Regulation of environmentally sustainable building remains more of a state and local issue than a federal one, according to David Farer, chair of the environmental department at the law firm Greenbaum Rowe Smith & Davis LLP.
In a video interview last month with REIT.com at REITWise 2012: NAREIT's Law, Accounting and Finance Conference in Hollywood, Fla., Farer discussed the regulatory climate for commercial building. With states offering the majority of grants and loans, builders are taking cues from those environmental regimes more so than federal programs.
"We're not seeing the kind of major legislation that would impact REITs," he said. "Again, the focus remains local, not federal, and very much self-motivated still on behalf of property owners."
One measure that has gained some visibility is the move in New Jersey, Massachusetts and Connecticut to privatize environmental clean-ups: "Rather than having the state agencies overseeing every aspect of our clients proceeding through the investigation and clean-up process, having consultants we've been working with more or less deputized into being licensed professionals standing in the shoes of the state agencies." In terms of concrete steps that REITs and commercial property owners can take to ensure eco-friendly buildings and operational practices, Farer said waste reduction and recycling are receiving greater interest. He also noted that a number of property owners have tried to take advantage of incentives to implement solar technology at their buildings.
Installing solar panels and similar technology raises a host of logistical issues, according to Farer. Property owners have to consider everything from insurance policies to securing access to the panels. They also need to make sure that they have agreements for tenants to buy the solar power being generated.