Interesting article from Mark Stempler in the March 9 issue of the Daily Business Review. Noting that “sustainable building is booming in Florida”, he discusses some of the unique considerations that should be addressed in the contract for these types of ventures.
Contracts for sustainable projects, however, are often not tailored to address the many issues and nuances that can appear with these types of projects. Whether the project is a new construction or renovations or retrofitting, a sustainability-focused contract is the best way to prevent problems later on.
The contract should be as specific about the project’s green goal
Simply using terms like green building, sustainable building or high-performing building are not enough because it is unclear what the precise goal is. For example, if a project is aimed at reducing a building’s electricity costs by a certain percentage range, that goal should be identified in the contract. In addition, an owner may require a third-party green rating certification like LEED. Which rating system and which level within that system is sought to be achieved should be identified so everyone knows what is expected.
Alternatives to Performance Guarantees
Mark outlines why project guarantees can be problematic in a sustainable building project, and suggests performance bonuses as a possible alternative.
An alternative to a guaranty is a performance bonus or bonuses based on the certification or performance levels achieved. In other words, a contract will describe a base fee for services on the project and then allow for additional compensation depending on level of certification the building gets or based on the level of performance of the building after occupancy.
The “green” building industry is growing rapidly.
In 2016, the Sunshine State ranked fourth in the number of LEED certified projects in the U.S. at 204, according to the U.S. Green Building Council. Florida now is home to more than 1,400 LEED-certified projects. LEED, short for Leadership in Energy and Environmental Design, is the world’s most widely used sustainable or green building rating system.
With that kind of growth, Mark’s recommendations are important and timely. To read more, here is a link to the Daily Business Review article, “Potential for Twists and Turns in Contracts for Sustainable Building”
Mark J. Stempler is a shareholder with Becker & Poliakoff in West Palm Beach. He is board-certified in construction law and is certified as a LEED green associate, and focuses his practice in the areas of construction law, government law and bid protests, and civil litigation. He may be reached at firstname.lastname@example.org.