November 3, 2011

The Washington Business Journal reported on October 31 that legislation will be introduced in Washington D.C. that will create an alternative to the much maligned LEED bond requirement in the D.C. Green Building Act of 2006.

Under the Act, as currently written, as of January 1, 2012, all new construction greater than 50,000 square feet must obtain LEED certification. Under the proposed legislation, developers will be permitted to make a binding "pledge" that LEED certification will be attained.

Under the pledge route, if a new building fails to be certified LEED within two years of receiving its certificate of occupancy, the developer would be penalized $7.50 per square foot for buildings under 100,000 square feet, and $10 per square foot for buildings larger than 100,000 square feet.

Notably, the D.C. Council proposed to create an alternative enforcement mechanism instead of correcting the D.C. Green Building Act's many flaws. Two prominent surety associations outlined these flaws in a white paper for the D.C. Government. The associations suggested that LEED bonds would be made available if the legislation were to be corrected.

For design professionals and contractors working in Washington D.C., the LEED Pledge will mean more onerous contract terms.  If developers can be penalized up to $3 million for not achieving LEED certification, these same developers will require guarantees of LEED certification from design professionals and contractors. There may be penalty provisions in contracts that mirror the LEED pledge penalty.