LEED Decertification
If you think LEED certification of a building is a one-time deal, think again.
USGBC’s latest version of LEED (version 3) establishes several new changes to LEED certification. Two of those changes are particularly significant. First, USGBC now requires building owners to submit operational performance data on a recurring basis as part of the LEED certification process. Building owners must provide the data for a period of at least five years. Second, and perhaps more important, LEED v.3 gives USGBC the right to decertify projects.
According to the USGBC, building owners can comply with this new data disclosure requirements in one of three ways:
1. Recertify the project on a two-year cycle using LEED for Existing Buildings: Operations & Maintenance;
2. Provide energy and water usage data on an on-going basis annually; or
3. Sign a release that authorizes USGBC to access the building’s energy and water usage data directly from the building’s utility provider.
As to decertification, LEED v.3 provides that certification "may be revoked" from any LEED project upon the USGBC's determination that a building does not comply with several minimum requirements, including environmental law and data disclosure requirements.
The impact of USGBC’s new enforcement right is unknown at this time. Indeed, USGBC has not yet decertified a project. However, one thing is clear: this new system of decertification may put your green investment at risk. Owners should have their attorneys draft contract provisions to protect against these risks during the design, construction, and post-construction stages of a project
New Oregon statute shortens period for asserting building defect claims on "large" commercial projects.
On July 14, 2009, Oregon Governor Ted Kulongoski signed HB 2434 passed in June by the Oregon Legislative Assembly. Although a chapter number has not yet been assigned to the new act, the law will go into effect for building defect claims that arise on or after January 1, 2010.
As addressed in prior Legal Updates from Stoel Rives’ Development Law Group, HB 2434 reduces from ten years to six years after substantial completion the maximum time period during which an owner of a "large commercial building" can assert claims against those who performed design, planning, surveying, architecture, engineering, construction, repair, or construction supervision or inspection of or for the building.
As defined in the statute, the term "large commercial building" includes but is not limited to:
- rental residential structures of more than four stories
- mixed-use projects
- commercial structures that cost more than $250,000 to construct
- motels, hotels, nursing homes, hospitals and recreational facilities
- commercial structures with a ground area over 10,000 square feet or a height over 20 feet
- commercial rental units in a larger structure, if the unit has a ground area of over 12,000 square feet or a height over 20 feet
The term "large commercial buildings" does not include publicly-owned buildings or condominium buildings.
One concern for affected building owners and developers is simply the shortening of the period from ten years to six years after substantial completion during which the owner or developer can pursue a defect claim of its own against the designer or contractor of the building.
A second concern, however, is that building owners and developers may end up with legal obligations to a purchaser or tenant regarding building defects for a longer period than the six years after substantial completion during which the owner or developer can assert the claim against the building’s designer or contractor. In this way, a building owner or developer could have a multi-year exposure to getting "caught in a squeeze" by having a defect claim asserted against it by a buyer or tenant yet having no right to assert that claim against the parties that designed and constructed the building.
Owners and developers of "large commercial buildings" in Oregon should consider modifying the claims, warranty, correction of defects, and statute of limitations provisions in their purchase and sale agreements, leases, and construction and design contracts to respond to the changes in Oregon law made by HB 2434.
If you have any questions about the issues of this posting, please contact James A. Zehren, a member of the Construction & Design Section of the Development Law Group in the Portland office of Stoel Rives LLP, at jazehren@stoel.com or 503-294-9616.
Oregon Statute Regarding Defective Design and Construction Claims Pending Governor Action
Oregon HB 2434, passed by the House of Representatives on May 4, 2009 and by the Senate on June 22, 2009, is currently awaiting the Governor’s approval or veto. The bill would reduce from 10 years to six years the maximum time period during which an owner of a "large commercial building" could assert claims against those who performed design, planning, surveying, architecture, engineering, construction, repair, or construction supervision or inspection of or for the building.
Read our full client alert on this topic.
If you are opposed to, or favor, this significant change in Oregon’s statutes, we encourage you to contact Governor Kulongoski. Because the Governor could take action on HB 2434 at any time, please convey your comments as soon as possible in order to increase the likelihood that they will be considered.
Chinese Drywall Reported In Oregon: How You Can Protect Yourself.
The Portland Business Journal recently stated that Chinese drywall has been reported in Oregon. In addition, late last week the United States Consumer Product Safety Commission (“CPSC”) issued a status report on its investigation into the imported drywall. This report states that 5,503,694 sheets of Chinese drywall were imported into the United States during 2006, so it is no surprise that Chinese drywall was used by contractors in Oregon.
Because the CPSC investigation is ongoing, we do not know whether the imported drywall will be recalled. While waiting for the CPSC to complete this report, if you suspect that a building that you occupy was built with defective drywall, you should:
- Investigate whether your building contains drywall from China. Chinese drywall may have “MADE IN CHINA” printed on its back side (the side facing the studs). In addition, the inner core of Chinese drywall may appear gray in color in comparison to the white inner core of domestically manufactured drywall.
- Look for corroded metal components throughout the building. Examples include door hardware, fixtures, pipes, wires and other exposed metal throughout the building. Corroded copper piping and copper wires may appear blackened from exposure to sulfur in the drywall.
If you believe that your building contains defective drywall, generally you should:
- Determine whether the drywall may be affecting your health. The CPSC has reported that the most commonly reported symptoms include irritated and itchy eyes and skin, difficulty in breathing, persistent cough, bloody noses, runny noses, recurrent headaches, sinus infection, and asthma attacks. Symptoms that may be related to something in a building may present themselves when you are inside but go away after you leave. If you are suffering from any of these or other symptoms, consult a physician immediately.
- Inspect the metal components in your building. In Oregon, a certified home inspector may be able to help you conduct an investigation. Of critical importance are components related your building’s electrical and gas systems. Because these systems have the potential to be hazardous to your health or property, they should be routinely inspected and repaired to decrease any risk of failure. Alert your local gas supplier if you believe your gas system has been affected. Likewise, consult a licensed electrical contractor for any issues related to your electrical system. Any inspections or repairs should be thoroughly documented to increase your ability to recover repair costs from those responsible.
- Submit a Consumer Product Incident Report to the CPSC, either through the CPSC website or by calling the CPSC toll-free at 1-800-638-2772.
- Contact your state and local authorities to report your concerns and get direction on any help or resources in your area.
- Contact your insurance company and contractor to report your concerns.
- Consult with an attorney regarding your legal rights and remedies.
Although we do not yet know whether the CPSC will require a recall of imported drywall, if it does, the repair costs and inconvenience to building owners and occupants will be significant. By taking appropriate steps, building owners may avoid potential hazards and place themselves in a position to recover repair costs should they be necessary.
A sign of hope: rental car garage at Sea-Tac to proceed
Puget Sound Business Journal reported this week that the Port of Seattle has announced that it will re-commence work on its 23-acre, $419 million dollar rental car facility at Seattle-Tacoma International Airport. The project was put on hold in December 2008 due to the anemic long-term bond market. According to the Port, it has now sold $317 million in revenue bonds to finance construction of the remainder of the massive parking structure, an optimistic sign that the finance markets (or at least the public bond markets) are starting to loosen up.
