Green Schools Grapple with Cost Premium

US lawyer William P Pearce looks at whether going green is costing American schools in the long run.

It's a question we've heard numerous times about green building in general, and LEED certification in particular, from colleagues, at green building tours, and from skeptical clients: When compared to a non-green building, how much more does a green building cost?

For most buildings, the answer usually seems to be around five percent or less for LEED Silver, with a realistic hope of recouping any extra cost in energy savings well within the useful life of the building.

The LEED Silver-certified Fairfield Inn & Suites in Baltimore reported a two percent cost increase associated with certification. A Fall 2009 study of Illinois green construction found a "green premium" of 3.8 percent additional cost associated with LEED compliance. Larger projects may incur a smaller "green premium". The additional cost of meeting LEED Silver standards for Target Field, the new home of the Minnesota Twins, was reportedly less than one-half of one percent.

When the Maryland Department of Legislative Services outlined the expected fiscal impact of the High Performance Buildings Act of 2008, which requires that all new public school construction using State funds meet or exceed the criteria for the LEED Silver rating, it found that the extra cost associated with LEED Silver compliance ranged from two to five percent and estimated that the new mandate would increase the cost of new school construction by two percent.

This is a relatively small increase, but it is not insignificant. Five percent of a $15 million school project is an additional three quarters of a million dollars out of a school board's capital budget. In addition, there exists anecdotal evidence that outside major metropolitan areas, the cost premium may be much higher.

For example, when the bids came back on a new middle school for the Washington-Nile School District in southern Ohio, the project was 22 percent over budget. Ohio's recent mandate that new public school construction comply with the requirement of the LEED Silver rating was blamed for the busted budget by local school officials (though it's worth noting that the Ohio School Facilities Commission appears to have had an overall problem recently in estimating construction costs in southern Ohio).

The local officials suggested that the rural character of the area was directly associated with the high premium for LEED, stating that area contractors did not have the same amount of experience with LEED as those in Ohio's major metropolitan areas.

In accordance with the High Performance Buildings Act of 2008, Maryland now requires compliance with the LEED Silver standard for all new public school construction projects for which the Request for Proposal process for the engagement of an Architectural and Engineering consultant began after July 1, 2009.

Until 2014, the State will pay half the additional cost of meeting the LEED Silver standard. After that, the school boards will incur the entire expense.

Because the State does not have enough money appropriated to meet the construction needs identified by its school systems, many proposed new construction and renovation projects are deferred each year. The extra cost of LEED compliance will necessarily be felt in terms of the reduced number of projects being undertaken.

The actual additional cost remains to be seen, but as the Interagency Committee on School Construction has pointed out, the costs of meeting these standards should come down as more contractors become familiar with them. The cost of green schools may well be an issue in the next few years, as school boards and green building professionals grapple with the learning curve associated with building schools green.

William P Pearce works for Whiteford Taylor Preston LLP.

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