Hawaii Green Building Law

Before you read this post take a couple seconds and write down your definition of “green building.”

So what is “green building”? It depends….in fact if you want run a Google search it retrieves about 1,800,000 results.

Green Building, as defined by the United States Environmental Protection Agency is:

the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building’s life-cycle from siting to design, construction, operation, maintenance, renovation and deconstruction. This practice expands and complements the classical building design concerns of economy, utility, durability, and comfort. Green building is also known as a sustainable or high performance building.

Some definitions are more specific. The State of California’s definition, for instance, touts that green buildings protect occupant health, improve employee productivity; use energy, water, and other resources more efficiently; and reduce the overall impact to the environment. Further, the National Lumber and Building Materials Dealer Association says that green buildings:

conserve energy and water; use resource-efficient materials; have good indoor air quality; and are integrated to the site and region…The value expected in individual projects include not only appropriate levels of performance at the best price, but also avoidance of future private and public costs from toxic by-products, pollution and greenhouse gas emissions, excessive energy and water consumption, and unnecessary waste in manufacturing, transporting, using, and maintaining building systems and components.

It is impossible to create one definition of green applicable to all projects. Defining whether a specific project is green depends on the facts and circumstances surrounding the project and the goals of the developer and other stakeholders.

The danger in not having a formal definition is clear. Contractors may be unaware of a developer’s undocumented expectations and visions concerning the green aspects of the construction. Thus, the parties may not allocate the risks associated with these goals properly. The result–a building not meeting a developer’s expectations and litigation.

It is essential that the parties document early in the development process what the parties expectations are concerning the project’s green building aspects and how the risks associated with construction will be allocated.

Several commentators have warned of the threat of the impending storm of green building litigation. When a developer or a tenant is expecting a “green” building and is not provided a property that meets their expectations, it is likely that they will point figures and seek damages.

Shaw Development v. Southern Builders presented our first glimpse of green building litigation. Shaw Development involved a condominium project in Maryland. The project was supposed to attain LEED-Silver certification and the developer anticipated receiving Maryland tax credits due to such certification.

While the contractor finished the project, the developer alleged that it was not built in accordance with the LEED-Silver requirements and that the contractor finished the project 9 months late. Accordingly, the developer alleged that the contractor was responsible for the project losing $635,000 in tax credits. Eventually the case settled, so we do not know how the Maryland court would have allocated the risks that the developer and contractor failed to address in their contract.

Green building presents an entirely new group of risks that need to be addressed by all parties involved in the development of a green building. In Shaw, the issue was the contractor’s alleged failure to comply with green building laws regarding Maryland tax credits. The Shaw parties, like many parties entering construction contracts, entered a standard AIA contract, which may not adequately address the specific risks that developers and contractors need to consider.

While Shaw is just the beginning, proper pre-construction planning can help protect all parties to construction contracts and clairfy each stakeholder’s expectations. In future posts we will focus on specific risks that parties face when building green.

Green building and sustainable development, while not entirely new concepts are growing rapidly. Despite this growth, aside from a few legal commentators, the industry for the most part has largely ignored the legal aspects of developing and owning green buildings. As attorneys with an understanding of green building issues, we hope to spark discussion regarding both the risks and rewards of green building.

With proper planning the risks can be limited and addressed at an early stage. This blog seeks to provide a resource for updated coverage of the growing legal issues surrounding green building in Hawaii and beyond.