Focus is not on key factors in current climate change crisis – CO2 and energy
Looks only at prescriptive design, not measurable performance
Favors bells and whistles, not basic good design
Too complicated, bureaucratic and expensive
Green – Real or Just Marketing
LEED not necessarily valued in marketplace
2009 RICS Study: LEED rating did not statistically improve rents while Energy Star rating associated with rents higher by 3.3%
“Defining Success Together”
Because of various standards and outcomes, it is important to work with client to understand just what client wants to achieve in undertaking a “green building” project
“Defining Success Together”
Green Building legal issues revolve around:
Identifying parties’ “values” and negotiating agreements that result in “wins”
Allocating risks, benefits, burdens and responsibilities
Anticipating and avoiding unnecessary trouble
Overview of Green Building
Green Building Standards
Green Building Incentives
Green Building Leasing
Green Building Design and Construction
Green Building Standards
LEED – Leadership in Energy and Environmental Design
Administered by the U. S. Green Building Council
Voluntary, consensus-based system
LEED Basics – Why LEED?
The “built environment” accounts for approximately:
40% of global consumption of raw materials
37% of primary U. S. energy consumption (operations)
Must commit to sharing whole-building energy and water usage data
Must comply with a minimum building area to site area ratio
LEED Basics
Must commit to sharing whole-building energy and water usage data
for a period of at least 5 years
in a free, accessible, and secure online tool or, if necessary, taking any action to authorize the collection of information directly from service or utility providers
must carry forward if the building or space changes ownership or lessee
LEED Basics
Decertification
MPR “Preamble” contains this “Note”:
“CERTIFICATION MAY BE REVOKED FROM ANY LEED PROJECT UPON GAINING KNOWLEDGE OF NON-COMPLIANCE WITH ANY APPLICABLE MPR”
GREEN GLOBES
Environmental impacts assessed on a 1,000 point scale in multiple categories:
Energy
Indoor Environment
Site
Water
Resources
Emissions
Project/Environmental Management
Green Globes
After achieving a threshold of at least 35% of the total number of 1,000 points, new and existing commercial buildings can be certified for their environmental achievements and sustainability by pursuing Green Globes certification that assigns a rating of one to four globes
Green Globes
Two Categories
New Construction
Continual Improvement of Existing Buildings
Green Globes
New Construction – 2 Stages
Stage I -- review of construction documents, working drawings, landscape designs, energy analysis, LCA documentation, commissioning reports, etc.
Stage II -- onsite walk through, review of additional documentation, and interview of key team members.
Green Globes
Continual Improvement of Existing Buildings
extensive documentation review and an on-site visit with a walk through and interview of facility manager and chief engineer
Energy Star
A program of the US Environmental Protection Agency
Home Energy Rating System (HERS) Index established by the Residential Energy Services Network (http://www.natresnet.org/).
Home meeting the 2006 International Energy Conservation Code scores “100” and a net zero energy home scores “0”.
Each 1-point decrease in the HERS Index corresponds to a 1% reduction in energy consumption compared to the HERS Reference Home.
To qualify for Energy Star, a home in Washington State (Climate Zones 4, 5 or 6) must achieve a HERS Index score of 85 or lower.
Energy Star - Commercial
“National Energy Performance Rating System” -- scale of 1-100.
A building that scores 75 or above on this scale (placing its energy performance among the top 25 percent among similar buildings nationwide) can earn an Energy Star label.
Energy Star also offers an energy management tool, Portfolio Manager, on the energystar.gov web site.
Government Requirements/Incentives
Approaches
Mandating compliance with specific standards like LEED
Requiring measurement and public reporting of energy use on an on-going basis
Incenting compliance with standards by offering bonuses, expedited processing, etc.
Government procurement: Structures of at least a certain size must comply
Adoption of codes
Governmental Green Requirements and Incentives
Federal
tax incentives to the private sector
require federal agencies to adopt green building principles
Energy Policy Act of 2005 (amended 2008) -- tax deduction of up to $1.80 per square foot for commercial buildings, placed in service on or before December 31, 2013, that achieved 50 percent energy reduction.
Federal Green Incentives
Executive Order No. 13423 (2007) - require federal agencies to reduce greenhouse gases by reducing energy usage and to reduce water usage by targeted amounts by 2015
Federal Green Incentives
EO 13423 also requires federal agencies to comply with the 2006 “Federal Leadership in High Performance and Sustainable Buildings Memorandum of Understanding” regarding energy efficiency, sustainable building design and practices, siting, high performance buildings, recycling materials, reuse of building materials, water conservation, indoor environmental quality, and the like.
Federal Green Incentives
2009 American Reinvestment and Recovery Act
$4.5 billion to the U.S. General Services Administration (“GSA”) for green building projects
$2.7 billion in formula grants to states, territories, local governments, and Indian tribes under the Energy Efficiency and Conservation Block Grant (EECBG) Program
More
Federal Green Incentives
Pending Waxman-Markley American Clean Energy and Security Act of 2009, H.R. 2454 calls for the creation of a national building label that would measure and disclose the energy performance of commercial property and homes.
Two ratings -- a performance grade based on utility bills and other operating characteristics, and an asset grade (also known as a design grade) that would assess a building’s energy efficiency potential based on computer energy models.
New label to be based on the Energy Star program, as well as the HERS Index, and programs at the Department of Energy
Washington State Green Incentives
Focus on green construction of new and remodeled state and state funded facilities.
Ch. 39.35D RCW
state-funded projects over 5,000 square feet achieve LEED Silver certification or better.
new public school construction must be LEED Silver or certified through the Washington Sustainable School Design Protocol
CTED recently established the Evergreen Sustainable Development Standard to comply with RCW 39.35D.080 for affordable housing projects funded from the Washington State Housing Trust Fund (HTF) under Chapter 43.185 RCW.
Washington State Green Incentives
Efficiency First! Act (SB 5854, Chapter 423 Laws of 2009)
Requires utilities to track and disclose energy use data for large public buildings and private, non-residential buildings using the Energy Star Portfolio Manager data and ratings.
Tracking is to begin on January 1, 2010 and disclosure is to begin by January 1, 2011 for buildings greater than 50,000 square feet and by January 1, 2012 for buildings greater than 10,000 square feet.
Building owners must disclose the Energy Star Portfolio Manager data and ratings to prospective buyers, lessees or lenders for the most recent continuously occupied twelve-month period.
CTED to recommend to the legislature by the end of 2009 a methodology to determine an energy performance score for residential buildings.
Local Green Incentives
King County
King County Executive Order FES 9-3 (AEP) (Oct. 25, 2001) requires all new public construction projects to seek LEED certification and encourages the application of LEED criteria to building retrofits and tenant improvements.
Local Green Incentives
King County
Green Building Grants Program
$25,000 for LEED Gold and $35,000 for LEED Platinum certification for new construction or major renovation in the county, but outside the City of Seattle.
Special consideration will be given to projects incorporating low-impact development (LID) strategies, and to projects pursuing LEED for Existing Buildings (LEED-EB) and LEED for Existing Buildings: Operations & Maintenance (LEED-EB:O&M) certification
2009 grant application period closes September 30
Local Green Initiatives
King County
Built Green incentive for single-family residential and community development projects throughout Seattle and King County includes grants ranging from $2,500 for a 4-star single family project to $20,000 for a 10 or more unit 5-star project. (2009 Grant Application period closed Sept. 18)
Special “Green Track” through the permitting process with a team trained in LEED and Built Green standards plus 3 -15 “free” project staff hours based on Built Green status
Local Green Incentives
Seattle
Requires LEED Silver certification of all city-owned projects and renovations over 5,000 square feet.
Encourages private construction to incorporate LEED design standards into new and existing buildings by providing various economic incentives for energy and water conservation.
Gives a height or density bonus to commercial or residential projects that achieve at least LEED Silver certification and contribute to affordable housing.
Seattle City Light also offers grants totaling up to 60 percent of the cost of qualifying energy-economizing improvements such as lighting, HVAC, controls, transformers, insulation, window glazing, and process improvements.
Local Green Incentives
Seattle “Green Building Capital Initiative”
proposed for Commercial and Multi-Family (ordinance expected this fall)
Mandatory measurement and disclosure of Energy Star Portfolio Manager energy performance benchmarking data and ratings.
Local Green Initiatives
Seattle “Green Building Capital Initiative”
Beginning in 2010 for commercial buildings larger than 50,000 square feet, multifamily buildings 20+ units.
Beginning in 2011 for commercial buildings larger than 25,000 square feet, multifamily buildings between 10-19 units.
Beginning in 2012 for commercial buildings larger than 10,000 square feet, multifamily buildings between 5-9 units.
Reported through EPA secure server with automatic downloads to the City
Green Building Issues - Leasing
Landlords and Tenants may have competing economic interests in “Green Building”
Landlords want to recover higher costs of Green Building
Tenants want to benefit from lower operating costs
Green Building Issues - Leasing
Key is to align respective control with responsibility and costs with benefits
E.g. – Landlord responsible for maintaining “green” performance of Shell and Core; Tenant responsible for “green” performance of TIs and equipment
Green Building Issues - Leasing
Both Landlord and Tenant should covenant not to act in manner that jeaopardizes “green” certifications or grants or financing
Green Building Issues - Leasing
Best to establish expectations and responsibilities in Letter of Intent – including applicable “Green” certification standard
Lease forms should complement to applicable standard
Green Building Issues - Leasing
Wide range of documentation
Simple “intend to comply with LEED” paragraph
“Green Addendum”
Model Green Leases – e.g. BOMA
“Green” Work Letter
Green Issues – Design/Construction
Identifying client goals
Contracting to achieve those goals
Liability when goals are not met
Insuring against failure
Commissioning/ongoing maintenance and operations
Green Issues – Design/Construction – Identifying Client Goals
Timing: If the tax credit requires placing the building in service by a certain date, how will that date be met?
Moral/ethical values of sustainability? How to define them?
Cost
Any project involves tradeoffs – no client will want a “green result” if its cost cannot be justified
Green Issues – Design/Construction – Contracting Models
Traditional model
Owner contracts for design, then contracts separately with contractor for construction
Design/Build
Owner contracts with one entity to provide design and construction
Integrated Delivery
Similar to design/build
Green Issues – Design/Construction – Design Contract Issues
Traditional Model: Owner contracts with architect
Need to be sure design contract embodies and does not hinder client goals
Cost: May need more extensive design development phase to more clearly define goals, costs, tradeoffs
Architectual standard of care
Typical contracts do not place burden on architect to achieve green results in a vacuum – need specific undertaking regarding design, timing to meet client goals
AIA commits an architect only to “consider” green issues and discuss them with owner, unless the architect agrees to assume a greater role
Green Issues – Design/Construction – Design Contract Issues
Insurance
Typical insurance does not cover contractual undertakings (e.g. breach of warranty, breach of contract)
Need to define architect’s standard of care such that failure to design green result results in breach
Green-specific insurance products are limited to non-existent
Green Issues – Design/Construction – Design Contract Issues
Typical contract clauses may limit owner’s rights in the event of failure
AIA documents contain mutual waiver of claims for consequential damages
Is the loss of a tax credit due to defective design “consequential damages”?
Lost anticipated increase in rents?
Lost financing?
Green Issues – Design/Construction – Design Contract Issues
Who is responsible for administering the LEED process? AIA Form B214
Identify client goals – to what extent does achieving them depend upon the contractor?
Achieving the design
Timing: Qualifying for a tax credit may require placing the building in service by a date certain; who assumes the liability for late completion?
Construction process: Some LEED credits apply to the construction process, like recyling of building materials, generally control of the environmental impacts of the construction process
Green Issues – Design/Construction – Construction Contract Issues
Achieving the result: Does the contractor clearly undertake work that is necessary to achieve the result?
Timing
Construction process
Substitutions
Commissioning
Green Issues – Design/Construction – Construction Contract Issues
How does the contract allocate the risk of failure?
Consider warranties
Consider liquidated damages/performance bonuses
If green goal depends on completion by a certain date, the contract should say so and include damages/incentives
Do other contract clauses potentially impair or change the allocation of risk?
Consequential damages limitation
Green Issues – Design/Construction – Lessons from the Trenches
Shaw Development v. Southern Builders
$7.5 million, 23-unit condo project in Maryland completed in 2006
Desired LEED Silver rating
Contractor brought suit for balance owed
Owner counterclaimed for damages of $635,000 in part relating to lost tax credits when contractor failed to complete in time to recover them
Settled for undetermined sum
Specification included LEED requirements, but contract documents were not clear as to undertaking of the contractor
Counterclaim alleged breach of contract and negligence
Conclusions
Green Building Certifications present a moving target
Critical to work with clients early and continuously to determine goals and objectives
Focus on objective performance measures and clear allocation of risks and responsibilities
Green building issues are presented in nearly every phase of development – look for opportunities to improve old practices and “boiler plate”
Don’t get bogged down, but don’t be afraid to innovate
