Page 298 - The Green Building Bottom Line The Real Cost of Sustainable Building

276 CHAPTER 9

All of this is good news, but from a developer’s perspective it can also increase risk.
Loan agreements that include incentives, for example, will also include requirements
that the project meet certain standards. For each requirement, developers must be sure
that they can either satisfy the requirement themselves or that another member of the
project team will be obligated to do so. If requirements are not met, the penalty, if pos-
sible, should be the loss of the incentive rather than a loan default. Default under loan
documents can spell the end of a project, and even the loss of an incentive may destroy
a project’s profitability, so the need to coordinate the requirements in a loan agreement
with the requirements in other project contracts is critical.

Brokerage and Marketing

Developers building green projects will want to advertise that fact. This raises a cou-
ple of concerns. The first is that brokers and marketing professionals may not fully
understand the product they are selling. This can make it difficult to communicate the
project’s benefits to a marketplace that increasingly expects projects to be more sus-
tainable, and can also make it harder to sell to potential buyers and tenants that may
be uncomfortable with new building technologies or unusual operating requirements.
The second concern is that the language used to market green projects should be
chosen with care. Though the law with respect to green buildings is not well-devel-
oped, the federal government and some states have shown an interest in the marketing
of products that are presented as beneficial for the environment. Marketing claims that
do not meet certain requirements can be subject to challenge under state and federal
consumer-protection laws.
The Federal Trade Commission (FTC), which regulates unfair or deceptive trade
practices, has published guides related to the marketing of environmental products. 5
These guides do not have the force of law, but they do represent the FTC’s position on
certain issues and can be useful indicators of where legal boundaries at the state and
national levels are likely to settle (California’s law, for example, explicitly references
the FTC guidelines). 6
The guidelines should be reviewed in full prior to marketing a product, but very
generally, marketing claims should:

1 Be substantiated. There must be a “reasonable basis” for making the claim.
Research, tests, studies, or other reliable evidence must show that the claim is true.
2 Be clear and properly qualified. In the context of green buildings, it could be
deceptive, for instance, to call a building “environmentally friendly” if the only dif-
ference between it and a typical building is the use of low-VOC paints. The claim
should be limited to the particular component of the building that is in fact “envi-
ronmentally friendly.” Comparative claims, such as “save 50 percent on energy
bills,” should be clear as to the basis for the comparison.