2023 District of Columbia Code › Title 6 - Housing and Building Restrictions and Regulations › Chapter 14A - Green Building Requirements › § 6–1451.05. Financial security

§ 6–1451.05. Financial security.
(a) Beginning January 1, 2012, an applicant governed by § 6-1451.03(a) shall provide a financial security, which shall be due prior to receipt of a certificate of occupancy.
(b)(1) The financial security requirement of subsection (a) of this section may be fulfilled by:
(A) Evidence of cash deposited in an escrow account in a financial institution in the District in the name of the licensee and the District;
(B) An irrevocable letter of credit from a financial institution authorized to do business in the District;
(C) A bond secured by the applicant to ensure compliance with this section; or
(D) A binding pledge that within 2 years of receipt of the certificate of occupancy the applicant will fulfill or exceed the current edition of the LEED standard for commercial and institutional buildings at the certified level.
(2)(A) A binding pledge pursuant to paragraph (1)(D) of this subsection shall be recorded as a covenant in the land records of the District between the applicant and the District in a form that is satisfactory to the District’s Attorney General or the Attorney General’s delegate.
(B) The covenant shall bind the applicant and any successors in title to pay any fines levied pursuant to this section.
(c) If, within 2 years of receipt of the certificate of occupancy, the project provides evidence that it has fulfilled or exceeded the current edition of the LEED standard for commercial and institutional buildings at the certified level, a financial security previously provided by the applicant in the form of cash, an irrevocable letter of credit, or a bond shall be returned to the applicant.
(d) If, within 2 years of receipt of the certificate of occupancy, the project does not provide evidence that it has fulfilled or exceeded the current edition of the LEED standard for commercial and institutional buildings at the certified level, the Mayor shall, as applicable, either:
(1) Draw down on a financial security provided in the form of cash, an irrevocable letter of credit, or a bond, in whole, or in part; or
(2) Levy a fine against an applicant that provided a financial security in the form of a binding pledge as set forth in subsection (f) of this subsection.
(e) A financial security in the form of cash, an irrevocable letter of credit, or a bond shall be calculated by square foot as set forth in subsection (f) of this section but shall be discounted by 20% of the amount of the fine described in subsection (f) of this section.
(f) A fine issued pursuant to subsection (d)(2) of this section shall be calculated as follows:
(1) In the amount of $7.50 per square foot of gross floor space if the project is less than 100,000 square feet of gross floor space.
(2) In the amount of $10 per square foot, if the project is at least 100,000 square feet of gross floor space.
(3) Beginning 4 years after receipt of the certificate of occupancy, the applicant shall pay a monthly fine of $0.02 per square foot to the District for failure to provide evidence that it has fulfilled or exceeded either the current edition of the LEED standard for commercial and institutional buildings at the certified level or the current edition of the LEED standard for Existing Buildings: Operations & Maintenance at the certified level. The monthly fines shall accumulate but shall be assessed annually.
(4) The fine described in paragraphs (1) and (2) of this subsection shall not exceed $3 million; provided, that an annual fine issued pursuant to paragraph (3) of this subsection shall not count toward the $3 million limit.
(g) The Mayor, for good cause, may issue time extensions to a project; provided, that the Mayor shall not grant more than 3, one-year extensions.
(h) Fines issued under this section shall be civil penalties.
(i) Substantial improvements shall be subject to the requirements of this section; provided, that only square feet included in a substantial improvement project shall be calculated for the purposes of a fine.
(j) The financial security option provided in subsection (b)(1)(C) of this section shall become effective upon the issuance of rules by the Mayor.
(k) Any payment made to the District for failure to meet the standards required by §§ 6-1451.02 and 6-1451.03 shall be deposited in the Green Building Fund.
(Mar. 8, 2007, D.C. Law 16-234, § 6, 54 DCR 377; Mar. 31, 2011, D.C. Law 18-349, § 2(d), 58 DCR 724; June 5, 2012, D.C. Law 19-139, § 2(e), 59 DCR 2555.)
Section References
This section is referenced in § 6-1451.02 and § 6-1451.07.
Effect of Amendments
D.C. Law 18-349 substituted “bond” for “performance bond” throughout the section; in the section heading, substituted “Bond requirements” for “Performance bond”; rewrote subsec. (b); in subsec. (g), substituted “standards required by §§ 6-1451.03 and 6-1451.06” for “verification requirements described in §§ 6-1451.02 and 6-1451.03”. Prior to amendment, subsec. (b) read as follows: “(b) On or before January 1, 2012, all applicants for construction governed by § 6-1451.03 shall provide a performance bond, which shall be due and payable prior to receipt of a certificate of occupancy.”
D.C. Law 19-139 rewrote the section, which formerly read:
“(a) A commercial applicant who applies for an incentive described in § 6-1451.06 shall provide a bond which shall be due and payable upon approval of the first building construction permit application.
“(b) All applicants governed by § 6-1451.03 shall provide a bond, which shall be due and payable prior to receipt of a certificate of occupancy, according to the following schedule:
“(1) On or after January 1, 2010, for an applicant governed by § 6-1451.03(b)(2)(A); and
“(2) On or after January 1, 2012, for an applicant governed by § 6-1451.03(b)(2)(B).
“(c) For the purpose of compliance with subsections (a) and (b) of this section, in lieu of the bond required by this section, the Mayor may accept an irrevocable letter of credit from a financial institution authorized to do business in the District or evidence of cash deposited in an escrow account in a financial institution in the District in the name of the licensee and the District. The letter of credit or escrow account shall be in the amounts required by subsection (d) of this section.
“(d) The amount of the required bond under subsection (a) of this section shall be 1% of the incentive provided.
“(e) The amount of the required bond under subsection (b) of this section shall be:
“(1) For a project not exceeding 150,000 square feet of gross floor area, 2% of the total cost of the building;
“(2) For a project from 150,001 to 250,000 square feet of gross floor area, 3% of the total cost of the building; and.
“(3) For a project exceeding 250,000 square feet building of gross floor area, 4% of the total cost of the building.
“(f) The maximum amount of a bond shall be $3 million.
“(g) All or part of the bond shall be forfeited to the District and deposited in the Green Building Fund if the building fails to meet the standards required by §§ 6-1451.03 and 6-1451.06.
“(h) The District shall draw down on the bond funds if the required green building verification is not provided within 2 years after receiving the first certificate of occupancy.
“(i) The Mayor shall promulgate rules to establish additional requirements for the drawing down or return of the bond.”
Emergency Legislation
For temporary (90 day) amendment of section, see § 2(d) of Green Building Compliance Emergency Amendment Act of 2011 (D.C. Act 19-257, December 21, 2011, 58 DCR 11222).
Temporary Legislation
Section 2(c) of D.C. Law 19-99 rewrote the section to read as follows:
“Sec. 6. Financial security.
“(a) Beginning January 1, 2012, an applicant governed by section 4(a) shall provide a financial security, which shall be due and payable prior to receipt of a certificate of occupancy.
“(b)(1) The financial security requirement of subsection (a) of this section may be fulfilled by:
“(A) Evidence of cash deposited in an escrow account in a financial institution in the District in the name of the licensee and the District;
“(B) An irrevocable letter of credit from a financial institution authorized to do business in the District;
“(C) A bond secured by the applicant to ensure compliance with this section; or
“(D) A binding pledge that within 2 years of receipt of the certificate of occupancy the applicant will fulfill or exceed the current edition of the LEED standard for commercial and institutional buildings at the certified level.
“(2)(A) The binding pledge described in paragraph (1)(D) of this subsection shall be recorded as a covenant in the land records of the District between the applicant and the District in a form that is satisfactory to the District’s Attorney General or his or her delegate.
“(B) The covenant shall bind the applicant and any successors in title to pay any fines levied pursuant to this section.
“(c) If within 2 years of receipt of the certificate of occupancy the project provides evidence that it has fulfilled or exceeded the current edition of the LEED standard for commercial and institutional buildings at the certified level, a financial security previously provided by the applicant in the form of cash, an irrevocable letter of credit, or a bond shall be returned to the applicant.
“(d) If within 2 years of receipt of the certificate of occupancy, the project does not provide evidence that it has fulfilled or exceeded the current edition of the LEED standard for commercial and institutional buildings at the certified level, the Mayor shall:
“(1) Draw down on a financial security provided in the form of cash, an irrevocable letter of credit, or a bond, in whole, or in part, as determined by rulemaking; or
“(2) Levy a fine against an applicant that provided a financial security in the form of a binding pledge as set forth in subsection (f) of this section.
“(e) A financial security in the form of cash, an irrevocable letter of credit, or a bond shall be calculated by square foot as set forth in subsection (f) but shall be discounted by 20% of the amount of the fine described in subsection (f) of this section.
“(f) A fine issued pursuant to subsection (d)(2) of this section shall be calculated as follows:
“(1) In the amount of $7.50 per square foot of gross floor space if the project is less than 100,000 square feet of gross floor space.
“(2) In the amount of $10 per square foot, if the project is at least 100,000 square feet of gross floor space.
“(3) Beginning 4 years after receipt of the certificate of occupancy, the applicant shall pay a monthly fine of $0.02 per square foot to the District for failure to provide evidence that it has fulfilled or exceeded either the current edition of the LEED standard for commercial and institutional buildings at the certified level or the current edition of the LEED standard for existing commercial and institutional buildings at the certified level. The monthly fines shall accumulate but shall be assessed annually.
“(4) The fine described in paragraphs (1) and (2) of this subsection shall not exceed $3 million; provided, that an annual fine issued pursuant to subsection (f)(3) of this section shall not count toward the $3 million limit.
“(5) The Mayor may reduce any or all of the fines for good cause.
“(g) The Mayor may, for good cause, issue time extensions to a project; provided, that the Mayor shall not grant more than 3, one-year extensions.
“(h) Fines issued under this section shall be civil penalties.
“(i) Substantial improvements shall be subject to the requirements of this section; provided, that only square feet included in a substantial improvement project shall be calculated for the purposes of a fine.
“(j) The financial security option provided in subsection (b)(1)(C) of this section shall become effective upon the issuance of rules by the Mayor.
“(k) Any payment made to the District for failure to meet the standards required by sections 4 and 7 shall be deposited in the Green Building Fund.
“(l) For purposes of this section, ’LEED standard for commercial and institutional buildings` means LEED for New Construction, Core & Shell, Schools, or Retail.”.
Section 4(b) of D.C. Law 19-99 provided that the act shall expire after 225 days of its having taken effect.