Green Building & Environmental Trends : Green Building & Construction LEED AP Consulting : Rich Cartlidge : Environmental Trends, Urban Development

This past week Elisa Wood of Renewableenergyworld.com wrote a very interesting blog piece focusing on the state of the commercial real estate market and the perceived costs and benefits of green buildings. Ms. Wood focused on what she calls the "ghosts" of green building, the perceived costs of green expenditures which in reality do not actually turn out to be true her post is based on a recent report released by Ceres which can be downloaded here.

The report established the methods by which both direct and indirect property investors can reduce their portfolios energy usage and increase its value:

• Establish a baseline measuremen tof energy use across portfolios
• Prioritize opportunities for energy reduction using a sequenced approach from ENERGY STAR that focuses first on the worst- performing properties that provide the lowest-cost, easiest opportunities for cutting energy use. Such sequencing includes:
• Retro-commissioning buildings, which involves testing building systems to ensure they are operating optimally
•  Upgrading lighting – Reducing electricity load demand of occupants and equipment – Upgrading and optimizing air distribution systems – Upgrading and optimizing heating and cooling systems
• Benchmark on a regular basis ongoing energy use against that baseline For indirect property owners who invest in real estate related funds or stock ownership:
• Seek funds with a specific mission of creating or acquiring energy efficient properties
• Seek funds with specific goals for energy efficiency improvements in existing holdings
• Use proxy voting and direct engagement to address energy efficiency with asset managers and public companies

The report contains very interesting material for all involved in the green building industry and is worthy of a quick read. The findings are very encouraging for the future of the industry and show that people are starting to appreciate the benefits that green buildings can provide.

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     Green buildings are unique in many ways but share one common trait with traditionally constructed buildings, without tenants they are of little use to their owners. With tenants comes the need for leases and with green buildings a green lease is a necessity. A green lease is needed from the owner's perspective to ensure that their investment is protected and from the tenant's perspective to ensure that the owner constructs and operates the building in a manner that ensures energy efficiency. Traditionally there have been two types of leases used in the leasing of commercial property, triple net leases and gross leases. A triple net lease is a lease where the tenant pays their monthly base rent, a portion of the building's energy costs, real estate taxes and insurance costs proportionate to their percentage occupancy of the building, and their proportionate share of the buildings public area maintenance. A triple net lease provides no incentive to the owner to increase energy efficiency as the tenants are already paying these costs. On the other hand a gross lease where the tenant pays a monthly rent which covers the tenants insurance, real estate taxes, and public area maintenance.

     In buildings which utilize a gross lease the owner would be well advised to take measures to increase the buildings energy efficiency as they will directly benefit from any savings. However, owners continue to fight measures such as those proposed by New York City which would require energy efficiency increases.

So what exactly should a green lease address? The following list while by no means exhaustive provides a good starting point for owners considering implementing green leases:

1. Require tenants to use energy efficient lighting fixtures which include occupant sensors and not to override these sensors if installed by the owner.
2. Require tenants to use low flow fixtures to reduce water use.
3. Permit entry by the owner's agents to monitor building systems on an ongoing basis to ensure that they are operating at their highest possible efficiencies.
4. Require tenants to utilize low Volatile Organic Compound (VOC) paints, adhesives, and cleaning supplies to ensure the highest possible indoor air quality.
5. Implement waste management policies which incorporate recycling programs to minimize the amount of waste sent to landfills.
6. Require that any tenant build-outs are conducted in a manner which will permit upgrading of building systems in the future if more energy efficient systems become available.
7. Ensure that provisions are in place which clarify what the owner's and tenants rights and cost burdens will be if energy efficiency measures are implemented in the future which either interfere with the tenant's use and enjoyment of the building or which require large capital expenditures by the owner but which pass tangible financial benefits onto the tenant.
8. A clause which allows the owner to terminate the lease if the tenant's use of the building is inconsistent with its design as a sustainable building.

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Today as I drove around Maryland with my mom running day after Christmas errands we passed a development called Spencer's Crossing and my mom asked if I would like to take a look. At first I was slightly perplexed as to why I would want to look at Maryland real estate, but my mom quickly changed my mind by telling me the development was Maryland's first LEED for Homes community! The community is the first in the nation to receive LEED Gold status and Certified Green status by the GE Ecoimagination program.

While the developers make some lofty promises such as 53% reduced heating and cooling costs they back these claims up with two guarantees, which for the lawyers among us translates to an enforceable promise. The two guarantees are unique and perhaps just what the green building movement needs to catch on in the mid-atlantic. The first guarantee is a heating and cooling guarantee which calculates the amount of energy needed to heat and cool the home and then guarantees that your costs will not exceed that amount. The second guarantee a comfort guarantee which assures that the homes temperature will not vary by more than 3 degrees from the center of any conditioned room. I can tell you based on my experience that the home was very well constructed and that I was unable to feel any noticeable drafts.

However, the most impressive feature of these homes was not their excellent construction or luxury features but rather their 60% reduction in property taxes offered as a result of the Baltimore County tax credit which is guaranteed for a period of 3 years and perhaps longer if it continues to be funded. The tax credit is Codified in the Baltimore County Code 11-2-203.2.

Do you think tax credits are the way to promote green building or are performance guarantees such as those provided by the builder of this community the better way to go?

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I consider myself truly fortunate to be a resident of Tampa, Florida particularly during times such as this past week when the North Eastern Seaboard where I grew up is covered in snow. The state of Florida is likely associated by most of my readers with Disney World, golf, and vacation. However, what many people don't know is that Florida is home to a variety of robust and diverse ecosystems ranging from the salt marshes along the coasts to the Everglades. Further, Florida, at least the majority of the state, has a very rich history and is perhaps one of the last true frontiers left in America a place where true cowboys raise cattle and reap the harvest of the land. The Florida Legislature has recognized the need to build sustainably moving into the future and to that end have enacted the following legislation.

255.2575  Energy-efficient and sustainable buildings.--

(1)  The Legislature declares that there is an important state interest in promoting the construction of energy-efficient and sustainable buildings. Government leadership in promoting these standards is vital to demonstrate the state's commitment to energy conservation, saving taxpayers money, and raising public awareness of energy rating systems.

(2)  All county, municipal, school district, water management district, state university, community college, and Florida state court buildings shall be constructed to meet the United States Green Building Council (USGBC) Leadership in Energy and Environmental Design (LEED) rating system, the Green Building Initiative's Green Globes rating system, the Florida Green Building Coalition standards, or a nationally recognized, high-performance green building rating system as approved by the Department of Management Services. This section shall apply to all county, municipal, school district, water management district, state university, community college, and Florida state court buildings the architectural plans of which are commenced after July 1, 2008.

While this legislation may not seem very progressive to those of you who live in some of the more progressive cities such as our nations capitol it is a great step forward for Florida. What I find to be the most interesting piece of this legislation is section 3 which encourages the fostering of green building professionals and a continuing education program which can help guide Florida's builders into the future. For additional information regarding Florida's green building and renewable energy initiatives I encourage you to take a look at the excellent resource assembled by DSIRE which can be found here.

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Several months ago my friend Shari Shapiro wrote a blog post Green Building Litigation--Whither the Lawsuits? Now many builders across the nation are wondering whither the green? An article by the Wall Street Journal, Green Builders Await the Green sheds light on a problem that those of us involved in the green building industry have been acutely aware of for some time...the government is dragging its feet on disbursing the green earmarked for green projects. The General Services Administration was allocated 5.5 Billion dollars under the American Recovery and Reinvestment Act, 2 Billion dollars of which was supposed to be distributed by the end of 2009. Now only two weeks away from the end of the year only 1.5 Billion of that 2 Billion dollars has been distributed! Even more striking, only 89 million dollars has been paid out thus far! So what exactly is taking so long for the green to reach the pipeline?

Are you a contractor who is vying for a part of the 4 Billion dollars that have yet to be allocated? Will 2010 see an explosion of green growth as project currently in the planning stage progress to construction? Will 2010 be the year of green litigation?

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Today I am very happy to announce that Build2Sustain has launched their white paper addressing sustainable construction and the need to increase transparency and demonstrate ROI. A free copy of the paper can be obtained by filling out a simple form on the Build2Sustain website.

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Last week I received a very interesting press release from a prestigious builder's PR firm. The email started by explaining the very admirable steps that the builder was taken to be a leader in sustainable building. The measures the builder was taking were extraordinary such as building a carbon neutral headquarters, taking measures to reduce carbon emissions from construction equipment, purchasing offsets to make their entire operation carbon neutral, etc. However, the PR firm committed a major goof which left me feeling like I had been scammed, they capped the press release off by exclaiming how the builder built homes with a completed value of up to 60 Million dollars! How can a 60 Million dollar home possibly even approach being considered sustainable?  Perhaps the builder would be best advised not to take measures to appear sustainable and instead serve as an educator to counsel their clients that outrageous extravagance is not needed and that they can build luxury homes without constructing the next McMansion.

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Image: Infobarrel

Environment News Service published the findings from the American Institute of Architects (AIA) green study this week and the findings show that America is experiencing explosive green growth.The AIA study shows that 138 cities now have green building programs compared with just 92 in 2007, an incredible 50 percent increase! The Eastern region experienced even greater growth with a 75 percent increase in the number of cities with green programs. However, what I found to be most interesting was the following quote by Christine McEntee, AIA's CEO:

"It is encouraging that cities are recognizing the economic benefits of energy-efficient buildings, and equally encouraging that the number of programs across the country are increasing despite such difficult economic conditions,Our ultimate goal is to achieve carbon neutrality in buildings by 2030 and that all design projects will be sustainable as a matter of course."

 In light of this growth what is your city doing to encourage green building and how are you preparing yourself to take advantage of it? While GBET often focuses on the risks of green building it is equally important to focus on the potential rewards. I would love to hear how you and your company are involved in the green building field or what your plans are to enter it.

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We are all well aware there is an ongoing identity crisis in the green building world. What does it mean to be green? Does it require certification? How will it perform? Blah blah blah. Well today a report (PDF) prepared by the USGBC and Booz Allen Hamilton completely redefined how many will think of green building! All too often when speaking about green buildings and economics we focus on the additional cost to the developer and the environmental benefits rather than the benefits to the overall economy. This study provides some staggering statistics which we here at GBET believe will change the way you think of green....can you say show me the money? According to the study from 2009-2013 green building will:

• Support 7.9 Million jobs
• Pump 554 Billion dollars into the economy
• Provide 396 Billion dollars in wages
• Contribution to the U.S. gross domestic product (GDP)
  • 2000-2008: $173 billion
  •  2009-2013 forecast: $554 billion
•  Jobs created or saved (includes direct, indirect and induced jobs)
  • 2000-2008: 2.4 million
  • 2009-2013 forecast: 7.9 million
• Wages
  • 2000-2008: $123 billion
  • 2009-2013 forecast: $396 billion
• Energy savings
  • 2000-2008: $1.3 billion saved
  • 2009-2013 forecast: $6 billion saved

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