What are the Broader Implications of DC's Green Performance Bond?
I recently had the pleasure of sitting down with Chris Birk of Surety Bonds Insider to discuss surety issues and the green building industry, particularly related to the D.C. Green Building Act.
As a quick reset, the D.C. Green Building Act of 2006 requires owners put up "performance bonds" that guarantee LEED certification for certain projects. The surety industry has raised concerns that these types of bonds do not exist. My favorite question was when Chris asked me about the implications of the D.C. Green Building Act "performance bond" issue for the broader green building industry:
Chris Birk: "What sort of long term, beyond the District implications are there in this?"
Chris Cheatham: "This same issue will pop up wherever there is a green building regulation being proposed or pushed forward. Whenever you are mandating some type of certification, some type of green building certification, you have to have an enforcement mechanism. Because if you don't then people won't comply and its pointless to have the regulation. You have to have some type of penalty."
Related Links:
Surety Bonds Sit-Down: The Future of Green Building with Chris Cheatham (Surety Bonds Insider)
Just look at Pittsburgh's green building mandate and the way they have chosen to enforce it. There is no enforceable contractural risk transfer mechanism that exists to support such a mandate and the penalties for non-compliance are severe.
What if rather than having a performance bond - or even LEED requirements - city building codes were updated to reflect latest ICC and ASHRAE requirements? That would accomplish same goal of buildings built green, and would be enforceable through the building permit review process and building inspections occurring pre-issuance of a certificate of occupancy. No need for any bonds; and failure to build according to code means no occupancy allowed. Seems like it would get to the same end result - more efficient buildings - with less hassle.
ASHRAE requirements? That would accomplish same goal of buildings built green, and would be enforceable through the building permit review process and building inspections occurring pre-issuance of a certificate of occupancy. No need for any bonds; and failure to build according to code means no occupancy allowed. Seems like it would get to the same end result - more efficient buildings - with less hassle.