Category Archives: misc.

Model Green Hotel—Putting the “Green” in Greensboro

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This Sunday’s N&O featured a piece on the Proximity Hotel in Greensboro, NC.  Developer Dennis Quaintance is the man behind the hotel, which is the first hotel in the country to obtain a Platinum LEED rating.  According to its website,  the Hotel was built to use 40% less energy and 30% less water than a comparable hotel.  Innovations include  a unique elevator design which captures and reutilizes the system’s energy expenditure as well as 100 rooftop solar panels to generate hot water.

In stark contrast to the recent Town of Cary decision  to forego LEED certification for its new fire department building, the Proximity Hotel has spent approximately 3% extra to obtain its certification.  Developer Quaintance expects to make the money back, through a combination of energy efficiency and state and federal tax credits, as early as 2012.

If more developers calculate that they can make more money through the LEED program, expect to see more LEED certified buildings in the future.  For now, however, two years after the Proximity Hotel first opened, there is only one other platinum hotel in the U.S.

 

Green Design—is it for the cache or the environment?

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A building can be designed to meet energy efficiency and sustainability goals, without actually obtaining LEED certification.  However, LEED certification is becoming one of the most recognized ways of demonstrating your commitment to green building.  It does not come, however, without a cost.  In addition to the registration fee to the Green Building Certification Institute, costs depend on the square footage of the building, ranging from $1,750 to $17,500 for GBCI members to $2,250 to $22,500 for non-members.  There are also commissioning fees and the soft costs associated with a green design.

Enter the Town of Cary and the new fire station.  While meeting many green goals, the Town has elected to forego getting it LEED certified because of the estimated $41,000 costs involved in doing so.  Is this the next trend in green building?  If not LEED certified, what is to stop unscrupulous builders from unilaterally declaring their work to be green without actually making it environmentally friendly?  Is the cache of being green worth multiple thousands of dollars in these lean economic times?  Is this a way to avoid risks associated with failing to meet LEED certification?

For more on this issue, check out Matt DeVrie’s article on this same subject, “What are the benefits of Leed Certification?”

No more Liens when a General Contractor is in Bankruptcy—the new North Carolina law?

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Unfortunately, bankruptcy is an all too common occurrence in today’s economy.  Companies which have been stalwarts of the construction industry are falling like dominos and entering into the protective waters of bankruptcy.  What effect does a bankruptcy filing have on your ability to file or perfect a lien?  A lot.

Until very recently, the general practice in North Carolina was that even if the general contractor was in bankruptcy, a subcontractor could still proceed with a lien on real property to the extent funds remained due and owing from the property owner.  It was common practice for subcontractors to serve a notice of claim of lien on funds and claim of lien on real property to the property owner even if the general contractor had filed bankruptcy, and no bankruptcy court approval was needed.

Recently, however, three cases in the Eastern District of North Carolina Bankruptcy Court (which extends from Raleigh to the Coast) have ended this practice and called into doubt whether any lien right can be preserved after the general contractor files bankruptcy.  The three cases are In re Shearin Family Investments, LLC, Case No. 08-07082080-JRL (Bankr. EDNC April 17, 2009); In re Harrelson Utilities, Inc., Case No. 09-025815-8-ATS (Bankr. EDNC July 30, 2009); and In re Mammoth Grading, Inc., Case No. 09-01286-8-ATS (Bankr. EDNC July 31, 2009).

In these cases, the Courts have held that no lien arises until it is perfected; therefore, if the notice of a lien on funds is not served prior to the bankruptcy filing, it is disallowed and the subcontractor (or supplier) will be treated as an unsecured creditor in the bankruptcy.  The Harrelson and Mammoth cases are on appeal, and the issue currently only concerns the Eastern District, although the Middle and Western Districts would likely treat those opinions with deference.

If these decisions stand, and become the new law of the land, then contractors and material suppliers must remain extra vigilant about account receivables and in pursuing lien rights if any sign of financial insecurity is suspected in the general contractor.

A detailed discussion of the facts of these three cases and each of their legal holdings can be found in article “To Assert or Not to Assert? Can Contractors Afford to Wait to assert Their Lien Rights”  (by Wayne Maiorano, Amos Priester, and Anna Osterhout), which first appeared in the October 2009 issue of the North Carolina Bar Association‘s  Construction Law Section newsletter, The Change Order.

 

Green Design | Legal risks to designing a Construction project for LEED certification (take 2)

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As I noted in an earlier post about risks related to designing buildings for LEED certification, those involved in construction should proceed cautiously in designing to certain LEED standards.

A recent Insurance Journal article discusses insurance and liability risks for a designer or contractor if he guarantees a certain level of “green” performance in his construction contract.

“If you’re an architect, engineer, or contractor, and you’re guaranteeing to your client that the building will be Gold certified by the U.S. Green Building Council, you’re opening up a pretty big can of worms.”

You should never “guarantee” any performance to keep your risks minimized, your insurance in place, and your attorney happy. This article is another reminder to be especially cautious in green construction, and to not make promises that you may not be able to keep.

Risks in designing for LEED certification

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“Green” building is a hot topic for construction professionals, and the coveted LEED certification (Leadership in Energy and Environmental Design) is the gold standard in demonstrating a commitment to environmentally friendly building.

According to the US Green Building Council which developed the LEED system, LEED is “an internationally recognized green building certification system, providing third-party verification that a building or community was designed and built using strategies aimed at improving performance across all the metrics that matter most: energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts,”

Because LEED certification is relatively new, the legal implications of designing to obtain a specific LEED certification are still being hammered out. Potential risk in designing to a specific LEED standard is the failure of a building, once built, to meet the green criteria it was supposed to meet.

Case in point: Charlotte’s ImaginOn, a Children’s Theatre and Public Library facility. Designed as one of Charlotte’s first LEED buildings, ImaginOn is not meeting the green requirements it was designed to meet. This is due, in large part, to the popularity of the Center, which has led to an increase in operating hours and, of course, associated energy costs.

As noted in the Charlotte Observer, “the episode illustrates gaps between energy-saving potential and actual performance.”

Whether or not the increased hours should be considered as foreseeable, questions remain. Should such a situation be considered a breach of warranty? A changed condition? Or a little of each?

Until these matters get resolved in the Courts, it is wise practice to design with LEED goals but not certification or performance guarantees. All parties should recognize that circumstances may change which will prevent LEED certification or which will in other ways limit or eliminate any energy efficiencies which are anticipated.

Update:  For more risks in designing for LEED certification, check out my post: Legal risks in designing a Construction project for LEED certification (take 2)