Building in Maryland and Washington, DC

E X C L U S I V E M A G A Z I N E O F T H E M A R Y L A N D - N AT I O N A L C A P I TA L B U I L D I N G I N D U S T R Y A S S O C I AT I O N MAR/APR 2013

Infill Housing - A Growing Trend Also in this Issue: Community Service Award Winners

FROM THE PRESIDENT

A.J. Jackson

Silver Linings Blueprint

A

t long last, there seems to be growing evidence that our industry has turned a corner and may be able to sustain moderate growth over the next year. The Census Bureau reported in January that new home construction rose 28 percent in 2012 and the annual pace of new home construction exceeded 950,000 units in December. Here in our region the picture is more mixed, perhaps because of the ongoing uncertainty surrounding sequestration and the federal spending that contributes so significantly to our region’s economy. According to the Center for Regional Analysis at George Mason University, active listings were the lowest on record at the end of December, having declined below 7,000 for the first time in seven years and new contracts were down 4.7 percent annually. At the same time, the median home price in the metro area rose 10.5 percent last year and Realtors are reporting the return of bidding wars in some neighborhoods.

Taken together, all of this data seems to provide reasons for cautious optimism about our local housing market as we continue into 2013.

In addition, a number of MNCBIA members attended the International Builders Show and NAHB Board Meeting in Las Vegas at the end of January, some for the first time in several years. There were more than 900 exhibitors on the show floor and NAHB conducted more than 100 educational sessions, covering topics ranging from green building to social media to marketing custom homes. If you weren’t able to attend the show but would like to hear one of the presentations, all of the educational sessions were recorded and are available at www.buildershow.com.

MNCBIA also has reasons to be optimistic about 2013. We are starting the year strong, with 500 members as of January 1st. In addition, we recently launched a new council, the Professional Women in Building (PWB) chaired

by Peggy White of Axiom Engineering Design.

PWB will provide opportunities for networking, education, community service and outreach. The PWB committee, which is organized under the auspices of the NAHB’s Professional Women in Building Council program, offers membership to all MNCBIA members as well as professionals from the public sector who may not be members of MNCBIA, such as planning staff. In this way, the committee can serve as an important resource for building connections between our

Closer to home, the Maryland state legislature has begun its annual session in Annapolis and MNCBIA is working through the Maryland State Builder’s Association (MSBA) to educate our state legislators on issues of importance to our industry. As part of the effort to be both more efficient and more effective in our state-level advocacy, MNCBIA’s Legislative Committee is meeting jointly with the HBAM Legislative Committee to review and rank legislation affecting the building industry. Our goal is to be able to speak with one voice, through the MSBA, in order to concentrate the industry’s message and have the greatest possible influence. In place of the MNCBIA Board meeting in Annapolis and afternoon legislative drop-in sessions with staff

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industry and those from the public sector with whom we must work closely in order to achieve our objectives.

On top of the good news about membership and the new committee, MNCBIA’s fiscal picture is improving. So far we have received $123,000 in STARS club sponsorships for 2013, surpassing our goal and topping last year’s total of $100,000.

Thank you to all of the STARS members.

BUILDING IN MARYLAND AND WASHINGTON, DC

that we conducted in years past, this year the County Liaison Vice Presidents will lead smaller groups on outreach visits to their respective legislative delegations. This new approach should improve the effectiveness and efficiency of our outreach efforts by better utilizing both MSBA staff in Annapolis and the local presence of our liaison committees at the County level. In addition, it will allow the MNCBIA advocacy staff to spend more time focusing on local issues affecting our members.

In addition to our fundraising, advocacy, and membership activities, MNCBIA members have been actively involved in serving our communities.

This month’s issue features the Home Builders Care Foundation Community Service Awards winners, highlighting those individuals who have gone above and beyond in their contributions.

Hopefully their examples will help to inspire all of us to contribute our talents to both HBCF and MNCBIA. As President Teddy Roosevelt said, “every man owes a part of his time and money to the business or industry in which he is engaged.

No man has a moral right to withhold his support from an organization that is striving to improve conditions within his sphere.” MNCBIA and the Home Builders Care Foundations are two such organizations, striving to improve conditions for our industry and the communities in which we live and work. In the months ahead, I encourage each of you to become more involved in the association and the foundation in order to help them achieve their missions. m Best regards,

BUILDING

Maryland-National Capital Building Industry Association 1738 Elton Road, Suite 200 Silver Spring, MD 20903 Phone: (301) 445-5400, Fax: (301) 445-5499 E-mail: communications@mncbia.org Website: www.mncbia.org

IN MARYLAND AND WASHINGTON, DC Representing Calvert, Charles, Montgomery, Prince George’s and St. Mary’s counties in Maryland and Washington, DC

2013 Executive Committee Brian “A.J.” Jackson President

Frank Bossong, IV, P.E. Associate Vice President

Rick Bailey Vice President/Calvert Co.

David Little Treasurer

Doug Meeker Vice President/Charles Co.

Dave Lunden Vice President, State Legis./Secretary

Clark Wagner Vice President/Mont. Co.

FEATURES

Robert R. Harris Life Director

Ken Dunn Vice President/ Prince George’s Co.

Steve Nardella Immediate Past President

Mike Mummaugh Vice President/St. Mary’s Co.

Stephen P. Elmendorf Legal Counsel

Hillary Colt Vice President/Washington DC

Diane K. Swenson, CAE Executive Vice President

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2013 Board of Directors

Brian Afnan Stephen Alfandre Liza Bowles Jeff Caruso Mike Conley Chuck Covell Tony Crane Timothy Dugan Lynn Elahi Tom Hudson Tom Hyde Rob A. Jacobs

MAR/APR 2013

Howard Katz Michael Kingsley Mark Macfarland Tom Marshall Jim Plazak Steve Robins Dusty Rood Michael Schueler Robert Spalding John Washington Peggy White Carter Willson

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MNCBIA’s Winter Ball Home Builders Care Foundation Honors Three for Community Service

10 Infill for Homebuyers 16 Clean and Green Energy Program

DEPARTMENTS 4 A Message from the President

MNCBIA Staff

Executive Vice President Diane K. Swenson, CAE Vice President, Government Affairs F. Hamer Campbell, Jr.

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Director, Government Affairs Robert Kaufman

Communications Director Kelly H. Grudziecki

21 MNCBIA Membership News STARS Club

Director, Membership & Events Jean Mathis

Index of Advertisers

Manager, Builders Development Guaranty Group Lisa S. Goheen

Published for Maryland-National Capital Building Industry Association 1738 Elton Road, Suite #200 Silver Spring, MD 20903 p. 301.445.5400 f. 301.445.5499 www.mncbia.org

20 Business Card Marketplace New Members

Director, Regulatory Affairs Annette Rosenblum

Director, Home Builders Care Foundation/HomeAid DC Patti Kane

18 The Legal Pad

22 Events Calendar

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DIRECTOR of PUBLISHING Krystie Dovenmuehler COPY EDITOR Carrie Bethel LAYOUT & DESIGN Jeremy Davis & Johnny Maattala VICE PRESIDENT of SALES Marc Lucia

MNCBIA’s Most Wanted List

To submit editorial or request information — email info@mncbia.org p. 301.445.5400 For information regarding advertising please contact Marc at 800.572.0011or marc@emconsultinginc.com

Published by E&M Consulting, Inc. 1107 Hazeltine Boulevard Suite #350 Chaska, MN 55318 p. 800.572.0011 f. 952.448.9928 www.emconsultinginc.com

Please note: Editorial and contents of this magazine reflect the records of the Maryland-National Capital Building Industry Association (MNCBIA). The MNCBIA have done their best to provide useful and accurate information, but please take into account that some information does change. E&M Consulting, Inc., publishers and MNCBIA take no responsibility for the accuracy of the information printed, inadvertent omissions, printing errors, nor do they endorse products and services.

We take no responsibility regarding representations or warranties concerning the content of advertisements of products/services for a particular use, including all information, graphics, copyrighted materials, and assertions included in the advertisements. The reader is advised to independently check all information before basing decisions on such information.

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BUILDING IN MARYLAND AND WASHINGTON, DC

HAVING A BALL E ach December MNCBIA members come together to celebrate the season and the end of another year at the Winter Ball & Silent Auction. Columbia Country Club has welcomed the Association for many years, and long-time members see the venue as part of a much-loved tradition. Newer members who attended for the first time were charmed by the elegance and history of the Club, which added to the excitement of the evening.

Breaking from tradition this year, the Winter Ball committee introduced something new; an interactive photo booth. Guests could don hats, glasses, and feather boas, and pose with various props alongside their dates and friends for some memorable photos to take home. The sillier the better. Check out all the photos on MNCBIA’s Photo Gallery webpage. Many thanks to BIA member Joe Pushak and his wife Kristen who brought the booth and manned it. Of course our official photographer Rex Reed was there to record the event from start to finish. You can view those photos in our Photo Gallery as well.

Of course the gala isn’t just for merriment, it is also the site of the Home Builders Care Foundation’s silent auction, one of the charities’ biggest fundraisers of the year. All the proceeds from the auction go to support HBCF’s ongoing shelter-related community service projects. More than 41 items were up for bid this year ranging from jewelry, gift baskets and electronics to hot air balloon rides. Thanks to the generosity of the MNCBIA members and guests who attended, the auction brought in nearly $6,590 for Home Builders Care, beating last year’s amount by more than a thousand dollars.

Thanks are due to the Winter Ball committee who begins planning this event in the summer. Loads of details, from choosing the band and flowers to designing the invitations and menu, go into this party, and it is all handled by a small, hard-working committee made up of, Chair, Lynn Elahi of Washington Gas, Vice Chair, Brooke Burns Ashley of Hanley Wood Market Intelligence and Penny Glover of SK&I Architectural Design Group, with support from BIA staffers, Jean Mathis, Patti Kane and Kelly Grudziecki. m

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Home Builders Care Foundation

Honors Three for Community Service N ew Home Builders Care Foundation (HBCF) President Liza Bowles of Newport Partners presented awards to the winners of the HBCF’s 2012 Community Service Awards at the association’s January dinner meeting.

they offered to donate the entire list of lumber materials needed to the Boys house project. About a week later, delivery was made and construction in the backyard began. And just before the holidays, the new deck and gazebo were completed, along with the new kitchen.

The award is presented annually to individuals or organizations affiliated with the local home building industry in recognition of significant contributions to the community through unselfish efforts and dedication in support of projects that help the poor and disadvantaged in our communities.

The Community Builder Award was presented to one of Home Builders Care Foundation’s most consistent and generous supporters. In both good years and in lean times, the Pettit Family Charitable Foundation has demonstrated its support of the mission of Home Builders Care to build for our neighbors in need. But not only have the Pettit’s been our long-time supporter, they have also – for years – supported numerous other charities throughout Montgomery County.

The first award of the evening, a Tom Sawyer Award for in-kind assistance, was presented to Builders First Source, who played a valuable role on HBCF’s renovation project for the ABH Boys Cottage in Derwood, MD. The ABH Boys Cottage is a Montgomery County-based transitional group home that offers extensive therapeutic care and needed refuge to teenage boys with history of mental health issues and family life struggles.

The goal of the renovation project was to improve and make safe the home’s two heavily used areas – the kitchen and the backyard. In the yard, the scope of work included removing old pool equipment and fencing, followed by the construction of a new gazebo which could be used for private counseling sessions. Another task item was to remove the existing deck and replace it with a larger expanded deck with stairs that could provide direct access to the backyard.

With a growing list of needed lumber and materials amidst a tight budget, the cost of the project was getting daunting – until Builders First Source answered the call for help. Through Kevin Hennessy and Toby Vance,

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Since 1989, the Pettit Family Charitable Foundation has also been working locally – mainly in the areas of housing, food and shelter. They have long been actively involved in many community organizations such as Montgomery Hospice, the Shady Grove Adventist Hospital Foundation and the Bernie Scholarship, which assists low-income citizens in county-subsidized housing with college tuition.

The list of local nonprofit organizations in gratitude to the Pettit’s is extensive. And longer still is the list of local citizens benefitting from the family’s investment in our community and its residents over the years.

Currently, Dick Pettit serves as Vice Chair of the Montgomery County Coalition for the Homeless who help provide shelter to about 1,000 homeless people who were recorded in the County last year.

BUILDING IN MARYLAND AND WASHINGTON, DC

“... the cooperation, dedication, and spirit...

...are excellent examples of why the Home Builders Care charitable construction program succeeds...”

happy with the new HVAC system and all are thrilled to have more storage space in the kitchen where the old furnaces used to be. Additionally, the project has caught the eye of EnergyStar specialists within the Federal government. The building’s energy use and CC DC’s savings will be monitored for two years and initial results are very promising.

The cooperation, dedication and spirit of these 2012 Community Service Award Winners are excellent examples of why the Home Builders Care charitable construction program succeeds in helping end homelessness by improving the lives of at-risk individuals and families in our communities. m

The final award of the evening was the Directors Award, presented in recognition of leadership and support in broadening the vision of Home Builders Care.

Mitsubishi Electric Heating and Cooling played a key role in HBCF’s HomeAid DC energy retrofit project for Community Connections, a Washington, DC, based non-profit mental health agency serving men, women and children in the nation’s capital.

The HomeAid DC retrofit project took place in a six-unit brick building constructed in 1956, with old furnaces and electrical panels probably dating back to the 60s. Each apartment also had multiple window AC units. An energy audit conducted by Newport Partners confirmed that the building was a prime candidate for an energy retrofit and it became HBCF’s HomeAid DC chapter’s second Environmental Sustainability Program (ESP) construction project.

ESP is HomeAid America’s national program funded by the Walmart Foundation. Its purpose is to retrofit existing shelters with energy efficient upgrades, allowing the agency operating those facilities to increase client service capacity by reducing their operating costs. The target metrics are to save at least 40 percent in annual utility costs and to recover the cost of the energy saving retrofits in five years.

When contacted about the project, Mitsubishi Electric stepped up to contribute new low-profile, wall-mounted mini-split, ductless heating/cooling systems, some of the most technologically advanced heat pump systems in the industry. Over $20,000 worth of equipment was donated.

Thus far, this small apartment building has proven to be an excellent application for these “most efficient” products. Both staff and residents are BUILDING IN MARYLAND AND WASHINGTON, DC

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Infill for

Homebuyers An EPA study says infill is a growing new housing trend in metro areas across the United States.

By Michael Fickes

he rising generation of millennials and empty nester baby boomers wants to live closer to downtown — where the action is. They are sick of the traffic and prefer to take the subway to work. While at home, they want to walk to the grocery store, restaurants and other stores.

For homebuilders, though, infill housing in metropolitan areas carries high costs and poses difficult construction challenges.

Nevertheless, homebuilders are giving millennials and boomers what they want across the country and in the Washington, DC, metropolitan area.

In a recently released study, the EPA found that in 209 metropolitan regions, 21 percent of all new home building occurred in infill or previously developed areas. In the Northeast, the trend is even stronger with 32 percent of new housing units built in infill areas.

The study compared growth in infill housing in metro areas across the country between 2000 and 2004 with growth between 2005 and 2009.

In 17 of 24 metro areas evaluated, including Washington, DC, infill growth increased. In the Washington, DC, metro area, infill housing grew from 17.6 percent of all new housing to 23 percent.

The EPA definition of the Washington, DC, metro area is unusually large. It includes the District, Arlington and Alexandria, Virginia, Maryland and West Virginia.

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If the metro area was limited to the Maryland-National Capital Building Industry Association’s (MNCBIA’s) geography, which includes Washington, DC, and Calvert, Charles, Montgomery, Prince George’s and St. Mary’s Counties in Maryland, the percentage of infill housing growth would likely be much higher.

Several factors are driving the trend in the MNCBIA region. These include federal, state and local policies, residential real estate economics and changing attitudes and demographics.

Government Policies That Drive Infill Development Government policies are an important component of the infill trend in the Washington metro region. In Prince George’s County and other areas across the region, government policies are giving rise to an infill trend.

“Maryland is part of a consortium of states charged with cleaning up the Chesapeake Bay,” says Thomas M. Farasy, president of Silver Spring-based Terra Verde Communities, LLC. “Part of the Bay cleanup effort calls for new development carried out in a way that creates less of a burden on the Bay. As a result, infill development is favored and sought after.”

The reason infill development is less burdensome to the Bay is urban density. An infill apartment or condo tower with 200 units on a single parcel in an existing community makes much less of an environmental impact than building 200 homes on 50-plus acres in the suburbs.

BUILDING IN MARYLAND AND WASHINGTON, DC

Not only is suburban land use inefficient, the owners of those 200 new homes fertilize lawns and gardens. They buy new cars. They build new schools, roads and other large pieces of infrastructure. All of this activity creates widespread pollution, some of which gets into the Bay. Farasy also points to SB 236, the recently enacted Sustainable Growth and Agricultural Preservation Act of 2012. The so-called Septic Bill aims to drive development into infill areas with existing water and sewer services while limiting development in more rural areas.

“Another policy favored by government today is transit oriented development,” continues Farasy.

“PlanMaryland, for instance, is a state effort that promotes smart development as well as building on infill parcels near transit and other existing infrastructure.”

in place to justify capital investment and borrowing for these projects? In Montgomery County, the economics are stronger. People will pay more to rent and buy there. As a result, there has been a lot of infill development including transit-oriented projects.”

Infill and Real Estate Economics Bethesda-based EYA proves Farasy’s point. EYA has been carrying out residential and mixed-use infill development in Montgomery County since the company’s inception 20 years ago. “The company’s founders noticed that coming out of the recession of the early 1990s, demand for housing in infill locations in Montgomery County seemed to be stable, much less volatile than demand for housing in outlying suburban areas,” says A.J. Jackson, senior vice president with EYA. “In addition, there was a lack of fee-simple for sale products in infill locations. Companies were building condos but not townhomes or single family detached. If you wanted to own you were limited to condos.”

Similar residential housing values prevail coming out of the current recession, continues Jackson, noting that the infill market prices held up better and did not suffer the same level of erosion as the suburbs.

Infill development satisfies the goals of the Maryland policies mentioned above in ways that are good for the environment.

Terra Verde specializes in transit-oriented development, multifamily properties and green building. An example is Terra Verde’s Mosaic at Metro in Hyattsville in Prince George’s County. “It is 260 units on metro property,” Farasy says. “Across the street is a Giant Food Store. There are lots of restaurants, a movie theater and a mall — The Mall At Prince Georges. Residents don’t need cars to go to work, buy groceries, go to the movies or shop.”

While policies are driving the development of infill housing, assembling property for such projects can prove challenging. “It can be difficult,” Farasy says. “In Prince George’s County, there is an abundance of ground on and around Metro Stations. But the big question is, are the market economics

“Several factors are driving the trend in the MNCBIA region...”

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Hasn’t this always been a common lifestyle choice for young people? “I think it is a bigger movement today, especially in areas of Bethesda and Arlington that provide entertainment and dining as well as a place to work,” continues Morris.

AvalonBay is just finishing a project called Ava H Street in Northeast Washington, DC AvalonBay bought a failed condo development and turned it into 138 small boutique apartments. “We demolished a couple of buildings on the site and did an environmental cleanup,” Morris says.

The environmental cleanup had to do with past use by a garage and gas station. More recently, the buildings housed a bakery and a taxi dispatch station.

Not everything has remained the same. Jackson says today’s market is about lifestyle. “Our tag line is: Within walking distance,” he says. “We evaluate sites by looking for retail, groceries, cultural areas and transit within walking distance. In fact, this kind of analysis led us to transition from a company focused purely on infill residential to mixed-use residential.”

The residential component is typically townhomes. According to Jackson, 75 percent of the firm’s projects build townhomes. “We traditionally think about retail as more of an amenity than as a separate business component,” Jackson says. “We evaluate retail in terms of the tenants we want. How will these retailers contribute to life within walking distance of the development?”

Infill mixed use residential development is quite different from conventional mixed-use development.

Infill housing is not immune to impact fees. Builders may not have to put in a new infrastructure, but they will likely have to expand existing facilities at substantial costs.

“The biggest difference is the site,” says Jackson. “There are always unknown site conditions. Who knows what you might find when you turn over the dirt.

The apartments contain a full amenity package tailored specifically to the lifestyles of today’s rising millennial generation. “The apartments have a gear wall where you can hang your bike, skis, golf clubs and so on up off of the floor,” says Morris. “Other walls are designed for big screen television sets, game systems and other technologies. Under the kitchen, there is a docking station for recharging mobile phones, tablets and laptop computers.”

AvalonBay has three brands, two for infill locations, says Morris. The Ava brand is for hip, young professionals. Then there is Avalon, AvalonBay’s bread and butter luxury apartment communities with many amenities. “Both Ava and Avalon are infill communities,” Morris says. “Our third brand, Eaves, is for value customers in the suburbs.”

Infill housing is positioned to continue growing across the Washington metro area. Millennials and baby boomers are feeding the market, and there are plenty of sites for infill building. Farasy says that Prince George’s county alone has more than 2,500 acres of undeveloped or underdeveloped land at or near Metro Stations.

Willing buyers and available land. That’s the core of the infill story. m

“From the construction point of view, you work in tighter quarters, staging is more challenging. There are no staging areas, and you have to figure out how to fit everyone onto the site.

“Then obviously you have neighbors. That can be challenge all the way from entitlement through the finish of construction. Homeowners, churches, civic groups want a say in the development. That is one of the biggest challenges of infill development.”

Changing Attitudes and Demographic Trends in D.C. “I think the infill market strengthened during and since the recession,” says Rick Morris, senior vice president with Arlington-based AvalonBay Communities, Inc. “People are tired of fighting traffic. They want an easier commute. They don’t want to live in the outer suburbs as much.

“We’re finding this especially with younger people. Their lifestyle preferences make them want to live closer to work in a small apartment close to transit.”

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BUILDING IN MARYLAND AND WASHINGTON, DC

2013 Leadership Team Takes Office

B

rian “A.J.” Jackson, a partner with EYA, LLC in Washington, DC, was installed as MNCBIA’s 52nd President on January 31, 2013, at the Bethesda Marriott. Chuck Ellison, 2004 MNCBIA President, conducted the installation.

A.J.’s goals as he heads into 2013 include nurturing our affiliation agreement with HBAM, ensuring that MNCBIA has the resources and capabilities to deliver excellent member service and the opportunities for members to network and do business with other members and to maintain MNCBIA’s position as a trusted voice for our industry with policymakers and elected officials. m

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CLEAN ENERGY

GREEN PROGRAM A SOLAR SOLUTION FOR MNCBIA MEMBERS

T

he Maryland National-Capital Building Industry Association (MNCBIA) officially launched its new Clean and Green Energy Program. The new initiative is aimed at promoting and encouraging the widespread adoption of solar power among its building industry member companies. Open to both builders of new homes and builders renovating existing homes, the Clean and Green Energy Program provides special incentives to MNCBIA members when they or their clients add solar to their homes.

it also benefits remodelers who likewise receive a cash incentive when they refer the client’s property for solar installation and the client signs. In this scenario, the builder can elect to split a portion of the cash incentive with his or her client, passing along a portion as a discount to the client.

The new program makes it easy for builders to choose a solar installer since the association has fully vetted Astrum Solar.

To launch the program, the MNCBIA selected Astrum Solar, a full-service home solar installer based in Howard County, to serve as the initiative’s official partner in helping to promote the adoption of solar energy within the building industry.

Among the myriad benefits of adding solar to their projects, the program gives builders extra value through cash incentives. The program is ideal for builders of new homes since they can offer solar to buyers as an add-on option, receiving a cash incentive for the referral when the customer signs with Astrum Solar; however,

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“MNCBIA is excited about this partnership because we have negotiated a discount for our member builders and as a result hope to see more solar opportunities for the consumers in this area,” said Diane Swenson, MNCBIA’s Executive Vice President. “We all want a more environmentally

BUILDING IN MARYLAND AND WASHINGTON, DC

responsible community and this is another step in MNCBIA members’ efforts toward that goal.”

Under the new program, Astrum Solar provides turn-key installation services to make the switch to solar as effortless as possible for builders and their customers. The company takes responsibility for financing, selling, designing, installing and maintaining the solar system; therefore, builders need only submit the project location and contact information through a specially created website, and Astrum Solar takes over the project from there.

Founded in 2007, Astrum Solar was recently recognized by Inc. Magazine as the second fastest growing private company in the United States. The Maryland-based company uniquely ensures that homeowners can easily switch to solar power and immediately begin reducing their monthly utility

According to a study from the National Association of Realtors, 88 percent of homebuyers are looking for energy efficient features in their new home. Additionally, the U.S. Department of Energy Efficiency & Renewable energy reports that a home with solar will sell twice as quickly as a home without solar. A 2011 Berkley National Lab study revealed that homes with solar panels sell more quickly than non-solar homes and at a higher price. bills. When buyers qualify for Astrum Solar’s monthly payment program, they can have their solar power system installed for no upfront cost. The company’s rapid growth is fueled by its ability to provide premier customer experiences in which Astrum Solar facilitates every aspect of a customer’s seamless transition from traditional energy consumer to clean energy provider.

“Offering solar options in new home projects can increase asking prices and enhance marketability,” said Mark Manthy, Astrum Solar’s MNCBIA program manager. “Combined with the cash incentives available under the Clean and Green Energy Program, incorporating solar into building plans can improve profit margins and provide other significant benefits.”

To kick off the program, MNCBIA invited several builder members to serve on a Builder Advisory Council, helping to steer aspects of the program to best serve the needs of the member community.

EYA, a builder with an established reputation for green building practices, was represented on the Council. “EYA has been proactive about building green for several years and we even offer rough-in options to our homeowners thinking about solar installations in the future” said Karen Benner, Director of Product Development at EYA. “We’re really enthusiastic to now have an easy, comprehensive program in place to provide a turnkey solar power option to our buyers.” m

“OFFERING SOLAR OPTIONS IN NEW HOME PROJECTS CAN INCREASE ASKING PRICES AND ENHANCE MARKETABILITY...”

- MARK MANTHY, ASTRUM SOLAR’S MNCBIA PROGRAM MANAGER.

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The Legal Pad Recent Jury Decision Makes the Case for Alternate Dispute Resolution for Condominium Warranty and Construction Claims

By Shelah F. Lynn and Katherine M. Noonan, Ballard Spahr LLP

I

n November, 2012, an Anne Arundel County, MD Circuit Court jury awarded damages in the amount of $5.6 million to a condominium association in its claim against the builder/developer regarding alleged faulty construction of the condominium. In Eden Brook Condominium, Inc. v. NVR Inc., Circuit Court for Anne Arundel County, Case No. 02C11158348, the jury found in favor of the condominium association on claims for breach of express and implied warranties and negligent misrepresentation relating to alleged faulty construction that the condominium association claimed resulted in water penetration and substandard heating and cooling in the condominium.

reasonable structure for the developer’s exit from the project. A fair and detailed provision requiring procedures for investigation, notification and informal resolution of potential disputes regarding claims for breach of warranty and alleged construction defects may provide a good roadmap to avoiding significant jury verdicts such as the one issued in the Eden Brook Condominium case. Dispute resolution procedures that require joint inspections, informal settlement conferences and mediation before the parties may proceed with litigation or, better yet, arbitration, often force the parties toward a negotiated resolution as opposed to costly and risky litigation.

The trial in the Eden Brook Condominium case lasted five weeks and included the testimony of multiple unit owners who described the need to keep buckets in their units to catch leaking water. It appears from case reports that the witnesses and evidence submitted by the condominium association also focused on the representations contained in marketing and sales materials provided by the developer. While a number of factors contributed to the verdict in this case, including substantial expert involvement and testimony, the testimony of numerous sympathetic witnesses likely captured the jury’s attention. The costs associated with litigating complex construction cases, the amount of time it takes to try such cases and the empathy that jurors may have for impacted homeowners certainly raise the question whether alternate dispute procedures should be utilized by builders and developers of common interest communities, and whether such procedures should be dictated by the governing documents. When complicated warranty disputes are pursued through the court system, they are subject to the court’s rigid rules and timelines with regard to discovery and experts and to the review of technical design and construction issues by lay persons. The complex nature of most construction defect cases require significant time for both sides to gather information, facts, opinions, and suggested remedies before disputes can be resolved. Less formal dispute resolution procedures often provide a better structure for the parties to fully examine alleged defects and come to a mutual and fair agreement as to the remedy.

While arbitration does not necessarily guarantee a reasonable and less costly resolution, it does limit the review of complicated technical matters by lay persons easily swayed by emotional testimony. As a result, it is less likely that a parade of sympathetic homeowner witnesses will significantly impact the outcome. In a recent decision from the California Supreme Court, the court affirmed that a provision in a condominium declaration requiring arbitration is binding on a unit owners association, even though the association did not exist at the time, the declaration was recorded. Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC, et al., S186149 (Cal. Aug. 16, 2012). While this decision does not have precedential value in Maryland, its reasoning may be persuasive on the enforceability of alternate dispute resolution and, particularly, arbitration requirements contained imposed in the governing documents of the common interest community.

Given the potential for juries to come back with sympathetic large verdicts, as in the Eden Brook Condominium case, builders/developers should give serious consideration to imposing alternate dispute resolution procedures in the documents governing new projects.

The governing documents will guide the condominium association as to the procedures necessary to investigate and assert warranty and construction claims. Additionally, such documents may provide a

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In the Pinnacle case, the community association filed suit against the developer seeking recovery for damage related to alleged construction defects. The developer then filed a motion to compel arbitration in accordance with the declaration provision that required construction disputes with the developer be solved through binding arbitration.

Both the trial court and the Court of Appeals held that the arbitration requirement was unconscionable, however, the California Supreme Court reversed, upholding the mandatory arbitration provision in the declaration. As is typically the case in the formation of condominium projects, the developer drafted and recorded the declaration, setting forth the terms and conditions upon which the condominium project would be governed. Because no units had been sold prior to recordation of the declaration (nor could they have been under law), the association was not comprised of owners independent of the developer at the time the declaration was recorded. Nonetheless, the California Supreme Court stated that once the first buyer accepted the declaration by purchasing a unit, all terms of the declaration became enforceable,

BUILDING IN MARYLAND AND WASHINGTON, DC

unless unreasonable. Even though the association did not bargain with the developer regarding the terms of the declaration, the terms of the declaration reflect enforceable written promises. The Court found that the arbitration provision was not unconscionable in part because it was not overly harsh or one-sided so as to shock the conscience.

In the initial stages of project formation, it is important for the developer to consider how construction defect issues will be addressed. Dispute resolution procedures, including arbitration clauses are not uncommon and, in light of the significant judgment issued by a jury in the Eden Brook Condominium case, such requirements warrant serious consideration by developers. m Shelah F. Lynn and Katherine M. Noonan of Ballard Spahr LLP concentrate their practices in the areas of common interest and mixed use development and warranty and construction defect disputes. They are members of the firm’s Planned Communities and Condominiums Group and represent clients in drafting creation documents for new communities as well as in negotiating and settling warranty and construction defect disputes. For additional information or questions, Shelah can be contacted at 301-664-6204 or slynn@ballardspahr.com and Katie can be reached at 301-664-6212 noonank@ballardsphar.com.

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Business Card Marketplace ADVERTISING

AGING IN PLACE

LANDSCAPE DESIGN & INSTALLATION

MNCBIA Membership New Members & Reinstatements (12/1/12 - 1/1/13) BUILDERS

Ferguson Enterprises Inc. Plumbing Contractors/Heating Equipment/Suppliers Pooja Gupta 13890 Lowe Street Chantilly, VA 20151 Ph: 703-375-5801 pooja.gupta@ferguson.com Sponsor: Michael Schueler Home Energy Rescue Remodeling/Renovation James Hanson 20506 Bordly Court Brookeville, MD 20833 Ph: 301-570-3626 jimh@homeenergyrescue.com Sponsor: A.J. Jackson Summit Investment Partners Builder/Developer Rob Jacobs 4550 Montgomery Avenue 11th Floor Bethesda, MD 20814 Ph: 877-546-3863 rjacobs@summitinvestments.com Sponsor: Robert Jacobs

ASSOCIATES

A/I/DATA Utilities Contractors Michael Maguire 1100 Batavia Farm Road, Suite #200 Baltimore, MD 21237 Ph: 410-686-5091 mmaguire@aidainc.com Sponsor: Peggy White AHC Management, LLC Property Management James Ponder 46 South Glebe Road, Suite #201 Arlington, VA 22204 Ph: 703-271-8400 jponder@ahcmgmt.com Sponsor: Steve Nardella Astrum Solar Solar Products & Contractors Mark Manthy 8955 Henkels Lane, Suite #508 Annapolis Junction, MD 20701 Ph: 410-829-0344 mark.manthy@astrumsolar.com Sponsor: David Lunden

C V Security Inc. Security Systems/ Low Voltage Wiring Audio/Video Design & Installation Chris Vendemia 16000 Trade Zone Avenue Suite #401 Upper Marlboro, MD 20774 Ph: 301-249-0600 chrisv@cvsecurity.com Sponsor: Vernon D. Pizzi Community Association Services, Inc. Association/Project Management Susan Szajna 18401 Woodfield Road, Suite H Gaithersburg, MD 20879 Ph: 301-840-1800 barbara.jensen@casinc.biz Sponsor: A.J. Jackson GTM Architects Architectural Illustration/Architects Lisa Wood 7735 Old Georgetown Road Suite #700 Bethesda, MD 20814 Ph: 240-333-2000 lwood@gtmarchitects.com Sponsor: A.J. Jackson

J. Maurice Carlisle Inc. Septic Tanks J. Maurice Carlisle 19700 Barnesville Road Dickerson, MD 20841 Ph: 301-428-8599 bocarlisle@msn.com Sponsor: Michael Schueler

REINSTATEMENT

Lenhart Traffic Consulting, Inc. Consulting Mike Lenhart 331 Redwood Grove Court Millersville, MD 21108 Ph: 410-987-3888 mlenhart@lenharttraffic.com Sponsor: Clark Wagner

M & R Floors Floor Covering Ceramics/ Floor Contractors Dee Ritter 1202 Rising Ridge Road, Unit 4 Mount Airy, MD 21771 Ph: 310-831-0302 dee.ritter@mandrfloors.com Sponsor: Tom Farasy

Blinds First/Next Day Blinds Shutters, Drapes, Shades & Blinds Alicia Skoug 8251 Preston Court Jessup, MD 20794 Ph: 240-568-8852 alicias@nextdayblinds.com

Torti Gallas Architects Architectural Illustration/Architects Tom Danco 1300 Spring Street, Suite #400 Silver Spring, MD 20910 Ph: 301-588-4800 tdanco@tortigallas.com Sponsor: Robert Harris

STARS Club (as of February 1, 2013) The special members of MNCBIA’s STARS Club allow the Association

INDEX OF ADVERTISERS

Appliance Distributors Unlimited ............................................Page 24 Builders Mutual® Insurance Company.....................................Page 23

to provide better services for your benefit, to function effectively, to continue special events dedicated to excellent networking and to strengthen our Advocacy program.

CentreTEK Solutions............................................................Page 17

PLATINUM

Fine Earth Landscape..........................................................Page 20

GOLD

GE Appliances....................................................................Page 03 Georgetown Insurance Service, Inc. .......................................Page 22 Linowes & Blocher..............................................................Page 06 Loiederman Soltesz Associates Inc. .......................................Page 09 Louis Tenenbaum................................................................Page 20 Monument Bank.................................................................Page 06 Propane Education & Research Council..................................Page 02 Shulman Rogers.................................................................Page 19 Tremco Barrier Solutions......................................................Page 15

DGG-MC Elm Street Development K. Hovnanian Homes Lerch Early & Brewer Pleasants Pulte

CohnReznick Craftmark/Craftstar Griffin Realty Gutschick, Little and Weber, PA Mid-Atlantic Builders, Inc. Miller, Miller & Canby Sandy Spring Bank Shulman Rogers St. Charles Communities Summit Investment Partners Ward & Klein

SILVER

FRIEND

Wells Fargo

Georgetown Insurance, Inc. Linowes and Blocher, LLP Loiederman Soltesz Associates, Inc. McMillan Metro Miles and Stockbridge, PC Rodgers Consulting Inc. Stantec Washington Gas Winchester Homes, Inc.

BRONZE

Axiom Engineering Design, LLC Ballard Spahr LLP Burgess & Niple, Inc. Charles P. Johnson & Associates

Baker Tilly Bowman Consulting Bozzuto Group Caruso Homes Inc. Dico, Inc. Dewberry EYA Furey Doolan & Abell Geo-Technology Associates Inc. Macris Hendricks & Glascock, P.A. Michael Harris Homes Miller and Smith Homes Mitchell & Best Homebuilders LLC O’Malley, Miles, Nylen & Gilmore, P.A.

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Events Calendar MARCH 2013

APRIL 2013 21

1 Prince George’s Liaison Committee meeting

6 Environmental Committee meeting

12 Real Estate Finance Committee meeting Codes & Standards Committee meeting

Business Management for Building Professionals Home Builders Care Foundation Board meeting

25 Prince George’s County Liaison Breakfast

26 Membership Direct Drive—Kickoff Party

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14 WSSC Liaison Committee meeting MNCBIA Executive Committee meeting

19 Certified Aging-in-Place Specialists (CAPS I)

20 Design/Build Solutions for Aging & Accessibility (CAPS II) Calvert & St. Mary’s Joint Liaison Committee meeting Charles Liaison & Chamber PGM Committee meeting

Professional Women in Building Council meeting DIRECT DRIVE—Membership Telethon MNCBIA Membership Committee meeting

28 DIRECT DRIVE—Membership Telethon MNCBIA Board of Directors’ Meeting Celebrity Chefs & Table Top Night

3 Environmental Committee meeting

5 Prince George’s Liaison Committee meeting

9 Real Estate Finance Committee meeting Codes & Standards Committee meeting

11 WSSC Liaison Committee meeting MNCBIA Executive Committee meeting

17 Calvert & St. Mary’s Joint Liaison Committee meeting Charles Liaison & Chamber PGM Committee meeting

18 Home Builders Care Foundation Board meeting Environmental Conference

24 Professional Women in Building Council meeting MNCBIA Membership Committee meeting

25 HBCF’s Bull & Oyster Roast

MNCBIA’s Most Wanted List Listed here are firms whose membership in MNCBIA

has lapsed in recent months. WE WANT THEM BACK! Please encourage these companies to reinstate their membership. Also listed are prospective members we are working to add to our team.

All Temp Heating & Air Conditioning • 1st Mariner Bank • AMEC Contracting • Augustine Plumbing • Chesapeake Irrigation Systems • Chester River Landscaping • Clearwater Landscape & Nursery • Colorworld Painting & Drywall • Commercial Image • Comstock Services • DeFore Designs • Digiterra • Edison Institute • Guardian Realty Management, Inc. • Harkins Builders, Inc. • Hatfield Equipment Services • JW Shipley • K.V. Gessford, Inc. • Lee Building Supply • McCormick Paints • Porcelanosa • Rexel • Ruiz Contracting Inc. • The Washington Savings Bank • Tower Companies • USI Insurance Services

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BUILDING IN MARYLAND AND WASHINGTON, DC

1738 Elton Road, Suite 200 Silver Spring, MD 20903