usgbc middle tennessee presentation

Chris Cheatham, Esq., LEED AP

Green Building Legal Issues On the Horizon

The Top 100 (green contractors) generated $38.69 billion in revenue in 2008 from projects registered with or certified by third-party rating groups. . . .

This marks a startling 70% [increase from] $22.76 billion [in revenue generated] for the group in 2007.

On the Horizon

• What Will You Learn?

• Think twice before making guarantees

• Guarantees of certification are risky

• Insurance hard to get

• Energy efficiency hard to control

On the Horizon

• Agenda

• State of green building

• LEEDigation

• Problematic regulatory schemes

• Green building defects

• What’s on the horizon?

State of Green Building

H.R. 1, the American Recovery and Reinvestment Act of 2009 (ARRA)

• $25 billion for the green building industry

$4.5 billion

$3.6 billion

$3.1 billion

$5 billion

LEEDigation

• Shaw Development v. Southern Builders

• Shaw retained Southern Builders to construct $7 million condo project

• Shaw sought LEED Silver certification

LEEDigation

• The Contract

LEEDigation

• The Contract

LEEDigation

• Allegation: Breach of Contract

LEEDigation

• Allegation: Negligence

LEEDigation

• The Damages

Project is designed to comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”

LEEDigation

Hypothetical

LEEDigation

Project will be constructed to comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”

Hypothetical

LEEDigation

Project will comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”

Hypothetical

LEEDigation

Regulatory Compliance

[TITLE OF PRESENTATION]

Suretyship and Green Building[TITLE OF

PRESENTATION]Regulatory Compliance

- U.S. Mayors Conference, Mainstreet Economic Recovery Report

• D.C. Green Building Act of 2006

“(b) On or before January 1, 2012, all applicants for construction governed by section 4 shall provide a performance bond”

“(g) All or part of the performance bond shall be forfeited to the District and deposited in the Green Building Fund if the building fails to meet the verification requirements described in sections 3 and 4.”

• Surety and Fidelity Association of America and Surety Bond Producers:

• “The new law incorrectly uses the term ‘performance bond.’ In short, the performance bond assures that the construction contract, and therefore, the project will be completed.”

• Question for you

• “4.4. ... [N]ew development is encouraged to at a minimum, achieve Leadership in Environmental and Energy Design certification. A floor area ratio (FAR) of up to 7 may be allowed if the proposed structure achieves a level of “Silver” LEED certification.” - Nashville Downtown Neighborhoods Design Plan

• What is the enforcement mechanism?

Green Defects

• Energy Efficiency

Green Defects

• Energy Efficiency

What’s On the Horizon?

• “This commitment must carry forward if the building or space changes ownership or lessee.”

• “NOTE: CERTIFICATION MAY BE REVOKED FROM ANY LEED PROJECT UPON GAINING KNOWLEDGE OF NON-COMPLIANCE WITH ANY APPLICABLE MPR.”

Recipe for LEEDigation

1. GSA requires LEED Silver

2. GSA receives $4.5 billion

3. Underbidding by 10-20%

• What Did You Learn?

• Think twice before making guarantees

• Guarantees of certification are risky

• Insurance hard to get

• Energy efficiency hard to control

Want to learn more?

www.greenbuildinglawupdate.com

ccheatham@crowell.com

usgbc middle tennessee presentation

chris cheatham

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