Green Building Intro and Legal Issues

Robert C. Newcomer rnewcomer@langlegal.com The Lang Legal Group LLC 404.320.0990

Business, environmental and real estate litigation and counseling.

LEED-AP

Member, Sustainable Atlanta Green Building Taskforce.

Urban Land Institute Co-Chair, Sustainability -

Community Assistance Sub-committee

Member, Technical Advisory Panel Committee

Director, Green Chamber of the South.

Green (Sustainable) Building Sustainability Green Building and

Rating System Legislation Contract Issues Claims and Litigation

Sustainability

“To meet the needs of the present without compromising the ability of future generations to meet their own needs.” - Brundtland Commission

Green building is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building's life-cycle from siting to design, construction, operation, maintenance, renovation and deconstruction.” - EPA (Green Building Workgroup)

Buildings: Triple Bottom Line Sustainability

Less environmental impact

Greater energy efficiency

Improved cap rates Increased marketability Higher lease rates

Improved productivity Reduced absenteeism Community connectivity

Population

Petroleum Resources

Test

12%Water Use

30%GreenhouseGas Emissions

65%WasteOutput

70%ElectricityConsumption

U.S. Building Impacts

GLOBAL COGLOBAL CO22 EMISSIONS EMISSIONS ( (BY SECTOR)BY SECTOR)

#1 Buildings#2 Transportation

#3 Industry

Global Warming?

Scientific Evidence

Carbon-based regulation . . . ?

Massachusetts v EPA (2007) EPA “Endangerment Finding”

Six heat-trapping gases are pollutants that endanger public health and welfare.

Proposed mandatory reporting of greenhouse gases emissions (April 2009)

Federal regulation . . . Cap & trade, carbon tax, ???

Implications for real estate . . . ???

“LEAP” to Zero Carbon:

Energy efficiency (reaction to 1970s oil crises) Green (environmentally responsive) Sustainable (holistic) High Performance (accountable)

Carbon Neutral

Green Building

LEED-NC Rating System

Sustainable Sites 14 total points (1 prerequisite + 14 credits)

Water Efficiency 5 total points (no prerequisites + 5 credits)

Earth & Atmosphere 17 total points (3 prerequisites + 6 credits)

Materials & Resources 13 total points (1 prerequisite + 13 credits)

Indoor Environmental Air Quality 15 total points (2 prerequisites + 15 credits)

Innovation in Design 5 total points (no prerequisites + 5 credits)

_____________________________________ 7 prerequisites + 58 credits (69 total points)

LEED “Certification”

Register project Satisfy all prerequisites Complete online submittals and

documentation for credits to be sought Respond to questions Retain back up data and documentation.

Four Levels of LEED Ratings:

Green Buildings worldwide are certified with a voluntary,consensus-based rating system.

USGBC has four levels of LEED.

LEEDv3 Rollout

Projected LEED EBO&M Projects

2006 2007 2008 2009 2010 2011 2012 2013

<50 <100 <1,000 <5,000 10,000 22,000 30,00050,000

50,000 -

45,000 -

40,000 -

30,000 -

25,000 -

20,000 -

15,000 -

10,000 -

5,000 -

1,000 -

By default, non-green buildings will be known as BROWN buildings

Less demand

Lower rents

Higher operating cost

Decreased value

Go GREEN or go home

U.S. Office Rental Rates:“Green” v. “Brown” Performance

Market Bifurcation Starts in 2009

2009 | 2010 | 2011 | 2012 | 2013|

2002 | 2003 | 2004 | 2005 | 2007 | 2008 |

CLASS ACLASS A

CLASS BCLASS B

Avera

ge R

en

ts

PS

F

Green Building Legislation

Federal (growing support and incentives) States Cities

Chamblee and Doraville ConyersAtlanta (proposed)

Chamblee and Doraville

Applies to: all municipal buildings commercial buildings and “multiple residences” > 20,000 sf.

Must be LEED-Certified (Chamblee accepts GG) No CO until certification

temporary CO available

Infeasibility exemption available

Conyers

Applies to: residential and municipal buildings > 5,000 sf

LEED NC or LEED Homes/EarthCraft No CO until certification

temporary CO available Infeasibility exemption available

City of AtlantaSustainable Building Ordinance

US Mayors Climate Protection Agreement Architecture 2030 Challenge Sustainable Atlanta Sustainable Building Taskforce

Lead Partners Research Engaged stakeholders Incorporated feedback Draft (4) presented to Mayor Franklin (April 27th)

Sustainable Building Ordinance

Applies to: Commercial projects > 20,000 sf Applying for permit 1 year after adoption All commercial projects 3 years after adoption

Sustainable Building Ordinance

Two years after adoption: Sustainable Building Standards

LEED Silver

Green Globes, 2 Globes

EarthCraft Tier 2

One year after adoption:

Sustainable Building Standards

LEED-Certified Green Globes, 1 Globe EarthCraft, Tier 1

Sustainable Building Ordinance

Does not affect: Single-family homesMulti-family projects < 3 storiesZoning or overlay districts

Provides: Compliance options Prescriptive and performance standards Variances from specific standards

Green Building Legal Issues: Certified or “Certifiable”? Development and construction Permitting and incentives Financing Marketing green Leasing Buying and selling green buildings

Legal Issues: Certified? or “Certifiable”? Register project Prerequisites Online submittals and

documentation for credits

Reviewer questions and requests

Retain back up data and all documentation.

DEFINE “certifiability” Determine:

Who decides? How? What data and

documentation is expected?

Retain back up data and all documentation.

Legal Issues:

Certified or “Certifiable”?

Development and construction

Development and construction: Integrated Design Assumes that each system affects the functioning of

another and that all systems must be harmonized to perform together effectively.

Optimizes performance while minimizing cost. Integrated design teams meet early and often:

Identify project goals Allocate responsibility for tasks Review and re-assess throughout design and

construction.

DOCUMENT responsibility for tasks and allocationof risk among the key players

Development and construction: Contract issues

Legal and financial incentives or requirements?

Contract conditions: Green features must be verifiable and verified. Sustainability goals for construction must be met. Risk that green features will hinder building

performance must be minimized. Client must be protected if problems arise.

Managing Risk in Green Buildings:

Assemble experienced green project team Identify sustainability goals and green attributes Document responsibility and allocate risk among key

participants For new green products or technologies:

Review technical data and warranties Research product manufacturer Seek additional guarantees

Certification consultant review/approval of change orders, material substitutions and construction practice changes

Request, collect and retain data and documentation.

Legal Issues:

Certified or “Certifiable”? Development and construction

Permitting and incentives

Permitting and Incentives

Zoning, building and development codes Homeowner/Community Associations

Legal Issues:

Certified or “Certifiable”? Development and construction Permitting and incentives

Financing

Financing

Appraisal Lender initiatives and incentives

Legal Issues:

Certified or “Certifiable”? Development and construction Permitting and incentives Financing

Marketing green

Marketing Green

Brokers, agents and marketing professionals Determine proper message Address marketing message in contracts. FTC “Green Guides”

Substantiated – “reasonable basis” Clear and qualified Do not overstate benefits.

Common problems: Registered – Pre-certified – Certified Implying certification is guaranteed Implying environmental or financial superiority.

Legal Issues:

Certified or “Certifiable”? Development and construction Permitting and incentives Financing Marketing green

Green Leasing

Green Leasing Identify green features Tenant (LL) acceptance of restrictions or

limited regulation of its operations Tenant (LL) compliance with requirements Remedies and damages Tenant (LL) payments to cover cost. Tenant (LL) data collection and reporting

Green Leasing: Work letter

Comply with LL requirements for construction waste management and recycling

Certify commissioning of all HVAC, lighting and energy systems and provide data to LL

Utilize: Energy-efficient lighting fixtures and occupancy-

based controls Low-flow toilets, waterless urinals and sensor-

controlled faucets Wood shall be FSC-certified Paints, stains, sealants and adhesives shall be water-

based, low- or no-VOC Carpet systems shall be Green Label Plus

Green Leasing: Sharing energy savings(a) LL will install, at LL’s sole cost, energy efficient

features to reduce electricity usage as more particular described in Exhibit A.

(b) LL will deliver to T written certification from licensed engineer setting forth projected monthly energy savings (“Monthly Savings”).

(c) On the day T is first obligated to pay rent and continuing throughout the term of the Lease, T shall pay to LL, as additional rent, __ percent (__%) of the Monthly Savings.

Green Leasing: Green Cleaning

Products must be: Environmentally safe, phosphate-free, non-corrosive, non-

flammable, low-VOC emitting, fully biodegradable “Green” (per Green Seal GS-37 Standard) Packaged ecologically

Paper products must be 100% recycled content Garbage bags must be biodegradable or compostable Vacuum cleaners must be capable of removing 99.97% of

harmful particles, including dust, mold spores and most microscopic respiratory irritants and allergens.

Tenant will properly separate recycling material from trash Tenant will provide MSDS to LL for all janitorial supplies

provided by T

Green Leasing: Double-edged Sword?

T may have additional claims against LL under quiet enjoyment provision

LL may be held to higher standard for the green features and building performance.

Legal Issues:

Certified or “Certifiable”? Development and construction Permitting and incentives Marketing green Green Leasing

Buying and selling green buildings

Buying and Selling Green Buildings

LEED-NC is no guarantee of performance

Buyers will demand information

Test

Green Claims and Litigation Claim scenarios Litigation

Shaw Dev. v. Southern Bldrs AHRI v. City of Albuquerque

Green Claims and Litigation Architect agreed that design would

achieve LEED-Gold. Developer advertised that building would reduce operating costs and provide healthier indoor environment. Building failed to achieve Gold certification due to budget and scheduling problems. Developer sued claiming Architect had guaranteed the certification level.

Green Claims and Litigation Following installation of a green roof,

structural instability resulted in water infiltration causing significant damage. Structural engineer claimed that he had not been provided the proper information related to the green roof. Contract with structural engineer limited its liability to an amount less than the cost to repair.

Green Claims and Litigation Law firm hired an architect to design

sustainable office space. The architect, in reliance on information provided by manufacturers, incorporated products into the design. Local press investigated the products and claimed they were not as “green” as advertised. Law firm sued Architect claiming its reputation was damaged.

Green Claims and Litigation County government required recycling of

construction materials. Architect agreed to monitor construction services. Construction contractor decided that recycling caused excessive delays and that declining price for recycled materials justified dumping construction waste in another state. County took action against Owner, and Owner sued Architect for failing to properly monitor construction services.

Green Claims and Litigation

Shaw Dev. v. Southern Bldrs

AHRI v. City of Albuquerque

QUESTIONS?QUESTIONS?

Robert C. NewcomerThe Lang Legal Group LLCrnewcomer@langlegal.com

404.320.0990