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The City and County of San Francisco, Office of Economic Analysis, issued a report (Mayor’s Green Building Requirements: Economic Impact Report) on May 21, 2008 challenging the economic basis for Mayor Newsom’s proposed Green Building Construction Ordinance.
 
The Ordinance, as proposed by Mayor Newsom, would require green building construction standards for privately-owned businesses in San Francisco.  Essentially, it requires LEED Certification standards for most commercial renovation projects within City limits and certain residential developments.  Currently, only municipal buildings within the City are subject to such standards.
 
The Office of Economic Analysis (OEA) has openly challenged the Ordinance, stating that the legislation would “impose a considerable cost on San Francisco’s economy”, and that approximately 57% of the city’s construction industry would experience higher costs as a result of the Ordinance.  The OEA cited that construction costs would increase, for example, by as much as 5% City-wide in order to achieve “LEED Gold” standards.  As a result, the OEA opines that the City’s economy would be impacted by:

  • a reduction in construction projects
  • higher rents
  • higher selling prices
  • less spending
  • reduced incomes

 

The OEA acknowledged that the negative economic impact associated with higher construction costs would, to some extent, be counteracted by the resource savings that green buildings offer its owner and tenants over the lifetime of the project; however, given the negative impact to the City in the short term, the OEA concluded that alternative approaches to reducing CO2 reduction should be considered.
 
Responding to the San Francisco Chronicle, Mayor Newsom rejected the conclusions reach in the report.  In a nutshell, as proposed by the Mayor, new commercial construction over 25,000 square feet must achieve “LEED Certified” in 2008, “LEED Silver” in 2009 and “LEED Gold” in 2012.  In addition to new construction, major alterations and tenant improvements (i.e. large commercial interiors) must achieve “LEED Certified” in 2008, “LEED Silver” in 2009 and “LEED Gold” in 2012, while medium (5,000 to < 25,000 square feet) interiors and major alterations must achieve LEED Checklist ratings for LEED WE 1.1 (water efficient landscaping) and  3.1 (water use reduction) in 2008, MR 2.1 (construction debris management) in 2011, plus LEED EA 3.0 (enhanced commissioning) and LEED EA2 or EA6 (on site energy generation or purchase) by 2012.
 
The Ordinance would also affect new residential high rise projects (5+ units and > 75′ in height), which must achieve “LEED Certified” in 2008 and “LEED Silver” in 2012.  Also, mid rise units would be required to comply with Green Point requirements.

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