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A LOOK AT HOW FUTURE GREEN BUILDING LEGISLATION COULD IMPACT ON PROPERTY PRACTITIONERS The launch of The Green Building Council of South Africa's [the "GBCSA"] new Green Star SA Rating tool geared at the commercial property industry caused quite a stir amongst property developers and large companies who wanted to win the race to becoming the first to have a Green Star SA rated building in South Africa.
Although the requirement to build in an environmentally sustainable way has not yet been written into legislation in South Africa, it is clear that we could be heading in that direction. For example, the draft Taxation Laws Amendment Bill 2009 released for comment in the first week of June, contains two tax incentives for business specifically aimed at encouraging businesses to reduce their carbon footprint.
The first tax incentive included in the draft Taxation Laws Amendment Bill 2009 (if promulgated) will be enjoyed by businesses who are party to qualifying clean development mechanism project(s) [CDMs]. The CDM mechanism was set up under the Kyoto Protocol to allow industrialised countries to invest in projects to reduce carbon emissions. For this incentive, the tax saving comes in with the disposal by the company of certified emission reductions (CERs). The disposal of qualifying CERs [derived in the furtherance of a qualifying CDM project] will be exempt from income tax.
The second tax incentive relates to energy savings achieved by businesses. Income tax deductions will apply where energy has been saved, based on documented evidence of such energy savings, duly certified by the Energy Efficiency Agency.
In addition to the draft Amendment Bill, we now also look at how the GBCSA’s new office greening tool and plans for the rolling out of similar tools for other building types (for example retail, hotel, multi-unit residential, conference centres and industrial) could impact on property practitioners.
It can already be seen that property practitioners will increasingly, over time, be affected by an upsurge in demand for green buildings and residences. It can be expected that green rated buildings, energy efficient and off-grid homes will soon (if not already) become a marketing tool for estate agents. Potential buyers are more likely to enquire about how 'green' a building is, and may base their decision to buy or not to buy on such a critical point. Furthermore, as consumers become increasingly aware of and eager to start leading 'greener' lifestyles, they are starting to base their spending decisions on whether a potential service provider is similarly concerned about reducing its negative impact on the environment. It appears that South Africa's bank sector is fully aware of this fact as many of SA's banks are at the forefront of 'greening' their offices. Furthermore, in face of the current economic conditions, it could also prove sensible for companies to “green” their establishment, even if for just the long term energy cost savings, proved increase in staff productivity, waste and consumption reduction benefits and cost savings [and tax incentives].
Once green building legislation is in place, it is likely to also become a compliance issue impacting on all property role-players, especially banks offering mortgage loan finance. It will be considered a risk issue for banks to offer mortgage loan finance to buildings that do not comply. It can be presumed that some financial institutions may even make it a requirement for mortgagors to furnish the mortgagee with a Green Star SA rated certificate prior to registering any (building) bond similar to (and in addition to) the current NHBRC requirements specified by most financial institutions for building bonds.
We now provide a brief overview of what is understood to be 'green building' and generally how the current Green Star SA rating tool works.
WHAT IS GREEN BUILDING?
- The GBCSA defines green building as:
"building which is energy efficient, resource efficient and environmentally responsible- which incorporates design, construction and operational practices that significantly reduce or eliminate its negative impact on the environment and its occupants"....and later elaborates by saying "Specific green building measures include careful building design to reduce heat loads, maximise natural light and promote the circulation of fresh air; the use of energy-efficient air-conditioning and lighting; the use of environmentally friendly, non-toxic materials; the reduction of waste, and the use of recycled materials; water-efficient plumbing fittings and water harvesting; the use of renewable energy sources; and sensitivity with regard to the impact of the development on the environment.”
- The GBCSA goes on to describe green building as: "an opportunity to use resources efficiently and address climate change while creating healthier and more productive environments for people to live and work in." and says "Green buildings can reduce their consumption of energy to less than half of what a conventional building does, with similar reductions in potable water usage, runoff to sewer and solid waste."
WHAT IS THE GREEN STAR SA RATING TOOL?
- The GBCSA defines it as "a green building rating tool (that) sets standards and benchmarks for green building, and enables an objective assessment to be made as to how "green" a building is. The rating system sets out a "menu" of all the green measures that can be incorporated into a building to make it green. Points are awarded to a building according to which measures have been incorporated, and, after appropriate weighting, a total score is arrived at, which determines the rating.”
- Many rating systems are in place worldwide, however, it was decided that the South African rating tool should be based on the existing Australian Green Star system as a result of the countries' similar climates. Certain modifications, were however made, taking into consideration South Africa's unique requirements.
- To become SA Green Star rated, building owners need to undergo an application process that involves paying a fee and the completing and submitting of certain documentation to the GBCSA. The GBCSA appoints independent assessors to assess the application, and if the applicant is successful, the appointed assessors will rate the building accordingly.
- The current Green Star SA rating tool is available for commercial (office) buildings only with two separate certification options:
- Green Star SA – Office “Design”, for certification to be awarded for the design phase of the project; and
- Green Star SA – Office “As Built”, for certification to be awarded following construction completion, this certification confirming that all green building strategies were in fact incorporated into the final building.
- Ratings are for 4-star, 5-star, or 6-star certification.
For more information on the Green Star SA rating system, please visit the Green Building Council of South Africa's website.
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