Mitigating LEED Certification Risks for Contractors, Engineers, and Architects using Contingency Planning

LEED Certifications are great branding tools.

Having such a certification is a very efficient way to communicate the values of the building owners to potential employees and stakeholders that care about the environment.  However, these certifications can pose some risks for Contractors, Engineers, and Architects. There are certain risk mitigation techniques for Contractors, Engineers, and Architects in Nebraska, Iowa, Kansas, and Missouri can use.

Building owners may want to seek a LEED or Certification for a variety of reasons.  Perhaps they can build a taller building if it is LEED Certified.   Many municipalities now require LEED certification for buildings over a certain height or size.  One list as of July, 2019 is available here. For example, Kansas City, Missouri passed Ordinance 110235 in 2011 for all new municipal buildings over 5,000 sq ft to earn LEED Gold certification.

One way to mitigate the risk that a construction project fails to meet the required LEED Certification is to plan for extra points so that if points are lost due to design changes, the Owner is not left with a continuing ordinance violation (or extensive additional project costs to add required modifications) if the planned certification does not occur.

The parties may want to stipulate in the agreement that certain damage categories are not recoverable (such a lost rental income or resale value).   However, Contractors, Architects, or Engineers may be willing to assist with limited costs if modifications are necessary to meet the initial certification.

Another issue can be posed by delays.  In one “green litigation” case, projects could apply for the Final Credit Certificate upon receiving a certificate of occupancy after construction is complete.  A LEED-AP was required to submit an Eligibility Certificate stating that the building meet the criteria necessary to receive the tax credit (i.e., it meet the requirements to qualify for a LEED Silver rating).   However, the Initial Credit Certificate expired prior to the project obtaining its Final Credit Certificate.  Thus, available credits were put back into the program’s pool, the project slides back in line, and must reapply.  It’s important to consider the impact of delays in the delivery date of the project on certifications and tax credits.

An Integrated Project Delivery (IPD) approach may be the best way to ensure the many players that can affect LEED Certification are on the same page.  Major project participants can each have a shared financial stake in mitigating risks that otherwise would be “someone else’s problem”, those team members are more likely to offer help in solving the problem.

Angela Madathil is happy to assist if Contractors, Architects, and Engineers in Nebraska and Kansas need assistance reviewing your Engineering Services Agreement, Construction Agreement, and Integrated Project Delivery Agreement to consider and resolve these issues.

Angela Madathil is a Construction Attorney and provides legal assistance to Contractors, Architects, and Engineers in Iowa, Missouri, Nebraska and Kansas.   This can involve contract review and negotiation, ongoing contract guidance during a project, and risk mitigation when issues arise.  The Goosmann Law Firm team advises Contractors, Architects, and Engineers throughout the Midwest and has attorneys licensed in Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota, and other states.