CI 2009 MRc1.1: Tenant Space—Long-Term Commitment

Tiago, I believe that what LEED is looking for is that renovation or build out of a space would coincide with the beginning of the ten-year lease.

The LEED Interpretation  you quote seems to come down firmly in terms of a 10-year lease, although it's too bad that it doesn't specify the timeframe. Perhaps you could get an Interpretation.

Hi Raymond, LEED reviewers will treat each application case-by-case, although nowadays they are much more rigid than in the past in sticking to the letter of the requirement. First, a 5+5 lease will be more acceptable if your Client can demonstrate firm economic commitments of a 10 year + occupation, eg heavy CAPEX with long payback periods. Second, the 10 year rule starts when the tenancy agreement was signed, so if this is a renovation project of an existing tenancy, you count backward to the start of the lease. Now if that lease is already a 5+5 you can argue your case with a head start.

Hello Steve, thank you for your reply. I will check with our client to see how long they have already been in the premises and the start date of the current lease agreement. I will check for history of contract renewals/extensions. Thanks again for your tips!

You'd have to submit a CIRCredit Interpretation Ruling. Used by design team members experiencing difficulties in the application of a LEED prerequisite or credit to a project. Typically, difficulties arise when specific issues are not directly addressed by LEED information/guide to be certain, but I'm fairly confident that a letter from the tenant quoting the relevants of the leasing and attesting to its confidentiality will be acceptable. 

I have asked that questions to the GBCI just in general. You only have to translate the part of the lease that is relevant to credit. The reviewer don't want to read more than they need to in order to check for compliance of the credit., but they have to read everything provided to them.

Kathy, since the credit requirement calls for a "10-year commitment" I think I would ask whether the tenant is truly committed for 10 years. If they feel like the 10-year lease represents their commitment and the 5-year clause is more of a technicality, perhaps you could make a case for the credit—although I wouldn't count on earning it.

Thanks to both Cara and Tristan for your thoughtful responses! At this time, we're not sure why the 5-year termination clause is being considered and under what conditions it would be exercised...that information will certainly direct how we might approach this credit, if at all, and/or whether we would pursue a formal CIRCredit Interpretation Ruling. Used by design team members experiencing difficulties in the application of a LEED prerequisite or credit to a project. Typically, difficulties arise when specific issues are not directly addressed by LEED information/guide.

How is the USGBC going to handle sub-leasing. If the tenant has permission to sub-let his space to sub-tenants, do they also have to have 10 year agreements in place? Do I have to have an agreement for each sub-let space? What about spaces not yet sub-let? The build-out may change or be adapted when ever sub-letting parties move in or out and the intent would be to keep 'em locked up for 10 years, but the agreements may start and terminate at different times. For big projects this may be impossible to achieve...and then it may inadvertently dissuade clients for certifying all the spaces. It will then make sense to shoot only for big space let customers with very long time lease ideals.

Jean, I don't think this is the most commonly achieved credit due in part to issues you raise.

However, I don't see any issues with sub-leases. As long as the principal tenant has a 10-year agreement in place, what is the issue?

I guess I'm thinking of the intent of the credit:

"To encourage choices that will conserve resources, reduce waste and reduce the environmental impacts of tenancy as they relate to materials, manufacturing and transport."

To achieve this you really need to keep the people using the space locked into a 10-year deal. No use in having the tenant have a 10-year deal and the sub-tenants are moving in and out every week, changing at least the appliances they use or the space standing empty.

Interesting question, and I checked the LEED-CI MPR's (min. program requirements, as found in the rating system document here) to review the issue.

In MPR #2, it says "The LEED project scope must include a complete interior space distinct from other spaces within the same building with regards to at least one of the following characteristics: ownership, management, lease, or party wall separation."

If I'm reading it correctly, the space could be owned by the occupant, but be separated by a party wall from other spaces in the same building, and still qualify for LEED-CI and thus for MRc1.1.

I can shed some light on this issue with a project we recently inquired about.

In addition to the MPR, you need to look at the document called "Rating System Selection Guidance," (http://www.usgbc.org/ShowFile.aspx?DocumentID=6667 ) which at first appears to say that if the occupant of the space is the building owner, then you cannot use CI. Specifically, it says CI is appropriate "... for interior spaces that are undergoing alteration work for at least 60% of the certifying floor area." However, use NC if the following two statements are true: "1) the entity conducting the work leases or owns and controls 90% or more of the building the space is located in, 2) the same entity is conducting new construction or major renovation in 40% or more of the gross floor areaGross floor area (based on ASHRAE definition) is the sum of the floor areas of the spaces within the building, including basements, mezzanine and intermediate‐floored tiers, and penthouses wi th headroom height of 7.5 ft (2.2 meters) or greater. Measurements m ust be taken from the exterior 39 faces of exterior walls OR from the centerline of walls separating buildings, OR (for LEED CI certifying spaces) from the centerline of walls separating spaces. Excludes non‐en closed (or non‐enclosable) roofed‐over areas such as exterior covered walkways, porches, terraces or steps, roof overhangs, and similar features. Excludes air shafts, pipe trenches, and chimneys. Excludes floor area dedicated to the parking and circulation of motor vehicles. ( Note that while excluded features may not be part of the gross floor area, and therefore technically not a part of the LEED project building, they may still be required to be a part of the overall LEED project and subject to MPRs, prerequisites, and credits.) of the building."

In our case, our client, the owner of the building, wants to build out 75% of the building for their own use and certify this space using CI. By the rule above, we at first thought this wasn't allowable (as they own more than 90% of the building, and were building out more than 40% of it).

However, it's important to look at the definition of "major renovation" provided at the end of that same document, which says, "includes extensive alteration work in addition to work on the exterior shell of the building and/or primary structural components and/or the core and peripheral MEP and service systems and/or site work."

So in general, typical interior fit-outs (like our project) won't meet this definition of major renovation, therefore it is OK for them to use CI, even if the building owner is also the occupant of the space. If there is work being done on the exterior, base building MEP systems, or exterior site, you'd have to do a calculation to see if it applies to 40% or more of the floor area. If it does, then you would have to use NC.

We submitted two projects under LEED CI. In both cases the building was owned by the occupant and we did only interior renovations. We had no problem. Also in PIF3 you are actually asked to selected between project owner manages or owns space or is speculative. It's my understanding that ownership of the building does not preclude you from using LEED CI. I agree with Julie. It's about the scope of space.

I am currently working on a CI project where the occupant is the building owner, but they created a separate LLC for the ownership of the building; therefore, proof of ownership will indicate the LLC as the owner - a different name than the occupant as listed on LEED registration documents. My thought is that the proper approach to documentation for this credit would be to submit proof of ownership in addition to LLC documentation showing the occupant is the same entity as that who created the LLC. Agreed? Other recommendations, thoughts or suggestions?

Amy, 

It sounds like that approach would cover all your bases.