The blogs have been crackling for several weeks with reports and analysis of the LEED “challenge” process.  Chris Cheatham devoted a multiple part series to analyzing the challenge filed and ultimately rejected to the LEED Gold certification awarded to the Northland Pines High School in Wisconsin.  Shari Shapiro has discussed the same and included an interesting interview with the challengers discussing their reasoning for the protest.

Without getting too bogged down in the technical details of the Northland Pines case that are covered elsewhere, I would highlight a couple important takeaways from what we have learned from the Northland Pines challenge case:

1. Currently, anyone can file a challenge – there are no standing requirements whatsoever.  If anyone can file a challenge, the threat to projects, and to LEED, is that anyone will file a challenge.
2. There are very loose/limited guidelines or rules on procedure, hearings, document and information exchange and the like in the challenge process.  Look for a future revamping adding more clarity in the challenge process rules.
3. It appears that USGBC permitted Northland Pines to correct, amplify and update its submittals during the challenge process to demonstrate compliance with the prerequisites.  USGBC needs to make clear whether certification requires bright line compliance based on initial submittals and information, or whether they are more interested in allowing some wiggle room as long as the project meets the standards at the end of the finish line.  Failing to make this basic philosophical tenet clear is not fair to project participants, opens the process to future inconsistency during later challenges, and ultimately threatens the credibility (and thus potentially the viability) of the USGBC process.
4. Last point, which may be the biggest and has not really percolated as a point of focus: as currently conceived, the LEED challenge process adds another completely unpredictable line item expense to the process.  The challenge process may also add another angle of attack on projects for unhappy losers in bidding, neighborhood NIMBY uprisings, and competitors that may want at low cost and effort to financially damage their opponents.  At least courts have a theoretical sanctions approach to address complaints filed in bad faith.  USGBC should strongly consider adopting rules that require a USGBC member to certify the challenge as being in good faith, along with membership penalties or sanctions for individuals signing off on complaints that have zero merit.

The challenge process in theory may add an important element of credibility, verification and transparency to LEED certifications.  As it stands though, there are loose rules, no standing requirements, and one can easily file challenges even in bad faith without facing any impact.  If we start seeing a rash of such challenges, we may start also seeing a growing movement away from LEED certification due to increased unpredictability.  The current challenge structure presents some serious risks and issues moving forward and needs to be the subject of significant thought and retooling to avoid future problems.

It’s a beautiful, warm spring day here in Richmond, VA.  The sprinklers were going in neighborhood yards as I left for work this morning and the clouds are moving lightly on the breeze.  With the sun shining and the birds chirping outside of my office window, even I and my old pal Eeyore could smile and see some optimism for the future.

Activity abounds in the sustainable building world.  California is implementing the first state wide “green”  building code and, according to my friend Imad Naffa (@imadnaffa on Twitter), that state will be pressing builders and developers to build in a sustainable manner.  Governmental units, both small and large, are seeking to add zoning or other incentives to build in a sustainable manner.   More and more developers are seeking LEED certification (though this certification is sometimes subject to challenge).  All of these signs point toward the desire for a more energy efficient and responsible built environment.

The dad in me wants this badly and quickly.  Better air quality, less energy use, and a more predictable weather pattern (to the extent that weather is predictable) can only lead to a better future for my kids.  However (and this is where you should get the “here he goes again” look on your face as you read this), the sad little donkey on my other shoulder is always reminding me to step back and take a quick look at the big picture.

The enthusiasm for the sustainable construction paradigm is laudable but should not overtake some sensible discussion of risks and costs.  Questions (several of which I have discussed at Construction Law Musings) that should be considered during the policy phase of this enterprise are as follows:

• What are the costs to a private developer of forced “green” building that cannot be tailored to a particular project?  Will these costs preclude certain development?
• Can the insurance industry catch up with the regulators?  Without proper insurance coverage, contractors may not be able to justify construction.
• How does the use of LEED (a laudable private rating system that can change without the usual legislative process) in certain zoning and building requirements create risks for the owners, architects and builders?
• What about simple time horizon risks?

None of these issues are insurmountable and I remain optimistic that we can deal with them in a rational fashion.  While I don’t know the answers to these questions from a legal risk management standpoint, as a construction attorney and father, I feel that I would not be promoting a permanent change without bringing the questions to light so that they don’t surprise us and kill this hard fought momentum.  Once many of these questions are considered carefully, we may decide that some are simply too small to deal with, while others are highly relevant and should be dealt with before the courts make the decisions for us.  Once the questions are in the open and some answer is reached, a more permanent foundation for a brighter, more energy efficient future will arise.

Let me close by saying that because of folks like Yahya Henry and the other contributors here at Aribra, and the many great friends I have met along the way, Eeyore is getting quieter and quieter as time goes on.

A recent article at the Ahead of Schedule Blog brings up a project owner’s perspective on “green” building.

The article starts by stating that:

Despite the explosion of articles, seminars and webinars on green building and development during the last year or so, there is a dearth of information in the development world regarding what project owners and developers who do want to build a green project should actually put in their design and construction contracts.

The post then lists several good points regarding what a construction project owner should look for and request in its contracts, particularly with a design professional.

My blog, Construction Law Musings generally discusses these issues from a contractor, sub-contractor or construction attorney’s perspective and the potential liability inherent in constructing such projects and this article has much to recommend it, and not just from an owner standpoint.  The fact remains that owners will be seeking sustainable building, whether through LEED or some other energy efficiency or environmental measure.  Project Owners will either chose sustainable building for economic or moral reasons, or through government mandate.

Knowing the other side’s playbook is one way that a football team can prepare, the same holds true in pre-construction negotiation of contracts. Knowledge of the types of contractual provisions an owner will seek to include in a construction contract can and will go a long way toward a general contractor’s ability to negotiate a proper contract, both with the owner and its subcontractors.  A working knowledge of the possible issues between owners and architects will inform a contractor’s working knowledge of the benefits and potential liabilities inherent in “green” building and keep it ahead of the curve.  Such knowledge will also go a long way toward dealing with these issues of human action and the long time horizons inherent in sustainability.

In short, just like a football coach who would love to know the other teams next play, contractors should be sure to check out this article and it’s insight into an owner’s “playbook.”

For more on this check out fellow Aribra contributor Tim Hughes’ post at the Virginia Real Estate, Land Use and Construction Law blog.

A recent post by my friend Andrea Goldman raises the interesting question of “why bother with LEED certification”? The post highlights a recent profile on the highly sustainable Hutton Hotel project in Nashville which elected to forego seeking LEED registration and certification. In particular, Hutton Hotel representatives are quoted as saying:

Doing the government documents alone cost $50,000. Also, the paperwork is so complicated you have to hire an expert to do it. They make the certification a little onerous so everyone won’t pile on. You also need engineers that do testing. It’s a whole process.

If the goal truly is to develop more sustainable, energy efficient and better performing buildings, perhaps that is where a project’s generally limited resources should be directed. The question is how less technically savvy owners, developers, and even perhaps government officials are able to evaluate how “green” are these buildings. USGBC has been able to carve out a niche and indeed expand that niche into widespread identification of LEED being synonymous with green building and presenting LEED as the most credible source of third party validation of green design and construction.

The questions raised by Hutton Hotel are not unique. Indeed, last week I had a long conversation with a longtime client who builds very upscale homes. He remarked that their design and building practice had “been what people are calling green now” for years. He added that LEED did not make sense for them because of its lack of teeth regarding energy performance. These comments echo the themes of earlier discussions regarding critiques of LEED and energy performance, its efforts to incorporate post-occupancy energy reporting, and the changes in credit emphasis in LEED 3.0.

In the end, the ability of LEED to succeed relies upon its stance as an accepted source for third party validation is critically dependent on its ability to maintain credibility. It is for this reason that the recent critiques of energy performance of LEED certified buildings and the USGBC’s efforts to address energy performance issues are so important to USGBC’s long term success. It seems to us that in addition, third party validation relies in part on the market necessity to “prove” a project is green rather than having a knowledgeable marketplace already in position to make that evaluation on its own. As marketplace knowledge and information improves, perhaps the need for third party validation begins to erode over time.

Originally published at Virginia Real Estate, Land Use and Construction Blog.

If you were to ask three different people the definition of sustainability, you’ll receive three different answers; this is ours.  Business structures are moving away from models based solely on economic returns and are now considering the environmental and social returns as well. The tides are shifting.

From Mother Nature Network | Sustainability: What does it really mean?

We are perhaps transitioning from a communications age to one of sustainability.

It is the buzzword of today, used in reference to the environment, economy, development, health care, food and more. During his address last month to Congress on health care, President Barack Obama said, “our health care system is placing an unsustainable burden on taxpayers.” He is working to restructure our economy around sustainability and “green” jobs rather than manufacturing and finance as in the past.

The Dow Jones Sustainability Index now tracks the financial performance of leading sustainably driven companies worldwide. We see the ideal in the construction of our homes and businesses. Colleges and universities now are creating environmentally sustainable campuses and adding courses that reflect students’ new belief that their futures will be driven by the ideal, says Dr. Shana Weber, sustainability manager in the Office of Sustainability at Princeton University. At Princeton alone, 51 courses now address sustainability in some way, in subjects such as the economy and energy.

We use the word so much, but do we really understand what it means? Is the word so overused it is in danger of losing its meaning?

Sustainability refers to everything

The word carries a “green” connotation, but really everything is connected, says Nancy Gabriel, director of the Donella Meadows Leadership Fellows Program at the Sustainability Institute in Hartland, Vt. A world in which the environment is pristine but poverty is rampant is not sustainable. She believes the definition includes three components: the environment, economy and social justice.

“It is truly an all-encompassing word,” Weber says. “We have to look at business structures. We have to look at social structures. We have to look at almost every aspect of how we live. And so that seems overwhelming, but that’s really what it’s about. What can we do to stabilize our global environment, social and economic systems?”

The word’s modern meaning dates to 1987. That year the United Nations World Commission on Environment and Development (also called the Brundtland commission after its chair, the Norwegian diplomat Gro Harlem Brundtland) issued a report defining sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

In time, a movement began revolving around a word that didn’t carry the negative connotations of environmentalism, Weber says. The LEED green building rating system emerged, making environmentalism more mainstream, and then Al Gore released his film, An Inconvenient Truth. The film was released at “exactly the right moment,” she says. “It was already in the air, and that film really seemed to galvanize something.”

At risk of losing its meaning

Today advertisers and marketers use sustainability to describe nearly everything. Perhaps the word is in danger of losing its meaning. But we also have been shocked by economic collapse and natural disasters such as Hurricane Katrina and the tsunami that devastated South Asia. We have watched water levels rise and glaciers melt. We understand change is necessary. Gabriel wonders whether, in fact, a sustainability age already has passed, whether instead we are entering an age of restoration or regeneration.

“People are feeling that I think our lifestyle of consuming goods, the way our lifestyle is, it has disconnected us from each other,” she says. “People are feeling that and feeling and really looking, wanting something different. And so this, all these kinds of collapses are opportunities really to restructure in different in ways.”

In a country where more is the American way, is sustainability feasible?

Embedded in our identity is a deeply held ambition to push away at boundaries. Early Americans pushed across the Atlantic and declared our independence. Then we pushed across the continent toward the West, crossing the Mississippi River and scaling the Rocky Mountains. We invented cars and planes and reached for the moon. Over time even our houses and food portions grew in size. “Where’s the beef?” we said.

That is why what has happened to our economy is so shocking and painful. The contraction we have experienced is un-American. The discouragement and humility we feel are foreign. Sustainability advocates insist they do not mean for us to lower our standard of living, but rather they want us to understand that less of many things taken together actually can lead to a better life.

Sustainability is a concept we are drawn to because it offers hope, Weber says. It makes us believe we can have both less and more at the same time, that our problems are surmountable, and the solutions lie within us.

“I think we have to shift away from this industrial growth model,” Gabriel says. “I really think there is a way to look at how to do development that’s more focused on well-being and not on this consuming of goods.”

Full | Sustainability: What does it really mean?

The USGBC has imposed extended reporting requirements as part of its minimum program requirements for LEED. It appears the extended reporting already adopted may only be an initial step. We may see extended reporting requirements backed up by decertification; we may see on-going recertification as a basic part of LEED program structure.  I admit this is speculative, but we may be seeing a shift from LEED using energy modeling towards an actual performance model.

Given the overall goal of improved building performance implicit in LEED, these changes and speculated upon shifts may make sense technically. These changes, however, raise some significant questions regarding risk and responsibility. The ultimate impact on risk, and thus embedded costs, of these changes may vary dramatically from state to state because of each state’s underlying legal framework.  Placing these changes into the complex network of construction contracts, contractual allocations of risk, and shared responsibilities raises some interesting observations and questions:

• States whose limitations period runs based on “injury”, such as Virginia, may experience extended limitations triggers where building performance is alleged to be the failure; such results could be different for the various players depending on their roles
• In damage trigger states, courts may find that “injuries” were suffered far earlier than owners even suffered performance problems, so results in these states are difficult to predict and there could be big winners and losers
• States with discovery based limitations accrual, such as Maryland and the District of Columbia locally, will present cases with ever longer, potentially plausible, arguments regarding why the owner “reasonably did not know” of a problem for years after occupancy of the project
• The timing issues presented by extended performance questions mean that contractual agreements on statute of limitations and when they start to run should be focal points of contract negotiations; negotiations regarding extended warranties will be pivotal as well
• The growing use of LEED certification in various local zoning approvals means decertification may carry unintended consequences. If a project is decertified, is there a possibility that its occupancy permit is threatened?
• The potential for decertification, or a failure to participate in recertification if that becomes standard, may place commercial landlords at potential for extended risk of breaches of lease agreements depending on the LEED requirements imposed
• Lease agreements in turn need to be carefully worded so that all parties are on the same page as to exactly what is the yardstick and time frame for complying with LEED related terms

These are just a few of the wrinkles that come the mind when one places an overlay of extended performance obligations into the context of LEED.  We will keep a close watch on these developments moving forward.  We believe that continued movement on the extended performance axis by USGBC will have some serious economic impact on the financial aspects of LEED projects, who “wins” and who “loses” based on these changes, and where bottlenecks may develop on the economic risk side of the equation in reaction to extended performance obligations.

I became a city planner because I wanted to marry my love for cities and my love for the environment.  I am not your typical “environmentalist.”  I am petrified of most animals and the only tree I hug is my Christmas tree before we send it to the curb.  Yes I do recycle and use a tote bag for groceries, but these token gestures do not equate to sustainability.  I want, like most people, to live a luxurious life.  The key is in figuring out how to live luxuriously and sustainably at the same time and on a middle class budget.

The parts of our cities designed post World War II are designed for the automobile and are thus innately unsustainable.  This is where most of us live and herein leys the problem.  Even if we put solar panels on our roofs and drive a Prius, we are still not living sustainably.  We still have to drive everywhere, which leads to more pavement, stormwater runoff, and water contamination; more gas used and air contamination; and more roads and parking lots, the loss of nature, and thus land contamination.  These things lead to other horrible things like the dependence on oil and thus national security issues and our overweight, over driven kids…but I’ll leave that for another day.  The topic of discussion here is that our modern cities and suburbs are not designed to be sustainable.

Building a green LEED certified house or building is important, but the framework of the neighborhood where we build that building is much more important.  Neighborhoods and cities that are connected and compact promote sustainable living allowing alternative transportation options – places where you can live, work and play without having to get into your car.  Now I’m not a car hater, I just think that a car should not be my only option to get from A to B.

In a car dominated society, your daily commute resembles photo group A.  You leave your house, drive to work on Anywhere, USA collector streets and a crowded interstate, to an office park, where you park and walk through a sea of parking to your building. This is definitely not sustainable, and I would argue not a preferable lifestyle either.

In a connected well designed society, your daily commute could look like photo group B.  You leave your house, drive, walk, ride or bike on networked streets to an urban mixed use area, where you can park your bike next to your building or disembark from your train nearby, and walk down an interesting sidewalk to your building or any other destination that may strike you.  This is where the luxurious lifestyle I prefer and the sustainable lifestyle I should lead are one in the same.

I plan to use this blog to highlight good and bad examples of urbanism.  I’ll use photographs to explain where a place went wrong or what they are doing right.  I look forward to everyone’s opinions, ideas and comments.  Thank you Yahya for the opportunity.