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Green, Sustainable, High Performance Building…
Whatever You Call It, It’s Here to Stay.   
By Carrie L. Ciliberto

Green building (aka sustainable building or high performance building) is booming, at least as reported by the U.S. Green Building Council (USGBC) in its September 2015 Green Building Economic Impact Study that was published recently.

The USGBC report shows that from 2011 to 2014, $167.4 billion in GDP, 2.1 million jobs and $147.7 billion in labor earnings were directly related to sustainable building in the United States (US). In looking to the future, they project that from 2015 through 2018, $303.4 billion in GDP, 3.9 million jobs, and $268.4 billion in labor earnings will be directly attributable to green construction in the US. These figures reflect increases of approximately 81%, 86% and 82%, respectively over the next few years. That growth in green building spending is outpacing non-green construction spending, with LEED construction accounting for approximately one-third of the included data.

The USGBC report opines that an additional investment of two percent (2%) above traditional construction costs to support green building measures has been shown to yield a building lifecycle savings of more than 10 times the amount of that additional investment. In the past few years, the federal government and a majority of states have passed green building policies, many of which include incentives to owners who incorporate sustainable and high performance products and measures in the new and existing buildings, and others that are mandatory requirements.

In addition to the potential financial and natural resource benefits, green buildings have been found to enhance work and life quality. While readers are likely more familiar with green building certification options such as LEED, Green Globes and similar designations, another type of certification is the International WELL Building Institute’s (IWBI) WELL Building Standard. According to the IWBI website, the standard was launched in late 2014 and is a “performance-based system for measuring, certifying, and monitoring features of the built environment that impact human health and well being, through air, water, nourishment, light, fitness, comfort, and mind”.

Occupants at the first WELL-certified office were surveyed and the results were overwhelmingly positive. More than 90% reported that the WELL-certified space created a positive effect on their health and wellbeing, as well as a positive impact on their business performance with 80+% saying that they “feel more productive”. This third-party certification is provided through IWBI’s collaboration with Green Building Certification Inc., which administers the LEED certification process.

What all of this data suggests is that owners have a vested interest in at least considering green building today and beyond. In order to make the right decisions, the parties (and the owner in particular since s/he has the most to gain or lose in the end) should carefully consider the project priorities, goals, measurable targets, costs, and benefits. Additionally, the project-specifics need to be taken into consideration. For example, the project’s location can influence the feasibility of certain techniques or processes, as well as the ease in availability of certain materials.

Once the owner has determined the green objectives, it is critical that all project participants understand their respective roles and responsibilities. Understanding expectations in theory is one thing, but making sure that those understandings are memorialized in a detail writing (aka the contract) is crucial. The contract is the vehicle through which the parties’ respective roles and responsibilities in facilitating or achieving the owner’s green goals are clearly defined. This includes what green goals are required and who is responsible for the various aspects of reaching those goals. Key components include ensuring that all steps of the process are clearly documented in as much detail as possible including not only design and construction, but also the data gathering and paperwork necessary to obtain any desired green building certifications.

When published in 2009, the ConsensusDocs 310 Green Building Addendum (GBA) was the first industry-standard contract to comprehensively address sustainable design and construction. The ConsensusDocs Coalition knew that with the rise in green building, there was a corresponding increased need for a fair and balanced standard contract to assist parties in this endeavor. Readers can register at www.ConsensusDocs.org to download a sample of the ConsensusDocs GBF.

The ConsensusDocs GBA “provides the decision making, communication, and documentation link among the parties so that nothing is hidden and nothing is ignored during the planning, design, and construction process,” states Stephen M. Charney, co-managing partner of Peckar & Abramson, in Victor O. Schinnerer & Company, Inc.’s Constructive Comments newsletter. “It is a flexible document that can be used on projects where LEED, Green Globes, or some other third-party certification is the goal, or just where the project client wants a high performance building that will be measured by objectively looking at its execution and operation.”

Unique to ConsensusDocs is the inclusion of a party designated as the “Green Building Facilitator” or “GBF”. The GBF is identified as the person(s) and/or entity(ies) who “coordinate and facilitate the process” of achieving the owner’s green building goals. This enables the owner to have a coordinated process in place to help ensure project success. The GBF “could be the architect/engineer, contractor, construction manager, or even a third-party advisory/independent consultant, as long as the GBF is not an in-house employee or staff member of the owner,” states Martha L. Perkins, Esq., general counsel for the National Association of Surety Bond Producers (NASBP), in AGC’s Constructor magazine.

When vetting a green building contract, it’s also important to make sure that the risk allocations are appropriate. For example, a contract that holds a contractor responsible for improper design is generally neither appropriate nor insurable. Another consideration is whether the contemplated green technologies and materials are new or experimental, which potentially can give rise to a whole host of issues throughout the building’s lifecycle.

While green/high performance/sustainable building is on the rise, litigation has been sparse to date. One often-cited case considered green building litigation, at least in part, is Southern Builders, Inc. v. Shaw Development, LLC filed in Maryland. The dispute arose from a $7.5 million mixed-use project where Southern Builders filed a mechanics lien against Shaw Development for nonpayment. Shaw alleged breach of contract due to failure to achieve the desired LEED certification.

While non-payment and breach of contract claims are not uncommon in the design and construction industry, the inclusion of green building factors is rather novel. A more recent case involving green building, again at least involving green issues in part, is The Chesapeake Bay Foundation, Inc., et. al. v. Weyerhaeuser Company also filed in Maryland. This case involves one of the first projects to be certified LEED Platinum and claims included breach of contract due to alleged “defective, inferior or unsuitable building products.” Litigation can arise in a variety of ways at least ancillary to green building, including non-compliance with regulatory requirements; inappropriate or ineffective techniques employed; lack of desired certification; misrepresentation; inappropriate, ineffective or defective materials; and a host of other traditional and specific-to-green building issues such as withheld payments like in the Shaw case.

While there have been only a handful of reported cases regarding green building to date, and no reported appellate court decisions, it is logical to assume that unless parties use solid contractual foundations that clearly define green objectives and the parties roles and responsibilities, disappointment, frustration, disputes and litigation likely will increase.

In addition to clear and open dialogue between the parties, the ConsensusDocs 310 Green Building Addendum can play a key role in helping to ensure sustainable projects stay on track. As aptly stated by Jeremy Oppenhein and Martin Stuchtey in their recent Fortune magazine article, “Like it or not, sustainability is now core to your business.” So readers would be wise to learn about and incorporate best practices quickly and thoroughly. Time will tell whether litigation increases due to green building, but taking the extra time and effort to discuss and memorialize in writing the expectations of the project participants can go a long way to minimizing negative impacts.

About the author: Carrie L. Ciliberto, Esq. is Senior Director and Counsel of Contracts and Construction Law for the Associated General Contractors of America (AGC), and Deputy Executive Director for ConsensusDocs - the only standard contracts written by a coalition of 40+ design and construction industry organizations. Ms. Ciliberto was the principal of Ciliberto & Associates, LLC, providing natural resources, environmental and water law counsel for 10+ years. She is licensed in Colorado, DC, and federal courts including the U.S. Supreme Court. She frequently speaks at industry events around the nation and has authored numerous industry articles. You can reach Carrie at cilibertoc@agc.org.


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