Maryland Green School Causes Delay, Extra Costs

Last week, I gave a presentation on green building law to legal counsel for D.C metropolitan jurisdictions.  One of the things that I said, and have repeated to other groups, is that green schools will be a hotbed for initial LEEDigation (see slide 25).  

Want to see an example of what I am talking about? 

The one-year delay in the opening of a new elementary school in Upper Marlboro was largely caused by school system planners' struggles to meet state-imposed environmental standards that were established last year, a school development officer said.
 
The Prince George's County Public Schools' Capital Improvement Program office submitted a final building permit for approval later than expected because designers had to incorporate changes in Leadership in Energy and Environmental Design standards, said CIP officer Rupert McCave.
 
"It changes over the year because everyone is still growing and learning the new requirements," McCave said. "You can talk to any school district in Maryland and they'll tell you it's a learning curve."

 

Why does a one year delay to construction matter?  A one year delay results in increased design and construction costs.  Design and construction firms want to be compensated for the delay.  Owners, in this case a school district, blame the designer and/or contractor for the delay. 
"Economically, [the delay] concerns me," said Board of Education member Donna Hathaway Beck (At-large), who said she asked the school system's chief operating officer, Lawrence Fryer, about the delay at a CIP meeting early in April. "We're paying money now, but we're not going to be using the building until next year."

 

The key to managing your green building risk is to understand the owner's expectations of the green building.  You don't want the owner making comments like this:
"It's just disappointing, and you remind them that this doesn't happen again," she added.

Disappointed owners of green buildings result in LEEDigation.  How are you managing green building expectations? 

Photo:  Dean Terry

GSA's Green Stimulus Projects

General Services Administration, I am impressed. 

The American Recovery and Reinvestment Act mandated that the GSA determine projects that would receive $5.5 billion by April 3, 2009.  The GSA beat this mandate, making its list of projects available on April 2, 2009 (hat tip to the Washington Business Journal for breaking the story ).

If you were hoping to benefit from the GSA projects in the D.C. metro area, you have a much better opportunity of working on these projects in the District than in other surrounding localities.  D.C. is set to receive $1.2  billion for GSA projects.  According to the Washington Business Journal, "the amount of work slated for D.C. appears to be more than any other jurisdiction. By contrast, GSA plans to modernize only five buildings for $66 million in Virginia and two buildings for $25 million in Maryland."

A full list of GSA projects receiving funding is available here.  Here's a list of GSA projects in D.C., Virginia and Maryland slated to receive funding:

Washington D.C.

  • Department of Homeland Security headquarters, St. Elizabeths Hospital west campus, Southeast, $450,000,000
  • Department of Commerce Herber Hoover Building (phase II and III), 14th Street and Constitution Avenue NW, $225,638,000
  • GSA headquarters (phase I), 1800 F St. NW, $161,293,000
  • Lafayette Building (phase I), 811 Vermont Ave. NW, $128,827,000
  • Mary Switzer Building (phase II), 330 C St. SW, $68,241,000
  • Department of Interior Building (phase IV), 19th & C streets NW, $63,450,000
  • Department of State Truman Building, 2201 C St. NW, $14,735,000
  • Veterans Administration, $1,499,000
  • Lyndon B. Johnson Federal Building, $4,162,000
  • Elijah Barrett Prettyman Courthouse, $3,662,000
  • IRS Building, $1,506,000
  • Ariel Rios Fed Building, $1,337,000
  • GSA-Regional Office Building, $592,000
  • Wilbur J Cohen Building, $16,701,000
  • Winder Building, $1,865,000
  • Theodore Roosevelt Building, $23,551,000
  • Robert C. Weaver Building, $3,663,000
  • Howard T. Market National Courts, $2,070,000
  • Tax Court, $8,083,000
  • 601 - 4th St, NW, $2,150,000
  • US Secret Service Headquarters, $1,601,000
  • EPA East and West and Connecting Wing, $4,564,000
  • Reagan ITC and Garage, $16,161,000

Virginia

  • Franconia Warehouse, Franconia, $9,512,000
  • Martin V.B. Bostetter Courthouse, Alexandria, $1,699,000
  • Advanced Systems Center, Reston, $690,000. 
  • Poff Federal Building, Roanoke, $50,968,000
  • Robert Merhige Courthouse, Richmond, $3,500,000

Maryland

  • New Carrolton Federal Building, Lanham, $1,647,000 
  • CMS HQ Complex, Woodlawn, $23,723,000

The federal website, www.fedbizopps.gov, should have more information about these projects very soon.  Any luck finding information? 

Wondering how to successfully bid these projects?  My "Getting Green from the Stimulus" slideshow is a good start.

Photo Credit:  JPhilipson

Getting Green from the Stimulus

As promised, below is the slideshow from last week's "Green in the Stimulus" presentation as part of Rutherfoord's Trends in Green Building seminar.  Unfortunately, I have not figured out how to synchronize audio files with a slideshow - maybe next time.

I had two goals when I created this presentation:

(1) Explain the green building provisions in the stimulus package.
(2) Convey how parties can prepare themselves now to take advanage of resulting green buiding opportunities. 

You can be the judge whether I succeeded.  The slides, by themselves, do not do the presentation justice.  If you are interested in hosting the "Green in the Stimulus" presentation for your company, please contact me at chris@greenbuildinglawupdate.com.  The presentation can be tailored to your specific state or region and industry. 

 

The Stimulus: Build Relationships Now

Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

I am wrapping up my "Green in the Stimulus" presentation for tomorrow and wanted to provide more information that may benefit your company as you seek out green stimulus projects. 

As you prepare to bid federal and state projects, relationships will be key.  You will need relationships with general contractors or subcontractors to facilitate your bid.  Relationships with the government officials that are creating or letting the government projects can also be helpful.  I am convinced that in the stimulus bidding process, information is power.  Government officials can provide information about requirements and preferences for green stimulus projects. 

How do you develop relationships with these government officials?  Here is an idea. 

Like Virginia, Maryland has developed a stimulus website .  Unlike the Virginia stimulus website, Maryland does not provide information about proposed stimulus projects.  But other information on the website may prove valuable. 



The Governor's office will be providing "Workshops for Local Leaders" related to the stimulus package.  The event is free.  You do not have to register. 

If you are in Maryland and you want to learn about stimulus projects and talk to the officials in charge of these projects, why would you not go to one of these events? 

Related Links: 

A Week of Epiphanies: I Don't Mean to Diminish This But. . .

In continuing our week of epiphanies, here’s another one that struck us here at Green Building Law Update:  should governments consider getting out of the green building certification process? 

Yes, I realize this epiphany is out there and that practically every state has implemented some sort of green building regulation.  Over the past few months, we have profiled green building regulations in D.C., Virginia, Indiana and Maryland, to name a few.  But the more I think about these regulations, the more I become concerned that governments should not mandate certification, particularly of public projects.

Apparently, I am not the only one with these concerns.  For example, this article cites an Evanston, Illinois official that is concerned with certification cost:

At the meeting, Evanston residents spoke about the Green Building Ordinance, which was drafted by the Evanston Environment Board. . . .  Ald. Lionel Jean-Baptiste (2nd) cited the need to look closer at the cost of the ordinance.

"It's difficult in this current economic climate for anyone to build," he said. "We need to look more into the cost, and have greater discussion at the committee level." 

And here is another example, this time a LaCrosse, Wisconsin official voicing concern over the costs for green building certification:

“When I think about all this discussion about certification and not certification, I think we’re going to do all this good stuff so let’s just declare it a green building and go home,” Supervisor John Medinger said during the Law Enforcement Center Construction Committee meeting this week. “We say it’s a green building. Who says it isn’t? I don’t mean to diminish this, but I’m trying to see what we’re going to get with this $161,000.”

With the state facing a $3 billion shortfall, Medinger said the county will take a hit and can’t afford to spend money that brings no return.

These officials represent a minority view that government’s should not mandate green building certification due to the associated costs.  But Mr. Medinger drives home the point:  what are governments getting out of certification? 

Green building certification is primarily a marketing tool used to sell a building.  Green building strategies can most definitely be incorporated without obtaining certification and the results can still be confirmed through commissioning.  What benefits are cities and states getting when their public buildings are deemed certified?

Related links: 

Can State Budgets Support Green Building?

As part of our review of the economic downturn's effect on green building, on Monday we looked at private projects that have cut LEED certification due to associated costs.  Today, we move from private projects to public projects.  Despite this shift, the theme is the same:  the economic downturn will result in less public projects pursuing LEED certification.  Want proof?  In the same Gazette.Net article cited to on Monday, one Maryland public project has already abandoned LEED certification:

A Frederick County Public School project, the Earth and Space Science Lab at Lincoln Elementary in Frederick, also had registered for LEED certification. Directors withdrew from the process in the spring, realizing it could not meet the standards without incurring additional costs.
This blurb got us thinking here at Green Building Law Update: what will happen to all of those states that passed regulations requiring public projects achieve LEED certification?  As you probably know, during economic downturns, less taxes are collected, which affects state budgets. Maryland, which has an estimated budget of deficit of $248 million heading into 2009, is a great example:

Gov. Martin O'Malley directed state agencies yesterday to look for budget cuts of up to 5 percent that could include layoffs or unpaid furloughs for state employees, as he seeks savings in this year's budget and prepares a spending plan for next year.  An economic downturn has cut tax collections, so O'Malley must make cuts for the fiscal year that began in July to keep the $14 billion operating budget in balance, as required by law.

One area where state agencies may seek budget cuts is through green building programs.  For example, the Maryland Green Buildings Tax Credit (you may remember this from the Shaw Development case) has yet to be renewed in 2008 and it seems unlikely to be renewed in the face of the state's huge deficit.  Additionally, Governor Martin O'Malley signed Maryland's High Performance Buidings Act on April 24, 2008, which requires construction or major renovation of public projects to achieve green building certification through LEED, Green Globes or an equivalent green building system unless a waiver is obtained.  If agencies are asked to cut 5 percent from their budgets, it's not a stretch to imagine agencies using  waivers to eliminate green building certification and the associated costs. 

Obviously, Maryland is not the only state with a major deficit that has now been hit by the economic downturn.  It will be interesting to see Maryland and other states manage the green building certification process in face of state deficits. 

Related Links: 

Projects Cut Out LEED Certification

Previously, Green Building Law Update wrote that the struggling financial sector may impact the number of projects seeking LEED certification. This past weekend, an article highlighting this point came across my desk that I had to share. Gazette.Net profiled numerous green building projects in Maryland that, despite initially incorporating numerous green building strategies, will not seek LEED certification:

Despite its bevy of energy-saving features, local construction material and preferred parking for hybrid vehicles, the latest office building by Matan Cos. of Frederick isn't receiving the green imprimatur of the U.S. Green Building Council.
 

Matan's RiversideFive office building — a 126,151-square-foot, four-story structure near the Monocacy River — meets the council's criteria for its Leadership in Energy and Environmental Design, or LEED, certification. But Matan is waiting until a tenant requests a LEED-certified building to actually complete the certification process, which can cost up to $2,250.
 

Matan Cos. went on to claim that LEED certification was not pursued because of owners “conscientious of savings.”  The article also highlights another development project that initially sought LEED certification and then abandoned green building strategies:

BP Solar, which is expanding its Frederick headquarters, originally sought LEED certification with a planned green roof, solar panels and energy-efficient design. Plans for going green changed when BP announced it would not complete the $97 million project to expand its manufacturing capacity, but finish only the $30 million addition for office space.
 

 
Obviously, this is just anecdotal evidence but these projects suggest that LEED certification will find itself on the chopping block as projects struggle to gain financing.  On Wednesday, we will discuss a Maryland public project that eliminated LEED certification.  State budgets, in particular, will feel a substantial impact from the financial downturn, and state green building efforts may pay the price. 

Photo Credit:  Matan Cos.

Related links: 

Developers cede LEED label for savings (Gazette.Net)

Southern Builders v. Shaw Development: Green Building Damages

Today we are wrapping up our discussion of Shaw Development v. Southern Builders, one of the first examples of major green building litigation.   On Monday we discussed the basic facts of the case; on Wednesday we looked at the contractual green building requirements between the two parties; and on Friday we looked at Shaw Development’s stated causes of action. We conclude our discussion today by looking at the damages alleged by Shaw Development. 

Parties that bring claims or lawsuits based on a green building project’s failure to achieve certification must also prove damages. Often, owners seek green building certification to obtain government incentives or comply with regulatory mandates. In Shaw Development’s counter-complaint, damages were based on the owner’s failure to obtain green building tax credits: 

Shaw Development demands judgment in its favor and against Southern Builders for . . . Six Hundred Thirty-Five Thousand Dollars ($635,000.00) in tax credits for failing to construct the Project in conformance with a (LEED) “Silver Certification . . . .”

The tax credits for which Shaw sought damages were part of a State of Maryland green building tax incentive program. Many cities throughout the country have enacted similar tax incentives to entice developers to build green. Failure to achieve anticipated incentives can result in litigation similar to this case. Additionally, many cities, including Washington, D.C., New York, Los Angeles and San Francisco, have adopted mandatory green building laws and codes that will require the incorporation of green building strategies into all construction projects. Failure to comply with green building laws and codes creates additional liability risks for contractors. 

 

As inexperienced parties undertake green building projects, unmet expectations will result in disputes and lawsuits. Parties must protect themselves from the start by clearly stating all parties’ understanding of the green building certification process and what is to be achieved. Furthermore, parties must fully understand the specific requirements of the green building incentives and mandates that apply in their locality. While Shaw Development v. Southern Builders was apparently settled without a trial, further green building litigation is just around the corner and is unlikely to be as easily settled.   Check back with Green Building Law Update as we continue to discuss how to mitigate your green building risks.   

400% Increase in County Green Building Programs

    Green building is growing in popularity at a rapid pace.  One reason for the increased popularity are states, cities and towns that have passed laws, regulations and ordinances mandating green building.  These green building laws, regulations and ordinances will also result in an increase in green building litigation. 

    Want  evidence of the popularity of green building?  According to the AIA, counties with green building programs have increased over 400%.  Even more interesting, the AIA study only looked at 200 of the most populous counties and found that 39 of them had green building programs, while 9 more are developing green building programs. 

    With more green building programs, chances of legal challenges increase.  This litigation could be in the form of a challenge to a county's program.  Or parties may fail to comply with the green building programs, resulting in litigation with the county or the party responsible for failing to comply. 

    Among the counties recognized as having "solid best practice examples of programs" is Montgomery County, Maryland.  We will take a look at Montgomery County's program later