Will the surety industry kill Washington's green building law?
Washington DC has one of the most progressive green building laws in the country. Passed in December 2006, Washington mandates, among other things, that private buildings above 50,000 square feet submit a checklist of green features by 2009, and meet LEED NC 2.2 standards by 2012. To enforce the law, there is a bonding requirement for each project.
Today's Washington Business Journal [subscription required, but you can get a synopsis of article here] reported that the surety industry is complaining that the enforcement mechanism is flawed:
Under the new law, if a project does not meet the strict green requirements, the city would receive money from a performance bond that has to be posted for the project in an amount of up to 4 percent of the building costs, or $3 million. Those dollars would be paid into a new city green building fund aimed at helping implement the legislation.
But the bonding mandate has surety companies wondering which party in the project — whether the building owners, the contractors or the designers — must shell out for the performance bond, therefore bearing the risk of noncompliance.
Without support from the sureties, which finance bonds, it will be difficult for Washington to enforce its law because construction projects won't be able to acquire the required bonds. If there is bond default, litigation will surely follow, funded either by the parties involved, or the surety guaranteeing the bond. Alternatively, the surety industry may choose to sue Washington, as the HVAC industry associations did to Albuquerque in AHRI v. City of Albuquerque, to enjoin the legislation from taking effect due to the poor drafting of the legislation.
Shari focuses on energy, environmental and building code policy, representing international companies, non-profits and trade associations in their policy and communications campaigns
