit to a specific schedule for processing the construction documents, and would have to extend into the preliminary approval stages that would include Planning Board hearings and environmental reviews.  In many cases, the project also requires outside agency approval, such as the Health Department, or Los Angeles County Flood Control.   

For our voluntary program, staff recommends that two types of incentives should be included:  1. Fee Reductions, and 2. Fee Waivers.

1.  Fee Reductions

It is recommended that fee reductions apply to all projects that comply with the minimum requirements of Level I, II, or III sustainability, and that the Building Division fees be reduced as follows: 

• Level I sustainability  5% fee reduction (plan check and permit fee)

• Level II sustainability 10% fee reduction  (plan check and permit fee), and

• Level III sustainability 15% fee reduction (plan check and permit fee) + 5% Transportation Fee.

However, it also recommended that the fees for specialized consultant plan check services not be included in the fee reduction calculation.  For most projects, this will typically be restricted to more complex mechanical, electrical, and plumbing system plan check fees.  The fee reduction will still apply to mechanical, electrical, and plumbing plan check when those services are performed in-house.   Depending on the complexity of the structural design, this exception to the fee reduction may also include specialized structural plan check fees, and, occasionally, geotechnical plan check fees.  Again, the reduction will apply to all structural and geotechnical plan check fees when those services are performed in-house.  This allows the Division to cover costs for specialized plan check services, while still providing incentives for the applicant.

In addition, staff recommends that any proposed LEED certified building be provided with expedited City approval services based on registration with the USGBC for certification at the time of submittal. 

However, as stated in item #3 in Sustainable Program Organization above, the primary benefits of a green building are seen over the life of the building and are related to energy savings, health, and productivity.  Because there is an up-front premium associated with these benefits, the additional construction costs cannot be mitigated solely by permit fee waivers.  The decision to develop a LEED certified building will most likely not be based on fees alone.  The marketability of the building, higher lease rates that may be associated with increase air quality monitoring, and other economic factors may affect a developer�s decision as much, or more, as a fee savings. 

2.      Fee Waivers

Fee Waiver Considerations

In general, we can separate a project into the following sustainable categories:

• Energy- lighting and mechanical systems, insulation, windows, cool roofs, and renewable energy such as photovoltaic systems.

• Water Conservation- plumbing fixtures, reclaimed water, and landscaping

• Materials- new construction, demolition, and building operations to control trash and recyclables.

• Air Quality- daylighting, low VOC materials, mechanical systems, and other low-emmission equipment.

• Sustainable Sites- site disturbance and reuse, stormwater management, light pollution, and alternative transportation including carpooling, electrical charging stations, bicycling and shower facilities.

It is important to determine if only selected categories, or if all categories will be eligible for fee waivers.  For example, if an existing residence is proposing to replace existing single glazed windows with new energy efficient windows, or if new insulation is proposed, etc, it must be  determined if that type of work, by itself, qualifies for the waiver. 

It must be considered that for a $100,000 addition and remodel the building fees will be about $1,200 ($400.00 plan check fee and $800.00 permit fee).  It is not atypical in a remodel for the computer energy modeling to consider the addition only.  This method allows the existing portion of the home to keep its single glazed windows and add no additional insulation.  If the energy model does not require the existing portion of the residence to upgrade, the most prudent financial decision for the owner may be to upgrade existing windows and add insulation if these will qualify for the waiver.  The additional cost of insulation and replacing windows would be offset by the fee waiver.

It would then be important to establish a threshold for the waiver.  Would additional insulation alone qualify, and would it qualify if it were only added to the attic and under-floor area, or would it have to be installed in the walls also?  In the same $100,000 addition, adding insulation to the existing attic and under-floor area could be accomplished by the owner at a minimal cost.  With a full $1200 fee waiver, the owner would most likely come out ahead, while the City would be performing plan check and inspection services without fees. 

It may be that the project would qualify for the waiver only in the amount of the work proposed.  For example, if the cost for additional insulation was $1,000, it is possible that the waiver be in that amount leaving a balance of $200 to be paid for the building permit.

Another approach may be similar to the disabled accessibility requirements that are based on an upgrade allowance, which is determined by 20% of the construction cost of the project.  In the same way, a cost breakdown could be required to determine the cost of the efficiency features in relation to the overall construction cost.  If it met a minimum percentage, we could then grant the waiver.  For example, the same $100,000 residential project could meet the waiver requirement by installing low-e windows in the entire house as well as the addition, installing or upgrading attic, floor, and wall insulation, installing high performance HVAC units, and sealing all ducting, if that work, which would be over and above the basic energy requirements, was valued at $10,000 (using a 10% example). 

Many of these installations may only be a part of a larger project.  Even a photovoltaic system may require structural upgrades to the existing building resulting in both a building permit and an electrical permit.  We must consider whether all related permits are eligible or only the electrical permit that is directly associated with the renewable energy source.

A recent installation was divided into three separate permits- a building permit for foundations for exterior equipment, an electrical permit for the photovoltaic system itself, and a building permit for structural upgrades required for mounting the photovoltaic panels.  In this case, all permits are related to the system.  It cannot be installed without all work being completed.

Similarly, it must be determined whether both the plan check fee and the permit fee should be waived or only the permit fee.  In some cases, there may be consultant charges.  In the case of a photovoltaic system, the Division�s electrical consultant reviews the plans for the system, while the structural is reviewed in house.  There are often expenses related to the permit beyond staff time. 

In cases where an entire project may be a LEED certified project, consideration must be given to the impact of a full fee waiver.  Typically on a large office building project, there is a building permit, grading permit, shoring permit, electrical, mechanical, and plumbing permit.  On a building like this there are consultant fees for structural, mechanical, electrical, and plumbing plan review.  Mechanical plan review for a LEED building may also require increased plan check time because of the more complex HVAC systems. 

For a LEED building it may be impossible to separate the sustainable features from standard features because the building is certified on the basis of holistic design principles.  Yet to waive the entire fee will cost the City more than staff time, there will be out of pocket expenditures to specialized consultants.

It must also be considered whether or not possible fee waivers affect only the Building Division�s permit fees or whether it will affect other fees, such as DR or CUP, Fire, Public Works, Parks, BWP, and other fees.

Fee Waiver Recommendation

The Division recommends the following fee waiver:

All photovoltaic and solar heating systems shall be granted a fee waiver for both building plan check and permit fees.  The waiver shall not extend to fees collected by other Divisions or departments.  Like fee reductions, the waiver shall not include specialized plan check fees, but only plan check fees related to in-house review.  The waiver shall apply only to the fees related to the system itself.  Permits for structural upgrades to an existing building, for example, shall not be included in the waiver.  This is in line with waivers through other jurisdictions such as Santa Monica.

Fee Reduction/ Fee Waiver Example:

The following examples compares estimated premium costs for LEED certification to the proposed Building Division fee reductions and fee waivers:

1.  Sample Commercial Project:     

• 50,000 SF Office Building, Type II-FR Construction

• Assume Level III compliance

Estimated Construction Valuation

• Non-LEED Construction Valuation:                      $6,250,000

• LEED Average Construction Premium:               $   200,000

• Total LEED Construction Valuation:                     $6,450,000

The USGBC estimates that the construction premium for a LEED building averages $3 to $5 per square foot.  For the sample project this would be an average total premium of $150,000 to $250,000.  However, this can range from a low of approximately 1% for LEED Certified buildings (+-$1.25/ sf), +-2 % for LEED Silver and Gold (+-$2.50/ sf), to 6.5% for LEED Platinum ($8.10/sf), all based on average construction valuation for offices of $125.00/sf (ICC standard valuation for an office building).  More specifically, we end up with construction premiums of $62,500 for LEED Certified, $125,000 for LEED Silver and Gold, and $405,000 for LEED Platinum.  This equates to an average construction premium of approximately $200,000.     

Estimated Fees

• Non-LEED Plan Check/ Permit Fees:                  $  52,500 (based on $6,250,000 valuation)

• Total LEED Plan Check/Permit Fees:                  $  53,500 (based on $6,450,000 valuation)

• Development Impact Fee (Transportation):                 $233,000 (no Demolition Credit)

• Development Impact Fee (Community Facilities):      $  61,000 (no Demolition Credit)

• Total Fee:                                                                         $347,500

The average construction valuation for a 50,000 sf office building at $125/sf would be about $6,250,000.  This would result in a building permit fee of approximately $45,000 ($19,000 for plan check and strong motion fees, and $26,000 for permit fees).  Additional Building Division fees would include electrical, mechanical, and plumbing permits ($900 for plan check and $3,400 in permit fees), and shoring and grading permits ($1,000 for plan check fees, and $2,200 for permit fees).  The maximum Development Impact Fee would be approximately $294,000 ($61,000 in Commercial Facilities Fees, and $233,000 in Transportation Fees). 

Proposed LEED Fee Reduction

• Level III Reduction:            15% of Plan Check/ Permit Fees + 5% of Transportation Fee

Estimated Fee Reduction Calculation

• $6,450,000 (Total LEED valuation) - $200,000 (LEED) = $6,250,000 (Non-LEED Valuation Reduction (LEED � Non-LEED): $53,500 - $52,500 = $1,000 Reduction

• $52,500 � $900 (Consultant Fees) = $51,600

• $51,600 @ 0.15 = $7,740 Reduction

• $233,000 (Transportation Fee) @ 0.05 = $11,650 Reduction

• Total Fee Reduction = $1,000 + $7,740 + $11,650 = $20,390

• Total Fee less Reduction = 347,500 � 20,390 = 327,110           

The calculation is based on the following:

1.       The applicant is not penalized for a LEED certified building by reducing the construction valuation by the estimated cost of the LEED premium.  This cost will be set as part of the building valuation data published by the Building Division.  The LEED premium will be based on USGBC construction premium averages and updated annually by the Construction Cost Index.

2.       The cost of specialized consultant services required for mechanical, electrical, and plumbing systems will not be included in the fee reduction calculation.  The total cost of these services shall be paid by the applicant.

2.  Sample Residential Project:                  

• 2,000 SF Single-Family Dwelling Addition, Type V-N Construction

• Assume Level II compliance

Estimated Construction Valuation

• Non-LEED Construction Valuation:                      $260,000

• LEED Average Construction Premium:               Not Yet Established

• Total LEED Construction Valuation:                     $260,000        

The USGBC is currently developing an LEED standard for residential projects.

Proposed LEED Fee Reduction

• Level II Reduction: 10% of Plan Check/ Permit Fees

Estimated Fee Reduction Calculation

• Total Permit Fees for $260,000 Valuation (Demo, Bldg, Mech, Elect, Plumb) = $4,800

• $4,800 @ 0.10 = $480 Reduction

• Total Fee less Reduction = $4,800 � $480 = $4,320

3.  Sample Photovoltaic Project:                       

• Photovoltaic System with $2,000 valuation for roof structural reinforcement.

• Assume specialized consultant for system plan check and in-house plan check for structural work.

Proposed Fee Waiver

• Waiver:      100% of In-House Plan Check/ Permit Fees for System Only

Estimated Fee Reduction Calculation

• Total Permit Fees for PV System and Structural Work = $290

• Waived Permit Fee for PV System = $70 (flat fee for photovoltaic systems)

• Specialized Plan Check Fee for PV system less waived in-house fee = $135 � $15 = $120

• Fee for structural plan check/permit = $85

• Total Fee less Waiver = $290 - $70 - $15 = $205

Program Summary

In addition to benefiting the City by reducing energy loads and the size of the waste stream, the Green Building and Construction Waste Diversion Programs allow Burbank to more easily achieve many of the goals that we anticipate being required of the City in the future.  Certainly stormwater regulations will become stricter, the waste stream will be required to be reduced, and worker productivity will become more critical.  All of these concerns, as well as alternative transportation, light pollution, and recycled materials, are addressed within the scope of our sustainable building and waste diversion programs.  While we are not the first city to implement such policies, this program allows Burbank to become one of the leaders in a rapidly developing area of the building and construction industry.

Recommendation

Staff recommends that the City Council approve the Green Building and Sustainable Architecture Ordinance and the Construction and Demolition Debris Diversion Ordinances as written with authorization for the City Clerk to publish the ordinance adopting the Green Building and Sustainable Architecture Ordinance, and the Construction and Demolition Debris Diversion Ordinance.

Attachments:

Exhibit A:  Green Building and Sustainable Architecture Reference Manual

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