GREEN BUILDING DESIGN

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GREEN BUILDING DESIGN CONSTRUCTION

• A LEGAL PERSPECTIVE

Presented to
AGC of TN
Middle TN Branch
September 16, 2008
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Overview

• What is a Green Building?
• LEED Today
• LEED Future
• Why Build Green?
• Design Construction of a Green Building
• Implementing LEED GCs Role
• Enhanced Risks When Building Green
• Effectively Managing, Mitigating Allocating
  Green-Related Risks
• Issues Related to Design Construction of a
  Green Building
• Exposure for Contractors
• Abercorn Case Study
• Summary Recommendations

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What is a Green Building?
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• High-performance building that reduces its
  environmental footprint through sustainable site
  selection and conservation of energy and
  resources, while improving the health and
  productivity of its occupants.
• 3rd Party Certification (USGBC-LEED Energy Star
  Green Globes)
• LEED is currently the preeminent 3rd party
  certification program.
• Leadership in Energy and Environmental Design
  (LEED)
• 5 Major Categories
• Sustainable Site Development
• Water Savings
• Energy Efficiency
• Materials Selection
• Indoor Air Quality

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LEED - Today
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• Current Rating Systems
• New Construction (NC)
• Commercial Interiors (CI)
• Existing Buildings (EB)
• Core Shell (CS)
• Homes (H)
• Neighborhood Development (ND)
• Numerous pilot programs (e.g. Retail)
• Certification Levels
• Certified 26-32 points
• Silver 33-38 points
• Gold 39-51 points
• Platinum 52-69 points

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LEED - Future
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• LEED 2009 Changes (Version 3)
• New 110 point scale
• Certain credits with more environmental impact
  now worth multiple points, with intention to
  reward owners for employing these strategies
• Water Efficiency Prerequisite 20 overall water
  use reduction (excluding irrigation)
• 4 additional points available through development
  density and community connectivity (intent to
  drive development toward infill sites)
• 4 regional points into NC

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Why Build Green?
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• Advantages of Buildings vs. Conventional
  Buildings
• Cost Savings (First-Cost Savings Ongoing
  Operating Expense Reductions)
• Minimize Impact on Environment
• Enhanced Health Productivity of Occupants
• Increased Value Lease-Up Rates
• Community Social Benefits
• Other Owner Benefits (Lender Incentives Tax
  Abatements Etc.)

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• Green Will Become Standard
• Required by Government
• Code in Europe
• Washington, DC and Pasadena, CA Require certain
  private development projects to meet LEED
  requirements.
• Boston, MA All new and rehabilitation
  construction projects gt 50,000 s.f. must earn at
  least 26 LEED points.
• Dallas, TX Government buildings gt 10,000 s.f.
  must achieve LEED silver Rating. New ordinance
  recently adopted applicable to private
  development
• Chamblee, GA All new construction gt 20,000 s.f.
  must achieve LEED certification as a condition of
  C.O.
• Los Angeles, CA Commercial projects gt 50,000
  s.f. must be LEED certified.
• San Francisco, CA Most stringent green building
  ordinance to date (enacted August, 2008). Newly
  constructed commercial buildings gt 5,000 s.f.,
  residential buildings gt 75 ft. in height, and
  renovations of buildings gt 25,000 s.f., must meet
  LEED or other 3rd party green standards.

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• Required by Owners
• Lender Requirements Expectations
• Overhaul of CMBS Standards on Wall Street
• Green Programs
• Incentive Programs
• Tenant Occupant Expectations
• Corporate green policies
• Reputation/marketing
• Health productivity of occupants
• Permitting Incentives
• Expedited permitting process
• Variances
• Tax credits abatements
• Growing Private Equity Demand/Requirement

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• Any Trends Away from Green Building?
• Short-term Pending suit regarding
  constitutionality of green building laws.
• Albuquerque, NM suit by HVAC contractors, et al.
  Misguided perception that green building
  standards will negatively impact contractors
  business and right to earn a living.
• Long-term Green building will become the norm in
  U.S.
• Legislation will become Code
• Lender expectations
• Tenant expectations
• Reputation in community

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Design Construction of a Green Building
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• Green Building vs. Conventional Building
• Newer Materials Technologies with Less of a
  Track Record
• Enhanced Operations Procedures During
  Construction
• Activity Pollution Control (ESC Plan)
• Construction Waste Management Plan
• Diversion of Waste from Landfill
• Recycling and/or Salvaging On-Site
• Re-Use of Materials
• Indoor Air Quality Management Plan
• Stringent Requirements Associated with 3rd Party
  Certification (LEED)

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Implementing LEED GCs Role
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• Prerequisite 1 Construction Activity Pollution
  Prevention
• Create and implement an Erosion and Sedimentation
  Control (ESC) plan for all construction
  activities associated with the project.
• Credit 5.1 Protect or Restore Habitat
• On greenfield sites, limit all site disturbance
  to 40 feet beyond the building perimeter 10 feet
  beyond surface walkways, patios, surface parking
  and utilities less that 12 inches in diameter 15
  feet beyond primary roadway curbs and main
  utility branch trenches and 25 feet beyond
  constructed areas with permeable surfaces (such
  as pervious paving areas, stormwater detention
  facilities and playing fields) that require
  additional staging areas in order to limit
  compaction in the constructed area.
• On previously developed or graded sites, restore
  or protect a minimum of 50 of the site area
  (excluding the building footprint) with native or
  adapted vegetation.

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• Credit 2.1 Construction Waste Management Divert
  50 from disposal
• Recycle and/or salvage at least 50 of
  non-hazardous construction and demolition.
• Develop and implement a construction waste
  management plan that, at a minimum, identifies
  the materials to be diverted from disposal and
  whether the materials will be sorted on site or
  commingled.
• Credit 2.2 Construction Waste Management Divert
  75 from disposal
• Credit 3.1 Materials Reuse 5
• Use salvaged, refurbished or reused materials
  such that the sum of these materials constitutes
  at least 5, based on cost, of the total value of
  materials on the project.
• Credit 3.2 Materials Reuse 10

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• Credit 4.1 Recycled Content 10 (post-consumer
  ½ pre-consumer)
• Use materials with recycled content such that the
  sum of post-consumer recycled content plus
  one-half of the pre-consumer content constitutes
  at least 10 (based on cost) of the total value
  of the materials in the project.
• Credit 4.2 Recycled Content 20 (post-consumer
  1/2 pre-consumer)
• Credit 5.1 Regional Materials 10 Extracted,
  Processed, and Manufactured Locally
• Use building materials or products that have been
  extracted, harvested or recovered, as well as
  manufactured, within 500 miles of the project
  site for a minimum of 10 (based on cost) of the
  total materials value.
• Credit 5.2 Regional Materials 20 Extracted,
  Processed, and Manufactured Locally

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• Credit 6 Rapidly Renewable Materials
• Use rapidly renewable building materials and
  products (made from plants that are typically
  harvested within a ten-year cycle or shorter) for
  2.5 of the total value of all building materials
  and products used in the project, based on cost.
• Credit 7 Certified Wood
• Use a minimum of 50 of wood-based materials and
  products, which are certified in accordance with
  the Forest Stewardship Councils (FSC) Principles
  and Criteria, for wood building components.

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• Credit 3.1 Construction IAQ Management Plan
  During Construction
• Develop and implement and Indoor Air Quality
  (IAQ) /management Pan for the construction and
  pre-occupancy phases of the building.
• During construction meet or exceed the
  recommended Control Measures of the SMACNA IAQ
  Guidelines for Occupied Buildings under
  Construction, 1995, Chapter 3.
• Protect stored on-site or installed absorptive
  materials from moisture damage.
• If permanently installed air handlers are used
  during construction, filtration media with a MERV
  of 8 shall be used at each return grille. Replace
  all filtration media immediately prior to
  occupancy.

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• Credit 3.2 Construction IAQ Management Plan
  Before Occupancy
• Option 1 Flush Out
• After construction ends, prior to occupancy with
  all interior finishes installed, supply a total
  air volume of 14,000 cu.ft. of outside air per
  sq.ft. of floor area while maintaining and
  internal temperature of at least 60F and
  relative humidity no higher than 60
• If occupancy is necessary prior to completion of
  the flush out, the space may be occupied
  following delivery of 3,500 cu.ft. of outdoor are
  per sq.ft. Once occupied, space must be
  ventilated at a minimum of 0.30 cfm/sq.ft.
• Option 2 Air Quality Testing
• Conduct baseline IAQ testing using testing
  protocols consistent with the United States
  Environmental Protection Agency Compendium of
  Methods for the Determination of Air Pollutants
  in Indoor Air.
• Traditionally, developer and architect drive the
  ship, but LEED requires integrated planning
  between design and construction. General
  contractor will need to play a larger role in the
  transition from DDs to CDs.

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• Ask for a LEED checklist and modify existing
  practices based on which points are targeted.
• For some points, it is best practice to implement
  overall program changes.
• Construction waste management
• IEQ management plan can be a set of standard best
  practices employed on all job sites.
• Construction activity pollution prevention
• Develop policy for sourcing material that
  maintains integrity of targeted points.
• MR credit 4.1 and 4.2 Recycled Content 5.1 and
  5.2 Regional Materials
• EQ credit 4.1-4.4 low-emitting materials
  (adhesives, sealants, paints, coatings, carpet
  systems, and composite wood and agrifiber)
• General Conditions/Pricing should reflect
  additional time and effort for targeted points.
• Materials and Resources 4.1 Recycled Content
• Sustainable Sites 5.1 Protect or Restore Habitat

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Enhanced Risks When Building Green
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• Design Construction Issues
• Failure of innovative materials to meet
  performance requirements
• Improper installation due to inexperience of
  contractors
• Unanticipated performance failures due to design
  or construction flaws.
• Construction Delays
• Failure to maintain adequate records
• Failure to Achieve 3rd Party Certification
• Owner Impacts
• Loss of Financing
• Loss of Permitting or Incentives
• Loss of Tenants

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• Contractual Issues
• Ambiguity in contracts as to expectations,
  responsibilities and liabilities of parties
• Enhanced obligations and liabilities of
  architects and contractors
• Greater exposure to litigation and consequential
  damages
• Failure of Building to Meet Ongoing Performance
  Requirements
• Failure to properly train operations personnel
• Lack of continual measurement verification
• Lack of performance of materials or technologies
• Unanticipated side-effects
• Failure to properly regulate tenant behavior
  under leases (need experienced green leasing
  counsel)

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Effectively Managing, Mitigating Allocating
Green-Related Risks
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• Clearly Define Roles Responsibilities of
  Various Parties (architects, engineers
  contractors, commissioning agent, etc.) Through
  Design Charrettes
• Contracting Process
• Clearly define roles and responsibilities of
  parties in contracts
• Contracts for project team, when aggregated,
  should include everything required to complete
  project with no overlap
• Specify expectations regarding construction waste
  management (salvaging recycling diversion from
  landfill measurement)
• Clearly specify the types of materials to be used
• No change or substitution of materials unless
  approved by owner, contractor and LEED consultant
• Responsibility for training operating personnel
• Record keeping
• On-going measurement verification
  responsibilities

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• Exposure For Contractors
• Standard of Care Liability
• Enhanced standard of care of architect and
  contractor in green building context
• Failure of materials or technologies to perform
• Compliance with new rapidly evolving green
  legislation
• Usually required when construction permit
  application submitted
• Can conceivably cause project to be re-designed
  and/or reconstructed
• Should take adequate measures to limit liability
• Limit obligations to compliance with legislation
  in effect at time of contract execution
• Owner indemnity for any issues arising from
  newly-enacted legislation

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• Damages
• Great exposure to consequential damages in green
  building context (loss of 3rd party
  certification, governmental incentives (tax
  credits/abatements), financing and/or tenants
  reputation)
• Consider liquidated damages provision if damages
  not quantifiable (Caps on damages negotiable)
• Warranties
• Define with specificity the breadth of the
  coverage
• In green building context, may cover
  unanticipated green-related obligations, such as
  innovative materials and technologies required
  under LEED

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• Indemnity
• In green context, may expose architect and
  contractor to greater liability
• Liability with respect to non-performance of
  innovative materials and technologies
• Exposure to broader consequential damages (loss
  of financing, tenants, etc.)
• Must confirm if covers green aspects of project
• Thoroughly investigate materials and technologies
  being used be consistently sensitive to LEED
  requirements

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• Keep Detailed Accurate Records (LEED
  Demonstrate Performance)
• Assure Adequate Measures in Place DURING AND
  AFTER Design Construction Process to Ensure
  Design, Construction and Performance of Building
  Meets 3rd Party Certification Requirements and
  Expectations of Parties
• Proper training of operating personnel
• Operation manuals
• Periodic testing procedures
• Ongoing measurement verification
• Ensure a LEED AP Consultant is Engaged by Owner
  Proper Allocation of Responsibilities for LEED
  Issues

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• Education About LEED
• Insurance Performance Bonds
• Insurance
• Design Team Errors and Omissions Insurance
  (EO)
• Protects against claims that insured did not
  perform up to required standard of care (level of
  care and skill of similar professionals in same
  locality)
• Insures against design defects, not construction
  defects
• Contractors Commercial General Liability
  Insurance (CGL)
• Typically covers construction defects caused by
  negligence of contractor or subcontractors
  (insures negligence, not perfection)
• Owner Property Insurance in a Builders Risk
  Policy
• Traditionally, excludes losses resulting from
  design defect or faulty workmanship

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• Green-Related Issues Regarding Exclusions from
  EO and CGL Policies
• Typically, the standard of care (i.e.,
  negligence) is not sufficient to cover the
  enhanced green-related obligations, so must
  confirm extent of coverage, and must thoroughly
  investigate the materials and technologies being
  used, and consistently be sensitive LEED
  requirements
• No coverage for the following
• Warranties or guaranties or claims arising
  therefrom
• Contractual obligation to achieve a certain LEED
  Rating (i.e., LEED Silver or Gold)
• Contractual obligation to cause certain energy
  reductions or similar outcomes
• Certifications, declarations or warranties in
  connection with LEED template
• For the foregoing reasons, contractors and design
  professionals must be very prudent as to the
  contractual obligations they subject themselves
  to, as the same may not be covered by insurance.

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• New products out on the market
• Firemans Fund Amended in 2006 to include green
  building specific coverage
• Aon Corporation Green Building Property Program
  assures reimbursement for repair or replacement
  of green building components, enabling owners to
  upgrade to environmentally efficient components
  (covers certified and non-certified buildings).
  Tied to local government mandates, as well as
  LEED and other recognized standards
• XL Insurance Sustainable Property Endorsement
  allows insured to collect an amount greater than
  value of damaged property if replaced with
  environmentally acceptable substitute (tied to
  LEED)
• Travelers Just recently joined USGBC. Likely to
  lead to additional green building insurance
  products in the market
• Performance Bonds
• Guaranty, not insurance
• Guarantees owner that a contractor will perform
  as required by its contract, and will pay for
  required materials and labor
• Insurance companies may be reluctant to guarantee
  the enhanced contractual obligations of
  contractor in green building context

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Case StudyAbercorn CommonSavannah, Georgia
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Abercorn Plaza in the 80s
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Abercorn Common Today
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First LEED Certified Retail Shopping Center in
U.S. (Awarded LEED Silver CS) 2007
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First LEED Certified McDonalds In U.S. (Awarded
LEED Gold CS)
GOLD
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Sustainable Features
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Vegetated Roof White Roof Membrane to
Reflect/Absorb Heat and Keep Center Building
Cooler
White roof membrane reflects heat, keeping the
center cooler
Concrete paving reflects heat, keeping the center
and parking lot cooler
Pervious pavement diverts storm water
Abercorn Common Shopping Center, Savannah GA.
A Case Study
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Pervious Pavement

• Almost 1 acre of pervious pavement, which
  allows water to infiltrate the ground
  (runoff coefficient of .3 vs .95 for
  traditional concrete)
• Decreases the need for municipal stormwater
  treatment
• Helps remove sediment and pollutants
• Decreases site runoff by 25

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• The Cistern harvests rainwater from rooftops,
• 5 million gallons annually

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• Low-flow toilets Faucets and waterless urinals
  reduce water use
• Tighter envelope, better glazing high
  efficiency HVAC lighting to reduce energy
  consumption
• Located ¼ mile from 3 bus stops, preferred
  parking for hybrid vehicles bike racks
  changing facilities encourages use of
  carpooling alternate transportation

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Indoor Environmental Quality

• Low-emitting paints, sealants and adhesives used
• Zero or low volatile organic compounds (VOCs)
• No smoking (including restaurants) before GA
  became non-smoking
• Increased ventilation 30 over ASHRAE 62

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Waste Reduction

• Stringent construction waste management practices
  prevented 85 of construction waste from
  landfills
• Over 6,000 tons were recycled or reused

Abercorn Common Shopping Center, Savannah GA.
A Case Study
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Materials and Resources

• Over 70 of materials manufactured within a 500
  mile radius
• Over 20 recycled materials by cost
• FSC Forest Stewardship Council Certified Wood
  used at McDonalds

Abercorn Common Shopping Center, Savannah GA.
A Case Study
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Summary

• Abercorn Common is
• 30 more energy efficient than code (ASHRAE
  90.1)
• 55 more water efficient (than 1992 Energy Policy
  Act)
• Healthier indoor air less toxins and more fresh
  air
• Has 30 Less stormwater runoff
• Uses no potable water for irrigation

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Summary Recommendations

• Green Building is here to stay
• LEED rating system is likely standard
• Contractor directly affects several prerequisites
  and point
• Enhanced risk issues for contractors
• Knowledge and careful allocation of contractual
  liabilities and obligations is critical
• Rapidly evolving marketplace

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Robert E. Stanley, Esq.
1170 Peachtree Street, Suite 750
Atlanta, GA 30309
(404) 835 - 6201
rstanley_at_seblaw.com
www.seblaw.com