Green Leases

Posted by admin on Feb 12, 2013 in Blog | 14 comments USE GREEN LEASES TO PUT MORE MONEY IN YOUR POCKET A Green Lease Guide For Commercial Owners And Tenants By now you certainly have heard of the benefits of a green lease: the energy savings; brand enhancement; and of course the increased rents. But, with all these benefits, should they be used in every case or are there pitfalls and how do you avoid them? To begin with, let’s define the term “green lease”. In actuality, it merely a lease, or a clause in a lease, that addresses “green” issues associated with the leased property. The great thing about green leases is that they can be anything you want them to be. It can be limited to a single issue such as allocating cost/benefit of energy savings from an energy upgrade or as complex as controlling the behaviors of the tenant including the recycling practices, use of cleaners, and landscapers, etc. In other words, it is one more tool for both tenant and owner in the leasing process that can have some real benefits for both parties, if used correctly. Benefits of Green Leasing Let’s take a quick look at the benefits of green leasing. For purposes of this article we are only going to talk about the energy efficiency side of green leasing. That’s where the real money is for both parties. We will leave the other elements for which you can use green leasing for later discussions. “The results show that, on average, both ENERGY STAR and LEED projects enjoy rent and occupancy premiums that not only pay for the additional green development costs but also provide attractive IRR on green investments.” Jerry Jackson, How Risky Are Sustainable Real Estate Projects? Property managers should take note here. By improving your building’s energy efficiency, you can use that information to help persuade tenants that your building is the more efficient choice, but more importantly, that it cost them a whole lot less to lease from your energy efficient building compared to the energy hog across the street. Get the right information from leasing experts so you are able to maximize the value and capitalize on this trend. So as you can see, there is a tremendous benefit to engaging in green leasing practices. The benefit can be one of actual dollars saved; it can be the benefit of public relations from “going green”; energy savings; or anything in...
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Are You Liable For Criminal Environmental Violations By Your Employee

Posted by admin on Jan 7, 2013 in Blog | 8 comments Criminal Environmental Violations It is the worst-case scenario.  You own a business.  Your business has environmental requirements – lots of them.  You, personally, cannot assure compliance with all the requirements – that’s why you have hired staff to do it.  One of their tasks is to maintain compliance with the environmental laws and regulations. But what happens when they screw up?  Who is responsible?  After all, you gave them express directions to maintain compliance and to follow the law, right?  Well, unfortunately, their actions might land you in the crosshairs of criminal environmental enforcement. Let’s take a quick look at some recent examples from EPA criminal enforcement cases for 2012. 1.              In February of 2012, Edward Hannan was found criminally liable for illegally discharging oil contaminated waste into Breton Sound, off the coast of Louisiana.  The chain of command became a large part of the case.  What started as Edward Hannan ordering an employee to illegally discharge the oil contaminated water, turned into liability for Hannan’s employer St. Bernard Well Service, and for Linder Oil Company.  Linder Oil Company made two mistakes.  First, it hired St. Bernard Well Service.  Second, and most importantly for the courts, Linder Oil Company did not implement sufficient safeguards to detect and prevent the discharge – putting all three in the criminal enforcement crosshairs. What is the take away from this case?  It is that your company is ultimately responsible for the acts of its employees including third parties and independent contractors.  You cannot merely hire an independent contractor and assume they will do the right thing.  You must take action to put in place any safeguards that are needed to prevent criminal environmental violations. 2.            In September 2012, the Scotts Miracle-Gro company was sentenced for 11 criminal environmental violations.  It will pay $12.5 million dollars in criminal and civil penalties.  At the core of the case is an employee Sheila Kendrick, at the time, the Registrations Manager at Scotts. Currently serving jail time.  It was her duty to maintain the insecticides, fungicides and rodenticides registrations with the federal government under FIFRA.  Over a course of several years Ms. Kendrick made false statements to authorities and fabricated pesticide documents.  To conceal her fraud, she suggested that the EPA must have “lost” its copies of her filings.  She also provided false registration documents to other Scotts employees knowing that they would submit...
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Lead Paint Penalties for Contractors and Owners

Posted by admin on Dec 11, 2012 in Blog | 8 comments Failure to take some simple actions with lead paint can lead to stiff penalties from EPA. If you are a building owner/operator/manager or if you are a contractor/painter/renovator, you need to pay attention to lead paint issues. No contractor/painter/renovator is too big or too small to warrant EPA scrutiny for lead paint.  EPA penalties include small one or 2 person companies and as small as 1 renovation job.   And no landlord or building owner is too big or too small.  EPA is an equal opportunity penalizer for all aspects of the lead paint rules. What exactly are these folks doing wrong under lead paint rules? If you didn’t remember, many buildings built before 1978 have paint that contains high levels of lead.  Lead from paint, dust, and soil can be dangerous, especially to young children, babies and developing fetuses.  People can get the lead into their bodies by breathing the dust, eating soil or paint chips.  To combat this danger, EPA established rules to inform tenants about exposure risks to lead paint, to managers about how to manage lead paint in place, and to renovation contractors about how to renovate when lead may be present.  Additionally, EPA established training standards to train contractors and renovators so that they would know how to properly handle lead materials and risks. EPA created a rule called the Lead Renovation, Repair and Painting rule (RRP).  The RRP rule requires the use of lead-safe work practices to ensure that common renovation activities like sanding, cutting and demolition, which can create hazardous lead dust, are conducted properly by trained and certified contractors and individuals.  EPA finalized the RRP rule in 2008 and the rule took effect in 2010. Additionally, failure to notify tenants is a violation of the rules.  According to the EPA, landlords, property managers and home sellers have a responsibility to inform people about lead risks, and they can do this by simply giving potential tenants available records and a short EPA approved pamphlet that explains lead hazards. In follow up to the new rules taking effect, EPA has begun a concerted campaign to educate owner/managers and contractors/renovators.  As with all education campaigns, EPA has also instituted a rather strong enforcement protocol. Here are some of the top enforcements. Contractors/Painters/Renovators 1) In November of 2012, EPA announced 16 enforcement actions for lead paint violations.  In total EPA penalties added up to over $175,000. ...
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Stormwater Runoff Means Big Penalties

Posted by admin on Nov 8, 2012 in Blog | 9 comments Did you know that stormwater running off your construction site (active or inactive) can place you in the cross-hairs of EPA and State regulators? More importantly, just because you think you have the pieces in place to comply with the stormwater requirements, doesn’t mean you do.  The permitting requirements are very specific and failure to comply results in significant penalties.  Just ask Toll Brothers, one of the nation’s largest home builders.  In June 2012, they were the latest in a long list of home builders that were penalized for violating the stormwater requirements.  Toll Brothers agreed to pay over $740,000 in penalties for violations of the stormwater requirements.  And if you think that was just a fluke, then you need to take a closer look at stormwater enforcement over the years. Here is a brief list of some of the major penalties that have been dished out by EPA over the last four of years. 1)      Toll Brothers – $741,000 in civil penalties, including a comprehensive compliance program to prevent future violations.  (2012) 2)      The Ryland Group – $625,000 in civil penalties, including a comprehensive compliance program to prevent future violations. (2011) 3)      Lindsey Construction Company – $430,000 in civil penalties since construction was completed as the site, no injunctive relief was requested. (2011) 4)      Beazer Homes USA, Inc. – $925,000 in civil penalties – Additionally, EPA required the implementation of a “compliance program” to prevent future violations.  EPA values that compliance program at over $9 million dollars.  Additional money that Beazer will have to spend to comply with stormwater rules. (2010) 5)      Hovanian Enterprises – $1 million in civil penalties, including a comprehensive compliance program to prevent future violations. (2010) 6)      Centext Homes – $1.485 million, including a comprehensive compliance program to prevent future violations. (2008) 7)      KB Homes – $1.185 million, including a comprehensive compliance program to prevent future violations. (2008) 8)      Richmond American – $795,000, including a comprehensive compliance program to prevent future violations. (2008) 9)      Pulte Homes – $877,00, including a supplemental environmental project valued at $608,000 and a comprehensive compliance program to prevent future violations. (2008) 10)   Home Depot – $1.3 million, including a comprehensive compliance program to prevent future violations.  (2008) So what does this mean for me? It means that you need to pay attention to something as simple as stormwater, or risk significant penalties.  The stormwater program covers many aspects.  The...
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Jail Time For Asbestos?

Posted by admin on Oct 8, 2012 in Blog | 7 comments

Remember Asbestos? The naturally occurring insulating material that was determined to be a hazardous air pollutant way back in the 20th century? Well the initial excitement over inspections, removal and encapsulation may have worn off, but asbestos as a continuing issue for contractors, remodelers, developers and property owners is alive and well. And if you have become complacent or been ignoring potential issues regarding asbestos, you’d be wise to refocus your efforts. Why? Well EPA appears to have refocused its efforts on enforcement and it resulted in some pretty serious penalties, including criminal violations.

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Hail Damage, a Commercial Property Pitfall?

Posted by admin on Sep 21, 2012 in Blog | 14 comments Hail Damage is Hard to Find. There are a lot of elements included in due diligence for commercial properties, but the hail storm that hit the valley 2 years ago has added perhaps one of the most costly elements in recent memory.   And before you dismiss this as “old news” let me ask you this question, are you 100% sure you building was not damaged or if it was damaged that it was properly repaired?  Here’s a quick story for you that will shed some light on why I am asking this very leading questions. A large apartment complex in central phoenix filed a claim shortly after the storm, concerned they might have damage.  The insurance adjuster came out and walked the roof and grounds with the building maintenance manager.  The result was a denial of claim because the adjuster and the maintenance personnel found “no damage”.  The Apartment owners contacted one of the leading hail damage teams in the Valley to do an independent assessment.  The team using their standardized assessment reports found $692,000 in damages which the insurance company agreed to and paid.  So the claim went from denied to $692,000 because the experts found and documented the damage.  The insurance company reviewed the expert reports and agreed with them, paying on the claim. I am told is not unique and that similar stories happen all the time with big storms like this.  Again, the reason for this story is to wake you up to the reality that there is hail damage out there and if it is not repaired by the deadline (Oct 4, 2012), then you may be looking at significant property devaluation. Let me explain further.  Take the above example. Let’s say that you represent the OWNER/SELLER of this apartment complex and they filed a claim, the claim was denied, their maintenance personnel said there was no visible damage, so the owner proceeds without any repairs.  The owner goes to sell the building for $3 million let’s say.  The buyer, who is savvy to hail damage, opens a copy of Google maps with the storm overlay, determines there is a high probability that the building was damaged, hires a hail damage expert who finds $692,000 in damage.   That $3 million asset is now instantly devalued by over 20%!    And since the science behind hail damage is pretty straight forward (which is why the insurance...
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