Hinterland Green

Saturday, December 12, 2009

Two Proposed Changes being Made to the Washington D.C. Green Building Act of 2007, Apply to the Surety Industry

Several revisions to the Green Building Act of 2007, which phased in green building in Washington D.C., are being proposed to clear up some of the confusion surrounding what it covers and to update the act. There are two proposed changes that apply to the surety industry. The first, proposes that the phrase "performance bond" be replaced with the word "bond." Companies in the surety industry, such as Surety Bonds, guarantees the completion of construction projects by issuing a wide variety of bond. These companies have been questioning the enforcement tactic in the current act, by saying the provision is patently unclear and saddled with more risks than relief. 

In essence, if a project fails to meet the green requirements, Washington D.C. would obtain funds from a performance bond that has been posted for the project in an amount of up to four percent of the building costs, or $3 million. That money would then be put into a new city green building fund, whose primary aim would be helping to implement legislation. This mandate has left surety companies, such as Surety Bonds, puzzled as to which party in the project, whether the building owners, the contractors or the designers, would have to pay for the performance bond and ultimately bearing the risk of failing to comply with the Act.

The D.C.-based National Association of Surety Bond Producers and the D.C. Building Industry Association have asked the D.C. Council, which passed the Act in 2006, to amend the language in the act because they claim it is wrong. They maintain that if the phrase "performance bonds" remained, it would result in reluctance from the surety companies to back the bonds. Developers must provide these "performance bonds" for each project seeking green building certification, such as LEED.

The second major change that is being proposed to the act is to force compliance to the latest Leadership in Energy and Environmental Design, or LEED, standards published in 2009. Starting January 1, 2012, all new construction projects in Washington D.C. will be required to report energy usage to the U.S. Green Building Council to ensure LEED certification. A public hearing on the revisions is set for December 14.

According to the Department of Consumer & Regulatory Affairs, the Green Building Act of 2006, requires that commercial buildings be certified, using the LEED Green Building Rating System. LEED is a nationally-renowned benchmark for green building design, construction and operation. It is a whole-building approach to sustainability. The Act also launches a green building incentive program, a Green Building Fund and a Green Building Advisory Council.

Photo credit:  Building Commissioning
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