by aleida, on February 3rd, 2010
Image from BrightTALK web site
The third session on the BrightTALK Green Building Summit line-up was Do Green Buildings Make Dollars and Sense? presented by Dave Pogue, National Director of Sustainability for CB Richard Ellis, Inc. Pogue presented the results of a nationwide study conducted over the last year which included 154 buildings, all ENERGY STAR rated at an average score of 83. The study sought responses from property managers, and approximately three thousand tenants, 800 of which actually participated. Also involved in the study were the information management team of CBRE and a research team at the University of San Diego. Just some key findings were: these green buildings don’t have lower operating expenses (because they are usually intensively managed, their expenditures are equivalent to non-green buildings)
- on average, the buildings have higher occupancy than the market norm
- on average, the buildings also have higher rental rates
- from an operations perspective, buildings saw only a 0.8 – 1% energy savings… but
- buildings that instituted separate metering for their tenants saw a 21% savings in energy costs
- tenant respondents agreed that their employees are more productive and take fewer sick days
Interestingly, the study found no evidence that the tenants chose to have their offices in those buildings because of their green characteristics.
Image from BrightTALK web site
Then came the session Green Building Legal Issues on the Horizon, presented by Chris Cheatham with the legal firm Crowell & Moring. He basically said that, when it comes to constructing and operating green buildings, there are four things to learn:
- think twice before making guarantees about your green building projects
- guarantees of certification are risky
- insurance is hard to get
- energy efficiency is hard to control
First he addressed the issue of “LEEDitigation” with the example of Shaw Development v. Southern Building. Shaw, claiming a loss of $635,000 in tax credits when one of its condo projects failed to achieve LEED Silver Certification in a timely manner, sued the contractor, Southern Building, for negligence and breach of contract. The contract stipulated that the project had been “designed” to comply with LEED Silver requirements. We don’t really know what happened because the parties reached a settlement, but this exemplifies the dangers that can exist when contracts fail to be very specific. As a hypothetical, Cheatham wondered what the repercussions would have been if the contract had said that the project should be “constructed” to comply with LEED Silver, or even if it went further to say that the project “will” comply.
Then he went on a quick review of problematic regulatory schemes, citing a problem in Vancouver where the city mandated green roofs on new residential developments. These projects also had to obtain home-owners insurance. The problem arose when insurers refused to issue insurance to these buildings with green roofs. So the developers were in a catch 22: if they adhered to the city mandate and added a green roof, they wouldn’t be able to get insurance. And if they didn’t install a green roof in order to get insurance, they were violating the city mandate.
And there is the chance for even further room for litigation related specifically to LEED. The LEED 2009 Minimum Program Requirements make it possible for certifications to be revoked if a project fails to comply with those requirements. Property owners have to be especially careful if selling their buildings, because if they don’t specify in the sale contract that the new owner must continue to report energy and water usage, etc., and the certification is revoked on the new owner due to this lapse of communication, the seller could be held responsible.
His presentation was followed by a lively Q+A period; it’s very worth checking out.
As a reminder, these webinars were recorded and are available for viewing at any time here.
Thanks very much for reviewing my webinar. I apologize for the technical glitch at the beginning that delayed the start. The Q&A was definitely lively – everyone submitted tough questions!
Have any suggestions for future webcasts?
Hi Chris,
I thought I was having the technical difficulties, so I quickly shut down my connection and then logged back in hoping I hadn’t missed much. I got back just in time to hear you say what had happened, so it was just pretty funny for me.
Part of the reason why I really enjoyed your session is that I hadn’t really thought about these legal issues before. So keep educating people about them. Are there more examples that you can review? Can you develop a “how to” guide for writing contracts that avoid liability for all parties involved, or is that just not really possible?
It was obvious your presentation got all the listeners thinking about all the potential minefields that practitioners might have to navigate. Thanks for your time on it!