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Weekly UpdatesWhat do you see as the most important change in the role of the architect in green buildings?
BUTTERS: Until the onset of "green architecture" as it is currently characterized, the architect would develop his or her work product in a manner best calculated to meet the owner's needs. In theory, the architect worked to optimize the owner's interests in the context of a particular project without taking an advocacy role for any particular solution. However, current "green design" thinking changes that approach and places the architect in an advocacy role. In addition, the architect's work has traditionally been separate from performance. However, as the architect begins to advocate in favor of particular design solutions--presumably on the basis that they will be justified by the performance--that separation will begin to dissolve and the architect will find himself or herself being painted as responsible for building performance.
MODERATORS: What are some of the most important risks facing the owner who is hiring a design professional to produce a green building? What are the risks for the architect/design professional?
BUTTERS: Of course the owner remains responsible for the financial performance of the building. If the owner begins to include promised green design performance levels in a project pro forma, or otherwise makes financial decisions predicated on the promised performance characteristics of a green building, the owner must first develop a very high degree of confidence in those promised performance characteristics, or run the risk that if the building fails to perform as promised the financials will be negatively affected. The risk for the design professional is that he or she may see increasing financial liability in circumstances where buildings fail to perform at projected levels. Unfortunately, some early evaluations suggest that performance projections are indeed overstated. As such, both the owner and the design professional may see increased exposure if the projections are not an accurate predictor of actual performance. This can have serious implications in the event of a dispute. The design professional may not actually be insured for this new role as advocate and that may mean that the owner has no recourse against the architect's insurance if the building fails to deliver on its promises.
MODERATORS: What role will the new American Institute of Architects 2007 Contract Documents play in either increasing or decreasing the risk to owners and architects?
BUTTERS: The AIA 2007 standard documents begin to create affirmative obligations on the part of the design professional to consider, evaluate and propose green design options. Because the contract is one source of the standard of care in the tort sense, changing the contract will have an effect on the standard of care. Although the actual effect is as yet uncertain, it would appear that an increase in the nature, quality and extent of the contract duties relative to green design (something the 2007 AIA contract documents undeniably embody) will in turn have an expansive effect on the duties and the applicable standard of care attendant on the practice of the design professions--both in the green context and in general.
MODERATORS: One of the most interesting developments in the promulgation of sustainable or green buildings has been the flurry of legislative and regulatory activity at all levels of government. At the national level, Congress passed the Energy Security and Independence Act of 2007, which explicitly references green building protocols and rating systems. At a federal level, the GSA, DOD, EPA and DOE, among many others, are all creating and promulgating regulations that embed green attributes into their procedures. Most of this is primarily driven by a hope that green buildings will save energy. The EPA also appears to have an interest in acquiring regulatory authority over indoor air quality. State and local governments are also actively participating in promulgating green through legislative and regulatory activity.
Can you help us understand some of the issues involved in the current legislative and regulatory activity taking place around the country?
DEL PERCIO: As concern about the state of the natural environment continues to rate higher on the public's agenda, more state and local governments have enacted legislation to combat the significant environmental impact of building construction and operations. As of August 2007, 24 states and 90 local governments had adopted the U.S. Green Building Council's LEED green building standards, while 12 states had included the Green Building Initiative's Green Globes system in legislation. In the rush to respond to what many believe to be an imminent natural crisis, much of this legislation has been quickly passed without consideration of its broader legal ramifications.
First, some pieces of legislation have been poorly drafted, incorrectly defining significant terms. For example, Washington, D.C.'s Green Building Act of 2006 seems to misunderstand the fundamental concept of a performance bond, which led the National Association of Surety Bond Producers to refuse to issue such bonds until the Act's language was clarified. Second, an increasing number of laws are now applicable to private construction, obligating projects over a certain size to comply with an independent, third-party rating system over which the local government exercises no control. In some ways, this type of legislation is simply undemocratic. It takes local government completely out of the decision-making process and hands control over the building code to a third-party organization over which the public exercises zero oversight. Third, pursuant to Supreme Court case law, constitutional questions exist over the ability of a local government to regulate private land use through the application of rating systems that may not, in fact, bear a substantial relationship to the public health, safety, morals or general welfare. Finally, legislating one specific building rating system into law may present antitrust law implications under both statutory and case law authority.
Enacting legislation without considering these critical legal implications is irresponsible and dangerous to the long-term prospects for the sustainable building movement at large. Every real estate industry stakeholder will agree that environmental conservation is an important goal. However, by quickly passing legislation that does not consider all potential legal ramifications, state and local governments may ultimately end up pushing the building industry away from that desirable outcome. A morass of litigation challenging regulatory schemes that are poorly drafted or essentially illegal could slow the sustainable building movement's positive momentum. Questioning the validity of these schemes should not be construed as legal pontification, but rather an important piece of the dialogue that will, hopefully, result in a more sustainable outcome.
MODERATORS: Why do you think that this legislative and regulatory activity looks to rating systems to solve the problem of decreased energy consumption instead of crafting performance-based solutions?
DEL PERCIO: The simplest answer may be that for most municipalities, it's the path of least resistance. Many local governments that have enacted green building legislation are small and don't have the resources to craft their own green building code that might require compliance with a certain performance-based standard. Moreover, these municipalities are not positioned to invest the requisite time and money in the ongoing performance-verification process that such schemes would entail. Third-party rating systems are well-known, are part of extensive marketing campaigns, and have received significant press as the green movement has grown over the past few years. From a politician's perspective, deferring to third-party systems that have a certain cachet in the public's opinion may be preferable to assembling a task force that could take months to deliver recommendations on how to improve energy efficiency or upgrade aging building infrastructure. A second, more significant reason--though it is likely municipalities have yet to even address this scenario--is that performance-based regulatory schemes at the local level would involve significant legal considerations. Tying a building's actual performance over time to compliance with a building code would dramatically change traditional construction contract and insurance policy relationships. Such a scenario refers back to my initial answer--investigating the twists that performance-based regulation would present to stakeholders could require significant time and effort that state and local governments--at least to date--do not seem interested in spending.
ENDNOTES
(1.) Rubin & Tal, "Does Energy Efficiency Save Energy?" CIBC World Markets, StrategEcon, Nov. 27, 2007.
(2.) Dargay, Gately and Sommer, Energy Journal, October 2007.
Panelists:
ROGER BEZDEK
President-Management Information Services, Inc.
Oakton, Virginia
MARK JEWELL
Founder and President-RealWinWin, Inc.
Philadelphia, Pennsylvania
MOLLY MCCABE
Founder and President-HaydenTanner
Bigfork, Montana
JAMES E. WOODS
Executive Director-The Building Diagnostics Research Institute, Inc.
Chevy Chase, Maryland
FRED BUTTERS
Attorney-Thomas M. Keranen & Associates, P.C.
Bloomfield Hills, Michigan
STEPHEN DEL PERCIO
Attorney-Zetlin & De Chiara LLP
New York, New York
Moderators:
SUSANNE ETHRIDGE CANNON, CRE
Associate Professor of Finance, and Douglas and Cynthia Crocker Endowed Director
FEED