BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Tom Torlakson, Chairman
35 (Ruskin)
Hearing Date: 8/30/07 Amended: 8/27/07
Consultant: Miriam Barcellona IngenitoPolicy Vote: EQ 5-2
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AB 35 (Ruskin)
Page 2
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BILL SUMMARY: AB 35 would require all state agencies that
begin construction of, or renovation to, a state building, as
defined, on and after July 1, 2010, to design, construct, and
operate that state building to meet minimum standards as
described in the United States Green Building Council's
Leadership in Energy and Environmental Design (LEED) for a gold
rating.
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Fiscal Impact (in thousands)
Major Provisions 2007-08 2008-09 2009-10 Fund
New building standard unknown increase in construction costsGF
offset by unknown, potentially savings
in out years
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STAFF COMMENTS: Suspense file
Staff notes that a green building, also known as a sustainable
building, is a structure that is designed, built, renovated,
operated, or reused in an ecological and resource-efficient
manner. Green buildings are designed to meet certain objectives,
such as the following: protecting occupant health; improving
employee productivity; using energy, water, and other resources
more efficiently; and reducing the overall impact to the
environment. A common green building standard often referenced
is the United States Green Building Council's Leadership in
Energy and Environmental Design (LEED), which includes different
ratings, including certified, silver, gold, and platinum.
The green building approach applies a project lifecycle cost
analysis for determining the appropriate up-front expenditure.
This analytical method calculates costs over the useful life of
the asset.
A green building is generally presumed to cost more initially,
but will save money through lower operating costs over its
AB 35 (Ruskin)
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lifetime. The belief that green construction costs more than
nongreen construction is not universal. For instance, in a July
2007 paper titled Cost of Green Revisited: Reexamining the
Feasibility and Cost Impact of Sustainable Design in the Light
of Increased Market Adoption, by Davis Langston (an
international construction consulting firm), the following
finding regarding green construction was concluded: "there is no
significant difference in average costs for green buildings as
compared to non-green buildings. Many project teams are building
green buildings with little or no added cost, and with budgets
well within the cost range of nongreen buildings with similar
programs." This is essentially the same result from a 2004
paper titled Costing Green: A Comprehensive Cost Database and
Budget Methodology.
In October 2003, a report was developed for the Sustainable
Building Task Force, which was a group of over 40 California
state government agencies. Funding for this study was provided
by the Air Resources Board (ARB), California Integrated Waste
Management Board, DOF, DGS, Department of Transportation,
Department of Water Resources, and Division of the State
Architect. The report was a collaborative effort and included
the contributions of Capital E, Future Resources Associates,
Task Force members, and the United States Green Building
Council. The report, titled The Costs and Financial Benefits of
Green Buildings: A Report to California's Sustainable Building
Task Force, found "an upfront investment of less than two
percent of construction costs yields lifecycle savings of over
ten times the initial investment." According to the report,
the benefits of green buildings include cost savings from
reduced energy, water and waste; lower operations and
maintenance costs; and enhanced occupant productivity and
health. The report estimated that an average increased cost of
$4 per square foot would result savings of $48.87 per square
foot if built to LEED certified and silver standards and savings
of $67.31 per square foot if built to LEED gold and platinum
standards, in net present value assuming, conservatively, the
useful life of the building is 20 years.
The report found the premium paid to construct green buildings
to the Silver standard was about 2.1 percent more than non-green
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buildings. The premium to use the Gold standard was about 1.8
percent. This is an anomaly in the data which the report
attributed to a small data set. Despite this anomaly, the report
concluded that "the data indicates that it is possible to build
gold level buildings for little additional cost. The higher
performance levels associated with gold buildings? combined with
their potentially low cost premiums ? suggest that, based on
available data, LEED Gold may be the most cost effective design
objective for green buildings " (emphasis theirs).
Executive Order S-20-04 requires state agencies, departments,
and other entities under the direct executive authority of the
Governor to cooperate in taking measures to reduce grid-based
energy purchases for state-owned buildings by 20 percent by
2015, through cost-effective efficiency measures and distributed
generation technologies including the design, construction and
operation of all new and renovated state-owned facilities paid
for with state funds as "LEED silver" or higher certified
buildings. The Department of General Services (DGS) and the
Department of Finance (DOF) have agreed that all new capital
projects for state buildings would meet the LEED silver rating
standards. DGS reports it currently has 36 projects in various
stages of the process, all meeting the silver rating standards.
AB 35 would require all state agencies that begin construction
of, or renovation to, a state building, as defined, on and after
July 1, 2010, to design, construct, and operate that state
building to meet minimum LEED gold rating. In determining if a
state building project would meet those standards, AB 35
specifies five existing guidelines or pieces of information that
must be considered. Staff is neither able to estimate how much
more construction of, or renovation to, a state building would
cost if it were built to the specified green standards; nor can
staff estimate how much long term savings could be achieved.
Staff notes, however, that relative costs to renovate a state
building up to the specified standards would be more significant
than the relative costs associated with new construction to the
specified standards.
Staff notes that SB 86 (Committee on Budget and Fiscal Review),
one of the pending budget trailer bills, contains provisions
that would require state buildings to be designed, constructed,
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and operated, to meet, at a minimum, LEED silver rating
standards.
Staff notes that AB 888 (Lieu) would create Green Building
Standards for Nonresidential Buildings Law and AB 1058 (Laird)
would create the Green Building Standards Law that would pertain
to residential buildings; both of these bills are before the
committee today.
Author's amendments (taken on Suspense) would make a minor
non-fiscal changes.