Page 305 - The Green Building Bottom Line The Real Cost of Sustainable Building

THE FINE PRINT: LEGAL ISSUES IN GREEN BUILDING PROJECTS 283

A Definition of Operating Costs

A typical broad definition of Operating Costs might read as follows:

For the purposes of this Lease, “Operating Costs” shall mean and include all
expenses, costs and disbursements of every kind and nature relating to or incurred
or paid in connection with the ownership, management, operation, repair, land-
scaping, and maintenance of the Building, including but not limited to the follow-
ing: (1) wages, salaries and other costs of all on-site and off-site employees
engaged either full or part time in the operation, management, or maintenance of
the Building; (2) the cost of all supplies, tools, equipment and materials used in the
operation, management, and maintenance of the Building; (3) the cost of all utili-
ties for the Building, including but not limited to the cost of electricity, gas, water,
sewer services, communication services, and power for heating, lighting, air con-
ditioning, and ventilating; (4) the cost of all maintenance and service agreements
for the Building and the equipment therein, including but not limited to security
service, garage operators, window cleaning, elevator maintenance, HVAC mainte-
nance, janitorial service, waste disposal and recycling service, telecommunications
services, interior and/or exterior landscaping maintenance and customary interior
and/or exterior landscaping replacement; (5) the cost of repairs and general main-
tenance of the Building; (6) amortization of the reasonable cost of acquisition
and/or installation of capital investment items and/or capital improvements made
by Landlord (including security and energy management equipment), amortized
over their respective useful lives, which are installed for the purpose of reducing
Operating Costs, promoting safety, or complying with governmental requirements;
(7) the cost of casualty, rental loss, liability, and other insurance applicable to the
Building; (8) the cost of trash and garbage removal, air quality audits, vermin exter-
mination, and snow, ice, and debris removal; (9) the cost of legal and accounting
services incurred in connection with the management, maintenance, operation, and
repair of the Building; (10) all taxes, assessments, and governmental charges attrib-
utable to the Building or its operation; and (11) the cost of operating the manage-
ment office for the Building.

temperature controls for the common areas of the building, and programs to individu-
ally measure a tenant’s energy or water consumption. The landlord may also reserve the
right to designate the provider of certain utilities, including electricity (green power)
and water, as well as for removal of waste and recyclable materials. Finally, the lease
may also include a specific declaration of the landlord’s intentions with respect to seek-
ing LEED certification for the building and a requirement for the tenant’s cooperation.
If some or all of the building’s energy or water needs are met through on-site energy
generation programs, the lease should specifically address the landlord’s right to pro-
vide these services to the tenants and to pass through the actual costs of producing
the same to the tenants. This may also give rise to concerns by the tenant regarding
the interruption or reduction of these services by the landlord, and the lease may need