Nov. 19, 2009
Fraud and the ARRA. Apartment market conditions improve. Comfort sacrificed to save energy. And more.

Influx of Federal Dollars Has Construction Industry Under Microscope

With heavy anti-fraud legislation built into the stimulus plan, commercial building owners and managers must be aware of when they can be held liable for fraud, and how they can reduce their risks when working with ARRA funds.

Over the last several months, the spigot of stimulus funds provided by the American Recovery and Reinvestment Act of 2009 (ARRA) has opened, and some $20 billion earmarked for tax credits, improved energy efficiency, and green building projects has begun to flow.

This extraordinary federal spending, however, occurs in an unprecedented environment of scrutiny and oversight that carries significant risks for even the most scrupulous companies. The ARRA includes more than $350 million for government agencies to investigate and prosecute fraud. At the same time, it seeks to employ the public as a whistleblower by requiring mandatory disclosures on the Internet, among other things. Thus, building owners and managers receiving ARRA funds may find themselves in the crosshairs of government regulators, citizen watchdog groups, competitors, and disgruntled or opportunistic employees.

A primary anti-fraud weapon in the government’s arsenal is the False Claims Act (FCA), a quasi-criminal statute that empowers and incentivizes private citizens to bring fraud claims on behalf of the government against companies receiving federal funds. A company that violates the FCA faces significant punishment, including penalties, suspension or debarment from federal programs, and the trebling of damages suffered by the government. Further, the resources necessary to defend an FCA lawsuit – not to mention the reputational hit – are substantial.

Despite its relatively straightforward name, the application and interpretation of the False Claims Act by prosecutors and courts are anything but clear. And recent amendments appear to have significantly broadened the act’s reach. A company violates the FCA by knowingly submitting, or causing someone else to submit, false claims (e.g. claims seeking payment for work never performed or hours never worked). However, a building owner who submits accurate claims may still be liable if he/she makes misrepresentations to establish eligibility to receive federal funds. Furthermore, a company that makes no false statements may be liable for someone else’s fraud. For example, a building owner who passes along a false invoice from a third-party contractor may be liable if he/she knew – or could have determined – the claim was false. And, a company that doesn’t make any false statements, but that knowingly keeps payments due to the federal government, may be liable for so-called “reverse false claims.”

Importantly, the FCA allows private whistleblowers – often current or former employees or competitors – to sue on behalf of the government and receive as much as 30 percent of any recovery. The FCA includes broad protections for these whistleblowers and punishes a company that fires, demotes, or otherwise discriminates against those who disclose information believed to be evidence of fraud. These significant financial incentives and protections create challenges for companies faced with terminating or handling troublesome employees.

These are just some of the scenarios in which risks presented by the FCA may arise. Moreover, the FCA is just one weapon in the federal government’s arsenal, and numerous states have enacted similar whistleblower statutes. Accordingly, to reduce its risk, a company receiving ARRA funds should familiarize key personnel with all relevant anti-fraud regulations, strengthen its internal accounting oversight procedures, implement a robust compliance program that provides employees with a means to report fraud concerns without fear of retaliation, and develop procedures to properly respond to allegations of fraud, whether made by an employee or federal prosecutors.

Michael S. Weisman is a partner in the Chicago office of national law firm Katten Muchin Rosenman LLP.

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Thornburg Campus Awarded LEED Gold Certification


The Thornburg Campus, which has performance numbers that make it the most sustainable building in New Mexico, has been awarded LEED Gold certification. The campus will use 47-percent less energy and 43-percent less water than a typical office building, and 90 percent of construction waste was recycled.

Features of the project include a highly efficient underfloor air delivery system, sensor-controlled T5 lighting, operable windows, low-emitting materials, and extensively controlled daylighting, along with passive water harvesting, an underground cistern, and an outdoor porous paving system that allows the campus to reduce outdoor water use and direct water back into the community aquifer.

The campus was designed by Ricardo Legorreta; the design is focused on honoring the natural beauty of Santa Fe, NM, while incorporating the latest in building technology and design.

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Accor Ranks No. 1 in Sustainability Rating

Accor North America, parent company to Motel 6, Sofitel, Novotel, and Studio 6, was recently recognized by Two Tomorrows North America, a sustainability consultancy, for designing a comprehensive approach to key sustainability challenges. Two Tomorrows ranked Accor No. 1 in sustainability among the world’s 10 largest hotel groups.

Accor North America features conservation and earth-friendly elements in all of its properties. The company continues to implement new environmental initiatives; Motel 6 and Studio 6 have been recognized by the U.S. Environmental Protection Agency (EPA) as ENERGY STAR Leaders.

Additionally, Accor is part of the EPA’s National Partnership for Environmental Priorities (NPEP), and has pledged to:

  • Recycle or properly dispose of mercury content from light bulbs and batteries.
  • Use water-saving showerheads and faucet aerators.
  • Use a technologically advanced HVAC system to save power.
  • Use CFLs.

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NMHC Survey Shows Apartment Market Conditions Improving

According to the National Multi Housing Council’s last Quarterly Survey of Apartment Market Conditions, the apartment market is showing signs of improvement. The survey showed an increase in sales activity and improvements in the availability of debt and equity capital compared to 3 months ago.

The survey showed that the sales volume index hit its highest level in 4 years, and the equity and debt financing indexes hit their highest levels in 3 years. Only the market tightness index, which measures vacancies and rent levels, remained below 50 (but rose from 20 to 31).

Full survey results can be found at www.nmhc.org.

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Jones Lang LaSalle Enrolls 100 Percent of its U.S. Portfolio in ENERGY STAR

Jones Lang LaSalle has enrolled 100 percent of its property management portfolio in ENERGY STAR, the U.S. Environmental Protection Agency’s voluntary program for benchmarking the energy efficiency of commercial buildings.

The portfolio includes 330 office buildings in 106 U.S. cities. The process involved reporting a range of energy-related information to receive a rating of between 1 and 100. The average rating of properties managed by Jones Lang LaSalle is 67 (17 points higher than the average score of 50). One hundred forty-three (143) of the buildings in the portfolio have ratings of 75 or higher, which is the cutoff to receive the ENERGY STAR label.

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More Companies Willing to Invest in Energy and Green in Owned Buildings

A joint survey by CoreNet Global and Jones Lang LaSalle shows that companies are investing funds selectively to achieve sustainability goals. The survey found that 70 percent of corporate real estate executives (CREs) say sustainability is a critical business issue. Additionally, 89 percent say they consider sustainability criteria in making leasing decisions, with 46 percent always considering energy labels (such as ENERGY STAR and HPE), and 41 percent always considering certifications (such as LEED, BREEAM, IEMA, and Green Star).

Despite the fact that 67 percent say obtaining funds for sustainability strategies is a difficult or extremely difficult challenge, 74 percent say they would pay a premium to retrofit owned space for sustainability criteria; however, 21 percent say they would only be willing to pay a premium rent if it were offset by lower operating costs.

An additional 60 percent of CREs surveyed say they’re adopting workplace strategies to meet sustainability goals while reducing overall occupancy costs.

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BOMA/Suburban Chicago Announces TOBY Award Winners

The Building Owners and Managers Association of Suburban Chicago (BOMA/Suburban Chicago) announced the winners of its local TOBY (The Office Building of the Year) Award competition. The program had a record-breaking year, and entries were judged by six teams of judges throughout the Greater Chicago area.

The TOBY competition recognizes properties that exemplify outstanding quality and management practices in 11 categories, including community impact, tenant relations, energy management, emergency preparedness, and training. This year’s winners were:

  • Corporate Facility: McDonald’s Campus Office Building
  • Earth Award: Oak Brook Pointe
  • Government Facility: Hammond Federal Courthouse
  • Historical Building: Robert A. Grant Federal Building & U.S. Courthouse
  • Medical Office Building: Edward Plainfield Medical Office Building
  • Renovated Building: Tallgrass Corporate Center
  • Suburban Office Park/Mid-Rise:
  • Mid America Plaza
  • Suburban Office Park/Low-Rise: Drake Oak Brook Plaza
  • Under 100,000 Square Feet: Pine Meadow Corporate Center II
  • 100,000 – 249,999 Square Feet: Highland Oaks II
  • 250,000 – 499,999 Square Feet: Riverway East
  • 500,000 – 1 Million Square Feet: 150/200 Martingale Road Building
  • Over 1 Million Square Feet: Schaumburg Corporate Center

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Majority of Workers Willing to Sacrifice Comfort to Save Energy

According to a new survey of office workers conducted by Johnson Controls, 69 percent say they would be willing to sacrifice their preferred ideal temperature level to help their company conserve energy; however, 78 percent say they‘re less productive at work when they’re too hot or too cold.

The survey of nearly 800 American adults that work in an office setting found that many workers think their employers could be doing more to be energy efficient, but also found that productivity suffers and energy costs may rise when workplace temperature isn’t ideal. Building owners must avoid negative impact on office productivity and the possibility that workers may take action to circumvent discomfort, including the use of portable fans or heaters.

The survey found that 49 percent of office workers use a fan if it’s too hot, while 28 percent use a space heater if it’s too cold. Additionally, nearly 30 percent report leaving the office to take a walk outside if it’s too hot or too cold, and 69 percent adjust their clothing.

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South Carolina Recognizes Benefits of Wood in School Construction

Continuing a trend that started last year in Arkansas, the South Carolina Public School Facilities Committee has voted to allow greater use of wood in school construction. The change will save the district money while opening the door to schools that are better for the environment and for learning.

In addition to the cost savings wood can provide, it’s also an excellent choice for green building. Wood is the only major building material that’s renewable and sustainable, and it’s also the only material with third-party certification programs in place to verify that products originate from a sustainably managed resource. Independent life-cycle assessment studies show that wood is also better for the environment in terms of embodied energy, air and water pollution, and greenhouse-gas emissions.

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