Green building: balancing fact and fiction.

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

The Real Estate Center

Depaul University

Chicago, Illinois

UJJVAL K. VYAS, Ph.D., J.D.

Principal-Alberti Group

Chicago, Illinois

About the Moderators

Susanne Ethridge Cannon, CRE, is an associate professor of finance, and the Douglas and Cynltbia Crocker Endowed Director of the Real Estate Center at DePaul University, Chicago, where she teaches undergraduate and M.B.A. real estate investment classes. Dr. Cannon has a B.A. in economics and a Ph.D. in finance, both from the University of Texas. She has authored papers on topic as varied as corporate governance, real estate feasibility, eminent domain, and housing markets, and has worked extensively in urban land use issues.

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Ujjval Vyas, Ph.D., J.D., is the principal of Alberti Group, a Chicago-based interdisciplinary consultancy specializing in emerging issues in the building industry including sustainabilily and high-performance buildings, building information modeling, and alternative project delivery systems. He has lectured and published extensively on legal business risks in the sustainable building marketplace, covering largescale policy, insurance, legal and technical issues. Dr. Vyas holds a Ph.D. from the University of Chicago and a J.D. with honors from Illinois of Technology/Chicago-Kent College of Law.

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About the Panelists

Roger H. Bezdek, Ph.D., is president of Management Information Services, Inc. He has 30 years' experience in consulting and management in the environmental, energy efficiency, renewable energy, utility and regulatory areas, serving in private industry, academia and the federal government. His consulting background includes estimating the costs and benefits of energy efficiency and renewable energy programs, energy and environmental industry forecasting, environmental impact assessments, and creation and management of federal energy efficiency and renewable energy R & D programs.

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Mark Jewell is the founder and president of Real Win Win, Inc., and previously founder and president of EEFG, an energy-efficiency consulting firm. He has spent 20 years in commercial real estate and nearly 15 years in energy efficiency. Jewell also worked with the U.S. Environmental Protection Agency to help create and promote the Energy Star Buildings Program for Commercial Real Estate, a voluntary pollution-prevention initiative. He is a graduate of The Wharton School at the University of Pennsylvania, where be specialized in economics and finance.

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Molly McCabe is the founder and president of Hayden Tanner, a firm that helps corporations and entrepreneurs maximize their financial returns by investing in sustainability and energy efficiency. She has more than 20 years of experience in real estate finance, business development, strategic planning, mergers, acquisitions and divestitures. McCabe was also the founder and president of Bridger Commercial Funding, and ran Bank of America's Real Estate Capital Markets Group. She holds an M.B.A. in finance and management from the University of San Francisco.

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James E. Woods, Ph.D., P.E., is the executive director of the Building Diagnsotics Research Institute, Inc., in Chevy Chase, Maryland. In 1997 be retired as the William E. Jamerson Professor of Building Construction at Virginia Polytechnic Institute and State University. Woods has served as a consultant to design engineering and architectural firms, utility companies, state energy agencies, the U.S. Department of Energy, the U.S. Environmental Protection Agency and other private and public agencies. Woods holds an M.S. in physiological sciences, and a Ph.D. in mechanical engineering from Kansas State University.

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Frederick F. Butters, FAIA, is an attorney with the law firm of Thomas M. Keranen & Associates, PC, Bloomfield Hills, Michigan. The firm specializes in design professional and construction-related issues. Previously he was a practicing architect whose projects include facilities for Eastman Kodak, IBM (clean room device manufacturing facilities), Domino's Pizza headquarters, a Toyota assembly plant and various General Dynamics armor facilities throughout the world. Butters has an M.A. in architecture from Lawrence Technological University and a J.D. from Wayne State University.

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Stephen Del Percio is a construction attorney with Zetlin & De Chiara LLP, a Manhattan-based law firm servicing the design, construction and real estate industries. Del Percio is also the publisher of green buildings NYC, an online journal that explores legal issues relating to green business, with emphasis on the LEED rating system and sustainable construction. He holds a B.S. in civil engineering from Columbia and a J.D. from William and Mary, where he also served as managing editor of the William & Mary Environmental Law and Policy Review.

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