On January 27, Whiteford, Taylor & Preston proudly accepted the President's Award from the USGBC-MD. WINTERGREEN, The Maryland Chapter of the U.S. Green Building Council's (USGBC) sixth annual awards celebration recognizing excellence and innovation in green building design, honored 16 buildings, seven companies and six individuals. The President's Award was established to recognize the valuable contributions volunteers are making in green building and encourage more people to serve. The USGBC Maryland created the President's Award as a way to thank and honor organizations that, by their demonstrated commitment to sustainability and by example, inspire others to share our mission of transforming the way buildings are designed, built and operated.Friday, April 1, 2011
Whiteford,Taylor & Preston Receives the President's Award from USGBC Maryland
On January 27, Whiteford, Taylor & Preston proudly accepted the President's Award from the USGBC-MD. WINTERGREEN, The Maryland Chapter of the U.S. Green Building Council's (USGBC) sixth annual awards celebration recognizing excellence and innovation in green building design, honored 16 buildings, seven companies and six individuals. The President's Award was established to recognize the valuable contributions volunteers are making in green building and encourage more people to serve. The USGBC Maryland created the President's Award as a way to thank and honor organizations that, by their demonstrated commitment to sustainability and by example, inspire others to share our mission of transforming the way buildings are designed, built and operated.
Maryland Legislature Poised to Extend Option of "Benefit" Status to LLCs
Maryland limited liability companies that pride themselves on their commitment to environmental and social responsibility soon may be able to obtain legal recognition, separate from their less magnanimous competitors. If passed, Senate Bill 595 and its companion House Bill 1151 will allow willing limited liability companies to elect "Benefit" status--similar to the "Benefit" status already available to Maryland corporations.
Under the new law, a "Benefit LLC" would be a for-profit enterprise that nevertheless chooses to place a premium on creating a perceived positive impact on the environment and society. Although the managing members of a Benefit LLC would owe their fiduciary duties exclusively to the company (like the managers of any business), their obligation to act in furtherance of the company's environmental and social philosophies in addition to the company's financial interests (as opposed to solely the financial interests) means that what constitutes satisfactory performance of those fiduciary duties would be quite different from what is expected from the directors or managers of a traditional corporation or LLC.
The legal advantage to Benefit LLC status would be that such a company's managing members would enjoy a significant degree of insulation from liability, if a disgruntled member files a derivative action based on the company's decision to forgo maximum profitability in the name of environmental or social responsibility. This would provide the managing members with greater freedom in running the business (however, there is a compelling argument that, in one sense, the managing members of a Benefit LLC actually would have less freedom, as their ability to pursue profits would be tempered).
Although still little-known and even less understood, Benefit status has been available to willing corporations in Maryland since October, 2011. Vermont also allows corporations to elect a similar legal status. In a Benefit corporation, directors must consider a proposed decision's impact on the long-term financial well-being of the company, the environment, the community, the company's employees, and society in general. To lessen the subjectivity involved in deciding the proper balance of those considerations, the Benefit corporation law requires directors of a Benefit corporation to inform their decision-making by looking to independent third-party standards that assess best practices in corporate social and environmental performance.
It appears that the Benefit LLC law will be similar, if not identical, in that regard. LLCs willing to elect Benefit status were right to complain about not being included in the Benefit corporation law, when it went into effect in October. As it turns out, many of the corporations electing Benefit status are small businesses with one or two shareholders, unlikely to wind up embroiled in derivative litigation. For such a corporation, however, there is nevertheless a very real business advantage in being able to say that the company is vetted as a good corporate citizen. That is what many LLCs want to be able to say as well, and the reason they would like to see the Benefit LLC law passed.
If the Benefit LLC law is enacted, its practical effect for participating LLCs, many of which likely will be small businesses with one or two owner-operators, will be that those companies can now market themselves as environmentally and socially conscious to potential customers, suppliers, investors, or anyone else they may hope to do business with. Because a Benefit LLC's legal framework would require it to work for a positive environmental and societal impact, as measured by a third-party standard, others considering doing business with the company would know that the company's stated ethos is more than just puffery. That could be a significant business advantage. Indeed, consumers are placing more and more emphasis on environmentally sustainable products and services. Moreover, many larger corporations are starting to create positions for "chief sustainability officers," whose job is to improve the corporation's environmental performance; thus, companies with Benefit status might have a distinct advantage over competitors, when seeking to supply goods or services to those large corporations.
For many small businesses, incorporating simply is impracticable because of the tax consequences. Thus, they operate as LLCs. Currently, however, the business advantage of Benefit status is not available to LLCs. By enacting the Benefit LLC law, the Maryland General Assembly would promote environmental and social responsibility and encourage business growth in Maryland. Both goals are laudable.
--Peter Sheehan
Under the new law, a "Benefit LLC" would be a for-profit enterprise that nevertheless chooses to place a premium on creating a perceived positive impact on the environment and society. Although the managing members of a Benefit LLC would owe their fiduciary duties exclusively to the company (like the managers of any business), their obligation to act in furtherance of the company's environmental and social philosophies in addition to the company's financial interests (as opposed to solely the financial interests) means that what constitutes satisfactory performance of those fiduciary duties would be quite different from what is expected from the directors or managers of a traditional corporation or LLC.
The legal advantage to Benefit LLC status would be that such a company's managing members would enjoy a significant degree of insulation from liability, if a disgruntled member files a derivative action based on the company's decision to forgo maximum profitability in the name of environmental or social responsibility. This would provide the managing members with greater freedom in running the business (however, there is a compelling argument that, in one sense, the managing members of a Benefit LLC actually would have less freedom, as their ability to pursue profits would be tempered).
Although still little-known and even less understood, Benefit status has been available to willing corporations in Maryland since October, 2011. Vermont also allows corporations to elect a similar legal status. In a Benefit corporation, directors must consider a proposed decision's impact on the long-term financial well-being of the company, the environment, the community, the company's employees, and society in general. To lessen the subjectivity involved in deciding the proper balance of those considerations, the Benefit corporation law requires directors of a Benefit corporation to inform their decision-making by looking to independent third-party standards that assess best practices in corporate social and environmental performance.
It appears that the Benefit LLC law will be similar, if not identical, in that regard. LLCs willing to elect Benefit status were right to complain about not being included in the Benefit corporation law, when it went into effect in October. As it turns out, many of the corporations electing Benefit status are small businesses with one or two shareholders, unlikely to wind up embroiled in derivative litigation. For such a corporation, however, there is nevertheless a very real business advantage in being able to say that the company is vetted as a good corporate citizen. That is what many LLCs want to be able to say as well, and the reason they would like to see the Benefit LLC law passed.
If the Benefit LLC law is enacted, its practical effect for participating LLCs, many of which likely will be small businesses with one or two owner-operators, will be that those companies can now market themselves as environmentally and socially conscious to potential customers, suppliers, investors, or anyone else they may hope to do business with. Because a Benefit LLC's legal framework would require it to work for a positive environmental and societal impact, as measured by a third-party standard, others considering doing business with the company would know that the company's stated ethos is more than just puffery. That could be a significant business advantage. Indeed, consumers are placing more and more emphasis on environmentally sustainable products and services. Moreover, many larger corporations are starting to create positions for "chief sustainability officers," whose job is to improve the corporation's environmental performance; thus, companies with Benefit status might have a distinct advantage over competitors, when seeking to supply goods or services to those large corporations.
For many small businesses, incorporating simply is impracticable because of the tax consequences. Thus, they operate as LLCs. Currently, however, the business advantage of Benefit status is not available to LLCs. By enacting the Benefit LLC law, the Maryland General Assembly would promote environmental and social responsibility and encourage business growth in Maryland. Both goals are laudable.
--Peter Sheehan
Wednesday, June 30, 2010
USGBC-Maryland's New Headquarters
The USGBC Maryland Chapter will showcase its new Hunt Valley headquarters tomorrow, July 1, at 5:30 pm with a “See the Green Building Tour.” For more information on the event and to register, click here. The new office is in Schilling Green, Maryland’s first speculative LEED Platinum Core and Shell building. Schilling Green features a green roof and rooftop photovoltaic panels, among other green elements. Whiteford, Taylor & Preston’s Tom Barbuti, LEED AP and Tami Daniel represented the Maryland Chapter on a pro bono basis in negotiating the lease for the new space with the building’s owner, Merritt Properties, as well as a sponsorship agreement whereby Merritt Properties has become a major sponsor of USGBC-Maryland.
Thursday, June 24, 2010
Green Building and Sustainability Newsletter: DOE Proposes New Standards for Federal Buildings; Baltimore County's Tax Credit for High Performance Homes
Every two weeks, Whiteford, Taylor & Preston’s Green Building and Sustainability Industry Group publishes an e-newsletter, edited by Adam Baker, LEED AP BD+C, covering sustainability issues that impact a wide array of industries, including Real Estate, Construction, Government Contracts, Manufacturing, and Intellectual Property. The latest edition can be found here. It features an article by Martha Perkins on proposed new standards from the Department of Energy for energy efficiency and sustainable design for the construction and major renovation of federal buildings; a piece by Jennifer Busse, LEED AP BD+C on green residential property tax credits in Baltimore County, also briefly discussed in this recent Green Building Law Brief post; and a recap of the USGBC-Maryland Chapter's 2010 Maryland General Assembly Session Green Legislation Wrap-Up Event, hosted by Whiteford, Taylor & Preston at our Baltimore office on June 9.
Wednesday, June 23, 2010
Update on Baltimore County's Green Residential Property Tax Credit
The Baltimore County Council has now passed a green residential property tax credit bill, No. 43-10, that maintains the county's grant of a tax credit for residences attaining a LEED for Homes Silver or better rating. As noted in an earlier Green Building Law Brief post, the initial version of this bill did not include LEED standards in establishing eligibility. The version as passed adds to the existing law by granting tax credits based entirely on the home’s energy efficiency, as established using either the Home Energy Rating System (HERS) or the Passive House standards, as well as the credits based on LEED standards.
Summer 2010 Construction Update Newsletter: Hybrid Public/Private Construction Projects; Sovereign Immunity Held by Maryland School Boards
Whiteford, Taylor & Preston's Construction Industry Group periodically publishes the Construction Update newsletter, edited by Lisa Sparks, LEED AP O+M, which covers legal issues of note to the construction industry. The Summer 2010 edition is out now. It features an article by Bob Carney and Lisa on the increased use of hybrid public/private construction projects, adapted from a paper the two authored earlier this year, Is It Public or Not?, which was presented by Bob at the 2010 ABA Forum on the Construction Industry MidWinter Meeting, held January 27-29, 2010 in San Francisco. The newsletter also includes a piece by Will Pearce, LEED AP BD+C on the Maryland Court of Special Appeals' recent decision in Board of Education of Worcester Co. v. BEKA Industries, in which the court addressed the sovereign immunity of Maryland’s county school boards to breach of contract actions and the application and enforceability of a no-damages-for-delay clause in a cosntruction contract. Most notably, the court held that in order for the waiver of sovereign immunity applicable to the school boards to be effective, the board must have appropriated funds available to satisfy the judgment. Since the newsletter went to print, the Maryland Court of Appeals, Maryland's highest court, granted certiorari and is expected to hear arguments in the appeal later this year.
Thursday, June 10, 2010
Green Building and Sustainability Newsletter: The Growth Goals of Baltimore County's Master Plan 2020 - Are PUDs the Answer?
Baltimore County's Master Plan 2020 will focus on sustainable development more than any previous plan developed by the county, promoting higher density, mixed use development types and walkable communities. The new approach to development is expected to result in significant decreases in stormwater runoff and vehicle miles traveled. In the latest edition of the Green Building and Sustainability Newsletter, Jennifer Busse looks at what's anticipated to be in the new plan, still in the process of formulation by the county, and how Planned Unit Developments ("PUD's") may play a substantial role in carrying out the goals of the new master plan.
Tuesday, June 8, 2010
The New Broadneck High School Environmental Literacy Signature Program
Broadneck High School (Annapolis, Maryland) will launch its new Environmental Literacy Signature Program tomorrow, June 9, with a kickoff event at the school at 5 p.m. Anne Arundel County Public Schools' Signature Schools program calls for each of the county's high schools to focus on a specific theme across its curriculum. Broadneck's Environmental Literacy Signature Program is the second such program to launch; the first was Meade High School's Homeland Security Signature Program. Whiteford, Taylor & Preston's Will Pearce was among the citizens who assisted in the introduction of the program to the school system's Signature Programs committee, presenting on the importance of green procurement to the county's economy. Click here for the press release from the school system announcing the program kickoff. The community is invited to the event; click here for more information.
Friday, June 4, 2010
The Newly Released AIA A312-2010 Performance and Payment Bond Forms
Green Building contractors and subcontractors should be aware that The American Institute of Architects recently released updated versions of its widely used A312 Performance and Payment Bonds and A310 Bid Bond. Click here for the AIA’s Commentary on the change, featuring the text of the new bond forms and for each, a comparison of the new version with the previous version (the AIA A312-1984 for the Performance and Payment Bonds, the AIA A310-1970 for the Bid Bond).
Probably the most notable feature of the new A312 is the addition of language that would avoid the effect of National Union Fire Insurance Co. v. David A. Bramble, Inc. Under the A312-1984 form, the surety has 45 days from receiving a payment bond claimant’s notice of bond claim to provide the claimant with a response “stating the amounts that are undisputed and the basis for challenging any amounts that are disputed.” In the Bramble case, decided in 2005, the Maryland Court of Appeals held that where the surety fails to provide this response under the A312-1984 payment bond form, it waives its defenses to the claimant’s payment bond claim, regardless of whether the claim is valid or the amounts sought are legitimately owed to the claimant by the bond principal. Few courts that have addressed the issue in the years since have agreed with the Bramble court’s holding, but the issue has not been definitively addressed in most jurisdictions.
In opposition to the adoption of the Bramble holding by courts in other jurisdictions, sureties have argued, among other things, that the penalty of a waiver of all defenses is too steep, that construing a surety’s silence as a waiver contravenes longstanding principles of contract interpretation, and that the 45-day period is too short to conduct an investigation on a complex construction project, especially given that the claimant is required to give little information in order to provide notice of its claim.
The surety industry’s concerns have resulted in changes in the new form. Under the A312-2010 form, the surety has 60 days to respond to the claimant, and for those subcontractors without a direct contract with the bond principal, this period starts to run only when the claimant provides the surety with a written statement similar to that required under public works bonds.
The most significant change is an explicit rejection, in Section 7.3, of any waiver of surety’s defenses for failure to respond. The new form provides that the claimant is not entitled to such a waiver if the surety fails to respond, but can recover attorney’s fees incurred in seeking amounts found to be due and owing to the claimant. The American Subcontractors’ Association has criticized this new provision, calling it “unfathomable” and arguing that it is unfair to bond claimants, who in some jurisdictions can lose entirely their rights to payment under a bond if they fail to comply strictly with its notice provisions, including claim submission deadlines.
It remains to be seen how widely used the A312-2010 form will be in both the short and long term. For years, the A312-1984 form has been relatively common in the industry. Owners and contractors, who generally mandate specific bond forms in their construction contracts with contractors and downstream subcontractors, will not be required to use the new form in place of the previous version, so the A312-1984 may well continue to see significant use in the coming years. Even today, some project owners still use the old AIA A311 bond forms, which were long ago replaced by the AIA A312-1984.
It’s worth noting that sureties, obligees, and bond principals can amend the bond language, so even where an A312-1984 form is used, it may include additional language similar to that in the new form, expressly disclaiming any intent to waive defenses from the surety’s failure to respond to a notice of claim. Such language has been added to the A312-1984 form for many projects since the Bramble decision came down; in 2008, the AIA even came out with its own such amendment to the A312-1984 to deal with the waiver issue. But not all users of the AIA A312-1984 necessarily included this new amendment in the A312 payment bonds mandated for their projects. So all parties have to pay close attention to the specific payment bond issued for their specific project in submitting and responding to bond claims. As they say in the industry: RTFB.
-- Will Pearce, LEED AP BD+C
Probably the most notable feature of the new A312 is the addition of language that would avoid the effect of National Union Fire Insurance Co. v. David A. Bramble, Inc. Under the A312-1984 form, the surety has 45 days from receiving a payment bond claimant’s notice of bond claim to provide the claimant with a response “stating the amounts that are undisputed and the basis for challenging any amounts that are disputed.” In the Bramble case, decided in 2005, the Maryland Court of Appeals held that where the surety fails to provide this response under the A312-1984 payment bond form, it waives its defenses to the claimant’s payment bond claim, regardless of whether the claim is valid or the amounts sought are legitimately owed to the claimant by the bond principal. Few courts that have addressed the issue in the years since have agreed with the Bramble court’s holding, but the issue has not been definitively addressed in most jurisdictions.
In opposition to the adoption of the Bramble holding by courts in other jurisdictions, sureties have argued, among other things, that the penalty of a waiver of all defenses is too steep, that construing a surety’s silence as a waiver contravenes longstanding principles of contract interpretation, and that the 45-day period is too short to conduct an investigation on a complex construction project, especially given that the claimant is required to give little information in order to provide notice of its claim.
The surety industry’s concerns have resulted in changes in the new form. Under the A312-2010 form, the surety has 60 days to respond to the claimant, and for those subcontractors without a direct contract with the bond principal, this period starts to run only when the claimant provides the surety with a written statement similar to that required under public works bonds.
The most significant change is an explicit rejection, in Section 7.3, of any waiver of surety’s defenses for failure to respond. The new form provides that the claimant is not entitled to such a waiver if the surety fails to respond, but can recover attorney’s fees incurred in seeking amounts found to be due and owing to the claimant. The American Subcontractors’ Association has criticized this new provision, calling it “unfathomable” and arguing that it is unfair to bond claimants, who in some jurisdictions can lose entirely their rights to payment under a bond if they fail to comply strictly with its notice provisions, including claim submission deadlines.
It remains to be seen how widely used the A312-2010 form will be in both the short and long term. For years, the A312-1984 form has been relatively common in the industry. Owners and contractors, who generally mandate specific bond forms in their construction contracts with contractors and downstream subcontractors, will not be required to use the new form in place of the previous version, so the A312-1984 may well continue to see significant use in the coming years. Even today, some project owners still use the old AIA A311 bond forms, which were long ago replaced by the AIA A312-1984.
It’s worth noting that sureties, obligees, and bond principals can amend the bond language, so even where an A312-1984 form is used, it may include additional language similar to that in the new form, expressly disclaiming any intent to waive defenses from the surety’s failure to respond to a notice of claim. Such language has been added to the A312-1984 form for many projects since the Bramble decision came down; in 2008, the AIA even came out with its own such amendment to the A312-1984 to deal with the waiver issue. But not all users of the AIA A312-1984 necessarily included this new amendment in the A312 payment bonds mandated for their projects. So all parties have to pay close attention to the specific payment bond issued for their specific project in submitting and responding to bond claims. As they say in the industry: RTFB.
-- Will Pearce, LEED AP BD+C
Friday, May 28, 2010
Green Building Video Roundup
We're not going to delve into anything deeply substantive until after the holiday weekend. Check out these video shorts on Green Building topics:
- Baldwin Homes' new Preserve at Severn Run community features an innovative Coastal Outfall System for stormwater management, designed to create its own ecosystem in a few years, so it might not even be perceptible as a stormwater management system. Click here for a video presentation on the system.
- Trauner Consulting's Construction Netcast site features netcasts on a number of construction topics. Click here to see Scott Lowe discuss the use of photographs to document issues on the jobsite as they occur.
- Energy Star's National Building Competition is a competition among 14 commercial and institutional buildings nationwide to see who can eliminate the most energy waste. Two area buildings are among the contestants: the 1525 Wilson Boulevard office building in Arlington, Virginia and the Sears in the Marley Station Mall in Glen Burnie, Maryland. Energy Star is styling the contest as a reality show, "Biggest Loser"-esque event. In that spirit, click here for a pep talk to the contestants from fitness expert Bob Harper.
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