Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

One of the bitter complaints about energy management and energy efficiency has been the lack of standardization in energy benchmarking, management, measurement and verificiation.  Policymakers don't like it because it is difficult to verify compliance, consumers can't trust the information they receive and financiers don't like it because they cannot forecast the risk associated with investment.  This lack of standardization has been cited over and over again.  According to a World Economic Forum analysis for accelerating energy efficiency:

Despite differing views of the market, all stakeholder groups acknowledge the gap between opportunity and implementation, recognizing that a standardized method of measurement, verification and enforcement would help create market transparency, a more stable environment and an upscaling of investments. This should be considered of high priority going forward.

A new tool for industry and regulators alike was issued last week.  The International Standards Organization launched ISO Standard 50001 for energy management.  Unlike LEED or Energy Stat, the ISO standard does not set energy targets or how to comply, but rather provides a standardized framework for planning, measuring, verifying and improving energy performance. 

Pilots of the ISO 50001standard demonstrated  cost and energy savings in large and small businesses:

 One of them was a plant owned by a major company, Dow Chemicals. The plant reduced its use of energy by 17.9 % over two years. At the same time, ISO 50001 principles are also successfully implemented by small businesses as shown by the experience of the other plant, CCP, of Houston, Texas, employing 36 people. In two years, it achieved energy savings of 14.9 %, worth USD 250 000 a year with zero capital investment.

Why does it matter?  According to the ISO, Up to the end of December 2009, at least 223,149 ISO 14001:2004 (environmental management standard) certificates had been issued in 159 countries and economies.  ISO 50001 is designed to work with the other ISO management system standards, including ISO 9001 (quality management) and ISO 14001 (environmental management).  In addition, in at least several studies, ISO 14001 has been statistically correlated with significant positive market reaction, increasing the value of the companies that implement it. 

In theory, new regulations could be based on energy performance measured and verified using the ISO 50001 standard.  Financial institutions could have greater security if energy savings, verification and management were based on  the ISO 50001 procedures.  If you can't measure it, you can't manage it...and you can't regulate it and you can't finance it!

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I have tried to make simple and clear many complex legal topics before, including class action law suits and IRS tax-free bonds, but never have I faced this great a challenge. 

Apparently, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), which are in charge of setting new accounting standards for companies, have set in motion a rulemaking process which would require companies to list leases as assets and liabilities on their books.  These leases would include Power Purchase Agreements, Sale-Leasebacks of renewable energy installations and ESCO contracts. 

By putting these transactions "on the books," it has a variety of implications, including increasing the debt ratio of many companies, and increasing the disclosure and transaction costs associated with those efforts.  These implications may mean that companies are less willing to do renewable energy and energy efficiency transactions, and ESCOs and other companies have a harder time benefitting from the transactions. 

 The folks over at the National Renewable Energy Laboratory have done a detailed analysis of the rule changes here and Forbes had a more user friendly (if less detailed) piece here. 

 

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There is a corner of the Federal government that, unless you are as data obsessed as I am, you never knew existed.  For the part 25 years, the Energy Information Administration (EIA) has collected  baseline data on commercial building energy usage, known as CBECS.  CBECS is the only government source of statistical data for energy consumption and related characteristics of commercial buildings.   The data EIA has collected forms the underlying data for programs like Energy Star and LEED, and laws like Energy Independence and Security Act of 2007 (EISA 2007).

Two pieces of bad news were released today.  First, the EIA tried to cut costs by contracting out its building energy information gathering.  Unfortunately, the data gathered by its contractor was so shoddy that the EIA is refusing to release the data. 

According to a press release from the EIA:

EIA regrets to report that the 2007 Commercial Buildings Energy Consumption Survey (CBECS) has not yielded valid statistical estimates of building counts, energy characteristics, consumption, and expenditures. Because the data do not meet EIA standards for quality, credible energy information, neither data tables nor a public use file will be released.

Worse still, according to the EIA, the budget cuts made in this year's budget negotiations have reduced the EIA budget so severely that it will suspend collection of 2011 data.  In other words, the best building data we have to work with at this point is almost 10 years old, and no further data is being collected. 

Because approximately 30% of all energy is used by buildings, without a good baseline assessment of current building energy use, it will be difficult to:

1. Accurately benchmark current building performance; and
2. Accurately model building energy efficiency efforts. 

If energy models are based on bad or old or unreliable data, the results in practice may not live up to the predictions, and it will be easier to dismiss efforts to comprehensively transform building energy usage.  In other words, garbage in, garbage out.   

To address this situation, there are two choices. 

 A relatively unbiased private organization, like ASHRAE or the International Code Council, could collect the data.  Although the standard setting organizations will have their own internal and external customers to serve, and questions will inevitably arise as to the bias and validity of the data, they possess the relevant expertise and are currently relied upon to provide input into laws (like building codes).  The other option is for the Department of Energy or other government agency to recognize data gathering as a priority, and reallocate funds for the purpose of building energy efficiency data collection. 

In any event, a reliable party must step up to fill the data void, or future efforts to actualize the most cost effective method of reducing energy use and greenhouse gases will be squandered.  We will pay now through unnecessarily high energy costs and the price tag for participating in conflicts in the Middle East, and future generations will pay for damage to the environment.  Garbage in, garbage out. 

 

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The United States is at a precipice with respect to public motivators for the green economy. Essentially, the carrot of public incentives or investment and the stick of potential mandatory regulation of carbon emissions are slated for elimination at the same time. 

Although we cannot know what this two part challenge to the green economy will do, it will certainly change its trajectory for the foreseeable future. 

First, of course, are the proposed revisions to the 2011 budget.  With respect to green building, slated for cuts are most programs that promote green building or which invest Federal dollars in green buildings directly:

• $3 billion of EPA funding overall
• $1.6 billion (nearly 20%) of the Federal Building Fund at the General Services Administration (GSA)
• $786 million (over 35%) of the Energy Efficiency and Renewable Energy (EERE) office at the Department of Energy (DOE)
• $250 million in funds for the Department of Housing and Urban Development (HUD) HOPE VI program, which leverages private sector dollars to transform existing blighted public housing into vibrant and livable communities.
• $10 million for the Energy Star program at the Environmental Protection Agency (EPA).

With respect to renewable energy, the proposed Republican budget bill slates for reduction or elimination over $900 million in investment. Among the programs slated for cuts or elimination is the Department of Energy Loan Guarantee Program for clean energy start up companies, established during the George W. Bush administration.  According to Forbes, DOE officials have said that eliminating this program would do away with 20,000 jobs, along with the benefits for the environment.

In addition to the direct cuts, at least four different proposals are pending (potentially up for a vote this week) restricting or eliminating EPA's ability to regulate greenhouse gases.  If the EPA is restricted in its ability to regulate greenhouse gases, one of the most potent motivators for investment in reducing carbon emissions through renewable energy, green buildings and other carbon reduction techniques will be eliminated.  

 The question will become not whether renewable energy and green building can compete without government subsidy, but rather whether renewable energy and green buildings can compete in the face of continuing subsidy to competing technologies like coal, oil, etc. 

According to the Center for American Progress, the proposed Republican budget will make few changes with respect to the $40 billion+ Government support of these technologies through tax incentives and other mechanisms. Fox News was unable to get a commitment from House Budget Committee Chairman Paul Ryan (R-WI) that tax breaks for oil and gas companies would be eliminated:

WALLACE: A lot of Democrats that are already saying, even before they’ve seen your budget, that you do all of this balancing of the budget on the spending side, and unlike the President’s debt commission, you don’t do it on the revenue side. Do you eliminate tax breaks? Do you bring in new revenue by eliminating, for instance, tax breaks for oil companies?

RYAN: We don’t have a tax problem. The problem with our deficit is not because Americans are taxed too little. The problem with our deficit is because Washington spends too much money. … So we’re not going to down the path of raising taxes on people. […]

WALLACE: But for instance, you will not eliminate tax breaks for Big Oil and Gas?

RYAN: Those are the kinds of details that we’ll come out later with, that the Ways and Means Committee will work on. We’re not going to go into the little details of which tax expenditure goes and which tax expenditure stays.

 [You can watch this portion of the interview on You Tube]

The next few weeks will be historic ones with respect to America's green future.  For better, worse or otherwise, these are interesting times which will mean changes for everyone in the green sector in the United States. 

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GBLB sat down with Ari Kobb, Director of Green Building Solutions and Co-Chair of Sustainability Committee for Siemens Building Technologies Division to discuss the Siemens/McGraw Hill Construction Study on the Greening Of Corporate America.  The study is available for download here.

GBLB: What did Siemens intend to accomplish with the study?

AK: We did the first study in 2006, published in 2007, and our main driver was to see the extent to which green and sustainability was being adopted and embraced by corporate America versus the public sector, because we viewed public sector as mandate driven. We thought the private sector drives the market. They make things more accessible when they embrace it. When the lightbulb goes off, they will develop more products, the service providers will be there, it drives market growth. When we did the 2006 study, the tipping point of sustainability and green buildings would be 2009-2010. We redid the study in 2009 because we thought the market had moved significantly, and we wanted to prove out some trend information. With the emergence of a corporate sustainability officer, we wanted to see what role this played. At the end of the day, we wanted to get away from the "if sustainability is significant" to the part where sustainability is driving the market.

Siemens did the study because we are a thought leader in the industry, we want to be associated with the green topic. At the same time, we embarked on our own internal sustainability movement. The data supports both our continued investment and growth in the green area and our own internal journey to becoming more sustainable. The timing was perfect. We started our own sustainability program in 2007, and at the same time, our customers both institutional and commercial were going green, the timing was right on that aspect.

GBLB: Who did you interview?

AK: We interviewed 203 executives from the C-suite of revenue over $250 million—CEO, COO, CFO, Chief Sustainability officer or someone in this position. This is a change from 2006, because there was no one in that position in 2006.

GBLB: What did you find?

AK: The main thing we found was that corporate America has moved attitudinaly toward embracing sustainability as part of corporate strategy. You are not going to be able to be a Stage 1 or Stage 2 company because of benefits the C-suite sees in sustainability. The alignment between efficiency and sustainability is being identified at the highest levels. We have seen an increase in Stage 4 and Stage 5 companies. Stage 4 and 5 combined increased from 18 to 37%, Stage 4 increased from 15 to 30—it doubled. Stage 3 has stayed the same.

This is an attitude study—we gave them a definition, and asked them to place their company. This measures the attitudes of the highest levels of the organization—it may reflect where they want to be. What we are seeing now 1/3 of the market seeing themselves as a Stage 4 and Stage 5.

Most companies have a dedicated sustainability role—61% have a dedicated sustainability staff.

When we looked at what was driving the sustainability efforts, we found that everyone (almost 80%) view a drop in costs as an outcome of sustainability efforts. A convergence of sustainability as an efficiency and cost-savings tool. Greater productivity was also perceived as an outcome of sustainability. Customer retention and attraction and employee retention and recruitment were also seen as benefits of sustainability. The concept is that there is a drive in the market to differentiate by providing more sustainable products, and also being driven to be more sustainable internally by their customer demands. An example is suppliers to major universities. They like green products. They are looking to the market to develop new green products, and they are also asking what their suppliers are doing to go green. In this economy, if this sliver is what will win you the job, you’ll do it. RFQs are beginning to ask how sustainable the suppliers are. 73% say perceived customer retention and attraction benefit.

There are a lot of people coming into the market who have grown up greener, who have a more ingrained understanding and expectation that where they go to work is in the green space, and is green as well. The two have to be connected.

This study was done in the depth of the recession. Over 60% said sustainability initiatives were continuing or growing. The pace may have slowed down, but it hasn’t gone backwards. It is one of the few bright spots we have seen. You can’t stop it. Even the Stage 1 companies will continue along the sustainability path.
 

GBLB: What is Siemens doing as a result of the study?

AK: We are distributing the information to show that the market has moved—the time to debate the value of embracing sustainability is over. Now, let’s all take it to the implementation level to satisfy what the market wants. The C-Suite are saying that the products, services, solutions are available in the marketplace. The time to say “is this going to take off” is over. The alignment with corporate strategy, profit motive, efficiency tied to conservation is there at the highest level of corporate America. The real question is whether enough is going on. Would you have expected to see more products, more services, etc.? Over 50% studied were providing sustainable products and services to marketplace, over 50% are also seeking sustainability initiatives from suppliers.

 

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CB Richard Ellis, the worldwide behemoth of real estate services, issued a report which addresses "the economics of sustainable buildings." Their conclusion? Basic level of certification adds between 2-3% to the cost, higher levels of accredidation add 5-7% of construction costs.  This is fairly in line with other cost estimates which have been issued.  However, there were some other interesting conclusions from the report:

• Although developers will reap some rewards in terms of higher rents and enjoy higher rates of rental growth,the rates of rent additionality is about the same as the excess development costs (2-6%), so the additional rental value is essentially a wash.
• Improvements in energy savings can be between 10-50%, a major number. 
• Residential customers will pay some premium for green, but not necessarily the actual cost of the green improvements
• Extra value will need to accrue from the investment markets for the lower risks and higher valuations of green buildings.

How should this study effect decisions making at the policy and business level?

• The potential market benefits from greening buildings have not solidified--this means that incentives can still be powerful tools to motivate green projects.  The incentive may be the tipping point.
• Energy savings, and measurement of the realization of energy savings, is an important factor in "pencilling out" green improvements.  From a policy perspective, this puts even more value on reporting and disclosure of building performance measures.
• Policy measures need to be different for commercial and residential sectors to motivate green.  There may need to be different levels of incentives applied to motivate different segments.

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Many months ago I wrote about the need for a floating gas tax to stabilize fuel prices, allow predictability and incentivize eco-friendly developments.  Now Ford chairman Bill Ford agrees.

Earth2tech reported:

“If prices are gyrating wildly,” he said, it becomes extremely difficult to know whether the company is planning the right vehicle or technology (if you’re operating under the assumption that automakers should supply what the market demands, and that there’s a lot less demand for fuel-sippers when gas is cheap). Ford noted that in the EU, diesel fuel “became an easy decision” for drivers after the government decided to make it much cheaper than gasoline.
 

When major environmental regulations were passed in the early 1970s, there was a lot of hand-wringing over how it was going to destroy the economy.  Now, with cap-and-trade, similar arguments are being made. Senator James Inhofe said yesterday, about EPA's declaration of greenhouse gases as harmful to human health:

This move by EPA will unleash a torrent of regulations that will destroy jobs, harm consumers, and extend the agency’s reach into every corner of American life.

But it turns out, in capitalism, the rules of the game don't matter, as long as they are predictable. So Obama should implement cap-and-trade, and those companies that can adapt and thrive in the new regulatory environment will survive.  And those that cannot, will not, but others will take their place.  I predict that with the attitude expressed by Bill Ford, Ford will survive...and the others should not.  

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Redgreenandblue.org had an article here that "BP has dumped its plans to build out wind farms and other renewable projects in Britain for projects in the United States" because of the tax incentives for renewables in the United States and Barack Obama's promise to spend $150 billion over 10 years to kick start a renewable energy revolution.

In other words, because of green laws and incentives, the United States is competitive for renewable energy on the world market. What does that mean? More clean energy here, and more green jobs.

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Daily Green had a nice post on how to save $4000 annually and go green available here

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Interesting post on Consumers Buying Into Sustainability
on Bulider Online. Builder Online reports that "energy efficiency" garnered an 88 percent favorability rating among consumers. This reflects, I believe, a growing opportunity for green buildings to command higher rents and be more robust in a declining real estate market.

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Ok, so there is sometimes a great divide in law between the corporate folks (in my office they live on the 20th floor and I see them sometimes rushing around to the printer, whatever that is) and the lit/reg folks that I pal around with. But I do know enough about corporate law to know that a big McKinsey study on how climate change mitigation measures will effect corporate valuations going forward matters. So here is the link to the study--http://www.mckinseyquarterly.com/Corporate_Finance/Valuation/How_climate_change_could_affect_corporate_valuations_2223_abstract

In short, failing to mitigate climate change will decrease corporate valuation and shareholder value. Which could have serious risk implications for the managers and directors in charge of those organizations. Which is another type of potential green legal risk.

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It looks like Europe, long the leader in climate change regulation may be getting cold feet on adopting the regulations because ofits financial impact, the Wall Street Journal reports here--http://blogs.wsj.com/environmentalcapital/2008/10/13/changed-climate-meltdown-has-europe-backpedaling-on-climate-caps/.

This is very bad news--and as shortsighted as can be. All estimates of the cost of climate change indicate that we will be getting a bargain by addressing the issues now and not waiting until catastropic effects--Tufts estimated in 2006 that the cost of climate change in the US alone would be as great as US$74 trillion. ase.tufts.edu/gdae/Pubs/rp/Climate-CostsofInaction.pdf

I hope that US regulators in the next administration will be less short sighted, but I fear not.

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Interesting article this morning on green as a haven in times of financial crisis, and an analysis of the green investment market over at Resnet. http://www.natresnet.org/resblog/post.asp?iPostID=7053

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Today I had the privilege of having lunch with Frank Baldassarre (President/CEO) and Bill DeFalco (EVP Chief Lending Officer), two of the founders of Philly's own sustainable financial institution, E3 bank. http://www.e3bank.com/

Bill and Frank were nice enough to tell me all about the E3 project so that I could share it with the readers of Green Building Law. And a very exciting project it is--Bill and Frank and the members of the E3 team are establishing a financial institution which not only invests in sustainable projects, but is itself a "triple bottom line" entity. E3, by the way, stands for "Building Sustainable Enterprise, Protecting the Environment, and Investing in Social Equity".

Frank has been in banking--traditional banking--for 27 years, and until two years ago, he had never heard of LEED. Once he was exposed to the green building world, though, it was like "having his eyes opened." he wondered why more people weren't building green and getting involved. "The lack of financial resources and instruments was a big reason people weren't doing it. We are setting out to change that."

Frank sees the opportunity for financial institutions to be a catalyst for change. "I see E3 not only as a resource, but as a facilitator of change on a large scale. Financial institutions have the ability to make change on a large scale. It will be hard to undo the damage to the environment without getting a lot of people involved."

E3 will offer financial products for sustainable projects, like energy efficient constuction and renovation. The instruments will be designed to "continually encourage people to take the next step in sustainability." For example, by providing discounted loan rates for projects which pursue higher sustainable goals, like LEED Platinum ratings, and using carbon offsets as loan collateral. In addition, E3 will provide value added services to their clients, like expertise in leveraging E3 funds with private and public financing sources.

E3 will also offer a deep green savings account where the money invested will go towards the greenest projects. According to Frank, "When you deposit your dollar, it will match your values."

Bill also mentioned the possibility of providing energy audit services to identify the best use of E3 funds.

Bill and Frank are veterans of the banking industry, but they have a lot of green experience behind the E3 project. Sandy Wiggins, the immediate past chair of the USGBC, is the Chairman of the Board of Directors of E3, and Jim Lutz, Senior Vice President of Development for Liberty Property Trust, David Berry, Co-founder of the Sustainable Water Resources Roundtable, Jackie O'Neil, winner of a 2007 Philadelphia Sustainability Award, Joyce M. Ferris, Founder and Managing Partner of Blue Hill Partners LLC, Judy Wicks, Owner and Founder of Philadelphia's 25-year-old White Dog Cafe, and Gavin Kerr, an experienced health care veteran are all board members.

Throughout lunch, Bill and Frank expressed their optimism for how E3 can change the financial industry and the world by aligning it to the triple bottom line. Frank noted that the single bottom line had not been working well lately for the financial industry, giving the example of the sub-prime lending debacle. If the financial instutitions had taken into consideration the social equity of what they were doing, perhaps it would not have happened.

As Frank says, "The more you learn, the more responsible you become for your actions."

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Cherokee Investments, which is "a private equity firm specializing in brownfield cleanup and sustainable redevelopment", released a report on its sustainable projects yesterday, available at http://www.cherokeefund.com/ (article at http://www.marketwatch.com/news/story/cherokee-report-highlights-its-investments/story.aspx?guid=%7BD55BC51C-630D-4C15-B3AC-A01C7D4D53A9%7D&dist=hppr).

Although the report does not provide hard numbers on their projects, it does highlight some of the community benefits of their projects--like transit oriented development and provide a succinct set of ideas for pursuing sustainability through real estate development.

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Two articles this morning brought to mind the the classic urban theory that the density of urban environments creates cross-pollination and agglomeration benefits. GreenBuildingsNYC had an article about four closely located green businesses in New York City's Lower East Side http://www.greenbuildingsnyc.com/2008/03/05/the-lower-east-side-nyc%e2%80%99s-emerging-green-retail-district/ and another about a proposed green industrial park http://www.greenbuildingsnyc.com/2008/02/29/new-york%e2%80%99s-first-green-industrial-park-breaks-ground-on-long-island/ .

Essentially, the argument goes like this--cities are places where people are densely packed together. As a result of the clustering of people and businesses, innovation increases and there is a benefit in human capital externalities (ie more businesses, more jobs, more money, etc.). If it all seems a bit esoteric, think about fashion. You can get a lot more ideas about what to wear to work on the subway in New York City than alone in your car on a suburban commute.

The same concept should work with green businesses and green building--the more of these entities grow up in a small geographic region, the better they will be able to feed off one another and innovate. This is a good argument for local government incentives to stimulate green building and businesses. One green building is good, but a cluster of greeen buildings with workers in green businesses will foster more carpools, more sharing of ideas, more emulation--in short more innovation which will lead to the afforementioned human capital externalities. With the growing concerns over a faltering economy, fostering dense clusters of green innovation is one way to combat the tide.

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Good article in the Boston Herald--http://www.bostonherald.com/entertainment/lifestyle/view.bg?articleid=1069349

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My Sunday perusal of the New York Times uncovered a very nice piece on the unintended consequences of legislation brought to you by the same guys who wrote Freakonomics, available here http://www.nytimes.com/2008/01/20/magazine/20wwln-freak-t.html?_r=1&ref=magazine&oref=slogin. The gist of their argument is that beneficial legislation often as the unintended consequence of deterring the very action the legislation was designed to provide--like the Americans with Disabilities Act reducing employers hiring of disabled workers.

The EPA and the Energy Information Administration (EIA) published analyses of Senators Arlen Specter (R-PA) and Jeff Bingaman's (D-NM) proposed "Low Carbon Economy Act of 2007″ (S. 1766), and declared that the impact on economic growth and prices would be "modest." Full articles available at Sustainablog, here http://sustainablog.org/2008/01/21/analyses-finds-law-would-cut-carbon-with-modest-impact-on-economy/.

What the bill and the analysis by the EPA and EIA fail to take into consideration is that the reliance of the Low Carbon Economy Act on carbon recapture and nuclear power has the potential to cause vast unintended consequences for the environment and for the economy. For example, a nuclear plant meltdown would have untold environmental cost and economic cost. Carbon capture technology can extend the use of coal fired power plants and the development of new coal fired power plants when such plants might otherwise be replaced with more sustainable forms of energy.

Similarly, green building legislation which is hastily drafted and passed has had embarrassing and counterproductive results. For example, the Las Vegas green building tax cut that threatened such a strong impact on state tax revenue that it had to be hastily rescinded. http://greenlaw.blogspot.com/2007/07/what-happens-in-las-vegas.html

For legislation to be successful in promoting positive environmental change, legislators need to look beyond the obvious and consider the unintended consequences of their actions. One way of doing so is to correctly articulate the desired outcome, and to ensure that the legislation works to promote that goal.

For example, the stated goal of the Low Carbon Economy Act is to "To reduce greenhouse gas emissions from the production and use of energy, and for other purposes." Is this really an accurate assessment of the purpose of the legislation? The purpose was more likely to preserve the environment for future generations by reducing greenhouse gas emissions. Using nuclear energy and coal will reduce greenhouse gas emissions, but it will not necessarily preserve the environment for future generations by doing so. Therefore, the first step to strong beneficial legislation which avoids unintended consequences is to articulate a valid purpose and confirm that the mechanics of the legislation works to positively promote the end goal.

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Individual green buildings are important, but the long term goal should be to develop sustainable communities. A new report by the Price of Wales' foundation demonstrates the economic and social value of walkable, mixed use and mixed income communities. The report is available here http://www.princes-foundation.org/index.php?id=8.

Among the most interesting analyses is a comparison among new urbanist communities in different supply and demand markets. The report concludes that the new urbanist model "appears to provide the greatest value enhancement where development is taking place in a moderate demand market." However, it records a 30% premium for the new urbanist community in a high supply market, which may be an even more important conclusion.

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Today Wells Fargo Bank announced that "it has surpassed the $1 billion mark in loans for Leadership in Energy and Environmental Design-certified buildings. " according to the Milwaukee Business Journal. See full article here http://milwaukee.bizjournals.com/milwaukee/othercities/eastbay/stories/2007/07/16/daily47.html?b=1184558400^1494032

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Building Green had an interesting post today about Green Financing organizations. http://www.buildinggreentv.com/blog-location/workshop-home/945

In addition to financing, of course, insurance is another key component in effective green building. Fireman's Fund has a product called Green Gard. http://www.firemansfund.com/servlet/dcms?c=business&rkey=437 In addition to providing insurance specifically for green buildings, it allows insureds to rebuild green in the event of a loss.

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Another good article on the financial benefits of green building. http://www.theglobeandmail.com/servlet/story/LAC.20070717.PRPROPERTY19/TPStory/Business

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Today's topic is money. One of my collegues recently told me that until developers see profit in building green, they will not be interested. It appears that day has come, and that REITs and developers are beginning to respond.

The New York Observer published an article on June 26, 2007 about the new Bank of America tower in New York City, which is striving for LEED Platinum. The interesting thing about the article is the dramatic premium developer Douglas Durst is getting for his office space. The Observer article states "Asking rents for each [remaining] floor will start at $185 per square foot annually, a source said, which are among the highest asking rents in any American office building ever. Average asking rent in Class A office space in midtown is $70 per square foot, according to the brokerage Cushman & Wakefield." The possibility of getting a 38% premium will certainly attract the attention of developers considering embarking on new projects.

A study made available today entitled "Responsible Property Investing: A Survey of American Executives" (available at http://www.uli.org/AM/Template.cfm?Section=Research&CONTENTFILEID=27159&TEMPLATE=/CM/ContentDisplay.cfm) explores the interest of REITs, developers, pension plans and other institutional investors in socially responsible property investing.

The study revealed that about 57% of survey respondents were implementing management strategies around conservation (promoting energy conservation, water conservation or recycling in your assets), and 36% were investing in Green Buildings. The sample size was small, only 189 respondents, but it reflects a growing interest among real estate investors in sustainable development.

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