Removing Market Barriers
to Green Development
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Principles and action projects to promote widespread
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Cover Images (clockwise from top left):
Aerial view of street incorporating natural drainage, Seattle, WA. This natural drainage pilot project was the first natural drainage system
constructed by the City of Seattle. It was completed in the spring of 2001. Photo credit: Seattle Public Utilities
U.S. EPA Region 8 headquarter office, Denver, CO. The new Region 8 Headquarters, which is leased by EPA, features numerous environmentally
friendly designs and systems. The Solicitation for Offers for the new facility included environmental provisions developed by the General
Services Administration and EPA to ensure that the building promotes energy and water efficiency and uses environmentally preferable
materials and design. Photo credit: U.S. EPA, Region 8
Hearst Tower, New York, NY. Completed in 2006, the 46-story Hearst headquarters floats above an existing six-storey Art Deco building and has a
progressive environmental strategy—the tower was the first occupied commercial building in New York City to achieve a LEED gold rating.
Photo credit: Nigel Young, Foster + Partners
Chicago Center for Green Technology, Chicago, IL. Chicago Green Tech is only the third building in the United States to be designed according
to the LEED rating system using the highest standards of green technology available. It is the only one of the three that is a renovation of an
existing building and the only one accessible by public transportation. Photo credit: City of Chicago
Anixter International distribution center, Alsip, IL. In 2007, this project became the first industrial-category building, and the second-largest
building in Illinois to achieve LEED certification. The design earned certification points across thirteen sustainable criteria. Among them, the
design utilizes a state-of-the-art energy management system and provides 100% natural light during daylight operations with a well-insulated
roof that includes 150 skylights. Photo credit: AIA Northeast Illinois
Redevelopment of the South Waterfront district, Portland, OR. The South Waterfront is a new high-rise district under construction on
former brownfield industrial land in the South Portland neighborhood south of Downtown Portland, Oregon. It is one of the largest urban
redevelopment projects in the United States. SoWa is connected to downtown Portland by an extension of the Portland Streetcar.
Photo credit: Portland Development Commission
Maplewood Raingarden street reconstruction, Maplewood, MN. In 1996, Maplewood installed it's first rain garden to help manage stormwater.
Today the city has over 450 home rain gardens and over 30 rain gardens on city land.
Photo credit: City of Maplewood, MN
Wentworth Commons Apartments affordable housing, Chicago, IL. Located in the inner city urban community of Roseland, this 1.14-acre site
provides 51 affordable rental apartments for 27 families and 24 single adults who are formerly homeless, disabled or economically poor. It is the
first multi-unit residential building to receive LEED certification in the Midwest for sustainable, green design that promotes a healthier living and
working environment. Photo credit: Mercy Housing Lakefront
Atlantic Station townhouses, Atlanta, GA. Atlantic Station is a LEED-qualified project on a former brownfield site with commercial and residential
buildings. It is, at more than 130 acres, so big it has its own zip code. Eventually 10,000 people will live there. Photo: Atlantic Station
This report is available from the websites of the
Northeast-Midwest Institute and the Delta Institute:
http://www.nemw.org
http://delta-institute.org
U.S. EPA Region 5, December 2008.
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Preface
Record fuel prices, soaring utility
costs, and climate change impacts
have sparked interest in sustainable
development as a way to adapt to
what many believe are indications
of permanent economic and
environmental changes. The direct
impact these issues have on the health
and budgets of Americans is causing
many to reflect on their consumption,
needs, and lifestyles, including where
they live and work.
Buildings, of course, are where we
live and work; in fact, a 2004 U.S.
EPA study found that we spend over
90% of our time indoors. However,
buildings do not exist in a vacuum,
but are a part of their community
where they are located. Development
patterns in communities dictate
transportation options and access,
traffic patterns, and the environmental
impact to our air, land, and water.
Consequently, green buildings and
sustainable development has emerged
as components of the overall strategy
to deal with the major environmental
and resource issues we are facing
today. For the purposes of this
research initiative, we used the term
"green development" to include site-
specific green building strategies and
community-wide sustainable planning
and development practices.
While many of the ideas and
technologies that green development
promote have been around for years,
market interest in these practices is a
relatively recent trend. Whether this
interest is attributable to an individual
or organization's concern for
conservation, the environment, health,
or economics, the market's adoption
of green development practices can
provide benefits to the developers,
the building occupants, and the
surrounding community. In order
to realize the benefits from green
development, we must figure out how
to remove barriers and facilitate the
transition from interest to action.
McGraw-Hill Construction's 2006
Green Building SmartMarket Report
indicated that green buildings
comprised approximately 2% of
the U.S. construction market for
both commercial and residential
construction in 2005. The share of
new construction starts is expected to
grow to between 5% and 10% (of both
commercial and residential) in 2010.
While this growth is impressive, we
should consider why a much greater
proportion of construction and
renovation is not being conducted
in a green manner. This concern is
especially relevant in light of some of
the most urgent issues we are facing
Removing Market Barriers to Green Development
3
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including energy prices, climate change, and
depletion of natural resources.
U.S. EPA Region 5 initiated a process to
look at market barriers to green development
practices, working with its partners the
Northeast-Midwest Institute and the Delta
Institute. This initiative grew out of EPA's
brownfields experience, where we realized
that specific adjustments to definitions or
processes transformed the market for reusing
environmentally impaired land. Similar to
the lack of initial acceptance associated with
brownfield redevelopment, we believe green
development practices can gain wider market
adoption if we can remove the barriers and
make some key changes. In many ways,
these efforts are converging as the focus of
many brownfield redevelopment projects
are evolving to include green buildings and
sustainable redevelopment.
Our objective for the Market Barriers
to Green Development initiative was to
examine what current market dynamics
inhibit mass adoption of these practices
and what can and should be done to make
green development the convention rather
than the exception in the U.S. This report
summarizes the experiences and ideas of
our many participants and partners. The
intended audience is professionals involved
in all aspects of development and planning,
as well as anyone who is interested in
expanding adoption of green development
practices in their community. We hope the
ideas and action projects provides some food
for thought as you seek ways to change the
market for green development projects.
This document is divided into three sections.
Section 1 provides an overview of the scope
and process of this project, findings from our
first workshop to identify green development
barriers, and a summary of green building
principles. Section 2 delves deeper into
each of the six principles and outlines
recommended action projects to overcome the
identified market barriers. Finally, Section
3 provides some thought about issues on the
horizon and the next steps we should take
to promote green development practices.
The following summary documents from
workshops related to the Market Barriers
to Green Development initiative can be
downloaded from the websites of the
Northeast-Midwest Institute and the Delta
Institute:
• Identifying the Market Barriers to Green
Development, May 2007. This document
provides further information on barriers
identified during the first workshop.
• Fostering Green Development Practices-
Roles of the Public Sector, February 2008.
This document provides ideas and case
studies of how the public sector can use
projects to influence green development
practices.
• Using Incentives to Promote Green
Building Practices, July 2008. This
document provides a summary of our
working meeting to look at designing
an incentive for affordable housing
developers.
Removing Market Barriers to Green Development
4
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Table of Contents
Preface
3
Section 1: Overview
6
1.1 Market Barriers to Green Development Initiative 6
1.2 Defining green development 7
1.3 The case for green development 8
1.4 Framing the issue: Identifying market barriers to green development 10
1.5 Principles for removing market barriers to green development 12
2.1 Applying the integrated design approach is essential to creating a superior
green development 15
2.2 Green building and infrastructure cost less than conventionally built
structures over their lifetime 21
2.3 Incentives can stimulate the adoption of green development practices 27
2.4 Regulatory processes and codes can help to promote green development
practices 31
2.5 Building transactions and leasing agreements can be designed to
accommodate green building 37
2.6 The cost, benefits, and performance of green buildings must be
documented and communicated to expand the market for green
development 42
Section 2: Removing Market Barriers to Green
Development Principles
15
Section 3: Future Issues and Conclusion
3.1 Issues just over the horizon 50
3.2 Conclusion 53
50
References
54
Participants & Partners
56
Acknowledgments
59
Removing Market Barriers to Green Development
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1.1 Market Barriers to Green
Development Initiative
In late 2006, the U.S. Environmental
Protection Agency's Region 5
assembled a steering committee to
develop a process to identify and
address market barriers to green
development practices. The steering
committee developed a process that
involves the following four phases:
1. Identify the most significant
market impediments to green
development practices;
2. Develop strategies to eliminate/
minimize targeted market barriers;
3. Research and begin to implement
strategies to remove market
barriers;
4. Communicate our findings and
successes through white papers,
reports, additional research, and
outreach.
This report is the product of this
process and examines how the market
may intentionally or unintentionally
create barriers to green development
practices. This report will also offer
ideas and recommendations for
those who build, finance, and are in
positions to approve or support green
development in all our communities
on how to eliminate these barriers to
begin making green development the
norm rather than the exception.
Market Barriers to Green Development Process
r
Phase 1
bO-
Phase 2
/
/
/
Identify and
contact
participants for
first workshop
January 2007
Formed
Steering
Committee to
outline
framework for
Market Barriers
to Green
Development
Initiative
Analyze
results of
workshop
and created
structure
for second
workshop
May 2007
Identify Market
Barriers to Green
Development
Workshop
Over 50 participants
from across the
development process
shared their
experiences and
thought about barriers
to green development
projects
July 2007
Produced and
distributed
Identify Market
Barriers to Green
Development
May 22, 2007
Workshop
Summary
/
Phase 3
I5
4?
§
Phase 4
£
&
£
Identify
Research and investigation period to
Prepare
and contact
identify best practices, meet with subject
initial
participants
matter experts, and establish contacts for
draft of
for second
the initiative. We also began implementing
final
workshop
some of our ideas during this period.
report
October 2007
Removing Market Barriers to Green
Development Workshop
Over 65 participants with development
and strategy backgrounds were brought
together to develop ideas and approaches
to solving the barriers identified in the
first workshop
Complete
report
July 2008
Workshop with
participants to
review findings and
draft final report
Continue
outreach and
implementation
of projects
December 2008
Publication of final
report by
Northeast-M idwest
Institute
Removing Market Barriers to Green Development
6
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1.2 Defining green development
Buildings are a part of the
environmental, economic, and social
systems of communities and, as
such, do not operate independent of
their environment. How a building
is designed and where it is located
clearly affect the users of the building,
the community, and the environment.
However, even for those who don't
live or work in a particular building,
the impacts can be significant and can
include traffic congestion, reduced
street accessibility, and higher utility
costs due to excessive use of energy
and water. These are external costs
that are borne by everyone. There are
also global implications in how the
built environment uses diminishing
natural resources and how heavily
it contributes to climate change.
Therefore, green development
strategies should examine impacts at
the site, neighborhood, regional, and
global levels. We strongly support the
inclusion of the following strategies as
part of green development: energy and
water efficiency, reuse of materials
and use of sustainable materials,
on-site stormwater management,
healthy indoor air quality, building
preservation and reuse, accessibility
to public transportation options, infill
and brownfield redevelopment, and
smart growth principles.
Many developers and builders
use third-party rating systems to
help guide their projects. The
rating systems typically focus on
specific building types (residential,
commercial, industrial), construction
type (retrofit, interiors), or resources
(energy, water) that help organize
the various strategies that green
building should include. At the U.S.
EPA, we are actively engaged with
these organizations and will continue
to work with them to enhance
their systems in future releases
to incorporate feedback from this
research initiative. However, this
report does not address the relative
merits of these various rating systems,
focusing instead on the recognition of
the value of green building approaches
within the market.
Removing Market Barriers to Green Development
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1.3
The case for green
development
A building's location, construction
methods, and ongoing maintenance
have major implications for the
environment. Collectively, the impact
the built environment has on our lives
and environment is significant:
Buildings accounted for 39.4
percent of total U.S. energy
consumption in 2002. Residential
buildings accounted for 54.6
percent of that total, while
commercial buildings accounted
for the other 45.4 percent;
Buildings accounted for 67.9
percent of total U.S. electricity
consumption in 2002. 51.2 percent
of that total was attributed to
residential building use, while
48.8 percent was attributed to
commercial building usage;
Buildings in the United States
contribute 38.1 percent of the
nation's total carbon dioxide
emissions, including 20.6 percent
from the residential sector and
17.5 percent from the commercial
sector;
On average, Americans spend
about 90 percent or more of their
time indoors. Indoor levels of
pollutants may be two to five
times higher, and occasionally
more than 100 times higher, than
outdoor levels;
Building-related construction and
demolition (C&D) debris totals
approximately 136 million tons
per year, accounting for nearly 60
percent of total non-industrial
waste generation in the U.S.
(1996);
Building occupants use 12.2
percent of the total water
consumed in the United States per
day. Of that total, 25.6 percent is
used by commercial building
occupants, and 74.4 percent by
homeowners (1995).1
Addressing development, building,
and transportation issues is
fundamental to EPA's mission of
protecting our environment. By
employing green development
strategies when constructing new
buildings and roads, retrofitting
existing buildings, and promoting
sustainable redevelopment of
brownfields and infill development,
we can reduce energy use, conserve
potable water, increase recycling,
decrease use of raw materials,
preserve natural systems, improve
indoor air quality, and reduce
greenhouse gas emissions.
The benefits of greening the built
environment are considerable. For
example, a recent study completed
1 U.S. EPA Green Building Statistics, http://www.epa.gov/greenbuilding/pubs/gbstats.pdf
Removing Market Barriers to Green Development
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by the U.S. Green Building Council and the
New Buildings Institute found that buildings
constructed to LEED (Leadership in Energy
and Environmental Design) standards are
25-30% more energy efficient than existing
non-LEED buildings. Along the same lines,
commercial buildings that have earned the
Energy Star (a joint program of the U.S. EPA
and U.S. Department of Energy) use nearly
40% less energy than average buildings
and emit 35% less carbon dioxide into the
atmosphere. EPA's findings from the recent
"Lifecycle Building Challenge" indicate that
27% of existing buildings will be replaced
between 2000 and 2030, and that 50% of
buildings in 2030 will have been built since
2000. This furthers the case for making
green building and sustainable development
projects an important focus area.
Although the EPA's primary mission is
environmental protection, green buildings
affect our economy and society as well. On
a micro level, a CoStar study that looked at
occupancy and rental rates for commercial
buildings showed that LEED and Energy Star
buildings command higher rental rates, have
lower vacancy rates, and have higher resale
value for the owners, proving that consumers
understand the value of green buildings.2 On
a greater scale, green development has the
potential to become an engine for economic
regeneration. Green development practices
provide an important pathway to a stronger
green economy where unnecessary spending
—on energy, long commutes, waste disposal,
producing new products when recycled or
reused ones are just as good, disaster relief
from extreme weather events, and other
problems caused by traditional development
patterns—is minimized and resources are
freed up to invest in education and new
jobs, technologies, products, and services
that support new frontiers in sustainable
development.
2 CoStar Commercial Real Estate Information, http://www.costar.com/partners/costar-green-study.pdf
Removing Market Barriers to Green Development
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1.4
Framing the issue:
Identifying market barriers to green development
On May 22, 2007, the first of two
workshops to examine market
barriers to green development was
held in Chicago, IL. The goal for
the first workshop was to identify
and describe the most significant
market barriers to green development
practices. In order to achieve this
goal, we brought together a select
group of approximately 50 experts
familiar with both conventional and
green development projects. The
participants included architects,
attorneys, appraisers, bankers,
brokers, developers, equity providers,
owner/operators, and others
directly involved in the real estate
development process.
Many of the barriers identified during
the first workshop, whether actual
or perceived, can be attributed to
multiple failings within the market
to recognize the value of green
development. We found that the
overriding reasons for most barriers
fell into one of five major categories
listed below.
Knowledge gaps in green
development quantification
One of the major barriers that
participants cited is the need for
reliable performance, cost, and
benefit information of green features.
Without this information, it is
Removing Market Barriers to Green Development
10
difficult for the market to justify the
occasionally higher up-front costs
for a green development project.
Quantification of energy savings,
lower utility bills, building longevity,
lower environmental impacts,
increased occupant productivity, and
the public health benefits of green
developments over those that are
conventionally built is required if
green development is to move from a
being a niche market to the norm for
construction projects in the U.S.
Communication shortfall
Participants from the first workshop
offered a range of thoughts that point
to misconceptions and uncertainty
about green development and failures
in the communication chain regarding
the benefits associated with such
projects. Developers cite a lack of
demand from consumers for such
features. Consumers, especially in
the residential sector, typically place
higher value on amenities such as
space or finishes over less visible
features such as energy efficiency,
and may do so because they lack an
awareness of what alternatives exist
or the range of benefits that could
be realized from green properties.
Those who oversee or facilitate the
exchange of property from developer
to occupants—brokers, appraisers,
property search specialists—rarely
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possess the data, tools, or knowledge
necessary to convey the value of green
features to buyers or tenants.
Ownership structure and operating
cost responsibility
Ownership and standard lease structures
determine who captures the benefits from
green features, primarily in terms of
associated cost savings. Unfortunately, the
beneficiaries of cost savings are often not
the decision makers in charge of design,
improvement, and development decisions.
There is little motivation for a developer
to build or install energy-efficient, transit-
friendly, or on-site storm water management
features, some of which will only have
benefits over the longer-term, if they will
be selling the building immediately after
completion of construction. Under typical
short-term leases where the tenant is
responsible for utilities, owners may not want
to go through the hassles or costs of energy
efficient system retrofits.
Funding issues
When evaluating projects, equity and
secondary markets often use criteria that
are geared more toward conventional
developments rather than green
developments. For example time horizons
are usually not long enough to capture the
benefits that accrue over time from up-
front investments. Also, it may be difficult
to "package" or sell mortgages for non-
conventional projects for the secondary
markets. Market conditions often make green
development projects more challenging from
a risk and return point of view.
Industry and government standards used in
project evaluation, especially as they relate to
factors such as cost escalation assumptions,
can determine whether projects are financially
feasible. Many of these accepted assumptions
need to be revisited to ensure that they are not
unintentionally impeding green development
by lengthening the payback period.
Risks and process issues
The lack of expertise and resources for green
building in many communities often creates
an environment that lengthens development
time frames. In the public sector, approvals
and permitting processes, many of which are
not equipped to handle green construction,
may cause delays. Building codes that were
written for conventional developments often
do not allow more environmentally friendly
systems. Additionally, when people have
fears about legal liability, they often default to
rules that are in place and well-tested rather
than adjusting them to meet the different
requirements of green systems. In the private
sector, the difficulty in identifying appropriate
architects, construction firms, attorneys,
construction materials, and other sources
can also lengthen the project schedule.
Delays often lead to greater risks and
higher costs, which many developers would
rather avoid given tight budgets and time
frames. However, experienced developers
also mentioned that up-front collaboration
between the architect, developer,
contractor, and the owner/tenant minimized
complications.
Removing Market Barriers to Green Development
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1.5
Principles for removing market
barriers to green development
Throughout this process, we have
encountered many communities,
organizations, and individuals who
have managed to overcome market
and other barriers to successfully
promote and build green buildings.
We have aggregated and augmented
some of these ideas and put forth
some of our own findings that
we hope will bridge the access,
knowledge, and process gaps that are
preventing widespread adoption of
green development practices today.
The following section outlines some
of these ideas. A detailed summary
of these approaches can be found in
subsequent sections.
Green Development Principle 7:
Applying the integrated
design approach is essential
to creating a superior green
development.
Integrated design is a key component
of successful green building
projects. Using this approach,
developers are able to improve the
end result by ensuring all building
systems work cooperatively in
the most cost effective manner.
However, the process can be further
improved by involving other project
stakeholders, especially those that
are involved in appraising, financing,
and insuring the property, and by
developing a common vocabulary to
improve communication among all
stakeholders.
Use integrated design to maximize
impact of green features
Use integrated design to minimize
overall green development cost
Involve market representatives
and municipal building officials
at the beginning of the integrated
design process
Use integrated design as a risk
mitigation strategy
Don't use third-party rating
systems as a substitute for
integrated design
Green Development Principle 2:
Green building and
infrastructure cost less than
conventionally built structures
over their lifetime.
The lack of access to knowledge
and materials, especially in parts of
the country where green building is
lagging, imposes initial costs that can
be deal-breakers for many developers.
This problem is compounded
since many of the benefits of green
buildings are realized over the longer
Removing Market Barriers to Green Development
12
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term. However, even if an organization is
able to overcome the issue of first cost versus
long term cost, the budgeting, accounting,
and incentive practices within many
organizations are not designed to recognize
green development benefits. In order to
truly capture the benefits green development
practices can provide, these processes need
to be adjusted so as to address all the factors
that affect an organization's and community's
bottom line.
Adopt integrated design as a cost savings
strategy
Include maintenance and operation
expenses when comparing costs
Include other green development benefits
when determining overall costs
Green Development Principle 3:
Incentives can stimulate the adoption
of green development practices.
Many communities have used incentives
to promote green development practices.
Incentives are not limited to providing
monetary grants or tax breaks. Many
process-type incentives have been embraced
and used successfully throughout the U.S. In
designing incentives, it is important to put
together a program that motivates the type of
behavior that would not have happened if the
incentive was not available.
Offset the "learning curve" in new
markets with incentives
Design incentives to motivate or change
behavior
Offer monetary or process oriented
incentives based on what works best in
the market
Green Development Principle 4:
Regulatory processes and codes can
help to promote green development
practices.
Public and government policies can heavily
influence whether green developments get
built. Existing codes and standards in many
municipalities do not account and adjust for
green features. In this sense, they can be a
barrier to more widespread adoption of green
developments. Codes and ordinances can
also be used as a regulatory tool to encourage
green development by setting clear criteria
that developers need to meet.
Adopt and align codes to meet
environmental goals
Use codes, ordinances, utility fees, and
process improvements to encourage green
development practices
Green Development Principle 5:
Building transactions and leasing
agreements can be designed to
accommodate green building.
The relationship among developers, owners,
and tenants disconnects investment cost
from benefits received. However, the
building transaction and bidding processes
can be adjusted to encourage green building
development. On the lease side, agreements
can be structured to motivate tenant behavior
as well as provide opportunities for owners to
invest in green features. A few organizations
in the U.S. and Canada have developed model
language that can serve as templates for
creating these leases.
Removing Market Barriers to Green Development
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Change bidding process to require green
features
Create model language for lease contracts
that includes provisions for green
practices
Green Development Principle 6:
The cost, benefits, and performance
of green buildings must be
documented and communicated
to expand the market for green
development.
The benefits of green development are
often not tangible; they are only evident
over the longer period with lower operating
costs, healthier tenants, and a positive
environmental and social impact on the
surrounding community. Educating
consumers and organizations should be a
part of the strategy to increase adoption of
green development practices. However,
there should also be tools that help those
that are directly involved in marketing these
properties to be able to easily communicate
the benefits to their clients. Additionally,
knowledge on green development
techniques and features cannot stop with
architects. To support green development,
all professionals that are involved in the
building trade, whether they are equity
or loan providers, brokers, appraisers,
construction companies, permit approvers, or
operations and maintenance personnel, will
need to be educated on the specific features,
performance, and care that set green buildings
apart from conventionally built ones. A few
organizations have started this process, but
education and training programs need to
quickly ramp up to meet this growing need.
Expand market data to specifically
address the performance and value of
green features
Make collection of performance data a
priority
Use third-party rating systems to help
consumers recognize the value of green
buildings
Extend green building education beyond
architects
Removing Market Barriers to Green Development
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Green Development Principle 1:
Applying the integrated design
approach is essential to creating a
superior green development
successful green developments that
are cost competitive.
Use integrated design to
maximize impact of green
features
An integrated design approach
requires that all stakeholders including
designers, engineers, the construction
team, environmental planners, and
users are involved in the project and
meet early in the development stages
to address project goals, needs, and
Designing and constructing a green
building requires a higher level of
expertise and coordination than
conventionally built structures. In
addition to the goal of creating a
functional space, green buildings
must also focus on the efficient use
of resources. To realize the synergies
across different building features and
functions, green building projects
should always use an integrated
design approach. While this approach
can be applied to any project, it
is particularly suited to creating
Definition: Integrated Design
Integrated building design is a process in which multiple disciplines of design are
integrated in a manner that permits synergistic benefits to be realized. The goal is to
achieve high performance and multiple benefits at a lower cost than the sum of all the
individual components. This process often includes integrating green design strategies into
conventional design criteria for building form, function, performance, and cost. A key to
successful integrated building design is the participation of people from different specialties
of design: general architecture, HVAC, lighting and electrical, interior design, and landscape
design. By working together at key points in the design process, these participants can often
identify highly attractive solutions to design needs that would otherwise not be found. In an
integrated design approach, the mechanical engineer will calculate energy use and cost very
early in the design, informing designers of the energy-use implications of building orientation,
configuration, fenestration, mechanical systems, and lighting options.
Designing, constructing, or renovating high-performance buildings requires a whole building
approach. This approach differs from the traditional design/build process, as the design team
examines the integration of all building components and systems and determines how they
best work together to save energy and reduce environmental impact.
Source: Department of Energy
Removing Market Barriers to Green Development
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Over-designing for Energy:
A Historical Perspective
According to Alan Whitson of Corporate Realty
Design and Management in Portland, Oregon, one
of the most wasteful features in buildings today is
the oversized electrical capacity. Buildings in the
1980's found their electrical systems overwhelmed
by the increase in electrical office equipment
such as the desk-top computer, as well as the
fax and copier machines. Upgrades to building
mechanical and electrical systems to meet the
increased demand proliferated. The building
design community continued to design with this
increased demand in mind, while at the same time
the technology industry was making strides to
reduce the power consumption of their products.
In 1993, the EPA Energy Star program helped
encourage the development of the sleep mode,
further decreasing total power need. However the
building industry has yet to catch-up with these
strides in energy savings. Designers and engineers
are not the only ones at fault; tenants looking for
new space often rely on the rule of thumb number
requirement of 4 to 6 watts of plug load capacity
per square foot, when in reality most tenants need
only under 2 watts plug load capacity per square
foot.
Sources:
Whitson, Alari. "Oversized System Hampers Ability to Control
Utility Costs." Business Xpansion, February 2002.
Klein, Sarah. "The Green Behind Green." Crain's Chicago
Business, October 2006.
potential barriers. Bringing all stakeholders
together early in the process allows the
project team to take a "whole building
approach," which is central to the concept
of integrated design. The whole building
approach allows the project team to make a
highly effective analysis of the project and to
leverage synergies between various building
functions and site characteristics. An
example of this is orienting a building within
a site to maximize natural light. This reduces
the total need for artificial light and cooling
capacity of the HVAC, therefore reducing
the overall electrical load capacity required.
Anticipating such features and including
them in the design is the best way to create a
successful green development while reducing
the overall cost of the project.
The integrated design approach can also be
used to avoid "over design". Over design
of buildings will add additional costs for
features that are unnecessary or are already
taken care of by natural environmental factors
or parts of other systems in the building.
Table 1 compares the conventional design
process with the integrated design process.
Use integrated design to minimize
overall green development cost
Using an integrated design approach can
minimize green building cost through all
phases of a building's lifecycle. Using this
approach early in the concept phases of a
green development can organize priorities
to align with a project's budget. During the
design and construction phase it can help
avoid cost overruns, minimize delays, and
decrease change orders during construction.
Finally, it can streamline operations and
maintenance of the building in the post-
occupancy phase as well as provide lower
utility and maintenance costs because of its
superior design from the onset.
Involve market representatives and
municipal building officials at the
beginning of the integrated design
process
A well-designed green building benefits
from full recognition of its features as well
Removing Market Barriers to Green Development
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Table 1: Comparison of Conventional vs. Integrated Design Process
CONVENTIONAL DESIGN PROCESS
INTEGRATED DESIGN PROCESS
Involves team members only when essential
Inclusive from the outset
Less time, energy, and collaboration exhibited in early
stages
Front-loaded time and energy invested early
More decisions made by fewer people
Decisions influenced by broad team
Linear process
Iterative process
Systems often considered in isolation
Whole-systems thinking
Limited or constrained optimization
Allows for full optimization
Diminished opportunity for synergies
Maximizes synergies
Emphasis on up-front costs
Life-cycle costing
Typically finished when construction is complete
Process continues through post-occupancy
Higher potential for cost overruns, delays, and change
orders
Change orders are minimized due to early
planning/iterative process
Revised from Busby, Perkins + Will and Stantec Consulting."Roadmap for the Integrated Design Process."
as a smooth approval process from the local
planning or buildings department. While it
is crucial for all members of the integrated
design team to share their knowledge and
work together to ensure that the systems they
put in place are complementary, it is also
important to include market representatives
and municipal building department officials
who may financially support or approve
the project. Market representatives such as
lenders, equity providers, brokers, appraisers,
or insurers who are educated about a green
building project can better market, value,
finance, and insure the development.
Working with the building department
early on can make the approval process go
smoothly or may offer perks or incentives that
are exclusive to green development projects,
such as expedited permitting or dedicated
green project coordinators.
Definition: Building Information Modeling
Building Information Modeling (BIM) is an emerging technology, with the potential to support and streamline
the integrated design process. BIM is a software tool that allows building professionals from divergent fields to
better understand how changes in one building system will affect other building systems by creating electronic
models to simulate these effects. This powerful tool can support the green building movement, the integrated
design process, as well as lead to a greater understanding of a whole building approach. Using BIM in
conjunction with cost modeling for green buildings may go a long way in making the case that green buildings
can prove cost-effective. An initiative to train technicians in the use of BIM with a focus on green features and
systems could accelerate the pace with which green buildings benefits are understood and adopted.
Source:
Sustainable Buildings Industry Council. "Whole Building: Route to High Performance." Building Operating Management. February 2007.
http://www.facilitiesnet.com/BOM/article.asp?id=6094
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Use integrated design as a risk
mitigation strategy
An unfortunate consequence of the
increase in green building projects is the
corresponding rise in performance related
liability issues. In a report by Marsh, a broker
and risk management firm, the scope of risks
and concerns over building green generally
include failure to achieve a desired LEED
certification, failure to deliver expected
energy savings performance, improper
installation of new products or faulty design
issues, and delays from lack of green product
availability.
Insurance companies are monitoring these
developments to determine how they can
offer coverage to their clients. However,
insurance coverage should never be the sole
tool used to manage risk. A risk management
plan should include multiple strategies,
regardless of whether the project is a green
development or a conventional one. An
obvious rule is to not over promise what
can be delivered—including a specified
certification or exact utility savings.
Communication and contractual language
can help manage expectations. Using the
integrated design approach can also be a
powerful tool to understand client needs and
requirements, evaluate and correct design
flaws, determine proper green material usage
and installation, and foster communication
among all stakeholders. Having a better
designed plan and process may also be
Case Study: Savings By Design-An incentive to help fund integrated design
Utility providers are also seeing the need to promote the more responsible use of energy to avoid energy short-
ages in the long term. California provides an example of a statewide utility effort to encourage building energy
efficiency.
Savings By Design is a California utility-sponsored program to encourage high performance nonresidential
building design and construction. The program promotes energy-efficient building design and construction
practices by offering up-front design assistance as well as owner and design team financial incentives based on
project performance.
• Design Assistance is offered to any projects and works to suit the needs of the project. Either a whole
building approach, or the systems approach is used depending on the scope of the project and the stage
during which assistance is sought.
• Owner Incentive is awarded for projects using either the whole building or the systems approach and
which meet the minimum energy efficiency thresholds, generally 10% better than California's Title 24 stan-
dards. The maximum owner incentive per project is $150,000.
• Design Incentive is awarded for projects using the whole building approach and a building energy model-
ing simulation. Qualifying projects must meet minimum energy thresholds, generally 15% better than
California's Title 24 standards. The design incentive is calculated at one third of the owner incentive to a
maximum of $50,000
California's four largest utilities participate in the Savings By Design program: Pacific Gas and Electric Company,
San Diego Gas and Electric, Southern California Gas and Electric, and Sacramento Municipal Utility District.
Sources:
http://www.savingsbydesign.com
http://www.energydesignresouces.com for case studies of projects that have used the Savings By Design program
Removing Market Barriers to Green Development
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favorably viewed by financing institutions
and insurers.
Don't use third-party rating systems as
a substitute for integrated design
Third-party rating systems, such as the
USGBC's LEED, the Green Building
Initiative's (GBI) Green Globes, and
Energy Star provide useful frameworks for
implementing strategies towards making
developments greener. However, as some
developers and owners have realized, using
these systems as checklists to obtain a
desired certification level will not necessarily
produce a high-performing building. Critics
of third-party rating systems cite this flaw in
such systems as contributing to the stock of
buildings that are green in label only.3 4 While
it is possible to put together various elements
that will allow a building to be certified
"green", many of the benefits associated with
integrated design may not be realized.
Case Study: Chicago's Center for
Neighborhood Technology
Chicago's Center for Neighborhood Technology
is one of the first LEED certified renovations of
an existing building. CNT's staff and design team
documented their integrated design process. An
integrated and informed team worked closely
together throughout all the phases of the project;
the team wrote a joint mission statement which
formed the center of all design discussions.
Find out more about CNT's integrated design process at:
http://www.wbdg.org/references/cs_cnt.php
3 Malin, Nadav,"Lies, Damn Lies, and... (Another Lookat LEED Energy Efficiency)". BuildingGreen.com. September 2,2008.
4 Gifford, Henry,"A Better Way to Rate Green Buildings". EnergySavingsScience.com. 2008.
Removing Market Barriers to Green Development
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RECOMMENDED ACTION PROJECTS
Expand integrated design discussions to include market representatives such as
appraisers, funders, insurers, and other support resources
Market representatives may not contribute to the green design process, but their
understanding of the design and process specifications can help provide the proper valuation
and funding for the project. Municipal contacts can assist with code, regulatory, and
incentive issues, as well as provide resources based on their experience with other projects.
It is in the best interest for the development team to start working with these agencies early
in the process.
Incorporate Building Information Modeling (BIM), which uses multidimensional, real-
time, dynamic modeling software, to gather building data to decrease wasted time and
resources during the design and construction phases
Advanced modeling tools allow simulation of proposed designs and systems before any
construction takes place and should be used by the design team as part of the integrated
design approach. For complex development projects, this can be invaluable in creating the
best possible design, as well as save time and expenses by avoiding change orders.
Create and use a common glossary to facilitate project comprehension across various
professions
Different professions have different terms for communicating their specifications and needs.
When working with any large design team that involve those outside of your immediate
profession, it is useful to have a common lexicon to speed understanding and avoid
mi scommuni cati on.
Develop funding mechanisms which address up front integrated design costs
Financing loans for green building projects have generally proceeded without incident
because lenders regard a better-designed and well thought out project favorably. Where
there is a funding gap is in the initial integrated design process. Integrated design has
primarily been funded internally by owners or companies with custom developments,
or funded by grants such as those offered by Enterprise Community Partners for green
affordable housing and Savings by Design. However, inclusion of integrated design
into standard practice will not occur without easy access through mainstream funding
organizations such as lending institutions or local governments. Grants, low interest loans,
or other financial tools can help bridge the difference between the cost of activities under an
integrated design approach vs. a conventional process that may just involve an architect or
designer. These activities may include conducting charrettes, modeling building systems,
and establishing periodic stakeholder meetings.
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2.2
Green Development Principle 2:
Green building and infrastructure cost
less than conventionally built structures
over their lifetime
Initial investment cost is often cited
as a major barrier towards widespread
adoption of green development.
A common practice to determine
the costs between a conventional
development and a green project
is to aggregate the costs of all the
comparable features. Using this
methodology, it is not surprising that
green developments are usually the
more expensive option, given that
premiums are often charged for newer
products and services. However, such
comparisons are flawed because they
do not consider that green building
projects need to follow a more
integrated design and construction
process than what is typically required
by conventional developments.
Additionally, the most significant
benefits associated with green
developments, including external
impacts on the community, are usually
not realized until post construction.
Recognizing these additional benefits
and using full-cost accounting
procedures provides a more fair
assessment, as building expenses are
never limited to just initial material
and service costs.
Definition: Full Cost Accounting
Full cost accounting takes into
consideration the implications of social,
environmental and economic costs
associated with any project. Often
the social and environmental costs of
decisions are not reflected properly in
the monetary price paid for a decision.
These externalized costs, however, are
still incurred and paid for by everyone
including those with no involvement in
a project. If environmental regulation
increases, many external costs will be
internalized, and often at higher costs
than if they had been avoided initially.
Taking full costs into consideration can
help development teams understand
potential future vulnerabilities and
anticipate costs or problems.
Adopt integrated design as a
cost savings strategy
Adoption of an integrated design and
whole building approach to green
building capitalizes on concepts that
will lower overall building costs
including:
Promotion of synergies between
building systems that may
minimize or eliminate the need for
certain building features;
Early incorporation and modeling
of design features that may
minimize change orders during;
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later stages, where costs may be much
higher;
Production of a more efficient, durable
structure, which will lower long term
operating and replacement costs; and
Using a commissioning agent to help
verify the building's systems are
performing correctly before occupancy.
Include maintenance and operation
expenses when comparing costs
The perception that initial costs are
higher may at least be partly due to the
inaccessibility to green development
knowledge, materials, and contractors. This
is especially true in certain markets across
the U.S., where a critical base of providers
has not surfaced to meet this need. As green
building service providers and products
become more commonplace, the expertise
premium for soft costs should decline and
cost differential should narrow, much as it
does for any emerging industry. Capital E's
Green Building Costs and Financial Benefits
study by Gregory Kats in 2003 showed that
between 1995 and 2000, the premium to
build a LEED Silver building dropped from
3-4% to 1-2% in Portland, Oregon and
from 2% to no premium at all in Seattle,
Washington. Follow-up studies in 2004
and 2007 by Davis Langdon, a construction
consultancy, disproved the notion that greener
buildings necessarily mean higher costs.
Analyzing only the construction costs, both
studies found that "there is no significant
difference in average cost for green buildings
as compared to non-green buildings."5
Definition: Commissioning
"Commissioning is an up-front cost where a
commissioning agent verifies that the building's
systems are performing correctly before
occupancy. Commissioning will help to reveal
equipment problems early on, usually before one-
year warranties are up, thus preventing long-term
unknown problems for the life of the building. In
return, the expenditure here ultimately results in
savings on utility and maintenance costs during
building operations."
Southface. "Life Cycle Economics"
http://www.southfaceonlinetraining.org/ecobenefits/
Obviously, the specific systems that are used
for a building will make a difference. It is
also important to keep in mind that regional,
and perhaps even local, capacity may offer
better insight into the initial cost differential.
Municipalities that have professionals with
experience in the green development field and
easy access to green contractors, knowledge,
and materials will find the costs for green
development to be more competitive.
Initial costs aside, the benefits of green
buildings are most evident over the longer
term, where a better designed and built
structure can save the owner and tenants on
operating and maintenance costs. The 2003
Kats study reports that "the total financial
benefits of green buildings are over ten times
the average initial investment required to
design and construct a green building."6 As
with any long term purchase or investment
that has an ongoing cost component—and
a building definitely fits in this category—a
more reasonable comparison of value will
include the maintenance and operating costs.
5 Matthiessen, Lisa Fay and Morris, Peter, "Cost of Green Revisited." Davis Langdon, July 2007
6 Kats, Gregory H., "Green Building Costs and Financial Benefits." Massachusetts Technology Collaborative, 2003..
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Include other green development
benefits when determining overall
costs
While lower maintenance and operation
costs remain one of the key selling points of
green buildings, there are also other benefits
that should be factored into the overall cost.
These include:
Higher occupancy, rental rates, and
sales prices
A recent study by the CoStar Group, a
real-estate information organization, found
that buildings that are LEED or Energy
Star certified had higher occupancy rates,
rental rates, and sales prices than their
conventionally built counterparts.7 This
information is summarized in Table 2.
While there are differing opinions regarding
the reliability of the CoStar Study,8 it does
offer initial encouragement that the market
values LEED or Energy Star buildings more
highly. Developers, appraisers, and financial
institutions should consider this information
when assessing a development's potential
market viability and risk.
Question the assumptions contained in
escalation standards usedfor investment
decisions
Return on investment (ROI) and other
financial calculations are useful in capturing
the longer term benefits that green buildings
provide. However, as with any evaluation
that involves estimating future costs or
earnings based on historical information,
the trend may not hold. Particular to green
development projects are estimates for
standards such as the anticipated annual
increase in energy rates. While these
standards are created by governments,
organizations, or agencies to provide a rule
of thumb, they may be outdated or may
not truly reflect current market rates. By
underestimating what energy, fuel, water, and
other natural resources may be priced at in
the future, the calculated return on investment
period may be much longer than reality. This
can affect a developer's decision to forgo
including green features in favor of a cheaper
alternative if the anticipated holding period
for the property is shorter than the calculated
return on investment period. It is important
to examine the standards of escalation used
to see if it is grounded in the most current
market information.
Table 2: National Averages for Green and Non-Green Buildings
Rental and
Occupancy Rates
Energy Star
Non-Energy Star
LEED
Non-LEED
2006 Occupancy Rates
90.0%
86.9%
91.1%
88.3%
2008 Occupancy Rates
91.5%
87.9%
92%
87.9%
2006 Rental Rates (p/sqft)
$26.33
$24.69
$33.69
$27.03
2008 Rental Rates (p/sqft)
$30.55
$28.15
$42.38
$31.05
Source: CoStar. http://www.costar.com/partners/costar-green-study.pdf
7 CoStar Commercial Real Estate Information, http://www.costar.com/partners/costar-green-study.pdf
8 Green Building Finance Consortium, "Quantifying "Green" Value: Assessing the Applicability of the CoStar Studies," June 2008.
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Financial risks of not building green
Early adopters of green development
technologies or methods may incur risks
that may be avoidable with conventional
practices. However, there are also risks
associated with not building green that
developers and property owners should
consider, especially as buildings are long term
investments that are not easily or cheaply
replaced. These include:
Obsolescence and changing market
conditions can easily make developments
fall out of favor with consumers. The
property market collapse and recent spike
in energy and oil prices has led to an
equally dramatic downturn in demand for
housing in far suburbs and large, fuel-
guzzling automobiles;
Effects of escalating costs for natural
resources and utilities will be exacerbated
for owners and tenants who are more
dependent on usage to operate their
properties. Those who use these
resources more efficiently may still feel
the effects of such changes, but at a more
manageable rate; and
Changing environmental regulation,
including climate change policies, may
necessitate retrofits to accommodate new
guidelines to avoid penalties and fines.
Redesigning and constructing existing
space and features for new standards will
be more difficult than incorporating these
ideas initially.
It is important to weigh the potential risks and
costs of not building green as they can likely
affect a property's financial viability and
should be taken into account when calculating
the cost of a potential development.
Definition: Life-Cycle Cost Analysis Tool
Life-Cycle Cost Analysis (LCCA) is a tool for
evaluating investments in the design of a building
or the building's systems in order to determine
economic performance over a lifetime. The
analysis includes a comprehensive assessment of
a building's lifecycle costs from the cradle to the
grave including:
Initial costs:
• Planning
• Research and development
• Design and construction
Maintenance costs:
• Repair
• Replacement
Operation:
• Energy costs
• Water costs
Production
Other significant costs over the life of the
facility, such as disposal or salvage
LCCA involves the calculation of all costs
associated over the building's life span, and
accounts for product value and replacement
over time. It is also used to evaluate reduced
costs and savings associated with an initial
investment in design strategy or product that
has contributed to that savings during building
operations, maintenance, and disposal. For high
performance buildings, it is an invaluable method
for determining the overall economic gains of
implementing certain design strategies that can
pay for themselves over the life of the building. It
can also help determine when those paybacks will
occur.
The LCCA is required for all federal building and
retrofit projects.
Source: Southface. "Life Cycle Economics"
http://www.southfaceonlinetraining.org/ecobenefits
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Indirect costs and benefits
Indirect costs and benefits should also be
looked at when determining the costs of
building projects. The following are some
aspects to consider:
Development projects that consider their
access to various forms of transportation,
its on-site stormwater management, and
its usage of municipal resources will
reduce their environmental footprint on
the site and the surrounding community,
thus lowering the clean-up and
replacement costs caused by flooding on
the community;
Infill and high-density developments
minimize the need for new investment in
infrastructure including roads and utilities.
The initial and longer-term maintenance
costs should be a serious consideration for
municipalities permitting developments
on greenfields and virgin land;
Case Study: Capital Markets Partnership Adopt "Green Underwriting" Standards that Recognize
the Value of Green Developments
There are usually barriers to financing green buildings in that lenders and underwriters tend to focus on initial
capital costs and may not recognize the principal bottom-line enhancements that can be attributed to green
buildings: operating cost savings, lower risks, and long-term enhancement of the property's value.
The 70-plus member Capital Markets Partnership recently adopted "green underwriting" standards that
allow lenders and real estate investors to account for these factors through a standardized quantitative rating
system. According to Evolution Partners (the authors of the proposal), properties would be "assigned "CMP
Green Score" from 0-100 based on the presence or absence of financially tangible criteria that influence the
asset's financial, operational, and market-risk profile." The Green Score will be an overlay relative to current
underwriting standards, and would take the following criteria into account:
• Asset features that lead to energy and water efficiency thus reducing current operating costs while also
insulating tenants from future energy and water price volatility;
• Location-based attributes that affect a tenant's commuting patterns and/or carbon footprint (gives
credit for proximity to transit, density and connectivity/mixing uses); and
• Improved indoor environmental quality that can lead to increased rents, and reduced risk and liability
exposure.
By rating these greening factors, lenders and underwriters can then assess bottom-line impacts, including:
• Higher rents and lower operating costs;
• Improved long-term asset value/reduced obsolescence; and
• Reduced default risk due to increased revenue potential, reduced operating expenses, exposure to
energy price volatility, and base risk exposure from lAQand mold.
The green underwriting standard was developed using ANSI-approved consensus protocols. The standard was
finalized and unanimously approved in early September 2008 and is anticipated to be operational by December
2008.
Source: http://www.capitalmarketspartnership.com/
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As Americans spend a majority of their
time indoors, better indoor air quality and
environments may decrease absenteeism
and improve productivity; and
Being an environmental steward offers
positive public relations.
RECOMMENDED ACTION PROJECTS
Adjust budgeting and accounting practices to ensure alignment with long-term costs and
benefits
Disconnects within an organization's budgeting, accounting, and reward system may mask
the most efficient decision on real estate transactions. An example of this may be that a
corporate real estate department's goal is to find the best space at the lowest cost. However,
without consulting other internal operations, that particular space may negatively impact
areas such maintenance and operation costs. Beyond reforming budgeting and accounting
practices, indirect benefits such as occupant wellness, productivity, and satisfaction will
also affect the overall value and attractiveness of a space. It is in the company's financial
interest to account for their costs and benefits across the organization as a whole. As many
organizations have realized, the expenses associated with these issues will affect the bottom
line and may change the overall costs picture of competing properties. This approach
should also be taught as part of the curriculum in our schools so that future business leaders
will be familiar with full cost accounting concepts.
Acquire comprehensive post-occupancy data for financial benefits in order to develop
cost models that are sensitive to indirect benefits and account for lifetime costs
Quantification of the benefits from green buildings, including information tied to specific
features and information related to other indirect benefits such as health, can help promote
more widespread adoption of green development projects and direct attention to particular
research and investment gaps. Universities and organizations involved in green building
can work with owners and operators to collect and disseminate this information.
Create a common reporting practice and metrics for case studies, which will allow
comparable financial evaluations of green building
Data collection and evaluation is only useful if the consumers and users of this data can
understand their measurement. With multiple sources of data, it is difficult to discern
which numbers are reliable and trustworthy. This issue was one of the barriers identified
in our workshop. Regardless of certification systems, the administrators for these systems,
governments, and building owners and operators need to collaborate and agree to a common
reporting practice and metrics for green buildings.
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2.3
Green Development Principle 3:
Incentives can stimulate the adoption
of green development practices
Higher up-front costs, lack of
knowledge, or potential risks are
often cited as reasons developers
might reject green development
practices. To overcome these barriers,
governments—primarily on the local
or state level—have offered incentives
as a way to minimize or eliminate
costs or issues related to their
adoption. However, incentives should
never be treated as "giveaways," but
rather as tools to motivate a desired
behavior or outcome that would not
have happened if the incentive was
not available. Incentives can be used
to generate interest, bridge knowledge
gaps, and encourage green building
practices over conventional ones.
Offset the "learning curve" in
new markets with incentives
In new markets where the knowledge
base and services for green
development projects have not been
established, incentives can be used
to ease the initial cost differential or
difficulty factor. Incentives can also
be added to fund integrated design or
bring in expertise for consultation.
Additionally, a well-advertised or
marketed incentive can bring positive
publicity to such practices, offering
developers an alternate design
where they and the community may
both benefit. Incremental adoption
of green projects will expand the
knowledge base and services offered
in the community.
Design incentives to motivate or
change behavior
Incentives should be used to promote
specific behavior that may not have
occurred if the incentive was not
available. It is important to design
incentives as contracts, where dates,
dollar amounts, or services are clearly
presented, but also to make sure
they are attractive and easy to use.
Incentives do not need to be created
from scratch; existing programs can
be restructured to favor or require
green or sustainable designs. Existing
programs such as Tax Increment
Financing (TIF) Districts, Community
Development Block Grant (CDBG),
Congestion Mitigation, and Air
Quality (CMAQ) Improvement
Program can all be further expanded
to include provisions requiring green
development.
An alternate way to promote green
or sustainable practices is to tie
them to economic or community
development incentives. Public
finance mechanisms can be used to
subsidize private investment and
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Case Study:
Iowa Provides Additional Tax Credits for
Green Development in Brownfields &
Grayfields
On May 15, 2008, Iowa Governor Chet Culver
signed HF 2687 which provides tax credits for
redevelopment of brownfields (24-30%) and
grayfields (12-15%) of qualified total investment
costs. The higher percentages are for sites that
meet green development standards.
Source: Iowa House File 2687 (signed 5/15/2008)
promote a certain type of development. For
example, a municipality can make location
within walking distance to a rail station
or transit stop a criterion for obtaining an
economic development incentive. Linking
green development requirements or incentives
with existing incentives, such as those offered
through brownfield redevelopment grants, can
also be effective. Planning and development
practitioners have an opportunity to
simultaneously achieve multiple goals
of business or community needs while
enhancing environmental objectives.
Periodic evaluations of program effectiveness
is required to determine if changes need to
be made to the incentive or whether it is
meeting expectations. To encourage use of
the incentive, a counter requirement can be
set up to eliminate codes and subsidies that
support unsustainable behavior and practices.
Incentives are generally most effective on
the local level where they can be designed to
meet local or regional environmental needs
and standards. However, state or federal
guidelines can also be used to set a minimum
standard that local municipalities can build
upon.
U.S. EPA Region 5 convened a meeting
on July 31, 2008 to examine parameters to
consider when creating financial incentives.
This meeting was primarily focused on the
affordable housing market, but many of
the ideas are applicable to developments in
general. The proceedings for this meeting are
available for download from the websites of
the Northeast-Midwest Institute and the Delta
Institute.
Offer monetary or process oriented
incentives based on what works best
in the market
Incentives can be designed as a financial,
time-saving, or regulatory benefit. Monetary
incentives include tax breaks, grants,
vouchers, and rebates. Non-monetary
incentives include technical assistance,
business planning assistance, marketing
assistance, expedited permitting, regulatory
relief, preferred loans, guarantee programs,
and dedicated green management teams in
building and planning departments.
Monetary incentives can offset any cost
differential or provide savings for choosing
green development over conventional
development, making the adaptation to green
development more feasible for property
owners and developers.
By providing sales tax exemptions and
property tax exemptions, the government
either partially or wholly offsets the cost of
purchasing, creating, installing, and building
new green technologies. It is important to
structure applicable exemptions prior to the
investment to prevent the owner's property
tax from increasing due to the improvement.
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Other options for sharing the cost of green
development practices include using
vouchers, rebates, and grants. A voucher is a
check for credit against future expenditures.
A rebate is a credit for expenditures made
in the past. A grant is a monetary gift, often
used in a specific manner. These three
monetary tools can be used to offset the
cost of developers or property owners who
are learning how to build green, or who are
literally calculating the difference between
conventional and green technologies in
order to properly finance their projects.
Furthermore, these tools are can also be
offered to tenants to promote purchases such
energy-efficient appliances.
Non-monetary incentives can save developers
and property owners' time and money by
mitigating risk and process issues. These
incentives include preferred loans, expedited
permitting, zoning/floor area ratios, technical
assistance, business-planning assistance,
research and development assistance,
marketing assistance, regulatory relief,
and dedicated staff for green development
in building and planning departments.
Non-monetary incentives work especially
well in situations where financial options
are politically difficult to pass or where
the existing infrastructure or regulatory
atmosphere is complex or restrictive. They
are also flexible and can be set up to fit local
conditions.
Case Study: IL DCEO Incentive helped green Merchandise Mart
Resources for up-front technical assistance and capital improvements can provide a much needed incentive
for buildings to implement green building initiatives. Annual operating budgets are generally not structured
in such a way that long-term operating savings can be used to justify a considerable capital investment. The
Illinois Department of Commerce and Economic Opportunity (IL DCEO) recognized this barrier and created
a green building pilot program, providing funding for private sector LEED projects that achieve LEED Silver
certification. This funding was provided to cover soft costs, primarily associated with technical assistance and
design work.
One such building, the Merchandise Mart in Chicago, IL, participated in the IL DCEO green building pilot
program. When they decided to consider LEED-EB (Existing Building) certification for their 4.2 million square
foot commercial office building, they were pioneers in the sector. The paybacks associated with pursuing
green building initiatives that would help them attain LEED-EB Silver Certification were unclear and ownership
wanted to know what the expected returns would be, before they invested in such a large undertaking. The
IL DCEO green building pilot program provided an important financial incentive that moved the project from
concept to implementation and helped ease the owners' concern. Anticipated benefits include savings for the
building, tenant satisfaction and retention, reduced environmental impacts, and positive public relations. The
Merchandise Mart is now the largest LEED-EB Certified building in the world, and their leadership and success
on green building initiatives has transformed the commercial office marketplace.
Incentives can provide an important and much needed stimulus for green development projects. Of course,
the costs and benefits of providing such an incentive must be weighed and evaluated closely. However, in
the case of a project that is likely to provide important data that can move the market towards more green
buildings, provide a range of positive social, environmental, and economic impacts, or result in a model project
that others can learn from, the case for incentives is strong.
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RECOMMENDED ACTION PROJECTS
Create financial and non-financial incentives on the local level to target specific behavior
Local governments are in an ideal position to create incentives that will appeal to developers
while furthering their own environmental goals. Depending on the local building and
development conditions and the resources of the local government, incentives can be set up
as monetary rewards, assistance with navigating the development process, or easements on
development restrictions.
Augment existing public financing programs to encompass green development incentives
Tight budgets may prohibit the development of new public financing programs. One way
around this is to augment existing local, state, and federal funding mechanisms to make
green development practices a requirement or an award consideration in competitive
situations. Using existing programs may also be more politically acceptable.
Track incentive successes and failures and adjust as required
Regardless of the incentive created, it is important to review their success and failure at
furthering intended environmental and planning goals. Local, state, and federal agencies
may work internally or with organizations skilled with administering, tracking, and fine-
tuning these programs to conduct periodic reviews. This will ensure that their programs are
adequately funded and the criteria for the incentive are properly set so that the results are
aligned with these goals.
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2.4
Green Development Principle 4:
Regulatory processes and codes can
help to promote green development
practices
Public policies and procedures can
heavily influence whether developers
incorporate green design into their
projects. Existing codes and standards
in many municipalities do not account
and adjust for green development
features, creating regulatory barriers
that make permitting such projects
difficult. In this sense, standards
and codes can be a barrier to more
widespread adoption of green
development practices. However,
codes and ordinances can also be
used as a tool to encourage green
development practices by setting
criteria that developers and property
owners need to meet.
Adopt and align codes to meet
environmental goals
Conflicting codes impede green
development
Building, stormwater, and energy
codes are all established to provide
minimum safety or performance
standards. These are often issued by
agencies such as the International
Code Council (ICC), who partner with
organizations such as the American
Society of Heating, Refrigeration,
and Air Conditioning Engineers
(ASHRAE) or Illuminating Engineer
Society of North America (IESNA) to
set engineering and safety standards.
Individual codes are bundled and are
offered to municipalities for adoption.
Codes are updated on a standard
cycle based on input from members.
Municipalities can choose to update or
alter their codes based on their needs,
but there are no requirements that the
most recent version of the codes be
used.
Issues arise when codes are not up
to date because the local government
does not have the resources to update
their codes or when different codes
conflict. This is especially the case
for green development projects where
performance information may still be
in its infancy or the latest code version
the municipality has adopted does
not account for newer systems. For
developers, two common problems
arise when working with municipal
building departments that do not
have codes that account for green
technologies:
(1) the staff's lack of knowledge of
green technologies will delay review,
approval, and permitting; and
(2) development projects may still
need to meet conventional building
code requirements, thus increasing
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Figure 1: l-Code Development Cycle
Code Changes
Submitted
Code Changes
Printed & Distributed
Supplement Or New
Edition Published
l-CODE DEVELOPMENT
CYCLE
Public Hearing Results
Printed & Distributed
Public Comments
Printed & Distributed
Vi
Public Comments
Sought on Public
Hearing Results
Source: International Code Council, http://www.iccsafe.org
costs and forgoing benefits that may have
been realized with the greener approach.
The second issue is common with on-site
stormwater management systems.
How codes are created
Codes are often developed by an agency such
as the International Code Council (ICC), who
work with engineering organizations, or they
are created by municipalities. Municipalities
may extract parts of these codes to create a
framework for their own codes. The ICC
has a specific development cycle (I-Code
Development Cycle, Figure 1) for their
codes, which is as follows: code changes
are submitted; code changes are printed and
distributed; a code development hearing is
held; the public hearing results are printed
and distributed; the public comments on
pubic hearing results; public comments are
printed and distributed; a final action hearing
is held; and a supplement or new edition is
published.
Public comments are due within 45 days after
changes to ICC codes are published. New
editions of codes are published every 3 years,
and supplements to codes are published every
18 months. The creation of new editions and
supplements involves a range of stakeholders
that include code officials, design
professionals, trade associations, builders/
contractors, manufacturers, and government
agencies. Code officials have the ability to
adopt new codes as they are published, but
this may be time consuming and costly for
most municipalities.
Once established, codes still require an
ongoing process of improvement. Regular
review and adaptive changes will help to
accommodate new information on green
system performance.
Performance us. prescriptive codes
Municipalities have adopted performance-
based codes and prescriptive codes to
encourage or require green development.
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Performance-based codes allow the design
team to fulfill a performance requirement
regardless of how they achieve the
requirement. While this can encourage
innovative solutions, it is also difficult
for municipalities to implement because
verification of performance compliance is
resource intensive. Additionally, it may
not achieve an overall superior design
because innovation in one system may
offer opportunities to neglect other areas
and still achieve the established minimum
performance standard.
Prescriptive codes dictate how the
requirement should be fulfilled, which
requires the design team to operate within set
boundaries. Conventional codes are often
prescriptive and provide a requirements
checklist for designs. This can allow
developments to meet regulatory standards,
yet still produce an inefficient, poorly
designed building.
Both performance-based and prescriptive
codes have advantages and drawbacks.
Municipalities should determine what
the most effective method based on their
particular situation or create hybrid codes to
encourage innovation, while setting minimum
feature standards.
Home rule states
Certain states are home rule entities that
may allow local jurisdictions to have greater
administrative roles in determining issues
over state regulations. For these states,
implementation of statewide codes is difficult
because local municipalities may overrule
them.
Case Study: Speeding up the Permit Process
The Chicago Department of Construction and
Permits (DCAP) created an expedited permitting
process for projects that incorporate green
building strategies. Applicants can receive permits
within 2-4 weeks, compared to the traditional 4-6
weeks, a significant time-savings. DCAP strongly
encourages applicants to schedule a meeting with
expert staff once the production construction
documents has begun. Upon meeting, staff walk
the applicant through the expedited permitting
process, identify what information the applicant
must submit, and identify certain technologies
or strategies that the applicant may incorporate
into the design of the building. In addition,
applicants may receive benefits from three tiers
depending upon the project type (e.g., market
rate multifamily vs. 20% affordable multifamily).
Benefits from these tiers range from expedited
permitting (goals of <30 days) to waiving
consultant review fee and expedited permitting
(goal of <15 days).
For more information about Chicago's Expedited Permitting
Program, please contact the City of Chicago Department of
Buildings.
http://www.cityofchicago.org
Code improvement focus areas
Code improvements have progressed in
some areas, such as energy efficiency,
but still require further resources in other
aspects of development projects. Some of
the more urgent needs include stormwater
management issues, site and location
planning, and transportation and parking
needs and requirements. All of these areas
have an environmental impact and financial
cost to the community and require attention to
ensure longer term environmental, social, and
economic sustainability goals.
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Use codes, ordinances, utility fees, and
process improvements to encourage
green development practices
Regulatory guidelines and processes are
areas where incentives or allowances can be
adjusted to encourage green practices. Many
communities have crafted green ordinances
that can be readily adopted or adjusted for
local needs. Processes and regulations
related to ordinances need to be easy to
understand and implement. The following
are some tools and examples that can serve
as a springboard to allow for and encourage
green development. However, they must be
approached from a standpoint where they can
make a significant difference to a developer.
• Floor area ratio
One tool municipalities have used to
leverage green development is floor
area ratio (FAR) bonuses. FAR bonuses
increase the building's allowable
building density, meaning a developer
can add floors or more usable space in
the building. These bonuses may be
granted in exchange for such features as
installation of a green roof or fulfilling
defined green standards. Developers
and property owners may recoup some
or all of their expenditures on the green
development designs with the increased
rentable/saleable space resulting from
FAR bonuses.
• Expediency
Some municipalities have chosen to
create expedited permitting programs,
shortening waiting periods. Such a
program allows developers and property
owners who integrate "green features"
into the design and site selection of the
building to bypass the normal permitting
system, with a guaranteed approval or
denial within a certain period of time.
However, this incentive may only work
where permitting time is an issue within
the municipality and if there is a team
with knowledge on green building design.
• Impact fees and performance bonds
Impact fees and performance bonds
may also be used as a tool to encourage
green development. Impact fees are
payments required by local governments
of new development for the purpose
of providing new or expanded public
capital facilities required to serve that
development. Performance bonds can be
used as leverage to guarantee satisfactory
completion of a development, as well
as a guarantee that funds are available
to complete the project if a developer/
property fails. The performance bond
shifts the responsibility for controlling,
monitoring, and enforcement to individual
producers and consumers who are charged
in advance for the potential damage.
Although impact fees and performance
bonds may not directly encourage
adoption of green features, they hold the
developer or property owner accountable
for the effects of their development.
Additionally, funds raised from impact
fees can also be used to subsidize
green developments. The American
Planning Association has comprehensive
information on impact fee standards.
• Green tutor and green go-to-staff
"Green tutors", or dedicated staff in the
planning or building department, are
growing in popularity. Green tutors meet
with the developer or property owner
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at the beginning of the development
process, walk them through the permitting
processes time line, identify what
information they will need to provide in
the application, and identify a range of
incentives for which the development
may be applicable. Planning departments
may scale staff time to the maturation of
the market, or a consortium of cities may
share a staff of green tutors depending on
demand.
For a green tutor program to be the most
effective, it is important for the applicant
and green tutor to meet at the beginning
of the planning process. This will allow
any challenges to be addressed before the
plan is solidified, as altering plans can
prove to be time consuming and costly.
Furthermore, it will allow the green
tutor the time to address opportunities
to integrate different green development
elements into the building's design.
Effective green tutor programs designate
staff from each municipal department
to meet regularly and address how
green development can be accounted
for in codes and ordinances more
effectively. This process helps streamline
departmental operations and break down
operational silos that can cause conflicting
codes.
On a national level, federal dollars can be tied
to requiring large infrastructure projects to
incorporate green principles. For buildings,
all General Services Administration (GSA)
new construction projects and substantial
renovations must be certified through the
LEED Green Building Rating System of
the U.S. Green Building Council. Other
construction projects, such as transportation
infrastructure and water treatment plants,
need to go beyond National Environmental
Policy Act (NEPA) impact reviews to create
designs that integrate environmental features
up front.
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RECOMMENDED ACTION PROJECTS
Lead by example—incorporate green development requirements into plans and projects
Governments at all levels can show leadership in green development by including
sustainability requirements for all their building projects. Many public buildings have
become showcases for successful green building technologies because governments are
willing to share their experiences and building performance information. By being a
steward of green development practices, governments can use the experience to shape
all future land and building development within their jurisdiction to be aligned with their
environmental and economic goals.
Work with standards organizations to ensure accommodation for green technologies
Organizations such as the International Code Council (ICC) work with researchers to
develop new standards and codes as they are requested by municipalities or members.
Municipalities can help promote green building by working with standards organizations
to continually develop and improve codes for green practices, working with researchers
who may need performance information to refine standards, and adopting newer codes that
include accommodation for green building. This will allow more green building plans to
be assessed through a typical review rather than an exception, freeing valuable time for
developers and minimizing their frustration with the regulatory process.
Modify regulatory codes and mechanisms to create incentives for green building
Two common approaches to adjusting regulations are allowing a higher floor area ratio or
lowering minimum parking requirements. Both of these approaches allow more intensive
development of the site and can allow a developer to build and sell additional units.
However, there are other ways that regulatory mechanisms can be used to promote green
building. Some cities have turned a particularly cumbersome process, such as permitting,
into a benefit (expedited permitting) that can be accessed by green project developers.
Other cities are looking at lowering the tax burden on owners who manage and treat their
stormwater on site and may not use a municipal service as intensively. These examples are
just a few of the ways that governments have been able to use their regulatory structure to
further environmental and planning goals.
Develop in-house programs to help businesses and internal offices navigate the green
building development process; offer "green tutor" assistance to developers
Dedicated programs in local planning and construction departments to help green project
developers navigate the various regulatory steps can make a significant impact on whether
such projects get built—and let the community know that green development is a priority.
It may be easier to begin by educating and training a small dedicated staff that will focus
on green development issues and personally work with developers. Make sure to open up
communication channels across different departments and align various programs to ensure
there are no conflicting procedures.
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2.5
Green Development Principle 5:
Building transactions and leasing
agreements can be designed to
accommodate green buildings
The relationship between the
developer, owner, and tenant creates
split incentives that do not promote
investment in green development.
Developers are hesitant to incorporate
features that may increase costs
or create permitting hassles if the
market does not value such features
or if the benefits accrue only after
their association with the property
is terminated. However, the
development bidding process and
leasing language can be changed to
make investments in such features
more feasible.
When developers build with the
intention of selling properties upon
completion, the decision to add
green features is weighed against the
premium that the market will pay for
such features. As the investment time
horizon for the developer does not
extend to the savings that are typically
realized during the post-development
period, the developer relies on the
valuation by the user, the appraiser,
and the lender. This requires a new
set of valuation and budgeting tools,
as well as better communication
across disciplines and stakeholders
to understand the potential for
savings that offset the up-front
costs. Transparency and complete
information in the marketplace gives
developers a better gauge for the
demand of green buildings and offers
consumers the tools to make informed
choices.
Change bidding process to
require green features
The bidding process and request for
proposals on development projects
often discourage green building unless
it is specifically required by the owner.
In the interest of limiting the costs to
create the proposal as well as making
the project more financially attractive
among other bids, developers are
hesitant to form an integrated design
team or may cut green features that
drive up costs.
Property owners who are seeking
bids for their green building project
should consider the experience and
approach of the development team. A
bid that demonstrates a commitment
to the integrated design approach
and consideration for whole building
design will produce a better product
and may reduce change order costs.
These goals can be written into
contractual agreements once they are
set so that the final product reflects
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Case Study: Requiring Sustainable Building Practices for City Subsidized Structures
The Chicago Department of Zoning and Land Use's Sustainable Development Policy illustrates how cities can
take a leadership role in advancing green development. The policy requires sustainable building practices
in new public buildings, planned developments, and privately funded structures that are subsidized by
the City of Chicago. Managed and implemented by the Department of Zoning and Land Use, the policy
includes requirements for green roofs, LEED certification, energy efficiency performance, and/or stormwater
management, depending on the type of building. The Department provides resources to help development
teams meet these requirements, including fact sheets, worksheets, design guidelines, and lists of providers and
financial incentives.
For more information about Chicago's Expedited Permitting Program, please contact the City of Chicago Department of Zoning.
http://www.cityofchicago.org
the intentions that were decided in the
process. Governments can take a leadership
role and require all their projects to meet
minimum standards for green building. This
can set an example for private developers
and allow a municipality to establish more
environmentally sustainable development
policies.
Create model language for lease
contracts that includes provisions for
green practices
Crafting a "Green Lease" is a task that is
gaining a lot of attention in the sustainable
building and operating community.
Understanding that the lease establishes the
ground rules for the relationship between the
owner/operator and tenant, the objective is to
create a framework that will be economically
sustainable for all parties without
compromising the mission of environmental
sustainability.
The lease structure dilemma
In the commercial building sector, an
important step to overcoming the barrier
of split incentives is to examine current net
and gross lease structures. The gross lease,
which incorporates energy and utility costs
into the base rent, provides little feedback
to the user regarding utility consumption.
Moreover, gross leases provide little incentive
to reduce consumption since tenants will not
directly benefit from savings. Conversely,
the net lease may provide incentives for the
user to conserve, but it does not provide
incentives for the owner or operator to make
capital investment outlays for more efficient
operating systems as they will not benefit
from the savings and recoup the costs of the
investment. This separation of investor costs
from user benefits is often referred to as split
incentives. Under these lease arrangements,
Building Information Technology
A number of software building information tools
currently exist to monitor building resource
consumption in real time, tracking environmental
performance and financial savings for green
buildings, as well as proper functioning of building
systems. Lucid Design's Building Dashboard and
Quality Attributes Software's iBPortal are just
two examples of the technology that is making
building energy and water use more visible.
This technology can also be used as a tool for
communication and target setting with tenants as
they begin to understand their demand patterns.
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savings that can be achieved if both
investments were made in energy efficient
operating systems and if overall energy
demanded was reduced is concealed.
Energy costs as a percentage of total
costs look very different for the average
commercial tenant when compared to the
average commercial building. While a tenant
may only spend 1-2% of their budget on
energy, a building's energy costs typically
account for approximately 30% of total
costs.9 For the average individual tenant,
retrofits that reduce energy costs by 30%
(average for LEED buildings) would not
yield large savings overall, whereas from a
building owner's or operator's perspective the
aggregate savings (including re-investment
potential or interest rates applied to those
savings) provides a significant incentive to
reduce energy costs.1" In comparing the
tenant's versus the building owner/operator's
incentives for energy efficiency, we see
that the net lease's incentive to the tenant
(savings in energy and utility bills) is not as
strong as the gross lease's incentive to the
owner/operator (greatly reduced operating
costs). However, direct feedback on utility
usage for tenants is an integral component of
understanding and reducing demand to meet
environmental goals.
Case Study: Sample Green Lease Language
A building in a large city dedicated to green business tenants may not be a typical for-lease commercial build-
ing. However it is an interesting case study the that can provide insight into the usage of green leases.
Green Business Building (building name has been changed) is committed to a green mission, as well as the
proper functioning and maintenance of its LEED certification. It has included the following language within the
commercial lease:
Energy Conservation. Landlord shall have the right to institute such policies, programs, and measures as may
be necessary or desirable, in Landlord's discretion, for the conservation and/or preservation of energy or energy
related service, or as may be reasonably required to comply with any applicable codes, rules and regulation,
whether mandatory or voluntary.
Under Tenant's Alterations it clearly mandates that all work performed within the premises must be "in accor-
dance with the Tenant Design and Construction Guidelines compatible with the 'green' mission of the Develop-
ment".
Rules and Regulations further makes known the responsibility of the user to maintenance of the building's
certification, in this case LEED, "Tenant acknowledges that the Development is certified for Leadership in Energy
and Environmental Design (LEED), and as such may have Rules and Regulations that are different from those
typical of other commercial projects in the "Large City" Area. Tenant agrees to comply with and observe all of
the construction rules and regulations and the operational Rules and Regulations".
9 Whitson, B. Alan,"Lease Structure Hinders Energy Efficiency." Facilities Management Resources, The BOMA Magazine. June 2005.
10 Ibid.
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Operating under a gross lease also challenges
owners and operators to engage tenants
in conservation and demand reduction of
energy. Communicating to tenants how
utility, insurance, and maintenance savings
affect rents is important. Providing direct
feedback, such as through sub metering, can
demonstrate usage costs to tenants.
Create a system of co-benefits
Creating a system of co-benefits that will
provide incentives to both the tenant and
owner/operator is key to the success of green
buildings and to increasing energy efficient
measures, while also promoting conservation.
A system for cooperative action and channels
for communication needs to be in place,
clearly outlining costs and benefits, and how
those will be shared appropriately. The tenant
requires direct feedback regarding usage, and
also an owner/operator who will correctly
reward that tenant's efforts. For example, an
owner/operator cannot merely apply costs
based on square footage if trying to promote
usage conservation; the reward system has
to be much more transparent and linked
to proactive measures taken by the tenant.
Tenants play an integral role in promoting
greener practices in commercial buildings.
Lead tenants, or a group of tenants, can
communicate the priority of a healthy and
sustainable environment to owners and
operators. This is most evident today in
requirements for green office and institutional
space in the federal, state, and municipal
sectors. However, any tenant can enter into
negotiations for ongoing improvements in the
building(s) they occupy. Communicating to
owners and operators these preferences will
help them better understand the demand for
greener space.
Several agencies and organizations, including
REALpac (Real Property Association of
Canada) and the California Sustainability
Alliance have developed leasing structures
that begin to address the issue of split
incentives. They provide good starting points
to change the leasing relationship so that
owners and tenants can both gain benefits
from investment in green systems.
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RECOMMENDED ACTION PROJECTS
Require green building and integrated design approach for all bids
One way that public building projects, as well as other building projects that use a
competitive bid process, can improve the quality of their projects is to make integrated
design a requirement. While integrated design can create a better built structure at an
overall lower cost due to tighter integration of building systems and reduction in change
orders, developers may be hesitant to initiate this process because it shifts the cost up-
front— an expenditure they feel they may not be able to recuperate if they do not win the
project. By requiring an integrated design process just as any other feature or construction
method, a municipality will demonstrate leadership that other developers can follow.
Factor in the following when evaluating project proposals:
• Experience of design team with green buildings and their ability to deliver products
with less cost overruns and change orders
• Anticipated post construction building costs for operation and maintenance
Successful green development projects are unique in that they require a design team that
has experience with different building systems, materials, goals, and approach. It would
be difficult for a design team without green building experience and knowledge to build a
structure that capitalizes on all the economic and environmental benefits. Choose a team
with a portfolio of successful green building projects and work with them to determine what
building operations, maintenance, and costs may look like during occupancy.
Use green lease templates to define owner/tenant responsibilities
New leasing language developed by various municipalities and entities can be useful
guidelines for green buildings. These leases can help create the proper motivation to alter
tenant and owner behavior. Sample leases are available from REALpac and the California
Sustainability Alliance.
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2.6
Green Development Principle 6:
The cost, benefits, and performance of
green buildings must be documented
and communicated to expand the
market for green development
Expand market data to
specifically address the
performance and value of green
features
Adoption of green development
practices by the market, including
developers and consumers,
requires education on the expected
performance of green development
features. Armed with this
information, consumers can better
gauge the value of their "purchases"
—much like they do with automobiles,
where not only the purchase price is
offered, but information regarding
mileage efficiency, maintenance,
insurance, and depreciation are
relatively easy to obtain. For
homes, offices, and industrial
spaces, investments that are much
more expensive, there is much less
transparency regarding maintenance
and operations costs. Consumers
and market representatives, such as
appraisers, therefore generally ignore
the value of these features. The result
of this leads to the perception that
green development practices offer
little if any additional value in the
market.
Consumer market needs
Drastic increases in energy costs
in recent years disprove the idea
that environmental and energy-
efficient features should be treated
as afterthoughts. The 2008 housing
market collapse is at least partially due
to these higher costs. Homeowners
strapped by the increase in utility
costs in their homes and gas costs for
transportation find that they do not
have enough cash flow to meet their
mortgage and property tax payments.
While information on projected
maintenance, operations, and transit
cost may not have prevented the
housing market collapse, it would have
at least been registered into the overall
affordability and value of a property.
The Energy Performance Certificate
(EPC) currently being phased in
throughout the European Union
mandates that buildings undergo an
energy audit, and that the score or the
EPC be included with the building
information for prospective renters or
Removing Market Barriers to Green Development
42
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buyers. This provides consumers with access
to full information about the building's energy
needs and can motivate owners to update
systems. This concept is gaining momentum
in the U.S. and will allow consumers to better
value green features when conducting a
property search.
Tools neededfor market representatives
Consumers are only a part of the equation
when valuing green properties. Along the
process chain of developing, financing,
marketing, and insuring, representatives
require information tools on green building
performance to properly value development
projects. Brokers need to be able to convey
the features and performance to their clients.
Bankers rely on the appraisal report to
determine how much financing can be offered
for a project. Insurers need quantification
information to determine whether projects
can be insured and at what price. There are
still many information gaps that need to be
addressed to help the market fully value green
development projects.
Make collection of performance data
a priority
Green development performance information
is important to market adoption of green
practices. Collecting and providing this
information will help those who may need
validation on green project investments and
will create a positive feedback loop to the
green building community to improve design
and features for future projects. In addition to
cost and performance data within a building,
information on occupant health, satisfaction,
and commuting patterns can make the case
for better indoor air quality and location
choice. Local and regional performance
Building Familiarity Survey
CASE STUDY
A
B
c
D E
F
G
H
1
J
K
AVERAGE
Lender
4
1
2
2 2
1
3
2
2.1
Architects
4
5
5
4 4
3
5
4
2
5
5
4.2
Appraisers
5
1
2 2
1
2
1.8
Planners
3
4
4
3 3
3
5
4
2
4
5
3.6
Developers
2
1
4
5 2
4
1
4
2
4
2
2.8
Tenants
2
2
3
3 3
2
3
2
5
2
2.7
Brokers
2
1
2 2
1
4
2.0
Average score
2.86
2.14
3.6
3 2.57
2.14
3.67
3.67
2
4.5
3.5
Table 3: Results of Green
Who knows what?
Architects have been central to the
green building movement, and
unsurprisingly, nine out of eleven
interviewees rated architects as having
a good or excellent understanding of the
field, giving them an average 4.2 out of
five. Planners ranked second with an
average score of 3.6, six of the eleven
interviewees ranking them as good or
excellent. Appraisers scored lowest,
at 1.8, below real estate brokers at
two and lenders at 2.1. Three of the
projects, however, had no involvement
with third-party lenders, appraisers or
real estate brokers.
A Green on the Grand, Kitchener, Ontario, Canada-Office building
B SAS building, Toronto, Ontario, Canada-Office building (UC) |(EY
C Ottawa Paramedics buiIding, Ottawa, Ontario, Canada - Office buiIding
D Vancouver Island Technology Park, Victoria, British Columbia, Canada-Office building l No understanding
E 260Townsend, San Francisco, California, United States-Office building 2 Limited understanding
F Philips Eco-Enterprise Centre, Minneapolis, Minnesota, United States-Office/Industrial building 3 Understanding
G Mountain Equipment, Co-op Store, Montreal, Quebec, Canada - Retail store 4 Good understanding
H The Solaire, New York City, New York, United States - Residential apartment building 5 Excellent understanding
I Cranberry Commons, New Westminister, British Columbia, Canada Co-housing project - Residential apartment building
J Oberlin College, Oberlin, Ohio, United States-Ed ucationa I facility
K CKChoi building and Lui Centre, Vancouver, British Columbia, Canada - Educational Facilities
UC Under construction
Source: Green Value Report/Green buildings, growing assets. Royal Institution of Chartered Surveyors, 2005.
http://www.rics.org/greenvalue
Removing Market Barriers to Green Development
43
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data is especially useful to determine best
practices given specific climate or geographic
features. Additional information that
recognizes the impact that buildings have
on their surrounding community, including
traffic patterns and congestion, utility and
road buildup, and stormwater flows and
habitat changes will provide an even stronger
case for green development.
Use third-party rating systems to help
consumers recognize the value of
green buildings
Third-party rating systems provide an easily
recognizable way for consumers to identify
green buildings. Developers have already
started using these systems to market their
buildings. Although rating systems are
not a guarantee of performance, they can
initiate dialog between different stakeholders
on the features and benefits that have been
incorporated into a property.
Extend green building education
beyond architects
Green building education needs to reach
beyond designers and architects for the
market to begin embracing green practices
for every project they initiate. While we can
present the market for green buildings as a
supply and demand curve (as demand for
green building features increases, developers
will increase the supply to meet this
need), we cannot simplify the training and
education that will be required to produce
this shift.
The 2005 Green Value study conducted by
the Royal Institution of Chartered Surveyors
(RICS) for the American and Canadian
market found that knowledge of the green
building field varied considerably among
professions who deal with development
issues. Table 3 shows the results to RICS'
survey question. The results of this survey
underscore the need to educate market
representatives such as lenders, appraisers,
and brokers on green development issues
because they determine property value
and viability. Without a green building
knowledge base, they will not be able
to evaluate such projects accurately and
effectively. In addition to the marketing and
finance fields that support these projects,
development of green building education is
Case Study: Jones Lang LaSalle Creates
In-House Sustainability University
Jones Lang LaSalle, a financial and professional
services firm specializing in real estate services
and investment management, recently announced
an in-house Sustainability University which
will provide green training for employees.
Those who attend will leave with basic green
knowledge, but many will also study for LEED and
Building Research Establishment Environmental
Assessment Method (BREEAM) accredited
professional exams. Lauralee Martin, Jones Lang
LaSalle's global chief operating and financial
officer, says that Sustainability University grew
out of internal and external interest in green
development: "Interest in, and concern about,
environmental sustainability continues to gain
momentum with our clients, prospects, investors,
and the professionals who take pride in working
for Jones Lang LaSalle. Our service capabilities
and industry-leading position allow us to deliver
real value and drive change that minimizes the
environmental impact of commercial real estate
while serving the economic requirements of
successful businesses."
Source: http://www.joneslanglasalle.com
Removing Market Barriers to Green Development
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most urgent in the engineering, construction,
maintenance, and operations fields.
Development of green collar jobs
The transition from conventional building
to green building will require skilled
workers who can build, install, and maintain
the systems to ensure the development is
constructed as designed and will operate
efficiently in the future. Existing workers,
primarily professional and blue collar
employees, can expand their skill set to
include green systems and techniques to
ready themselves for an evolving market.
Professional and trade union organizations
are invaluable networks that can assist
in disseminating information on green
building to their members and can act as a
liaison between green building education
organizations and workers. Widespread
adoption of green development practices will
bring about significant opportunities in these
fields, but a workforce knowledgeable about
the practices and tools needs to be in place
beforehand.
Working with educational institutions
Developing a mind set for sustainable
development begins in schools. An
educational institution's curricula can equip
students with the necessary knowledge on
sustainability issues, while its actions and
practices can demonstrate environmental
stewardship. Many universities are beginning
to add sustainability directors to their staff
who oversee all aspects of university activities
to make sure they are aligned with the
school's sustainability goals, including green
development projects. The addition of green
building design, technology, and economics
have been added to the architecture,
design, and engineering curriculum in
Case Study: IBEW 103 Trains Members in
Renewable Energy Technologies
Another group leading the way in green building
education is the International Brotherhood of
Electrical Workers Local 103. Headquartered in
Dorchester, Massachusetts, the IBEW Local 103
offers courses for members and local contractors
in wind and solar engineering and installation. All
IBEW apprentices are trained in renewable energy
technologies. Not only does IBEW Local 103's
apprenticeship training facility offer courses in
green building and renewable energy, it acts as a
billboard for high performance building. Located
just off a busy expressway, many Boston commut-
ers are greeted twice a day by the building's large
solar array and 100 kW wind turbine. Local 103
takes its visibility within the community seriously,
and as new renewable technologies are added to
the Dorchester site, the union will remain at the
cutting edge of the industry.
Source: http://www.ibewl03.com
some universities, but may still be absent in
other areas such as business. To encourage
curriculum development, Congress recently
passed all provisions of the Higher Education
Sustainability Act (HESA) as part of the new
Higher Education Opportunity Act of 2008
(HR 4137). HR 4137, signed into law by
President Bush on August 14, 2008, creates
a pioneering "University Sustainability
Grants Program" at the Department of
Education. It will offer competitive grants
to institutions and associations of higher
education to develop, implement, and evaluate
sustainability curricula, practices, and
academic programs.
Creating a common vocabulary
Communication is a key element of any
development project. Therefore, we urge
integrated design teams to speak with each
other frequently in order to create a fully
Removing Market Barriers to Green Development
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Case Study: Cape Cod Community College
Cape Cod Community College (CCCC) has offered courses in energy auditing and small-scale renewable energy
systems for many years. Starting in the fall of 2008, CCCC students will be able to matriculate with three
certificates in renewable energy technology, including small wind, solar thermal, and solar PV. Although CCCC
teaches some courses on-site, the majority of the technology labs take place at one of two local vocational
high schools. In helping these schools build and operate renewable energy labs, CCCC has been able to share
the cost of instructors and facilities. Because the high school classes end in the early afternoon, these labs are
then open for multiple college level courses for the rest of the day. The labs are also open for rental by local
contractors and professional associations for professional development workshops.
Students in the vocational technical renewable courses are awarded college level credit for some of their work
and can matriculate directly into advanced technology courses at CCCC. CCCC renewable energy certificate
graduates can enter the workforce with respected professional certifications (including HERS and NABCEP)
in addition to their associates degree, or matriculate into four-year environmental degrees offered by local
colleges. CCCC's educates more renewable energy technicians than any other Massachusetts school.
Source: http://www.capecod.mass.edu
integrated high-performance building.
However, communication is complicated
by the fact that all professionals in the
development community have their own
specialized vocabulary. That specialized
vocabulary—terminology specific to each
discipline—has evolved to meet a need
to describe a critical component of the
development process that is part of the
building landscape and should be respected
and not necessarily replaced. Nevertheless, to
bridge that divide, it is critical that all parties
become familiar with the basic vocabulary
central to the work of their colleagues. For
example, although an architect might think
"asset" diminishes a sophisticated design—
and a building is surely more significant than
a line on an investment sheet—the term is an
important reminder that finance is integral
to the green process. Creating a glossary or
dictionary for a green building project team is
an important method to bridge the remaining
language barriers and can translate to cost
and time savings.
Removing Market Barriers to Green Development
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Sample Green Development Vocabulary
Absorption: Time required to lease a certain number of units in a specific market
Appraisal: Value of a property according to an expert
Benchmarking: Applying standards by which something can be measured or judged
Capital cost: Costs required to buy land and materials and to bring a building to commercial viability
Capitalization rate: Calculation of the Annual Cash Flow divided by capital costs
Churn: Turnover of tenants in a building
Gross Lease: Lease structure in which costs of maintaining the building are paid by the owner
Life Cycle Cost: Total cost of owning, operating, maintaining, and disposing of a building or component over a
given timeframe
Net Asset Value: The value of an asset minus the value of its liabilities
Net Lease: Lease structure in which the lessee pays the operating expenses of the space including utilities and
maintenance
Net Operating Income: A property's net income after operating expenses
Net Present Value: Method of appraisal of long-term projects by calculating the value of an investment by
adding the present value of expected future cashflows to the initial cost of the investment
Net Usable Area: Square footage available to lessees
Operating Costs: Recurring expenses related to the maintenance and upkeep of a building
ROI: Return on Investment
Simple Payback: How long an energy efficient investment's savings will pay back for the cost of energy system.
Does not include future savings
Yield: Net income from an investment expressed as a percentage of its cost
Removing Market Barriers to Green Development
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RECOMMENDED ACTION PROJECTS
Create a research effort, in concert with other ongoing efforts, to document the costs and
performance of green projects
Green building performance and cost information is crucial to adoption of green building
practices. Research organizations and universities have led many of the efforts to gather
and analyze information that will be invaluable to green building advocates and developers.
Many need support to help fund, organize or participate in these efforts. The federal
government, private foundations, and trade groups can support these efforts with funding,
while it is the responsibility of green building owners and operators to participate and share
their development's performance information.
Accurate, comprehensive, geographically relevant data provides one of the strongest cases
for incorporating green features into building projects and can help provide justification
for return on investment projections. This is especially true for new developers or owners,
or those that may be located in regions of the country where green development is more
sporadic.
Use existing lines of communication and data sources to document the performance of
green buildings; augment (or develop) information tools that the market already accepts
as standards to include green building information
Many of the tools that are currently used in the market can be enhanced to include green
building information. Making available information such as estimated energy usage, water
usage, and other utility, maintenance, or operation costs available will help consumers
make an educated choice about their purchases. For example, estimated utility costs can
be listed on MLS listings to provide information to potential purchasers on how much they
can expect to pay in utilities, in addition to their mortgage, property tax, and insurance. The
benefit of using an existing system, versus creating a new system, is established market
acceptance and a built-in distribution network.
Develop green training and/or certification programs for market representatives such as
appraisers, brokers, and lenders to help them recognize and communicate the value of
green building features and benefits
Market representatives often control the construction, value, funding, and sale of
development projects. While some of these influential professionals have taken steps to
educate themselves on green building issues and understand the possible need to approach
their work in such a way to accommodate any green development differences, many view
green building features as insignificant to a property's value, or worse, as liabilities. Trade
and umbrella organizations have taken notice and are working to address this gap by
Removing Market Barriers to Green Development
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creating relevant training courses to educate their members, but much more needs to be
done to bring these important roles up to speed on the specifics of green building issues so
that the benefits these developments provide are reflected in their valuation.
Engage in public education connecting green building with climate change,
environmental degradation, and energy usage
Include green development issues as part of discussions surrounding climate change, energy
independence, environmental degradation, and natural resources depletion. All of the issues
are connected and need to be considered as a part of any overall management strategy. This
can help drive public knowledge, demand, and market acceptance of the benefits of green
development.
Removing Market Barriers to Green Development
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3.1 Issues just over the horizon
Those who are involved in the
development field are experiencing
many of the barriers covered in our
study right now. A lot of work needs
to be done to remove these barriers
and adjust the market to accommodate
current green development strategies.
However, the concept of green
development is one of continuous
improvement, where new ideas and
technologies offer opportunities to
further sustainability goals.
Future opportunities in green
development
Future changes to environmental
policies will present opportunities to
develop new products and services in
the green development field. Higher
accountability for emissions, waste,
runoff, and usage may boost interest
in sustainable development practices.
Some of the more innovative ideas
that are being discussed by leading
organizations include:
Incorporating energy efficiency and
location efficiency criteria
Sharp increases in utility and fuel
prices underscore the significant
portion of expenses that go towards
energy usage and driving; those who
live in higher density housing closer
to work with plentiful transportation
options were often the least impacted.
Mortgage and loan underwriters are
beginning to look at including these
expenses as part of their affordability
criteria. For development projects
that use public funding mechanisms,
there is already a movement to
include LEED or Energy Star as pre-
requisites; this may be expanded to
include energy and location efficiency
criteria to further influence land use
planning.
Developing strategies for the
sustainable reuse and redevelopment
of land
Location is usually acknowledged
as a component of an overall green
development strategy with its
contribution to lowering vehicle
miles traveled and offering building
occupants various transportation
options. Brownfields and other
environmentally impaired sites are
often in highly desirable locations
within or near central cities and
with established road and utility
infrastructure. While programs
such as LEED recognize brownfield
redevelopment as a strategy,
sustainable redevelopment of these
sites is an opportunity that has not
been fully explored. From reuse and
deconstruction to redevelopment,
every process can be completed in a
more sustainable manner. Sustainable
brownfield redevelopment offers
an opportunity to examine how
Removing Market Barriers to Green Development
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Case Study: South Waterfront, Portland-Transit Oriented Development in a former Brownfield
The South Waterfront (or SoWa) is a new high-rise district under construction on former brownfield industrial
land in the South Portland neighborhood south of Downtown Portland, Oregon. It is one of the largest urban
redevelopment projects in the United States. SoWa is connected to downtown Portland by an extension of the
Portland Streetcar, and to the Oregon Health and Sciences University (OHSU) campus atop Marquam Hill by the
Portland Aerial Tram.
SoWa is part of the Portland Development Commission's North Macadam Urban Renewal District. The first
phase of the South Waterfront is the $1.9 billion "River Blocks" development. Construction began in early
2004. The full build-out of the district envisions many residential (primarily condominiums) and medical
research towers ranging in height from 6 stories to 35+ stories.
Besides its location in a former brownfield and with access to public transportation, the development will
incorporate many green features including:
• Solar panels and a Trombe Wall, which preheats a building's hot water
• Bioswales and ecoroofs
• Non-toxic paints, wheat based products, and low VOC adhesives to ensure better indoor air quality
• Sustainably harvested wood and rapidly renewable materials
• Water conservation strategies for indoor plumbing and use of drought resistant plants and trees
• Wildlife habitat restoration
The OHSU Center for Health and Healing is targeting LEED Platinum, a first for medical and research facility of
this type, size, and complexity. The integrated design of the building achieves significant energy savings—more
than 6o percent below the Oregon Energy code.
More information about SoWa can be found at:
http://www.southwaterfront.com
we can conduct land planning and
development on a continuous lifecycle basis.
Incorporating embodied energy into
development projects
When existing buildings are torn down to be
replaced by a new building, the embodied
energy, or the energy that is required to
manufacture the original building is lost.
New buildings require a lot of energy with
respect to materials and transportation—even
for the greenest of structures. It would take
many years for any new green building to
recuperate the lost energy from an existing
one. Under a cap and trade or carbon
exchange system, carbon emissions saved
through the reuse of our existing structures
may provide market opportunities to focus on
retrofitting our existing building stock to be
greener.
Removing Market Barriers to Green Development
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Case Study: Using Carbon Offsets Sale to Help Build Green Affordable Housing
Silver Gardens, an environmentally responsible affordable housing development, is the first in the nation to
receive funding from a ground-breaking new initiative created by Enterprise Community Partners that taps the
booming market for voluntary "carbon offsets." This initiative will help low-income families experience the
health, economic, and environmental benefits of living in affordable green homes.
The newly formed Enterprise Green Communities Offset Fund™ is purchasing carbon offsets for at least 330
tons of carbon dioxide that will not be released into the environment due to the green design and construction
of this pioneering development in downtown Albuquerque. The green measures integrated into Silver Gardens
will both save residents more money and emit less C02 by using 15-20% less energy than similar projects built
using conventional technologies and approaches.
Through the Fund, Enterprise Community Partners, a national nonprofit, raises charitable contributions from
organizations, individuals and events to purchase carbon offsets from developers of green affordable housing
projects. Fully 100 percent of all contributions to the Fund go to community-based groups for activities that
reduce energy use and global warming pollution in homes for low-income people and result in verified carbon
emissions reductions. All Fund proceeds support activities that directly reduce carbon emissions below the
level that otherwise would be achievable.
Contributors to the Fund receive credit for verified emissions reductions that can offset their own carbon
generating activities and may take a tax deduction for their contribution. The Fund employs rigorous
measurement and verification procedures to determine and certify offsets that are aligned with international
best practices. The Fund "retires" the verified emission reductions it purchases, meaning the reductions cannot
be bought or sold during the period of the Fund's purchase.
Source:
http://www.enterprisecommunity.org/about/media/news_releases/documents/2008/july/offset_fund.pdf
Removing Market Barriers to Green Development
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3.2
Conclusion
Green development practices can yield
positive environmental, economic,
and health benefits to us and our
communities. With the overall
advantages that such practices offer, it
would seem clear that every building
project would choose to incorporate
green features into their plans. Our
hope is that implementation of the
recommendations of this report will
bring us closer to this goal.
Our objective for this report is to
highlight how many processes
and tools are still not equipped to
handle the unique challenges that
green development entails. Our
participants have presented ideas on
how to overcome these issues based
on our research, observations, and
discussions. Those of you who are
closely involved in specific processes
and tasks that support development
projects may recognize other barriers
or gaps to greater adoption of green
development practices. We encourage
you to work with your community
or organizations that support green
development to find solutions.
Continued collaboration among the
market and private interests, research
institutions, and government—and
a level playing field that gives every
opportunity for green developments
to financially succeed—is the best
measure of success.
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References
Busby, Perkins + Will and Stantec Consulting."Roadmap for the Integrated Design Process."
Commercial Real Estate and the Environment, CoStar Group, 2008.
http://www.costar.com/partners/costar-green-study.pdf
Cost of Green Revisited: Reexamining the Feasibility and Cost Impact of Sustainable Design in
the Light of Increased Market Adoption. Davis Langdon, July 2007
Gifford, Henry, "A Better Way to Rate Green Buildings". EnergySavingsScience.com, 2008.
Green Building SmartMarket Report. McGraw-Hill Construction, 2006.
Green Buildings Research White Paper. Building Design + Construction, October 2007.
The Green Built Environment in the United States. The Marsh Green Team, Marsh & McLennan
Companies. 2008.
Green Financial Products and Services: CurrentTrends and Future Opportunities in North
America. North American Task Force (NATF) of the United Nations Environment Programme
Finance Initiative, August 2007.
Green Office Lease Unveiled for Canadian Companies. GreenBizSite. Greenerbuildings.com,
June 17, 2008.
Green Value Report. Royal Institution of Chartered Surveyors, 2005.
www.rics.org/greenvalue
GSA LEED Cost Study. U.S. General Services Administration, October 2004.
International Code Council, http://www.iccsafe.org
Kats, Gregory H., "The Costs and Financial Benefits of Green Buildings." Capital E, 2003.
Malin, Nadav, "Lies, Damn Lies, and... (Another Look at LEED Energy Efficiency)".
BuildingGreen.com, September 2,2008.
Matthiessen, Lisa Fay and Peter Morris,"Costing Green: A Comprehensive Cost Database and
Budgeting Methodology." Davis Langdon, July 2004.
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Matthiessen, Lisa Fay and Morris, Peter, "Cost of Green Revisited". Davis Langdon, July 2007.
The Energy Performance of LEED Buildings—Key Findings. U.S. Green Building Council and
New Buildings Institute, 2007.
Quantifying "Green"Value: Assessing the Applicability of the CoStar Studies. Green Building
Finance Consortium, June 2008.
Romm, Joseph J. and William D. Browning,"Greening the Building and the Bottom Line."
Rocky Mountain Institute, 1998.
Southface."Life Cycle Economics"http://www.southfaceonlinetraining.org/ecobenefits/
Smith, April, "Building Momentum: National Trends and Prospects for High-Performance
Green Buildings." U.S. Green Building Council, February 2003.
Sustainable Buildings Industry Council. "Whole Building: Route to High Performance." Building
Operating Management. February 2007.
Tulacz, Gary J.,"Insurers Worry About Green-Building Risks". Engineering News Record,
McGraw-Hill Construction, 7/9/2008.
U.S. Department of Energy, Definition of Integrated Design
U.S. EPA, Green Building Statistics, http://www.epa.gov/greenbuilding/pubs/gbstats.pdf
Weber, Rachel and David Santacroce,"The Ideal Deal: How Local Governments can get more
for their Economic Development Dollar." Good Jobs First, UIC Center for Urban Economic
Development, 2007.
Whitson, B. Alan. "Lease Structure Hinders Energy Efficiency". Facilities Management
Resources,The BOMA Magazine. June 2005.
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Participants & Partners
Workshop & Research
Participants
Bill Abolt
Shaw Environmental and
Infrastructure
Lee Anderson
Heitman Architects
Phil Baugh
Baum Realty
Frank Beale
Chicago Metropolis 2020
Ann Beier
City of Milwaukee
Michael Berkshire
City of Chicago
Laurel Berman
ATSDR
Perry Bigelow
Bigelow Homes
Laureen Blissard
USGBC-Chicago Chapter
John Braden
University of Illinois
Urbana-Champaign
Kevin Breslin
Richmond Breslin
Sandeep Burman
Minnesota Pollution Control
Agency
Rico Cedro
Krueck& Sexton
Joyce Coffee
City of Chicago
Mike Cornicelli
BOMA Chicago
Jim Cross
CenterPoint Properties
Mike Davidson
Bola Delano
Chicago Metropolitan
Agency for Planning
Brent Denzin
Midwest Environmental
Advocates
Chris DeSousa
University of Wisconsin
Milwaukee
Jon DeVries
Roosevelt University
Kerry Dickson
Related Midwest
Megan Dobratz
Greenmarks Sports
Donna Ducharme
Delta Institute
Joseph Dufficy
U.S. EPA
Cassie Fennell
University of Chicago
Mark Fick
Chicago Community Loan
Fund
Joel Freehling
ShoreBank
Brooke Furio
U.S. EPA
Kalisa Gary
Richmond Breslin
Charles Goetze
Harris Bank
Eugene Goldfarb
Great Lakes Environmental
Planning
William S. Haas
Illinois Department of
Commerce and Economic
Opportunity
Meg Haller
University of Illinois at
Chicago
Removing Market Barriers to Green Development
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Dan Harmon
Turner Construction
Lauren Heberle
University of Louisville
Karl Heitman
Heitman Architects
Robert Hogfoss
Hunton & Williams
Greg Hummel
Bell Boyd & Lloyd
Helen Kessler
HJKessler Associates, Inc.
Bruce Keyes
Foley & Lardner
Jonee Kulman Brigham
University of Minnesota
James Kutill
Appraisal Research
Tom Lesch
Bank of America
Bill Loftus
SPACECO
Frank Lyons
Bryan Cave
Nasutsa Mabwa
McCaffery Interests, Inc.
John Magi 11
Ohio Department of
Development
Mike Malley
ENTRIX, Inc.
Wyllys Mann
Eastlake Management &
Development
Steve Mansfield
Westrum Development
James Mayka
U.S. EPA
Peter Meyer
Northern Kentucky
University
Nick Milano
Ohio Department of
Development
David Morley
University of Illinois at
Chicago
Torrence Moore
ABN AMRO
Mike Murphy
CenterPoint Properties
Matt Neumann
Prologis
Kevin O'Brien
Great Lakes Environmental
Finance Center
Mike Ohm
Bryan Cave
ErikOlsen
City of Chicago (formerly)
Rick Patraw
Minnesota Pollution
Control Agency
Evans Paull
Northeast-Midwest
Institute
Kevin Pierce
Shaw Environmental and
Infrastructure
Matt Rebro
Pepper Construction
David Reynolds
Earth Tech
Ken Sandler
U.S. EPA
Chris Slattery
Delta Institute
Andy Stapleton
Mortenson Construction
Emily Stern
City of Minneapolis
Aimee Storm
U.S. EPA
Maureen Sweeney
Maureen Sweeney, SRA
MarkThimke
Foley & Lardner
Removing Market Barriers to Green Development
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Gail Vermejan
Other Research
Oversight
NAI Hiffman
Partners
Committee
Gary Victorine
Allan Bilka
Christopher Choi
U.S. EPA
International Code Council
U.S. EPA
John Walters
Mark Halverson
Bob Newport
Jones Lang LaSalle
Pacific Northwest National
U.S. EPA
Karen Wan
Laboratory
James Van der Kloot
Chicago Manufacturing
Dave Hanna
U.S. EPA
Center
Prudential Real Estate
Audrie Washington
Jennifer Wang
Andrew Perry
Delta Institute
U.S. EPA
City of Indianapolis
Elise Zelechowski
Rachel Weber
David Hull
Delta Institute
University of Illinois at
City of Columbus
Chicago
Interns:
Tom Whalen
Barbara Sporlein
City of Minneapolis
Brita Pagels
University of Illinois at
University of Illinois at
Chicago
Tom Micuda
Chicago
Doug Widener
City of Bloomington (IN)
Hannah Sokol
USGBC-Chicago Chapter
Kyle Poyar
Univeristy of Illinois at
City of Cleveland
Chicago
Lee Winter
Gershman Brown
Jeff O'Brien
Anne Stephenson
Melissa Woolsey
Village of Downers Grove
University of Chicago
NAI Hiffman
Julie Penman
HGA Architects &
Kate Yoshida
Engineers
University of Illinois at
Chicago
Jennifer Siragusa
Moira Zellner
U.S. Equities Realty
University of Illinois at
Sundee Wislow
Chicago
U.S. Equities Realty
USGBC-Heartland Region
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Acknowledgements
The Removing Market Barriers to
Green Development Initiative was
conceived as a broad-based dialogue
and research project by the U.S. EPA
Region 5. The Initiative was convened
and facilitated by U.S. EPA's Region 5,
the Delta Institute, and the Northeast-
Midwest Institute; funded by the
Northeast-Midwest Institute through
a U.S. EPA Brownfields Training,
Research and Technical Assistance
Grant; and managed by an Oversight
Committee consisting of Chris Choi,
Bob Newport, Jim Van der Kloot,
Jennifer Wang, and Elise Zelechowski.
The steering committee for the project
included Mike Ohm, Bryan Cave;
Michael Davidson, the Campaign for
Sensible Growth; Donna Ducharme,
Jennifer Wang, and Elise Zelechowski,
The Delta Institute; Kevin O'Brien,
Great Lakes Environmental Finance
Center; Eugene Goldfarb, Great
Lakes Environmental Planning; Scott
Goldstein, Metropolitan Planning
Council; Megan Dobratz and Shelley
Schreffler, Minnesota Environmental
Initiative; Evans Paull, Northeast-
Midwest Institute; Chris Choi, Bob
Newport, and Jim Van der Kloot, U.S.
EPA; Dr. John Braden, University of
Illinois at Urbana-Champaign; and Dr.
Rachel Weber, University of Illinois at
Chicago.
The Oversight Committee thanks
interns Brita Pagels, Hannah Sokol,
and Anne Stephenson for their insight,
support and writing; Mike Ohm for
hosting our two workshops; Laura
Cresap for her organizational support
with both workshops; Meg Haller,
David Morley, and Tom Whalen for
taking copious notes from our first
workshop and Cassie Fennell and
Kate Yoshida for helping out with
the second workshop; Rachel Weber
for helping to guide and edit our
workshop content and summaries;
Chris Choi, Jim Van der Kloot, Bob
Newport, Aimee Storm, Jennifer
Wang, and Elise Zelechowski for
writing and editing, and Evans Paull
for contributions to the final report.
Most of all, the Oversight Committee
thanks all the participants of this
Initiative as well as the numerous
subject matter experts we were
delighted to meet throughout this
process for their time, energy, and
commitment to the project, and for
their constructive and innovative
ideas.
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