During the 2008-2009 Legislative Session, the New Jersey State Legislature has introduced a handful of proposals for initiatives relating to what has come to be known as “green building” – a term that was inserted in the State Uniform Construction Code Act (“UCC”)  by amendment last year and defined to mean “[b]uilding construction practices that significantly reduce or eliminate the negative impact of buildings on the environment and their occupants and may consider, but need not be limited to five broad areas[.]”   These five “broad areas” include “[s]ustainable site planning; safeguarding water and water efficiency; energy efficiency and renewable energy; conservation of materials and resources; and indoor environmental quality.”   For example, Assembly bill A1559, which was signed into law by Governor Jon S. Corzine on August 5, 2008, relates to the first “broad area” of green building – “sustainable site planning” – and amends the Municipal Land Use Law (“MLUL”)  to authorize a local planning board to include in its master plan a “green buildings and environmental sustainability plan element.”   The purpose of this new master plan element is to encourage and promote, among other things, “[t]he efficient use of natural resources [and] . . . the impact of buildings on the local, regional and global environment . . . through site orientation and design.”   This enactment will likely eliminate any vestige of apprehension that municipalities may have had about their legal authority to enact green land use ordinances and could open the floodgates to new regulation.

Another recent green building initiative, introduced as Assembly bill A3062 on June 23, 2008, is designed to improve “energy efficiency and renewable energy” – the third “broad area” of green building – and would also amend the MLUL  adding to the statute a definition of “inherently beneficial use.”  The proposed definition, if enacted, would specifically designate certain uses as being inherently beneficial, such as “a wind, solar or photovoltaic energy facility.”  The Legislature is also proposing, among other things, a host of low interest loans and tax incentives for green building.  One such proposal was introduced in the Assembly on February 7th as A2065, which requires the New Jersey Economic Development Authority (“EDA”) in consultation with the Commissioner of the Department of Community Affairs (“DCA”) to “[e]stablish and administer a program that makes low-interest loans available to a developer or redeveloper, who constructs a new building or renovates an existing building that, when completed, qualifies as a high performance green building.”   A “high performance green building” is defined as “[a] building having at least 15,000 square feet in total floor area that is designed and constructed in a manner that achieves at least a silver rating according to the Leadership in Energy and Environmental Design Green Building Rating System as adopted by the United States Green Building Council.”

As for tax incentives, the proposed Green Building Tax Credit Act introduced in the Assembly as A2070  provides a “taxpayer” with “[a] credit for allowable costs paid or incurred by the taxpayer in connection with a green building[]” computed in accordance with the provisions of the act.   Under this proposal, a taxpayer may be eligible to receive as much as 4% of allowable costs plus “[0.]5%, 1.0%, 1.5% or 2.0% of allowable costs, attributable to buildings but not to other site improvements, qualifying as Certified, Silver, Gold, or Platinum status, respectively, under the LEED Green Building Rating System or the LEED Residential Green Building Rating System.”   The term “allowable costs” is generously defined under this legislative proposal and includes such expenses as “legal, architectural, engineering and other professional fees allocable to construction or rehabilitation, site costs, such as temporary electrical wiring, scaffolding, demolition costs and fencing and security facilities . . . not to exceed $280 per square foot of interior space, for both commercial and residential space.”   A taxpayer may apply up to 20% of the total amount allowed under the credit in any one tax year and shall have the right to carry forward unused portions to succeeding tax years.   Furthermore, in the event a taxpayer conveys the property to which a credit relates, the taxpayer may retain the unused portion of the credit or transfer it to the grantee.

A peculiarity about the proposed Green Building Tax Credit Act, which may serve as an obstacle for builders, is an overly complex and potentially contradictory definition of “green building,”  – one that is dissimilar to the definition of green building in the UCC.  Indeed, the proposed statute allows a taxpayer to become eligible for the credit upon a showing “[t]hat the building with respect to which the credit is applied meet[s] either (a) the green building standards . . . or (b) the criteria required for Certified, Silver, Gold or Platinum status under LEED Green Building Rating System or LEED Residential Green Building Rating System[]”  – even though the act defines “green building” only as “[a] building meeting the standards prescribed and adopted [by the DCA].”   It remains to be seen whether the Legislature will revisit the “green building” concepts presently embedded in the text of this proposed legislation to make them less cumbersome and reconcile any inconsistencies.

The foregoing demonstrates how interested the Legislature and our State has become in promoting energy efficiency in the design and construction of buildings.  This enthusiasm will likely produce even more legislative initiatives in the near future.  While the fate of the above-cited proposals not already enacted into law is yet uncertain, one thing at least is clear.  The push to become ever so green will present many legislative (and other) challenges and will undoubtedly soon transform the legal landscape.