New York's 7 World Trade Center leads the way
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New York's 7 World Trade Center has been a building of firsts.
The first permanent office space built at the World Trade Center site following the Sept. 11, 2001, terrorist attack, the 52-story tower at 250 Greenwich St. also was the city's first office building to be certified by the U.S. Green Building Council's Leadership in Energy & Environmental Design program.
Although its developers and builders are quick to tout 7 WTC's pioneering environmentally sustainable commercial space in New York, that same distinction generated several unique challenges for risk managers and other executives involved in the tower's construction and operation.
“When you're the first at anything, it's always difficult to explain to people what that means in theory, and the LEED features were no exception,” said Dara McQuillan, a senior vp at Silverstein Properties Inc., the tower's developer and owner.
Mr. McQuillan noted that the LEED program was just three years old when Silverstein began initial planning for the tower, which had substantial implications for its insurance programs during and after construction, as well as its leasing and marketing strategies.
“Remember, the building was designed in 2001 and 2002, when most of the market hadn't even heard of LEED certification or the U.S. Green Building Council,” Mr. McQuillan said.
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Designed by Chicago-based Skidmore Owings & Merrill L.L.P.—which declined to comment for this story—7 WTC was awarded gold LEED certification when it opened in May 2006. Among prominent features that earned the tower its certification are its floor-to-ceiling windows and recycled building materials; high-efficiency heating, cooling, air filtration and plumbing systems; and a rooftop rainwater collection system used to irrigate the park at the base of the tower.
Though pursuit of the certification did little to alter New York-based contractor Tishman Construction Corp.'s risk management strategy from an operational or workplace safety standpoint in building the tower, it did make key changes to its insurance program. Primarily, it negotiated to amend its professional risk policy to include work intended to result in a LEED certification.
“Back then, as you can imagine, (green building) was a fairly new concept,” said Bill Motherway, executive vp of risk management at Tishman. “It wasn't that a claim brought against us as a construction manager on a LEED building would have necessarily been excluded, but we wanted to have it specifically spelled out in the policy within the definition of our professional services.”
Mr. Motherway said the key to quelling hesitation among Tishman's undisclosed underwriters at the time was to clearly delineate between construction management and services that could be interpreted as design or engineering work.
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“With green building, the risk is really generated from the design and guarantee standpoint more than it is from a construction standpoint,” Mr. Motherway said. “We weren't doing any of the design work or signing off on any architectural documents, and that's something you need to make sure the insurers understand. As long as you're not straying outside the scope of construction management and into the architectural or engineering fields, that usually puts underwriters at ease.”
LEED certification for 7 WTC also had significant insurance implications for Silverstein before and during construction.
In addition to professional risk coverage it purchased for the various providers and consultants involved in the tower's design and engineering phases, Silverstein placed property and terrorism coverage for the city's first LEED-certified office building in a marketplace that still was familiarizing itself with green commercial construction.
“We spent a lot of time talking to underwriters about the types of materials being used, the recycling systems and the energy-saving measures,” said Shari Natovitz, vp of risk management at Silverstein. “We needed our underwriters to understand that all of those elements—including design costs, materials and labor—were built into the total cost of the building that we were insuring.”
Compounding that challenge, Ms. Natovitz said, was the fact that many costs associated with building for LEED certification—including construction materials and specialized labor—often were not adequately itemized in construction documentation.
On top of coverage for direct damage claims, Ms. Natovitz said the tower's green elements also affected negotiations on business interruption coverage.
“Recertifying the building would certainly have been a part of any recovery process,” Ms. Natovitz said. “We needed to make sure that there was no restriction on our recovery in the event of any business interruption claims.”
