Hawaii Green Building Law

I previously posted on the prospect that LEED projects, owned by the State of Hawaii could risk decertification due to budget cuts and improper maintenance.

We’re one step closer.

Hawaii public school teachers (in the face of State budget cuts) agreed to shut down the Hawaii public school system for 17 Fridays beginning in October. Furlough Fridays (as they are referred to in Hawaii) could have a drastic impact on the State’s LEED certified buildings.

Hawaii law requires all major state renovation or construction projects be designed and built to meet LEED silver or Green Globes standards. Several new state building projects have achieved LEED certification, including buildings on public school campuses and buildings that are part of the University of Hawaii system. The budget cuts and Furlough Fridays could prevent the State from providing adequate maintenance to these green buildings.

At this point, a project can be de-certified if it fails to provide ongoing monitoring data. The USGBC has not yet stated what will happen if a building’s energy and/or water usage is higher than projected, which could occur if a building is not properly maintained. Nevertheless, even if a project achieves LEED certification, funding issues could prohibit the state from keeping up with the USGBC’s minimum program requirements.

The family of a construction worker killed last year in a construction accident at MGM Mirage’s CityCenter are suing over his death.

The family reportedly attributes the death to unrealistic deadlines for the project’s completion and “shoddy” safety practices. In addition, the lawsuit alleges that the developer (MGM Mirage), the general contractor (Perini Building Co.) and the company operating the crane that killed the worker (Dielco Crane Service) all were negligent in their “hiring, training and supervision of employees.”

CityCenter is a 68-acre, $11 billion project aiming to achieve a combination of LEED silver and gold certifications across the various hotels, residences and commercial buildings making up the project.

Dielco, the crane operator has been investigated for multiple safety violations and was fined $12,000 by the Nevada Occupational Safety and Health Administration for a series of violations, including failing to instruct employees to sound a horn before swinging the crane.

As previously discussed, LEED credits are not awarded for the implementation of safety training programs under the current version of LEED. Nevertheless, safety training is an integral part of developing a skilled green collar workforce (the Wall Street Journal reports that CityCenter introduced more than 10,000 construction trade and craftsmen to green building techniques).

Unsafe working conditions exposes stakeholders to liability. This is a risk in all construction projects, not only green developments. In green projects, however, additional factors come into play. For instance, often new technologies and construction materials are being implemented, which untrained workers may not be accustomed to applying. Also, incentives such as tax credits could create time pressures to meet certain deadlines and to complete construction. The combination of these factors makes green buildings particularly open to risk. Properly evaluating such risk and planning for potential liability is essential before breaking ground on the construction project.

Green buildings are not immune to foreclosure. Recently foreclosure proceedings were commenced against developers of the EcoCentre, a South Florida commercial development seeking LEED Gold certification.

The developers allegedly failed to pay their $6.9 million construction mortgage. However, according to the developer, “the fact that the building is a green building is not why the building financially is in trouble… it has to do with a failure to properly and adequately financially plan the building in the beginning…”

Foreclosures involving green buildings create unique issues. Foreclosure proceedings often take several months. Inadequate or deferred maintenance of green building systems during the foreclosure process could effect the efficiency of the building. For instance, improper maintenance of a HVAC system could lead to degradation of efficiency, equipment life, air quality and comfort.

Further, if a project is certified under the United States Green Building Council’s (”USGBC”) LEED certification or other green building certification program, the project must must keep up to date with the requirements of its certification. For instance, as previously discussed, LEED projects must comply with minimum performance requirements, including submitting operational performance data on a recurring basis to the USGBC, or face possible decertification. The USGBC has not provided any exception to its requirements for projects that are in foreclosure.

There could be further issues if the project involves tenants who entered green leases. The landlord could potentially be in violation of a green lease if the green building systems are not operating correctly, if the project is decertified or if any construction or maintenance is done that would jeopardize the green features of the building.

Special attention must be paid to foreclosures involving green projects.

The San Francisco 49ers unveiled plans to build a new stadium in Santa Clara, California. The proposal is for a $937 Million, 68,000-seat stadium that would incorporate a vegetated roof and solar panels. Reportedly, the stadium would be equipped with a lighting system designed to conserve energy. The 49ers’ intent is for the stadium to achieve LEED certification.

The Niners’ proposed stadium would not be the first LEED stadium. That distinction goes to Medlar Field at Lubrano Park, a $30 million, 5,400-seat baseball stadium on the Penn State campus. Highlights include water-efficient landscaping, a 76 percent construction waste recycling rate and power provided in part by a wind turbine system.

Stadiums are ideal for the implementation of sustainability concepts–they are massive projects, large energy users and often tied into public transportation routes. But stadiums are not immune to potential legal disputes. The Washington Nationals built the first major league ballpark to achieve LEED certification. After the Nationals moved into their stadium, they stopped paying rent alleging that the stadium was not “substantially complete.” The Nationals cited problems with the ballpark, including the high-definition LED lighting on the scoreboard. The Nationals subsequently settled their dispute.

Likewise, as discussed in a prior post, the home of the NBA’s Minnesota Timberwolves, the Target Center, is the subject of a labor dispute submitted by roofers to the National Labor Relations Board.

I think there are several reasons that make stadiums particularly prone to disputes. As with all green building projects, expectations are high. This is particularly true with stadiums which the public often expects to be fitted with state-of-the art technologies. Meanwhile, most stadium projects are at least in part taxpayer funded. Also, although the USGBC has considered a rating system specifically tailored to LEED stadiums, no such rating system exists to date.

High expectations + innovative but unproven technologies + budgetary and political issues + unestablished guidelines = potential problems.

Will increasing numbers of green building projects create a wave of litigation? While legal commentators have been predicting a boom in lawsuits, green claims are already here.

Here is a brief summary of just some of the actual green claims brought against engineers and architects, according to Frank Musica, an attorney at insurance underwriting manager Victor O. Schinnerer & Co. in Chevy Chase, Md.

-Claim that windows in a university library designed to bring in fresh air instead brought in air contaminated by pigeon droppings that accumulated under a rooftop solar shade.

-Mold issues related to moisture retention of cork flooring.

-Construction delays caused by the unavailability of a specific green building product recommended by an architect.

-Completed project’s failure to reduce energy costs as required in a design contract.

-Alleged negligence of an architect for specifying a solar shading system that was covered by an enforceable patent.

Green building disputes spread much further than liability for a project’s failure to acquire a specified LEED certification. The risks are real and each party involved with a green building project must consider the risks and benefits in submitting bids and negotiating contracts. Stakeholders should consult with counsel with knowledge of green building certification.

If a green roof is being installed should the workers be compensated as roofers or landscapers? This is one of the questions raised by non-union roofers in Minnesota who filed complaints with the National Labor Relations Board.

The roofers have been working on installing a green roof on the Target Center, in Minneapolis. The roofers allege that they have been receiving inadequate pay—specifically that they are receiving landscaper pay–$20 less per hour than the prevailing wage for roofers. They also allege poor working conditions and that their employer, a Minnesota roofing contractor, retaliated after the workers complained and tried to unionize. The contractor defends the lower wages saying a lot of green roof work is landscaping, according to the Minneapolis Star Tribune.

This is a labor dispute. Nevertheless, the roofers’ complaints demonstrate that legal issues go beyond the situation of a developer alleging that a building did not attain a specific certification level, as in Shaw Development v. Southern Builders, or a building’s green features failed to perform as expected. What’s next?

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.