Reaping Gold by Sowing Green: Investing in High Performance Public Buildings

Richard B. Kennelly, Jr.
Conservation Law Foundation

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High performance buildings seek to improve efficiency and effectiveness by designing out waste. Many public facilities significantly underperform or even become “sick buildings,” squandering taxpayer dollars and resources such as energy and human capital. The returns on public sector investment in high performance facilities can be substantial: the Commonwealth of Pennsylvania, for example, through adherence to its “Guidelines for Creating High Performance Buildings,” expects to save up to 60 percent on building energy costs and 90 percent on costs of periodic office reconfiguration (or “churn”).1 Similarly, New York City officials estimate that innovative design to maximize building efficiency and performance can not only save at least 30 percent on energy costs, but can reduce total life-cycle costs of new buildings by 11 percent.2 Indeed, more than a decade of experience with utility energy efficiency programs in New York and New England demonstrates that on average modest investment in proven, readily available technologies such as efficient lighting and cooling equipment can achieve energy savings of 30 percent or more over standard code practice with a payback of two to four years.3 Yet this experience also shows that the public sector has not taken advantage of utility energy efficiency programs to the degree the private sector has, despite large potential savings.

The Commonwealth of Massachusetts, for example, spent approximately $43 million in fiscal year 2000 on electricity for its buildings.4 If the state could cut its energy use by 30 percent, it would save some $13 million annually. Nationwide, buildings consume about 60 percent of our electricity,5 and the public sector accounts for 20 percent of U.S. commercial and industrial energy demand.6 Although a few jurisdictions have recently committed to high performance design principles for new and substantially renovated public facilities, the public sector generally has yet to identify and seek to overcome systemic barriers to high performance design. Given the large potential benefits of high performance buildings, government can hardly afford not to seize the opportunity.

High performance design is not simply another call for energy conservation. Wellintended efforts aimed simply at cutting energy costs can lead to poor overall building performance in terms of degraded quality of light, thermal comfort, and indoor air quality.7 In Massachusetts, for example, many public schools covered the air intakes of room ventilator units in the 1970s to cut energy bills by reducing the amount of outside air, but this of course results in poorly ventilated rooms and associated health problems.8 The application of high performance design principles results in buildings that enhance human activity by being more effective as well as more efficient. Properly designed and integrated, the energy efficiency measures that often justify the financial investment in high performance features also create better buildings—spaces with superior lighting, acoustics, aesthetics, thermal comfort, and indoor environmental quality, as well as sharply reduced operating and maintenance costs.

By improving the offices, schools, and other spaces that support human activities, high performance design can significantly improve human performance and productivity. The economic benefits of improved productivity, while harder to quantify than the energy savings that inspire the design in the first place, can be far greater than the efficiency benefits. Numerous case studies of high performance buildings conclude that worker productivity increases significantly in firms that reduce energy use through better lighting design and better thermal performance. Energy efficiency measures like these improve thermal comfort while making it easier for employees to see what they’re doing. The result is a persistent 6 to 16 percent gain in productivity from increased worker effectiveness, as well as reduced absenteeism and fewer errors and sick days.9 While energy efficiency savings can be a significant portion of a building’s energy budget, the benefits of increased worker productivity are much larger. Studies have found that the typical cost of energy in U.S. office buildings is just under $2 per square foot, while employee costs (including salary, benefits, and equipment) per square foot are 100 times greater.10 Thus, a 1 percent productivity improvement would be financially comparable to eliminating the entire energy bill.

Lockheed Martin’s Building 157 in Sunnydale, California, used substantial natural lighting, an efficient cooling system, and other measures to achieve energy savings 50 percent greater than California’s tough building code required. Saving nearly $500,000 annually, the energy measures paid for themselves in four years, but the rate of production among Lockheed’s 2,600 employees increased 15 percent. That allowed the company to bid successfully on a contract it would not otherwise have won, the profits from which paid for the entire building.11 In the public sector, the U.S. Post Office mail-processing facility in Reno, Nevada, invested $300,000 in an energy efficiency retrofit of its lighting systems, realizing combined energy and maintenance savings of $50,000 per year (a simple 6-year payback). But with the improved lighting, worker output increased 6 percent, and sorting errors dropped to the lowest level of all post offices in the western United States, worth between $400,000 and $500,000 per year. The renovations accordingly paid for themselves in less than 9 months.12

If the Commonwealth of Massachusetts were able to realize comparable increases in employee productivity, the economic benefits would be large. In Massachusetts, as in most states, about 80 percent of the budget goes to employee costs (salaries and benefits).13 With a fiscal year 2001 budget of about $21.5 billion, then, Massachusetts will spend some $17 billion on its employees. If the state could realize even a 1 percent increase in employee productivity, that increase would be worth about $170 million, which is more than the revenue generated last fiscal year by the estate and inheritance taxes.14 A 16 percent productivity increase would be worth more than $2.7 billion, or 13 percent of the entire budget.

Of course, it takes hard work and a concerted effort to achieve the energy savings and productivity gains described above in just one building, much less across the entire state. But with such enormous potential savings, and the possibility of significantly improved public facilities, why isn’t the public sector insisting on such buildings as a matter of course? This paper describes the components and benefits of high performance design and recommends ways to overcome some of the more prominent barriers to creating high performance buildings in the public sector.

The Problem

Investment in high performance buildings is rare in the public sector. Public sector buildings typically underperform and can even be significant liabilities. Even if occupants are not becoming physically ill and winning substantial damages in litigation, taxpayers are burdened with subsidizing needless waste from underperforming buildings for decades after they’re built. Although there have been dramatic private sector successes in high performance design, the barriers to importing those successes into the public sector are large and deeply entrenched in typical cost-accounting methods.

Underperforming and “Sick” Buildings

Examples abound of public buildings that have poor lighting, inadequate ventilation, and noisy air handling systems that rarely achieve comfortable temperature and humidity levels. Tolerating underperforming buildings can be very costly. Perhaps most infamous are those few facilities that perform so poorly they are labeled “sick buildings” because of the occupant complaints of headaches, fatigue, and respiratory ailments from breathing unhealthy indoor air. In Massachusetts, the state Registry of Motor Vehicles (RMV) building in Ruggles Center is a recent instructive example. The agency had to evacuate this $31-million building in 1995 after more than 500 workers complained the 9-story structure made them sick. The forensic engineers charged with diagnosing and correcting the problem found that the indoor air was contaminated as a result of two cost-cutting efforts in the building’s construction.15 First, the state saved about $100,000 by not installing air-preconditioning equipment designed to prevent humid air from entering the ductwork and causing mold and other microbiological growth problems in the air distribution system. Second, the state saved $15,000 to $20,000 by not using a sealant on some fireproofing material, which then released chemicals into the building’s air systems. The engineering cost of correcting the problems was about $5 million—it cost $42 in repairs for every $1 saved in construction. But the total cost to taxpayers, including the cost of relocating the agency, was in excess of $14 million, or nearly half the initial cost of the entire building.16

Just as well-intended cost-cutting measures can lead to disaster in a new building, so deferred maintenance of existing infrastructure can also lead to sick buildings and enormous expense. The Charles Young Elementary School in Washington, D.C., suffered from deferred maintenance for 22 years. Trying to manage for decades within woefully small budgets by avoiding simple repairs to air systems and common water leaks, the 500-student school eventually had serious problems with mold, rot, and unhealthy indoor air. The U.S. Environmental Protection Agency, in cooperation with the school district, hired a Massachusetts engineering firm in 1997 to design and oversee the repairs. The firm repaired leaks in the roof, walls, and piping systems; replaced mold-damaged carpet and ceiling tiles; replaced the air conditioner and boiler units; and repaired fans and room ventilator units. The engineers spent more than $1.5 million to repair damage attributable to long-term neglect of the ventilation system and calculated that the school could have avoided that huge rehabilitation cost by spending only $364 each year on simple maintenance. Discounted to net present values, the repairs cost $100 for every $1 saved in deferred maintenance.17

Sick buildings can also lead to significant liability for personal injury claims. Juries have awarded judgments of $30 million or more—sometimes against the city or state— in lawsuits involving sick building claims.18

These examples may represent extreme cases, but they point to a simple truth: whether a building is new or old, a penny-wise, pound-foolish approach that ignores the life cycle costs of buildings will inevitably result in significant sums of wasted money. The obviously “sick” buildings tend to get fixed, but the majority of buildings simply underperform, continually wasting money, energy, and human productivity without remediation. The efficiency programs described above that have achieved on average 30 percent energy savings suggest that many buildings consume 50 percent more energy than they should. Various studies, moreover, indicate that poor indoor air quality results in a 3 percent annual productivity loss, worth some $60 billion in the United States each year.19 While productivity data may be “soft,” they make intuitive sense: buildings with high-quality lighting and comfortable temperature and humidity levels are easier places in which to work or learn.

The Solution

High performance buildings—ranging from office buildings to libraries, from courthouses to schools and daycare centers—achieve dramatic operating cost savings and improved occupant productivity through superior lighting, indoor air, and acoustic qualities. The fiscal and government efficiency benefits of such buildings flow from two central design principles: 1) resource efficiency (e.g., minimizing energy and water use, and waste production), and 2) improving the indoor environment to maximize occupant health and productivity (e.g., optimizing lighting and indoor air quality). There is no one formula for high performance design: it requires careful analysis and integration of various proven and widely available measures and technologies. Investment in efficient, high-quality lighting and air systems yields dividends in operating cost savings and improved effectiveness—and therefore value—of public spaces. Conventional buildings, by contrast, needlessly waste resources such as energy, water, and human labor, thereby wasting precious public funds.

There are a few notable examples of high performance building initiatives in the public sector. New York City’s Department of Design and Construction, which released its “High Performance Building Guidelines” in April 1999, has several noteworthy buildings under construction. One is the new South Jamaica Branch Library, which will achieve annual energy savings of 31 to 38 percent at a capital cost typical of similar branch libraries. A notable feature of the library is the extensive daylighting in the reading rooms, creating not only energy savings but also superior light quality for library patrons. The Administration for Children’s Services Children’s Center, as another example, is a facility for children entering foster care that includes office and training space for social workers. Reusing a registered landmark building (formerly part of a hospital complex), the Children’s Center will achieve approximately 33 percent annual energy savings (about $94,000 each year), with less than a four-year payback on an incremental capital cost of less than 1 percent. The energy savings largely result from natural lighting (using light shelves to reflect daylight deeper into the building from the windows), and highly efficient air and ventilation systems. This building demonstrates that one can cost-effectively improve daylight and air systems within the constraints of renovating an existing, historic structure.

Schools present appealing opportunities for high performance design, both for the savings they can bring to financially challenged school districts, and for the educational and health benefits they can bring to our children. High performance school buildings can achieve operational savings comparable to those in other buildings, calculated to be about $56 per student per year.20 The Choptank Elementary School in Cambridge, Maryland, for example, will reap $400,000 in energy savings over 20 years from using high efficiency geothermal heat pumps.21 The Durant Middle School in Raleigh, North Carolina, features extensive daylighting, efficient artificial lighting, and sophisticated energy management systems to achieve $21,000 in annual energy savings.22 Facilities such as these improve the educational environment by providing quieter classrooms, better light quality, cleaner indoor air, and improved thermal comfort. They also provide an object lesson to students in sustainable design.

In addition to energy savings, high performance buildings can reduce costs associated with office reconfiguration or “churn.” Office churn represents a substantial cost: the average annual churn rate in the United States is 25 percent, which can cost nearly $900,000 each year for a 1,500-employee agency.23 The Commonwealth of Pennsylvania’s new South Central Regional Office of the Department of Environmental Protection not only realizes substantial annual energy cost savings, but officials have calculated that the design cuts annual churn costs by 90 percent.24 These savings result from an innovative, modular design that greatly simplifies the reconfiguration process.

The most significant opportunities for energy savings, and for improving the performance of a building and its occupants, lie in the lighting and air systems.

Efficient Lighting Systems

Lighting systems consume about 40 percent of a typical commercial building’s electricity.25 Efficient lighting design, including strategies to utilize natural daylight, can produce significant energy savings. The U.S. Environmental Protection Agency’s new Region 7 headquarters building in Kansas City, Kansas, for example, achieved 50 percent savings on lighting costs through extensive use of natural daylight (which avoids some of the cost of artificial lighting— from powering both the lights themselves and the extra air conditioning needed to remove the heat emitted by the lights).26 Daylighting systems reflect diffuse, indirect, ambient light deep into occupied spaces—a plain window allowing bright sunlight to stream through onto a desk, by contrast, makes reading or using a computer more difficult, and can add to the air conditioning load.

Light from the sun has many benefits: it is free, easy on the eyes, and it makes people, products, and exhibits look better. A recent study on daylight in schools found that children learn faster and perform better on standardized tests in classrooms with more daylight. In Orange County, California, students with the most daylight progressed 20 percent faster on math and 26 percent faster on reading tests in one year.27 Across three school districts, students with more daylight had 7 to 18 percent higher scores on standardized tests than those with less daylight.28

Maximizing daylight to provide free, ambient lighting is an important component of efficient lighting design. But virtually all buildings use some artificial lighting at all times, even during the day, so proper integration of artificial and daylight systems is critical to maximizing savings. The following compares the components of a traditional, inefficient system with those of an efficient design that can save 50 percent or more on lighting costs.

The savings in efficient lighting systems come both from more energy efficient equipment and from changing views about what constitutes good lighting. With more office workers looking at computer screens in recent years, recommended ambient lighting levels have decreased.29 Task lighting (such as a desk lamp, or extra lighting near certain workstations) can provide higher illumination levels as needed, rather than everywhere. Some of the latest lighting systems for office cubicle spaces provide individual controls for continuous dimming above each workstation, controlled from one’s computer—these achieve savings not through lower-energy lamps, but because many workers prefer lower lighting levels and will run lighting systems at a fraction of the installed power density (achieving power density levels as low as 0.6 watts per square foot—a 65 percent savings over traditional design).30

Efficient Heating, Ventilation, and Air Conditioning (HVAC) Systems

As with lighting, some manual control over the HVAC systems in a building is a component not only of high performance design but also of a more user-friendly work environment. Windows that open, once abhorred by HVAC engineers wishing to control fresh air volumes, pressure, humidity, and airflows, are a simple measure found in most high performance buildings. Specifying efficient systems is important, of course, from chillers and ground source heat pumps, to motors, fans, and controls. But with HVAC systems, as with lighting, it is the careful integration of specific measures into a package that can achieve great overall savings and performance. High performance design can reduce the overall size of the HVAC mechanical systems, yielding capital and operating cost savings. Some strategies to maximize the efficiency of an HVAC system using chillers to cool a large commercial space appear below.31

An interesting design strategy for HVAC systems is called displacement ventilation. Typical office systems have air ducts above, concealed by ceiling tiles, forcing conditioned air down to mix with the old air. In the summer, the new air must be delivered at fairly low temperatures and high pressures to cool the space adequately. But heat naturally rises, and there is no need to cool the air near the ceiling since people move and breathe in the lower part of the room. Displacement ventilation involves raising the floor, rather than lowering the ceiling, with air ducts and wires for data and electricity under the floor. Fresh air is then introduced from beneath, where it naturally displaces the existing, old air in the room, which is vented out near the ceiling. Such a design has many advantages: the conditioned air can be introduced at a higher temperature and lower pressure, saving a lot of energy and making the system quieter and less drafty; the air can be cooled by the natural cooling of the building mass, reducing the need for artificial air conditioning; old air is exhausted, rather than being mixed with the fresh air, resulting in better air quality; the floor ducts can come in modular units that can be relocated quickly, facilitating individual comfort and room layout preferences as well as greatly reducing the cost of “churn” or office reconfiguration; and air ducts can be targeted at sources of heat, such as computer equipment, so that the heat is exhausted straight up and out of the room rather than diluting and degrading the fresh, cool air.32 Such systems have been used in Europe and Scandinavia for decades, but are just beginning to emerge in the United States.

Putting It All Together

Through careful design integration of various high performance measures, significant savings and performance enhancements are possible. Such integration may be simpler in new construction, with fewer existing constraints, but it is certainly achievable in renovations as well. Existing buildings have a clear history of energy and other costs, making it easier to project savings and calculate cost-benefit ratios and payback periods for various upgrades. A recent case study from a Massachusetts utility is instructive, as it compares a basic, code-complying renovation with a high performance renovation. Built in 1979, the building in question is a two-story, 155,000-square-foot facility typical of many corporate and industrial park buildings in New England. Under a standard rehabilitation to bring the building up to code requirements, the building was projected to have a total energy bill of $245,000 per year. Heating would be accomplished with steam, and cooling with chilled water. For the high efficiency alternative, the study recommended installation of a high efficiency lighting system as described above, instead of a standard system. For the HVAC system, the study recommended installing variable-speed drives to allow fans to run at low speeds when appropriate, premium efficiency motors, and intelligent digital control systems to maximize efficiency and provide demand ventilation. In the end, the high performance design was projected to reduce energy use 43 percent below the standard, code-complying renovation, saving some $85,000 each year.33

Barriers to High Performance Design

Some barriers to creating high performance buildings plague both the public and private sectors. Such barriers include lack of information, “fast track” schedules, and failure to introduce high performance design criteria early in the process (leaving them to be considered—if at all—once the capital budget and schedule are fixed and sacred). Without taking time to analyze the design for high performance opportunities, project managers often proceed with conventional design standards and assumptions. Individual high performance measures are subsequently considered piecemeal and often rejected for their higher initial costs. The resulting design is unlikely to achieve the synergies possible through careful integration of appropriate design elements, and thus will not likely achieve significant cost savings or enhanced building performance. Such obstacles are common in private projects, and can be overcome by establishing high performance design principles early in the process and taking a whole systems approach to design integration. With a lot of analysis and creative thinking, designers can create systems that cost-effectively achieve high performance standards.

But government systems do pose some barriers that are largely absent from the private sector. As evidence of such barriers, state and local government has not responded as the private sector has to technical and financial assistance from existing utility energy efficiency programs.

The greatest single barrier is that capital and operating budgets are completely separate, so that any operating savings go to the general fund, never to be realized by the agency that made the capital investment in the building. Taxpayers ultimately foot the bill for both capital and operating expenditures, of course, but government almost universally accounts for capital and operating expenses separately. Thus, an agency has no direct incentive to invest even an extra 1 percent in capital costs to save on operating expenses and life cycle costs it never sees. Energy bills are often paid by one central agency, with no connection to the agencies and their capital projects. Fiscal waste is all but guaranteed.

Compounding this problem, capital budgets are often set well in advance of actual design and construction and tend to be underestimated to help ensure approval, creating very tight capital budgets from the start. Finding even an additional 1 percent to invest can be challenging if the project is already struggling to come under a tight budget. This encourages investment in measures that cost less up front but cost more over time.

The public construction process builds in many requirements that hinder efforts to take a whole systems approach to design integration. For example, consideration of high performance design elements almost always comes late in the process, as competitive bidding requirements ensure that the design will be largely set before the final design team is selected. Constrained by the initial design, the architects and engineers will likely be unable to justify adding many high performance elements to the building, especially if they are not expressly told up front to do so (and compensated for the extra work).

Taking the BCEC (see case study) as an example, that project received legislative approval in 1997 with a set capital budget. As time went on and regional construction costs rose (for the Big Dig and everyone else), the budget did not also rise. The building has an aggressive schedule, with very real consequences if it is not ready for the first conventions and exhibitors. Thus, the universal constraints on time and budget, exaggerated in this project, make consideration of unusual design strategies very difficult. If a design team takes a high performance, whole-systems approach from the outset, it may be possible to keep within the original budget by achieving such efficiencies that mechanical systems can be downsized or eliminated. That is, spending more on some elements can allow for spending less on others. But this is rare, especially when high performance design considerations are introduced later in the process, closer to the deadline and after much initial design work has been done. There simply may not be an extra $3 million to spend on high efficiency lighting and HVAC systems even if the payback is very short.

One problem, then, is finding a source for the incremental cost of some high performance systems. The new $300-million Pittsburgh convention center (technically a substantial expansion of the existing facility), which seeks to set a new standard for high performance convention centers, will receive a 10-year, $3-million loan from the Heinz Foundation to be paid back out of operating savings.36 Chicago’s convention center also sought private capital, in a sale-leaseback arrangement for the entire HVAC system. An energy provider designed, built, and operates the system, an arrangement that provided the convention center with enormous capital relief and allowed it to afford an efficient HVAC system.37 Looking to the private sector for capital can help overcome the capital-operating barrier, but if the deal is attractive to private energy companies, then the public agency should be able to reap the savings, too.

The barriers described above are deeply rooted in most systems of public cost accounting, and surmounting them will require some fundamental changes to those systems.


  1. Align incentives to reward efficiency.

To overcome the barriers to high performance design in public buildings, the essential first step is to align incentives to encourage such design. The best approach would be to assign energy and other operating costs directly to the occupant agencies themselves. This is a critical step in bridging the capital-operating barrier because it would allow an agency to perform life cycle cost analyses of design alternatives and provide a direct incentive to minimize those costs.

For example, if an agency is given a capital budget to create a new building, or substantially renovate or expand an existing one, the agency’s natural incentive is to minimize capital or first costs without much regard, if any, for operating costs. Accordingly, if the cheapest bidder proposes energy-intensive HVAC units because they are cheaper to install, the agency is unlikely to switch to a more expensive chiller system despite substantial operating and maintenance savings and a five-year payback. But if the agency were charged with meeting capital and operating expenses, then it would surely consider the full costs of the alternative systems over the respective lifetime of each system. And it would be inclined to select the system with the lowest life-cycle costs.

To make this succeed, these agencies would need expanded authority to act on their incentive to increase efficiency. If an agency manages its own building, it can act on efficiency opportunities. Agencies should at least have specific authority to

  • enhance operating and maintenance systems and make modest building improvements
  • contract for equipment improvements through lease programs (leases remove items from the capital budget and permit payment for efficient measures through realized energy savings)
  • hire a resource efficiency manager out of energy savings (perhaps with a utility or other guarantee for the first year), to be rewarded in proportion to savings, who would have the expertise, authority, and a direct incentive to maximize building performance.

Another way to help agencies finance capital improvements would be to establish an advisory service to help agencies contract with private energy service companies. These third-party providers are a source of private capital and technical assistance that can invest in a public building’s energy systems, as in the Chicago convention center example above. Building commissioning should be mandatory.39 The agency should also be credited with any reductions in worker’s compensation insurance premiums from lower indoor air quality risks. In the long run, finally, civil service structure modifications to reward expertise in building operations (including divisions occupying specific buildings) would provide greater incentives to maximize building performance. The system should reward employees who save money.

An alternative approach to aligning incentives would be a shared savings system, where an agency would be entitled to keep a portion of any savings realized. The Oregon legislature took this approach in 1993,40 assigning 50 percent of realized savings to the responsible agency, combined with an efficiency loan program to help agencies overcome capital constraints (the loans are also available to the private sector). Oregon also passed a law requiring major state new construction projects to undergo design review for efficiency by the state Office of Energy.41 These elements work together to provide agencies with the incentive and the ability to invest in improved performance. Agencies may use the savings to increase productivity through additional energy efficiency projects, information technology improvements, or other infrastructure upgrades.

Washington State similarly allows agencies to retain 50 percent of savings in capital expenditures under its “Savings Incentive Program.”42 In the three years since it began, this program has mostly been used for computer and telecommunications infrastructure. But it has the potential to help an agency realize large savings and put those toward improving building conditions. This program helps reward efficiency, but it does not completely overcome the capital-operating barrier. Accordingly, to help agencies surmount capital limits, the state authorizes agencies to 1) hire performance contractors (from a pre-approved list, to streamline the process) and 2) enter into leasepurchase arrangements at very low state treasury rates. Both of these strategies shift expenses from capital (or first) costs to operating costs, helping public entities choose lowest life-cycle cost options.

The strategies from these two states help provide relief from tight capital budgets while providing incentives to the specific agency to maximize savings. The ability to create more buildings, and to improve and update current ones, is likely to motivate agencies to maximize performance and earn efficiency savings. Still, shared savings is not the same as keeping 100 percent of the savings, as a private owner might. The first recommendation, to assign all operating costs directly to specific agencies with the attendant powers to capitalize on efficiency opportunities, would provide a greater incentive for agencies to maximize overall building performance.

  1. Benchmark the Savings

A high profile benchmarking effort would provide strong motivation by emphasizing performance measurement and quality improvement. Benchmarking would be a good complement to the more direct measures recommended above. Energy efficiency, for example, is readily measurable and easily linked to specific, objective goals. Both Pennsylvania and New York City have specific performance standards in their high performance building programs, such as 30 percent energy savings relative to state code; 50 percent savings on lighting energy; specific energy intensity (measured in British thermal units or watts per square foot); indoor air quality standards, such as limits on carbon dioxide levels and specific humidity and temperature ranges; and window glazing and wall insulation requirements. Performance standards, linked to specific, accepted industry standards, are important to guide initiatives and to gauge success.

To implement a successful benchmarking effort, a state or municipality first must define the specific performance measurement tools and standards. Some have defined their own standards (as have Pennsylvania and New York City); others may wish to commit to common, independent standards that would facilitate comparison across state borders, such as the U.S. Green Building Council’s “Leadership in Energy and Environmental Design” (LEED) rating system, or the U.S. Environmental Protection Agency’s “Energy Star Buildings” program. The various existing standards and guidelines share many common themes and even specific performance standards.

The next step would be to select high-priority buildings for further study. Ideally, the jurisdiction would have already aligned incentives as recommended above, so that the occupant agency is responsible for operating costs and manages its own building. Regardless, the agency or department accountable for building management should form a working group with the occupant agencies and departments. Third, conduct an operations and maintenance audit, including a review of building operations, staffing, training, and management accountabilities. Fourth, create an operations improvement plan—many audits focus on capital improvements and other maintenance issues, but many opportunities for savings lie in operations. These steps should form the basis for a capital improvements audit designed to increase overall performance.

For new building projects, the state or municipality should require all projects over a certain size to comply with its performance standards. As in Oregon, each project should receive technical assistance and be subject to mandatory design review to ensure that the project is taking full advantage of efficiency opportunities where warranted. That technical assistance could be provided under a utility energy efficiency program, if available, or by a public entity so charged.

High performance means operational and maintenance savings, increased productivity and reduced absenteeism, and the ability to upgrade buildings without raising taxes. Together with providing efficiency incentives directly to the agencies, benchmarking will provide much needed motivation and accountability through performance indicators. It also would provide a system for taking account of performance from the beginning of a new project, rather than coming into it midstream. Accordingly, agencies should be required to adhere to specific performance goals from the beginning, rather than after the competitive bidding process is over and preliminary designs are drawn.


High performance design initiatives can readily be adapted and replicated in other jurisdictions. No technical obstacle exists to high performance design in any particular climate or region—appropriate technologies and designs will vary according to specific building needs and site characteristics, including available daylight, typical humidity levels, and temperatures. But technical measures exist for all climates that follow high performance design principles. The major obstacle is getting attention to the magnitude of the existing problem and the potential for large cost savings through creating superior buildings. Securing commitment to high performance design standards is a challenge, but in the few jurisdictions that have had initial success with high performance building initiatives, it has been essential.43

A thorough understanding of the state’s current cost accounting system is necessary to devise appropriate changes to align incentives as fully as feasible. But this is not an obstacle so much as it simply requires careful work. Just as each building has unique design issues, so each jurisdiction has unique financial and accounting systems that must be considered.


There are several ingredients necessary to create a public sector high performance building initiative. Assigning operating costs directly to specific agencies, together with the authority to act on opportunities for increased efficiency, would provide a direct incentive to maximize performance and earn savings. Emphasizing performance measurement and productivity increases through a high profile benchmarking effort would complement the direct incentive approach. These two elements, together with an efficiency loan program to help agencies overcome capital constraints, should empower public agencies to design, implement, and benefit from high performance initiatives that save money, create better buildings, and foster enhanced effectiveness. A few jurisdictions around the country have taken the lead and demonstrated some early success, but there is room for more leaders and higher standards. It is an opportunity we cannot afford to miss.

About the Author

Richard B. Kennelly, Jr., a staff attorney at the Conservation Law Foundation, directs CLF’s Energy Project from its Boston office. CLF works to solve the environmental problems that threaten the people, natural resources, and communities of New England. Founded in 1966, CLF is a non-profit advocacy organization with offices in Boston, Massachusetts; Concord, New Hampshire; Montpelier, Vermont; Providence, Rhode Island; and Rockland, Maine.

  1. Remarks of Jim Toothaker, Pennsylvania Department of Environmental Protection, “Building Green: Smart Places for the Public Realm,” Harvard University symposium, May 15, 2000. For more information on Pennsylvania’s Guidelines, see
  2. Remarks of Hillary Brown, Assistant Commissioner, Department of Design and Construction, New York City, at the “Building Green” symposium, May 15, 2000.
  3. See “1993 Forecast Appendix, Conservation and Load Management,” Connecticut Light and Power Co., July 1993, 1991-1992 program results showing that an average incremental investment of about $1 per sq. ft. in efficient lighting and cooling equipment in new commercial/industrial construction projects produced annual savings of $0.50 per sq. ft. (paying back the investment in two years) and used 30 percent less electricity than a base design conforming to ASHRAE code 90.1-1989; in remarks at the “Building Green” symposium May 15, 2000, Craig Kneeland, New York State Energy Research and Development Authority, noted that since 1996 NYSERDA has assisted developers of nearly 8 million sq. ft. of public and private buildings to achieve an average savings of 33 percent over state energy code for less than a 1 percent increase in capital costs (an average payback period of under 4 years and annual savings of $21 million from the projects completed to date ( green.htm); interview, Kevin Grabner, KG Energy, Blue Mounds, Wisconsin.
  4. Interview, Jonathan Goldberg, Director of Infrastructure and Support, Operational Services Division, Executive Office of Administration and Finance, Commonwealth of Massachusetts. This figure is approximate and includes executive agencies, colleges, universities, trial courts, and sheriffs’ departments, but does not include certain other state entities, such as authorities.
  5. Rocky Mountain Institute, Green Development (New York: John Wiley & Sons, 1998), p. 7.
  6. Interview, Fred Gordon, Pacific Energy Associates, Portland, Oregon.
  7. See John Snell et al., 2000, “Public Health Concerns and Opportunities for Energy Efficiency Upgrades in Subsidized Housing,” in Proceedings of the 2000 Summer Study on Energy Efficiency in Buildings. Washington, D.C.: American Council for an Energy Efficient Economy, discussing public housing buildings with degraded indoor air quality and moisture problems resulting from otherwise successful energy efficiency upgrades, and concluding that both energy efficiency and indoor air quality can be improved if the design considers these goals together.
  8. Interview, Mary Beth Smuts, Regional Toxicologist, U.S. Environmental Protection Agency, Region I, Boston, Massachusetts, also noting that many of these covers remain in place more than two decades later.
  9. See Rocky Mountain Institute, pp. 17-18, describing several studies.
  10. Ibid.; interview, David Mudarri, Indoor Air Division, U.S. Environmental Protection Agency, Washington, D.C. Additional savings may arise from reduced worker’s compensation insurance premiums for high performance buildings, due to improved indoor air quality and consequently reduced risk of sick building syndrome. Similarly, premium discounts may be available for designers’ liability insurance if they perform commissioning.
  11. Rocky Mountain Institute, pp. 165-66.
  12. Ibid., pp. 17-18.
  13. Interview, Glen Tepke, Massachusetts Taxpayers Foundation, Boston, Massachusetts.
  14. Data from the Massachusetts Department of Revenue.
  15. Interview, Joseph Lstiburek, Principal, Building Science Corp., Westford, Massachusetts (forensic engineer for the RMV cleanup, provided cost and technical information).
  16. “Troubled Effort to Clear Air at Registry; Mistakes, Disputes and Worker Illness Add Up to $14 M Taxpayer Burden,” Boston Globe, Sept. 3, 1995.
  17. Interviews, Jack McCarthy, Environmental Health & Engineering, Inc., Newton, Massachusetts; David Mudarri and Mark Heil, Indoor Air Division, U.S. Environmental Protection Agency, Washington, D.C.
  18. Rocky Mountain Institute, pp. 16-17, describing lawsuits ironically involving sick courthouses.
  19. Interview, David Mudarri, Indoor Air Division, U.S. Environmental Protection Agency, Washington, D.C., referring in part to a 1989 study, “Report to Congress on Indoor Air Quality; Vol. II: Assessment and Control of Indoor Air Pollution,” EPA/400/1-89/001C, U.S. Environmental Protection Agency, Washington, D.C. A 1990 study by the American Medical Association and U.S. Army found that health problems caused by poor indoor air quality resulted annually in 150 million lost workdays and $15 billion in lost productivity in the United States. See Rocky Mountain Institute, p. 16.
  20. Sustainable Buildings Industry Council, “High Performance School Buildings” initiative.
  21. Ibid.
  22. Ibid.
  23. Remarks of Jim Toothaker, Pennsylvania Department of Environmental Protection, at “Building Green” symposium, May 15, 2000.
  24. Ibid.
  25. Interview, Charles Michal, Principal, Weller & Michal Architects, Keene, New Hampshire.
  26. U.S. General Services Administration, “Off the Shelf: EPA Regional Headquarters, Kansas City, Kansas” (1999), also noting that lighting accounts for 25 percent of all federal electricity use.
  27. Heschong Mahone Group for Pacific Gas and Electric Company, “Daylighting in Schools” (June 1999). This study considered more than 21,000 student records and 2,000 classrooms from 3 school districts (Orange County, CA; Seattle, WA, and Fort Collins, CO) and reports a 99 percent statistical certainty controlling for other variables. A companion study, “Skylighting and Retail Sales,” which studies a retail chain with 108 similar stores, two-thirds with skylights, found a 40 percent increase in sales per square foot with daylighting averaged over 18 months. See for executive summaries of and ordering information on these studies.
  28. Ibid.
  29. Interview, Charles Michal, Weller & Michal Architects, Inc., Keene, New Hampshire (referring to Illuminating Engineering Society of North America, “Lighting Handbook,” 9th ed., 2000). The handbook recommends ambient lighting at 30 to 50 foot-candles for general office work spaces, whereas formerly the standard was 60 to 75 foot-candles.
  30. Ibid.
  31. These strategies are based on an interview with Christopher Robertson, Principal, Christopher Robertson and Associates, Portland, Oregon.
  32. Christopher Schaffner, P.E., R.G. Vanderweil Engineers, Inc., Boston, Massachusetts.
  33. “Smart Renovation Choices,” Design 2000 Memo, New England Electric System.
  34. Unless otherwise noted, information on the BCEC was obtained through numerous meetings and workshops on sustainable design with BCEC officials, including Walter C. Upton, Director of Capital Projects, Massachusetts Convention Center Authority.
  35. Interview, John Trocciola, Marketing Manager, ONSI Corp., South Windsor, Connecticut.
  36. Rebecca Flora, Executive Director, Green Building Alliance, Pittsburgh, Pennsylvania, remarks at the “Building Green” symposium. The Pittsburgh convention center hopes to merit a Gold or Silver rating on the U.S. Green Building Council’s LEED rating system (see
  37. Interview, Robert Whitney, Senior Vice President, TriGen- Boston Energy Corporation.
  38. Fred Gordon, Pacific Energy Associates, Portland, Oregon, provided most of the ideas and advice in this section, based on his extensive experience with public and private energy efficiency initiatives.
  39. Commissioning entails having an independent engineer inspect the mechanical systems to ensure that they are installed and operating according to the specifications and at maximum efficiency. Too often, a building has efficient systems that were improperly installed or incorrectly adjusted, so they operate inefficiently.
  40. See House Bill 2054 (1993 Regular Session), amending Oregon Revised Statutes §§ 469.752 and 469.754.
  41. See Senate Bill 1060 (1989 Regular Session), amending Oregon Revised Statutes §§ 276.900, 276.905 and 276.915.
  42. Interview, Fred Gordon, Pacific Energy Associates.
  43. Remarks of Jim Toothaker, Pennsylvania Department of Environmental Protection, “Building Green” symposium, May 15, 2000; remarks of Hillary Brown, Assistant Commissioner, New York City Department of Design and Construction, “Building Green” symposium, May 15, 2000.


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