Denver Green Roof Initiative Passes – Will Businesses Lose Some Green on their Balance Sheets?

Denver voters recently passed a ballot measure, Initiative 300, also known as the Denver Green Roof Initiative, that has many developers and real estate owners seeing red. Or, maybe green. Despite opposition from Mayor Hancock, the Denver Post, and others, and a huge spending advantage for developers opposing the measure, 54 percent of voters gave the initiative a green light. City officials are now reviewing the measure and preparing for its implementation early next year.

Starting January 1, 2018, the initiative will require that new, and in some cases, existing, buildings must dedicate a portion of the roof space to gardens, or a combination of gardens and solar panels. Buildings with 25,000 to 49,999 square feet of gross floor space will be required to set aside 20 percent of the rooftop for green space. Those with 50,000 to 99,999 will have to set aside 30 percent, with the rooftop space requirement increasing by 10 percent each increment of 50,000 square feet, to a maximum of 60 percent for buildings over 200,000 square feet. Further, the mandates will apply to existing buildings of that size when owners replace the roof, or expand the structure in an amount that meets the 25,000 square-foot threshold. Importantly, the measure exempts residential buildings with four or fewer stories, and allows the city to grant an exemption when green roof modifications aren’t feasible. In that case, the owner or developer would have to pay a fee that roughly equals the cost of complying with the mandate.

Opponents contend that the new mandates will be more stringent and far-reaching than any other green roof requirements nationwide. However, supporters of the initiative claim that these requirements are similar to those adopted in Toronto and San Francisco and will help reduce the “heat island” effect caused by heat-radiating roofs and sidewalks. According to one study, Denver faces the third-largest “heat island” effect among U.S. cities. Proponents say the benefits don’t stop there. By covering portions of the roof from rain, snow, hail, etc., the roof may last longer. Also, because plants will soak up rainwater, the resulting decrease in storm runoff will help improve water quality nearby. Finally, rooftop gardens and solar energy collectors can provide savings in the long run, thus offsetting some of the initial costs.

Opponents, who outraised supporters by a 12-1 margin, claim that these new mandates will dramatically increase development costs. According to some studies, the upfront cost could be as much as $30 per square foot, which means rents and other costs will increase for owners and tenants. Based on those projections, opponents argue that the measure will drive up the cost of a typical grocery store by $300,000, and require an additional $15 to $20 million for the expansion at the Colorado Convention Center. City officials also made clear that they have concerns about the cost to taxpayers for government buildings, especially in light of the fact that voters at the same election approved nearly $1 billion in bonds for various city projects, meaning some of the projects funded through the bonds may be more costly than originally anticipated.

The Denver City Council is permitted to make changes to initiated ordinances, though it must wait six months following final passage to initiate additional changes, and must approve any changes by a two-thirds majority. Between political pressures and financial calculations, it’s clear that the City Council may continue to feel some heat from both sides of the issue with further questions about the new rules. And the answers may not be as clear as black or white.