On Wednesday, we looked at the best case scenario that can result from the D.C. Green Building Act "performance bond" requirement. We assumed that the green building "performance bond" was created. The scenario was not pretty and involved extensive LEEDigation™ .
Today we look at the worst case scenario. Imagine no new construction projects in D.C. Imagine an emergency meeting with Mayor Fenty, Councilmember Cheh, major developers and the Surety and Fidelity Association of America and the National Association of Surety Bond Producers. Sound far fetched? It’s not. I call this scenario the "Vancouver Catch 22." See, Vancouver went down the same road as Washington, D.C. Many British Columbia jurisdictions, including Vancouver, began mandating green roofs. Simultaneously, the Homeowner Protection Office required homeowner’s insurance covering roofs for new developments. A resourceful government official with the Homeowner Protection Office did some digging and sent out a letter emphasizing that insurers would not issue policies covering green roofs. What was the result?
Green roofs not covered by B.C. insurers No coverage means no new residential developments. This has left developers caught between the possibility of being mandated by city governments on one hand and shut out by insurers on the other.
In the end, the Homeowner Protection Office had to call a meeting with the insurers, the building industry and government officials to find a solution. Quite embarrassing. A similar scenario could arise in D.C. if the City mandates green buildings and requires green building "performance bonds" but sureties refuse to issue the bonds. I know D.C. is working hard to resolve the bond language so this will be my last post for some time on this issue. Which scenario do you think is most likely to occur?