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What is a Green Lease?

Fri, Jul 23, 2010

Green Business

A green lease is different from a typical landlord/tenant relationship in that provisions are built into the agreement to encourage green business practices. These agreements encourage owners to build and maintain sustainable spaces without limiting tenant comfort. They are becoming increasingly popular as companies look for ways to help the environment.

The California Sustainability Alliance has many useful green lease resources that can easily be tailored for small businesses specific needs. Gina Davis, a partner at the Dennis Law Group, a Washington D.C. firm specializing in green real estate law offers the following advice, “If a landlord already has a green building and is deciding to lease the space, they should make sure to add language to the lease that requires the Tenant to agree that they will not conduct activities that could disrupt the ‘green’ status of the building.”

Green Lease Guidelines

Provisions incorporated into the leases include guidelines for energy and water use, building maintenance, recycling and waste management, and employee transportation. For example, lessors and lessees will work together to achieve ENERGY STAR ratings by a mutually agreeable date. ENERGY STAR is a program run by the EPA and the Department of Energy that offers businesses energy management strategies.

Other energy savings agreements built into a lease include installing occupancy sensors for lights; buying green sourced power from the utility company; and retrofitting older buildings according to utility company standards to increase building performance.

What Should Landlords Provide?

Landlords also agree that all water fixtures meet current EPA standards, limiting faucet flow rates to 2 gallons per minute and maximum toilet flush rates to 1.6 gallons per minute. This limits the burden on portable water supplies while maximizing efficiency. A preventive maintenance system should be put in place to insure that heating and cooling systems are able to meet the highest standards.

Collection bins for commonly recycled materials, like paper, glass, plastics, and aluminum should be provided by the lessor, as well as the labor to recycle them. Such receptacles should be clearly marked and accessible. Any chemicals needed for maintenance should be housed off-site. The landlords can also demand that the tenants introduce waste reduction policies for their employees to follow.

Green Commuting

The space itself is not the only consideration in a green lease. The parties can also come to agreement about how workers get to the office. To encourage more employees to bike to work, buildings should include bike storage facilities and showers. According to the Centers for Disease Control, every mile on a bike instead of in a car keeps one pound of pollution out of the air.

If a building is located further than an agreed upon distance from public transportation, the lessors will provide shuttle services to the employees. Lessors can establish preferred parking spaces for those who drive hybrid cars or carpool.

With some careful advance planning, businesses entering into new lease agreements can help the environment.

By Danielle Bullen

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