GRELJ on Summer Sabbatical Through Labor Day
We’re taking the rest of the summer off here at GRELJ to recharge but will be back with you after Labor Day delivering new content on green real estate legal issues of interest.
Category: Featured
Jerry Yudelson: “Dereliction” of Duty by Architects & Engineers Who Fail to Advocate for LEED Certification
Green building consultant Jerry Yudelson delivered two keynote addresses earlier this month at an event sponsored by the Central Texas Green Building Council. According to a press release, during the course of his remarks Yudelson “presented clear evidence that high-level green outcomes add significant value to buildings. ‘What part of a 30 percent increase in value from LEED certification is hard to communicate?’ He challenged architects and engineers to do a better job of advocating for green building with their clients. ‘You are doing your clients a disservice by letting them build projects without LEED certification,’ he said. ‘It almost amounts to dereliction of your duty as professionals.’” As you likely know, this latter remark about the design professional’s responsibilities in the green building space is exactly the opposite of what many construction attorneys have been preaching over the past few years as best practices for architects and engineers. Putting aside for purposes of this article any analysis of Mr. Yudelson’s claims of 30 percent increases in value for LEED-certified buildings, I think his remarks provide a good opportunity to review the risk management implications of the design professional’s representations to his or her clients about the possibilities and potential pitfalls of green building, including the LEED certification process.
Sep 18, 2009 | 7 comments | View Post
Is San Francisco Reconsidering Its Green Building Legislation in Light of the LEED Performance Debate?
The San Francisco Chronicle has picked up on the recent flurry of commentary generated by Mireya Navarro’s piece in the New York Times about the LEED building performance gap. The article opens up by stating “[r]evelations that many buildings certified as green under a broadly accepted national standard for energy savings are not performing as well as predicted recently prompted changes to the [LEED] program and are forcing San Francisco officials to consider amending city rules that are tied to the older guidelines.” However, a closer look at the substance of the article suggests that city officials may actually be trying to expedite the application of the LEED 2009 system and its corresponding Minimum Program Requirements (“MPRs”) to large, private construction projects. (As you will recall, the new MPRs require that projects which pursue LEED certification to “commit to allow USGBC to access all available actual whole-project energy and water usage data in the future for research purpose” or risk decertification.) I also think the piece is noteworthy because it suggests an inextricable link between increased data reporting and increased building performance.
Sep 11, 2009 | 2 comments | View Post
Can USGBC Improve the Performance of LEED Buildings by Collecting More Data?
Mireya Navarro’s recent piece in the New York Times about the energy performance of LEED buildings does not really shed much new light on a topic that many of us have been paying close attention to for the past two years, particularly in the aftermath of the controversial New Buildings Institute study that claimed LEED buildings performed, on average, 25 percent better than the CBECS database. Nevertheless, Navarro’s piece seems timed to coincide with USGBC’s press release of August 25 that announced a new Building Performance Initiative which will complement the LEED Version 3.0 Minimum Program Requirements’ ongoing performance data reporting obligations in order for projects to maintain their LEED rating and avoid the unsavory potential consequences of decertification. Any commentary on this press release – at least in the blogosphere – appears to have been lost in the August doldrums, but I think it is worthwhile to consider an effort which could ultimately have major repercussions for the underpinnings of the LEED system itself. However, many building scientists will tell you that simply collecting more data does not necessarily translate into improved performance. Consider (after the jump) the following letter that was submitted to the New York Times by ASHRAE Fellow and Distinguished Lecturer Larry Spielvogel, P.E., in response to the USGBC press release announcing the Building Performance Initiative, which Mr. Spielvogel was kind enough to allow us to reprint here at GRELJ.
Sep 04, 2009 | 6 comments | View Post
Reactions to Green Building Industry’s First LEED Certification “Guarantee:” Implications for Insurance Coverage & Limitation of Liability Provisions
As you likely know by now, Atlanta-based Energy Ace, Inc. recently announced that it will offer what the company is calling the green building industry’s first LEED certification guarantee. According to Energy Ace CEO Wayne Robertson, the firm “can offer clients a certainty that their project is going to be certified and remove that anxiety.” The specifics of the guarantee are as follows: clients retain Energy Ace pursuant to a standard service contract under which the firm performs LEED administration, fundamental building commissioning, and energy modeling. It holds a LEED charette and, if everything is satisfactory, the contract will be amended to “guarantee” certification. That guarantee, though, actually reads in substance much more like a limitation on Energy Ace’s liability; if the project fails to earn its target level of certification (i.e. Gold or Silver) or is not certified at all, Energy Ace will refund its LEED administration fee to the owner (which is typically between 30 and 45 percent of its total fee). Although there are a number of additional facts that would be helpful in analyzing the implications of the Energy Ace initiative more comprehensively, I do think it provides us with a timely opportunity to review a number of important general construction contract and insurance coverage considerations, many of which we have considered here at GRELJ during the course of 2009.
Aug 27, 2009 | 5 comments | View Post
Contractor Leads Attack Against Nashville’s LEED Legislation
Some interesting legislative developments are taking place right now in Nashville, Tennessee that implicate many of the green building policy issues that we’ve been wrestling with over the past few months here at GRELJ. Since 2007, metropolitan Nashville has required most new and major public projects to larger than 5000 square feet or costing more than $2 million to earn LEED certification. Recently, city councilman Duane Dominy of suburban Antioch introduced legislation that would “allow the Metropolitan Government to pursue an alternative sustainable development design standard to LEED certification based upon pre-determined energy reduction and efficiencies. If Metro chose to pursue an alternative to LEED, the contractor would be required to warrant for a three-year period that the annual energy use for the building will be less than similar buildings” or will earn a minimum score under EPA’s Energy Star program.
Aug 17, 2009 | 5 comments | View Post
Energy Performance in LEED Buildings: A History
“LEEDing from Behind: The Rise and Fall of Green Building” is a survey piece by Community Solutions executive director Pat Murphy that reviews the significant body of critical commentary on the energy performance of LEED buildings that emerged beginning in 2005 with Randy Udall and Auden Schendler’s seminal “LEED Is Broken – Let’s Fix It” article. Mr. Murphy’s stated purpose in writing his piece was to “show the history of the dialogue about LEED energy performance.” Many of the articles cited will be familiar to you, but this is the first time that I have seen all of them organized chronologically with their key points about LEED-related building performance highlighted. I think that reviewing the piece is extremely instructive in terms of framing both green building policy-related issues, as well as corresponding risk management considerations, from a much broader perspective. Mr. Murphy concludes that “[t]here has been concern with the LEED rating system relative to energy and CO2 since its inception. . . . LEED has failed to lead in the important areas that are measurable. Initially, [USGBC] adopted a weak status relative to energy consumption. [It] did not recognize and incorporate accountability and verification, unfortunately wasting years that could have providing important feedback relative to energy use. [It] has also not clearly and honestly communicated that LEED is not an exemplary indication of energy performance.”
Aug 05, 2009 | 12 comments | View Post
Baltimore Developers Raise Questions About Green Premiums Under New LEED-Driven Legislation
On July 1, new green building legislation applying to private development took effect in Baltimore. Council Bill 07-0602, which was signed in August of 2007, required that the city establish green building standards for new or substantially renovated commercial and multi-family residential buildings larger than 10,000 square feet. City-owned buildings were required to comply with the new legislation beginning January 1, 2008, city-subsidized buildings by January 1, 2009, and all other buildings this past July 1. While the city is developing its own Baltimore-specific green building standards that should be released by the end of 2009, in the interim, in order to obtain a building permit, all buildings applying must be “equivalent” to LEED Silver. The legislation does not require formal LEED certification, but owners must submit a checklist for the appropriate LEED rating system as part of the plans submittal for a new building permit. Checklists must set forth specific credits the project will pursue, briefly describe how each credit will be achieved, and (interesting to note from a legal perspective) the parties responsible for each credit. The checklist must also be signed by a LEED AP who is not an employee of the building owner at the time of submittal. Again, although certification is not required, in order to obtain a building occupancy permit from the city, at the time of occupancy permit application, project teams must submit a completed checklist indicating which credits the project met successfully, signed by a non-employee LEED AP. As we’ve discussed frequently here at GRELJ, all of these requirements could raise interesting- and novel- liability issues in the event that a project fails to receive a building permit or certificate of occupancy as originally contemplated. However, the city’s development community is calling for Baltimore’s City Council to reconsider the legislation based on perceived additional green building first costs and asking it to propose an incentive-based structure in its place.
Jul 30, 2009 | 7 comments | View Post
Case Study: A Practical Look at the Risks of Green Roofs
Recently, there have been a number of articles suggesting that the risks associated with green roofs have been overblown. Over the past few days, I’ve spent some time looking for more concrete examples of green roof-related risks in practice. I started by looking for case law where a plaintiff alleged an attractive nuisance claim against the owner of a building arising out of a green roof or other rooftop landscaping. Westlaw did not return any results entirely on point, but I did find a number of interesting attractive nuisance decisions which I may present in a subsequent post here at GRELJ. The much more practical research that I turned up was the following except from an article by Kelly Luckett, the self-proclaimed “Green Roof Guy” who writes a column for greenroofs.com. In a column from the very end of 2008, Mr. Luckett describes how uneducated project teams may unwittingly expose themselves to unanticipated risks stemming from the maintenance requirements of green roof installations. His remarks also reflect a number of key points we’ve made consistently both here at GRELJ and over at gbNYC with respect to the additional risk management strategies demanded by new green building technologies and third-party certification programs.
Jul 23, 2009 | 7 comments | View Post
New Marsh Report Offers Construction Industry Feedback on Green Building Risks
It may have been lost a bit in the recent discussion over LEED 2009 decertification, but last month Marsh released a new report that solicited feedback from construction industry executives on the risks that they perceive as arising out of green design and construction across ten risk categories: brand and competitive edge or reputation, project consultants and subcontractors, education, finance, building performance, green building regulations, return on investment, standards of care and legal, supply chain and technology. To obtain the feedback, Marsh convened four forums in in Washington D.C., San Francisco, Chicago, and New York City in late 2008 and early 2009, which were attended by a total of 55 industry executives. While the executive summary to the report, which is titled “Green Building: Assessing the Risks, Feedback from the Construction Industry,” acknowledges that its findings “might be characterized as anecdotal,” I do think that the report is important to consider in the context of the types of risks that stakeholders identified as the most salient.
Jul 16, 2009 | 2 comments | View Post
Green Building Basics for the Healthcare Industry: A Legal Perspective
Green building design, construction and operation practices have gained widespread popularity in the healthcare industry in recent years, even considering the current challenging economic climate. This trend is likely to continue because green building practices result in both decreased overall life cycle costs and healthier building occupants. This article will briefly examine the background of building green in the healthcare sector, discuss the unique needs of healthcare facilities in relation to green building practices, and finally examine the choices and challenges faced by healthcare facilities in determining whether to design, construct and/or operate a green building facility, with a specific emphasis on the legal issues therein.
Jul 15, 2009 | 0 comments | View Post
Do Third Parties Have Standing to Initiate LEED 2009 Decertification Proceedings?
The possibility that a LEED-certified project could be “decertified” by USGBC or GBCI in the event that any of the new LEED 2009 Minimum Program Requirements (“MPRs”) are not satisfied presents a variety of novel legal issues which we presented earlier this year here at GRELJ when the first iteration of MPRs was announced by USGBC. Today, Engineering-News Record (“ENR”) published an article that highlights a number of those issues, but also raises the question of who, exactly, would have standing to bring a decertification proceeding. If strictly limited to USGBC or GBCI, a recent comment here at GRELJ from Brian Anderson (“lawsuits are bad for marketing”) suggests that decertification would be a remote possibility. However, in the ENR piece, which is titled Building Rating System Requirement Raises Concern and authored by Nadine Post, my colleague Ujjval Vyas notes that “[a]ny third party has the right to initiate a non-compliance action by USGBC. This creates a huge risk and provides standing to any entity whatsoever to injure a building owner or tenant.” If third parties can compel decertification proceedings, the risks associated with failing to comply with the MPRs are far more serious than if that discretion rests exclusively with USGBC or GBCI.
Jul 09, 2009 | 8 comments | View Post
Section 201 of Waxman-Markey Could Impose Energy Efficiency Mandates as Decried by NAIOP
As the Waxman-Markey climate change legislation heads to the Senate, I think it’s important to note that, as currently drafted, the bill includes provisions that could impose the types of energy efficiency mandates which NAIOP argued against in its controversial report that was released earlier this year. Section 201 of the American Clean Energy and Security Act (H.R. 2454) would first set baseline standards for all commercial (ASHRAE 90.1-2004) and residential buildings (the 2006 IECC code) and dates for certain percentage reduction targets in energy consumption over those baselines. The Act would require an immediate 30 percent reduction over those baselines once enacted (likely in 2011 or 2012 if the bill proceeds through the Senate and is implemented as drafted), followed closely by a 50 percent reduction by 2014 for residential buildings and 2015 for commercial buildings. The reduction mandate would increase by 5 percent every 3 years through 2029/2030 for a total reduction of 75 percent over the baselines. However, the Department of Energy would have the ability to increase or decrease the reduction targets based on technological feasibility. Section 201 further obligates state and local governments to adopt the codes, or their own codes that meet or exceed the established targets; the federal government itself will enforce the national codes if state and local governments fail to comply. If you recall the comments from NAIOP President Thomas Bisacquino in the aftermath of the uproar created by the NAIOP study, Waxman-Markey may ultimately create the precise scenario that NAIOP and its constituents feared: 30 to 50 percent reductions over ASHRAE 90.1-2004 in the short-term.
Jun 30, 2009 | 0 comments | View Post
Victor Schinnerer: New LEED AP Program Raising Standards of Care, Changing Risk Profiles
Victor Schinnerer’s most recent quarterly report has some interesting commentary on the increased risk that the new LEED Accredited Professional (“LEED AP”) program may be creating for professionals that participate on LEED projects. Specifically, on page 4, the report notes that the new LEED AP program, which divides LEED APs into three tiers of increasing expertise, from LEED Green Associate, to LEED AP with specialization, and up to LEED AP Fellow, “has significantly changed the value of the program and the risks to [the] program’s participants.” However, although the report acknowledges that “[m]embers of the upgraded LEED AP [Fellow] program now will face a higher standard of care for their services,” it also states that “[c]urrently this increased exposure is a manageable risk. Current claims information does not indicate a need for additional insurance premiums to cover the exposure created by the higher standard of care.” I think that this latter point is critical- as I wrote previously here at GRELJ, most professional liability insurance policies contain an exclusion for assumptions of liability that are not imposed by law (i.e., because the LEED AP Fellow designation implies that the design professional will perform at a higher level than the prevailing common law standard, the design professional may not be covered for any resulting claims of negligent design services arising out of disputed green design services). It seems to me that if the LEED AP fellow designation implies a higher standard of care than is prevalent in the industry, this type of form exclusion would come into play. Accordingly, I am very curious to see if there is any reaction from insurance industry professionals on this crucial issue.
Jun 25, 2009 | 2 comments | View Post
Labor Law Issues May Begin to Impact Green Construction
There have been a couple of interesting articles recently that suggest the pending intersection of labor law and green building. First, you probably read about a complaint that was recently filed with the NLRB by workers who attempted to unionize while installing a green roof on the Target Center in Minneapolis. In addition to alleging a number of safety violations, the workers claimed that the contractor paid them the prevailing wage for landscapers- not for roofers, who earn $20 more per hour. The $5.3 million installation was a city project, and officials, along with OSHA, investigated the workers’ safety concerns earlier in the spring, finding that “the contractors lived up to the specifications of the contract to ensure safety.” From a prevailing wage rate perspective, is the installation of a green roof more akin to landscaping than roofing? This was the contractor’s argument and, I think, a neat example of how green construction practices continue to introduce legal wrinkles into even the most traditional of practice areas. However, what got me thinking a bit more seriously about the intersection of green building and labor law was an article (link after the jump) discussing the California Labor Federation’s two-day conference held earlier this month in San Francisco.
“Whither the Lawsuits?” A Mid-2009 Assessment of the State of Green Building Litigation
In a piece that appeared both on her blog and at Greener Buildings, my colleague Shari Shapiro opines on why, as we rapidly approach the midpoint of 2009, there remains a dearth of reported lawsuits arising out of green building projects, despite much commentary suggesting the contrary to be imminent. Ms. Shapiro suggests four reasons: (1) a relative lack of green building practices generally as compared to overall construction; (2) owners who are “too afraid” to measure building performance and are thus unable (or unwilling) to assert a claim arising out of violated green building expectations; (3) a general reluctance to engage in costly litigation given the economic downturn; and (4) the green building movement’s relative infancy. However, over the course of 2009, and notwithstanding the lack of lawsuits filed to date, there has been an explosion in commentary on green building litigation across the legal community. Accordingly, I thought Ms. Shapiro’s piece was particularly timely and worthy of some additional discussion here at GRELJ.
Jun 09, 2009 | 4 comments | View Post
Considering Standard of Care Provisions in Green Construction Contracts
One of the most critical provisions in any contract for professional design services relates to the standard of care under which the design professional will be required to render its services. In the absence of contract language to the contrary, a design professional will be held to a common law standard of care commensurate with that of other professionals providing the same services to a geographically similar community. However, on a green building project, an owner may seek to retain a design professional specifically because of its sustainable design expertise. Accordingly, it may attempt to hold the design professional to a higher standard of care than that which prevails in the industry. This may be problematic for both sides for a number of reasons. Professional liability insurance policies provide insurance for legal liability that arises out of negligent professional acts, errors, or omissions. However, if not properly vetted, standard of care provisions have the potential to trigger standard exclusions to such policies. This article suggests two such exclusions and strategies for owners and design professionals to consider as they draft and negotiate construction agreements for green building projects.
May 15, 2009 | 4 comments | View Post
Mitigating Risks When Building Green Roofs
Green roofs have been a part of building for over a thousand years. The current green building movement has, however, had the greatest impact on the growth of the green roofing industry. A green roof is commonly defined as a roof that consists of vegetation and soil, or a growing medium, planted over a waterproofing membrane. There are two basic types of green roofs: (i) an extensive roof, which has a few inches of soil cover; and (ii) an intensive roof that has two feet or more of soil for a variety of grass, trees, bushes and shrubs. Green roofs are used in a multitude of buildings, including industrial facilities, commercial offices, retail properties and residences. The benefits of a green roof include reduced storm-water runoff, absorption of air pollution, reduced heat island effect, protection of underlying roof material from sunlight, reduced noise, and insulation from extreme temperatures. A green roof can thus be a critical design element for a green building. As more properties across the country are attempting to obtain LEED certification, it is worth noting that a green roof can help a property obtain over a dozen LEED credits, including credits for reduced site disturbance, landscape design that reduces urban heat islands, storm water management, water efficient landscaping, innovative wastewater technologies and innovation in design. The increase in green roofs and the green building movement is also resulting in an increase in liability resulting from errors in the design, installation or maintenance of green roofs. As a result, owners, design professionals and contractors should carefully consider ways to mitigate the potential risks involved with building a green roof.
May 11, 2009 | 4 comments | View Post
Initial Legal Thoughts on the LEED 2009 Minimum Program Requirements
As you may know, USGBC’s LEED v3 program launched this past Monday, April 27. Project teams currently pursuing LEED certification under any of the Version 2 programs can opt into LEED v3 for no additional registration fee through the end of the year. The Version 2 programs will be available to project teams for registration until June 26; after that date, all projects must proceed with registration under LEED v3. LEED v3 is comprised of what USGBC calls “LEED 2009″ revisions to the suite of LEED rating systems (other than Homes and Neighborhood Development, which are not changing under v3), a new online interface for project teams, and a shift in the administration of the LEED certification process to the Green Building Certification Institute (“GBCI”). USGBC calls the LEED 2009 credit revisions “a reorganization of the existing commercial and institutional LEED rating systems along with several key advancements.” The revisions contemplate harmonization (i.e., credits and prerequisites are consistent across all LEED 2009 rating systems), credit weighting (i.e., greater emphasis on energy efficiency), and regionalization (up to four bonus credits for projects that address a local environmental issue of import). Although they are important to review for background purposes, the thrust of this article is not to detail the mechanics of the LEED v3 program. Rather, a number of the new minimum program requirements (“MPRs”) present some novel legal issues for project teams- and their attorneys- to consider in connection with drafting construction agreements or leasing documents in connection with LEED v3 projects.
May 01, 2009 | 2 comments | View Post
Lessons on Predicting Building Performance from New Yankee Stadium
During the first homestand of the season at $1.6 billion New Yankee Stadium, baseballs flew out of the ballpark at an unprecedented rate; the 20 dingers that were clocked during last weekend’s series against the Cleveland Indians were the most ever in a four-game set to open a new stadium in baseball history. Last season, Old Yankee Stadium saw 160 home runs; the current pace would yield a mind-boggling 351 round-trippers for the entire 2009 season. The Yankees did not anticipate that their new ballpark would turn into a Little League bandbox; dimensions at the new park are the same as they were across the street and engineers performed a wind study in advance of construction that did not suggest any major changes in currents or speeds. So, after witnessing several routine fly balls to right field land halfway into the lower deck last Saturday, it struck me that there are some parallels between what’s been happening thus far at the new ballpark in the Bronx and some of the building performance issues that we frequently discuss here at GRELJ.
Apr 28, 2009 | 2 comments | View Post
