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These days, there are few topics of greater interest in the commercial real

estate industry than green build-ing and sustainable design. The current perception among build-ing owners and developers is that potential tenants value the cost savings and positive public rela-tions aspects of green buildings and, accordingly, green build-ings will be more successful in attracting tenants in an otherwise difficult market. The most effec-tive way to market a building’s green or sustainable features is through third-party certification, the most common of which is the Leadership in Energy and Envi-ronmental Design certification issued by the U.S. Green Build-ing Council. LEED provides dif-ferent rating systems for different types of buildings, including rat-ing systems for new construction, existing buildings and tenant fin-ish. Available certifications range from the lowest level (certified) to the highest level (Platinum). In addition to marketing benefits, LEED certification may provide additional benefits to building owners and developers, such as tax and zoning incentives or bet-ter financing terms.

Many articles written on this subject naturally focus on the benefits of green building, includ-ing energy cost savings and a reduced impact on the natural environment. From a legal stand-point, many discussions of green building and sustainable design issues have centered on lease agreements, and the allocation of costs and responsibilities between landlords and tenants. However, equally important are issues relat-ed to contracts between building owners, including developers, and green building profession-als, such as design professionals, engineers and LEED consultants. It is important for these parties to carefully allocate the risks asso-ciated with green building and sustainable design and to express those risk allocations in prop-erly drafted agreements. This article focuses on contracting issues between building own-ers, including developers, and LEED consultants. In preparing these contracts, owners, develop-ers, LEED consultants and their respective counsel should pay careful attention to the key issues discussed below.

n Goals and methods. Own-ers seeking LEED certification for their projects will want to deter-mine in advance, to the extent

p o s s i b l e , whether such c e r t i f i c a -tion will be received and at what level. However, it is difficult for LEED consul-tants to predict with certainty that any given project will receive LEED certification at a specific

level. LEED credits, which pro-vide points toward certification, are obtained in differing ways and at differing costs to the build-ing owner. As such, the ability of a LEED consultant to achieve these points for a project will be dictated, in part, by project con-ditions that may not be known at the time of contracting and, in part, by the owner’s willingness to expend funds as necessary to achieve credits. Achieving cred-its, and thereby points, toward LEED certification often involves collaboration between building owners, LEED consultants, other green building professionals and additional subcontractors. It is therefore difficult, from a practi-cal standpoint, and unwise, from a liability standpoint, for LEED consultants to offer any guaran-tee that a project will receive a certain level of LEED certifica-tion.

Rather than a specific guarantee of certification, a LEED consulting agreement should describe the owner’s goal of obtaining LEED certification for a project (and the level of certification desired) and provide a general description of the methods to be used by the LEED consultant to obtain such certification. Often, these goals and methods may be incorporat-ed into, or guided by, the LEED consultant’s proposed “scope of work,” in which case, owners should ensure that the consul-tant’s “scope of work” is consis-tent with the owner’s desired goals and methods, and that those goals and methods are properly expressed in the agreement. For example, a contract provision related to goals might state an owner’s “desire” to obtain LEED certification at the “Silver” level, or at the “highest possible” level. Additionally, a provision related to methods might provide guid-ance with respect to the owner’s priorities for achieving necessary credits. For instance, in a LEED

consulting agreement related to an existing building (LEED for Existing Buildings: Operations & Maintenance), an owner may want the LEED consultant to give priority to the most cost-effective LEED credits, such as changes to building operations, before seek-ing credits that require substan-tial capital investment.

n Performance standards and collaboration. While it is important to ensure that all the parties are on the same page in terms of the building owner’s goals with respect to LEED cer-tification, it is also advisable for the parties to a LEED consult-ing agreement to provide perfor-mance standards for the LEED consultant, such as timelines for the delivery of plans, preparation of credit schedules or submit-tals to the USGBC. Additionally, although it may seem obvious, as a part of the consulting contract’s performance standards, building owners should expressly prohibit the LEED consultant from taking any action that could threaten or jeopardize the project’s receipt of LEED certification at the desired level. For example, in the case of new construction (LEED for New Construction and Major Renovations), such actions might include using nonrecycled mate-rials, if the parties are planning to achieve LEED points under the credit for using recycled con-tent materials (MR Credit 4). In the event that the LEED consul-tant’s actions do threaten LEED certification for the project, the agreement should require that the consultant take any actions that may be necessary to correct the problems.

Even though it is important for building owners to establish performance standards for LEED consultants, it also is wise for LEED consultants to require an acknowledgement of the collab-orative nature of the LEED cer-tification process from building owners. To avoid any potential ambiguity, such an acknowledge-ment should state that the proj-ect’s receipt of LEED certification, and the specific level achieved, may be dependent on the own-er’s willingness to expend funds and incur costs to obtain LEED credits and should also identify any other responsibilities of the owner in the LEED certification process. The inclusion of this language provides LEED con-sultants with some level of con-

Key issues for LEED consulting

Justin D. Pless Attorney, Pless Law Firm LLC, Denver

Please see Law, Page 39

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September 1-September 14, 2010 — COLORADO REAL ESTATE JOURNAL — Page 39

tractual protection in the event that the consultant enters into an agreement to seek LEED cer-tification for a project, only to find the project hamstrung by an owner who is unwilling to expend the necessary funds to obtain certification.

n Damages. Finally, as with any contract, it is important for a LEED consulting agreement to provide for damages in the event of breach. Because ordi-narily LEED consultants will

not guarantee that a project will receive LEED certification, own-ers should structure the default provisions in their LEED con-sulting agreement so that the consultant will be liable for dam-ages suffered by the owner, if the project fails to receive LEED certification (or receives a lower level of certification) due to the negligence or intentional mis-conduct of the consultant. While not a guarantee, such a provi-sion provides some recourse to the owner in the event LEED certification at the desired level

is not achieved because of mis-takes or improper conduct by the consultant.

Such a provision should also identify specific types of dam-ages that may be suffered by the owner as a result of the failure of the project to receive LEED certification at the desired level, including consequential dam-ages. For example, such conse-quential damages might include the loss of tax benefits related to LEED certification, loss of financing or favorable financ-ing terms, loss of LEED related

favorable zoning variances or damage to the projects branding or marketing. Because contract damages are based upon the expectations of the party at the time the contract is formed, it is important for the parties, espe-cially building owners in this circumstance, to be clear about their expectations at the time of contracting.

n Conclusion. There are risks inherent in every transaction and in every contract. Agreements for LEED consulting services are no different. However, the risks

associated with LEED consulting agreements may be even greater because green building and sus-tainable design is a relatively new area of the law, and there are few statutes or court deci-sions allocating risks and liabili-ties between contracting parties. Accordingly, building owners and LEED consultants should pay careful attention to the pro-visions and considerations dis-cussed above and should care-fully draft agreements that allo-cate risks in accordance with the intention of the parties.s

vation for deconstruction is to better the environment and use materials to their full potential,

it is still a business and needs to be monetarily worthwhile. That is why demolition is usually the method used because of the time it takes compared with decon-

struction. Therefore, residential and small commercial buildings are the most feasible projects to deconstruct since they can be taken down over a period

of weeks. A 45-story skyscraper downtown may take a little bit longer. Nonetheless, throwing away perfectly good materials that can be reused or recycled is

an inefficient and unsustainable practice. With natural resources in finite supply, using decon-struction methods makes good sense and cents.s

to achieve the sought-after pro-

ceeds. If the loan is coming up for

refinance in a year, it is impor-

tant to start reporting correctly in the upcoming year. The finan-cial institution may look past the

other historical years and focus on the most recent year. Until financing begins to loosen up, the

loan proceeds will be based off verified income levels and P&Ls will generally be ignored.s

existing buildings were built in 1963 and subsequently remod-eled and expanded.

The newspaper will move to

Karlin’s 25,000-sf building at 5450 Western Ave. The Camera signed a five-year lease with options. Build-out should be completed by December, Gibbons said.

“This transaction created an

opportunity for the Daily Cam-era to create more efficient office space and presents a great oppor-tunity for downtown Boulder to re-create a prime space to benefit the community,” said Carlbom.

Other Newsn There With Care, a nonprofit

organization that supports chil-dren and families facing critical illness, leased 2,121 square feet of

industrial space at 2825 Wilder-ness Place in Boulder.

Paige Coker Heiman of Acquire Inc. was the listing bro-ker. The landlord is 1000 South Associates.s

Law

Deconstruction

Maximizing

Boulder

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