Two regulatory changes coming

No time to improve upon two excellent summations of upcoming rule changes regarding LEED and lead.

In the first, Green Building Law Blog summarizes the substantial changes and reinvigorated focus on carbon footprint in LEED 2009 at: LEED 2009–A Tweak or An Overhaul? : Green Building Law Blog. One excerpt caught my eye:

The reference standard allowed up to 2.2 gpm for these faucets so a change to 0.5 gpm was significant. Trouble is the International Plumbing Code mandates 0.5 gpm for lavatory faucets in public rest rooms anyway so these savings were illusionary for many LEED buildings. With the new rating system, this [water efficiency] loop hole is closed – the International Plumbing Code is now a reference standard. In addition, there is now a 20% water reduction prerequisite. The strategies we have been using to get 3 points will now just barely allow us to meet the prerequisite.

In the second, Jeff Echols tweeted about changes to EPA Regulations on lead paint. The immediate change is a new, more comprehensive brochure entitled “Renovate Right: Important Lead Hazard Information for Families, Child Care Providers, and Schools“. By 2010, additional training and certification will be required for all lead abatement projects, and several techniques will no longer be permitted. Curtailing the aerosolization of lead particles by requiring HEPA filters with sanders is one of the techniques affected. Additional information from Remodeling Magazine or from law firm Holland and Knight.

NAHMA LIHTC White Paper

I discussed the National Affordable Housing Management Association’s 2 page position paper on LIHTC stabilization yesterday. In general, I felt it accurately described the challenges (tax credits have no value, knowledge base and infrastructure at risk) but that it did not necessarily prescribe what is required for a full cure. Due to the collapse of demand, the only way to stimulate additional demand is to increase CRA requirements and perhaps accept credits as some type of collateral for TARP. Like shredding old bills, removing these credits from active trading might help reflate the market.

Fears of a growing LIHTC meltdown were echoed in an internal company call recently, in which it was disclosed LIHTC originations for 2009 are expected to be <15% of 2006. This is a pretty gutting forecast and I think it is fair to ask how LIHTC businesses and investments should be valued through 2012.

Regardless, please read NAHMA’s thoughts on stabilizing LIHTC and comment below.

Whither LIHTC Part 2

The National Affordable Housing Management Association (NAHMA) issued a 2-page ‘white paper’ this week, “Stabilizing and Restarting the Residential Tax Credit Marketplace”, which was sent to various Congressional chairmen and ranking members.

I can’t find the document on their website, which seems an odd restriction for building legislative report.

The report identifies several challenges to the Low Income Housing Tax Credit program (LIHTC) that are familiar to regular readers. These dangers include:

1. Inability to close deals in the pipeline.

2. The reduction in credit value (from mid-80 cents per dollar to low 70 cents per dollar) requires increased equity contribution from the developer.

3. A small market made 40% smaller by the absence of Fannie and Freddie.

4. Banks and other tax credit holding institutions have no offsetting gains and experience a 10% reduction in value [Note: the tax credit period runs 10 years per project] each year the credits go unused.

5. No investors want or need tax credits, harming rural areas in particular.

6. State agencies rely on new projects and fees to fund operations and in some cases, provide general funding opportunities.

7. A sustained drought [Note: unspecified but MFG thinks 2+ years] will lead to a loss of expertise, investor interest, and professional infrastructure.

Most importantly, there is a risk that very little affordable housing will be built before 2012. If you assume that the financial institutions that drove the tax credit market for 10+ years will not show income before 2010, their current losses should carry forward well into the first part of the next decade. When combined with the long lead time to design and apply for tax credits, the lack of new product will be acute.

Unfortunately, most of the solutions proposed by NAHMA address supply rather than demand. The abject lack of demand is the crux of the problem and why lenders, syndicators, and developers are being crushed.

1. Provide either government guarantees or backstopping to unfreeze the current market in Tax Credits. As noted above, tax credits’ values depreciate over time. With the current lack of earnings in most sectors of the economy, those credits that are trading are priced at deep discounts. With the imbalance in supply and demand, there needs to be some modification to the use of credits that will preserve an orderly market.

[Note: There seem to be 2 goals here. One is a Federal backstop that would undermine existing guaranteed funds that are enhanced in some way. Secondly, NAHMA does not offer a solution to the 'imbalance'.]

2. Use existing enacted Federal Housing Administration lending programs to provide low interest “bridge” financing to permit new development to continue in markets with significant needs for more workforce and rural housing. FHA insured financing can be used where the loans are structured to permit new and rehabilitated developments and provide an option to use Tax Credits to take out the loan within one or two five-year terms. Initial loans could be structured as five-year financing with one renewal and no lock-ins that would permit earlier conversion if market conditions permit. These loans should be underwritten and administered through the State Tax Credit Agencies. The bridge financing would be designed to allow the properties to move to full Tax Credit status easily. This could occur either during the loan period or at the end of the loan period. The implementation of these bridge loans and subsequent Tax Credit compliance should begin either at the point of conversion from the bridge loan or year six, whichever occurs first, with a ten-year compliance period. Regulatory and compliance policies and procedures should be revised to allow investors assurance on tax credit compliance as the bridge loan converts.

[Note: Many deals have blown up because either the syndicator could not take or lay off the credits or, in some cases, the bank has refused to close. The problem is that most of the deals are underwritten aggressively so that there's not much room for FHA to make a credit-worthy decision. Now if we considered the FHA to be more of a 'soft second' lender, that would not be a problem.]

3. Address current tax and Securities and Exchange Commission regulatory policy to stabilize the book values, pricing and price volatility of Tax Credits. With the bulk of purchasers facing uncertainty in how purchases of new Tax Credits would be valued, the market is illiquid, and purchasers are risk averse. Greater certainty in subsequent valuation is needed.

[Note: I don't understand this proposal at all. Tax credits only have value to an investor to the extent they offset gains elsewhere. They have a defined benefit period and cannot be carried forward. Under Mark to Market principles, unused credits (for current or future years) should be valued at their current market price. The problem is there's no demand for the tax credits, not that there is uncertainty about valuation.]

4. Review current tax and regulatory policy with an eye to improve yield on Tax Credits. Policies should be developed that will allow the Federal Housing Finance Administration to place all “written down” and “written off” credits held by the GSE’s and other institutions in conservatorship with the Treasury, and allow the Treasury to hold the credits to maturity. This will prevent a “fire sale” in credits from undercutting the market. Methods to allow viable but unprofitable banks to place credits with the Treasury should be explored.

[Note: This is a good suggestion and should be enacted in concert with an increase in CRA requirements; eliminating the tax credits held by Fannie and Freddie and other institutions that accepted TARP funding would dramatically increase demand for tax credits to meet CRA regulations. If there is no demand for a product at any price, you must create demand by allowing it to fulfill other purposes. The traditional driver was CRA, but with so many CRA-subject companies combining or disappearing, that demand has slackened. Increasing CRA requirements for the survivors or eliminating old tax credits, would be one way to stimulate demand for fresh credits. Of course, what is not clear is what to do about the investments made in earlier tax credit rounds and whether that money is gone or must be returned by the developer or syndicator.]

5. A primary goal is to create new markets for Low Income Housing Tax Credits supporting affordable workforce housing, which continues to be in short supply in all major markets. Expanding the market in Tax Credits will permit expanded production both in the new construction and rehabilitation markets. Modifying current regulations to permit expansion in the market for Tax Credits is absolutely essential. 

[Note: Providing new and renovated affordable housing is the most important policy goal. It is not clear that the tax credit program can meet the demands for this product in the next 18-60 months. Ultimately what advocates of affordable housing want is more and better housing regardless of the funding source.]

Three points toward a trend

Galley Eco Capital fleshes out a recent NYT article on pension fund investments in sustainable buildings. Noting that the article said little about groups such as CERES or Business for Social Responsibility, GEC recommends that general partners have some information about their portfolio’s sustainability at the ready.

Without providing a timeframe, GEC says simply ‘soon’. Given the hellacious market conditions, most GPs or LPs are probably just trying to keep above water (or no more than 3″ below the surface). Certainly I’ve become much more skeptical of GP claims about pending payments and improved performance. Until we finish triaging portfolios, I’m not sure we will see an increase in portfolio reporting requirements. Once that process is complete, probably by 2Q 2009, we’ll need to start working on financial stabilization or exit strategies for properties. At that point, I think there is a tremendous role for sustainable analysis to play.

In that vein, here are a couple of articles inspired by recent postings at Globest.com. Globe Street is terrible about their paywall, so I’ll link directly to the source material where possible. CalPERs announced on November 30th that its real estate partners reduced energy consumption in 2007 by 13%, partway toward their goal of a 20% reduction in energy use by 2009. The primary vehicle is the Hines Green Development fund, which currently has $725mm for promotion of sustainable real estate holdings. The methods identified by CalPERs are standard steps any responsible owner should be taking such as low-flow and sensor-operated fixtures, recycling programs, and preemptive, onsite water treatment.

The more important (and actually reported) article discusses a new CA law mandating utilities to maintain an Energy Star Portfolio Management Database for all non-residential properties in CA. Contained in Assembly Bill 1103:
1) Requires electric utilities, beginning January 1, 2009 and upon the written request of the owner or operator of a nonresidential building, to provide the owner or operator monthly energy consumption data for the building in a format that is compatible for uploading to the US Environmental Protection Agency’s (EPA) Energy Star Portfolio Manager.
2) Requires electric utilities, beginning January 1, 2009 and upon the written authorization of a nonresidential building owner or operator, to upload monthly energy consumption data for the building to ESPM.
3) Requires an owner or operator of a nonresidential building, on and after January 1, 2010, to disclose to a prospective buyer, lessee, or lender the ESPM benchmarking data and scores for the building.

Writes Globest’s Brian K. Miller:

One year from January, anyone looking to buy, finance or lease an entire building will be entitled to obtain the building’s Energy Star Portfolio Manager benchmarking data and ratings. The Energy Star program rates buildings on a scale from 1 to 100 against other buildings within its class. Buildings within the top quartile will be eligible to be recognized as an EPA Energy Star Building and can use the “Energy Star Label” to communicate its energy efficiency to tenants, lenders, and other stakeholders.

Obviously buyers and owners do this kind of comparison already, but with the addition of the Energy Star scoring, all parties will be in a position to both analyze and act upon energy efficiency opportunities rather than passively accept the consumption rates.

My East Coast bias won’t allow me to say that most initiatives begin in California, but by sheer market size, these requirements or requests for information are likely to start moving east in the next 18-36 months.

Trammell Crow Residential settles ERC suit

Multifamily Executive has the latest update on the discussions between Trammell Crow Residential and the Equal Rights Center. MFG mentioned this in an earlier post.

The DC-based Equal Rights Center, which focuses on Fair Housing and ADA compliance, sued Trammell Crow Residential in June 2008. In a September 2008 article in MFE, prior recipients of ERC actions were criticized for quickly settling. “From an industry perspective, the Archstone folks didn’t raise any of the legal or factual issues or put up a fight. They entered into a settlement that many of the companies in the industry said they would never do.”

Trammell Crow Residential agreed to fund a 10-year, $1.5mm program with ERC to aid multifamily developers with compliance issues. Additionally, Trammell will rehab 4,500 units by improving accessibility.

(Via Multifamily Executive.)

Whither LIHTC

Although the articles don’t leap out at you, Affordable Housing Finance is providing some nice summaries of this week’s action at AHF Live in Chicago.

One industry roundtable, Where Does the LIHTC Industry Go? identified some significant challenges to the LIHTC program and the business models of affordable developers, syndicators, and financiers. The hard truth was highlighted by Kansas City’s Lee Harris of Cohen-Esry, “We’ve got equity for many developments that is simply not available. Where equity is available, pricing is down 20 cents or more.”

So how did we get here? The shortest answer is that for the past several years, the early LIHTC (Low Income Housing Tax Credit) non-financial investors disappeared and the GSEs and financial firms came to dominate the $10b market. In addition to the monetary benefits of the tax credits, the commercial banks could meet CRA (Community Reinvestment Act) needs and ‘green’ their portfolios by throwing a few ducats at Enterprise’s Green Community Programs (a laudable goal) and at those developers who anticipated the direction of the larger market. So long as the Fed enforced CRA and profits required tax credits, the industry hummed.

Some of you may have read recently that’s no longer the case.

Losses on other operations will be carried forward to offset profits (if any) over the next two years. With the early Fall panic in the banking industry, the Fed basically waived CRA requirements for urgent acquisitions. That may be temporary, but the carry-forward losses for 2007-09 will keep the commercial banks out of the market until 2010-11 at the earliest.

My firm essentially stepped away from the syndication business back in 1Q 2008. We had been one of the largest syndicators and debt originators of affordable housing in the country, but between stress placed on warehouse lines (where we stuck projects before selling them to the fund investors), wildly changing construction costs, and the inability to finance marginal deals with tighter credit standards, we are done for a while. I think we’ll limp through 2009 doing agency debt deals, but the equity side is not very busy right now. I don’t think they’ll ramp up again until 2010-11 at the earliest.

So the lack of demand for our product (tax credits) means that there is no supply for developers. Builder magazine highlighted the pain in the SFH market, but I promise it extends to multi-family developers as well. Unfortunately, since LIHTC funds an outsize portion of the affordable housing in the US, this means that there will be very, very few deals completed over the next several years. The shadow market of failed condo projects, REO homes, and aging market rate properties may take up some of the slack, but we are facing several years when no new affordable product is created or rehabilitated.

Which gets us back to the initial question: Whither LIHTC?

I don’t know yet. We are facing several bad years and the collapse of stalwart investors means that the entire program may need to be rethought. I’ll leave that for another post.

For those interested in the history of LIHTC or the Green Community Program, Enterprise provides an excellent summary. The NYT also has a nice summary of the challenges faced by Jonathan Rose even in the oddball NYC market.

Confidence in Apartment Sales, Credit, Even Occupancies Declines, NMHC Reports

NMHC just posted their quarterly survey of apartment market conditions. Of the 70 respondents, 43 (61%) felt that conditions were looser (higher vacancy, lower rent growth) than three months ago. An additional 20 (29%) felt that conditions were unchanged. The number of respondents who felt conditions were worse (looser) jumped from 35% to 61% from the prior quarter and from 26% from the same period in 2007. Nearly 60% acknowledged that current credit conditions had a material impact on current and planned business activities.

Equity and debt availability (or its perception thereof) was at the lowest confidence in over 10 years. Unable to read this in table form, I threw together this quick graph for further analysis. Looking at the history of the survey (50 is neutral) sentiment for debt and market tightness moved inversely until October 2006 when everything fell of a cliff.

The survey measures investor sentiment so it imperfectly reflects debt and equity availability. The Q2 MBA survey of commercial and multifamily originations has more quantifiable data. In that survey, commercial and multifamily originations were down 63% over Q2 2007 and fell to their lowest level since Q1 2004.

Quarterly reports from Q3 2004 onward.

Echoing this falloff was an item I saw in MBA Newslink on October 30th providing this summary of an RBC report:

“Fannie Mae and Freddie Mac continue to finance 80 percent to 90 percent of multifamily transactions across different regions of the country, supplemented mostly by local and regional banks, RBC reported.”

I’ll guess that any non-conforming deals simply cannot be done at any reasonable LTV these days. I’m still looking or the RBC report but please send it along if you have a link.

HT: Multifamily Executive

Spreading and Refining Sustainable Guidelines

Lots of discussion about the increasing use of sustainable guidelines and controversy over the refinement of these same guidelines. There’s also plenty of anecdotal comments about what the current real estate recession might mean for green building here in the US. Better and more complete coverage can be found at:

1. Jetson Green

2. Building Sustainability

3. Building Green

4. Green Building Law Update

So while others talk about spreading, revising, and postponing, here are two ways to keep track:

1. The new AIA white paper, “Local Leaders in Sustainability”

2. The original clearinghouse, Database of State Incentives for Renewables & Efficiency (DSIRE)

HT: Facilities Net

Software to measure carbon footprints

Apparently this is shout out to Greener Buildings day at MFG. A few weeks ago they carried an article about TREES, a new program from Tririga, which helps owners analyze the environmental impact of their buildings.

I’m not entirely sure how easy this is integrated into residential buildings, but I found this comment from George Ahn, CEO of Tririga, to be very telling:

“There is regulation coming — whether its in the form of a carrot-and-stick as to tax credits and penalties or something else — and at the end of the day (businesses) are going to need to prove where you are and what you’re doing.”

TRIRIGA Markets System to Measure, Reduce Carbon Footprint of Buildings | GreenerBuildings: “”

(Via Greener Buildings.)

Affordable, modular projects in Tacoma and Seattle

It’s modular construction day here at MFG. While looking into some projects similar to Raines Court, I ran across an article about a multifamily project in Tacoma via Green Building Elements. According to their information, the 110-unit property will be a mix of 60 LIHTC units and 50 ‘affordable townhomes.’ Per the News-Tribune, it appears the townhouses will be for sale product.

Absher Construction, which is serving as contractor, estimates the total project cost at about $23mm. At $209,000/unit, that seems high, so I’ll keep digging. The Tacoma Housing Authority has authorized about $8.5mm in bonds, so the total cost may be much closer to that figure. Construction is expected to be complete by October 2009.

The support from the News-Tribune columnist lays out a very good response to NIMBY-ism and should inspire others who battle this scourge:

“The overall project, will be environmentally friendly and, as Mirra likes to say, lovely.

So, why should we trust him?

This housing authority has demonstrated good faith with its residents and its neighbors.

It brought a neighborhood representative onto the design team.

It paid part of the cost for the traffic light the city installed when it reconfigured the problem intersection at 64th Street East and McKinley.

One objector said the dense development would overburden fire services and be a fire trap. But there’s a new fire station in the neighborhood, and Hillsdale’s site design assures easy access by emergency vehicles.

The housing authority has worked with the Tacoma School District, which says nearby schools can handle the new kids in the neighborhood.

The housing authority and city will improve, and install sidewalks along, the deplorable stretch of 60th Street East bordering the new homes. It will have on-site parking.

Opponents said bringing subsidized housing into the neighborhood would devalue existing homes. The 50 town houses will sell for about $200,000, well in line with values in the neighborhood.

And then there were the charges that the people living in the 60 subsidized rental apartments would bring crime with them.

Salishan, the housing authority’s 1,200-home redevelopment on Portland Avenue, is the rebuttal to that.

It’s safe. And it’s lovely. We can expect the same standards at Hillsdale Heights.”

One more project from the Seattle-Tacoma area.

Unico Properties is planning a 66-unit project in Seattle’s Queen Anne neighborhood. Built by Guerdon, the same firm involved with Hillsdale Heights, the project is expected to start delivery in late 2Q 2009 after a 9-month construction schedule.

This is not a LIHTC deal, but the unit mix is what you would expect for urban infill, mostly 450sf studios and 525sf 1 bedrooms.

The Times had a much longer article in May 2008, which included interior and exterior shots of the proposed units. Tip for Unico: either take your own architectural shots for publication or replace the dead vegetation and paint the panels something besides ‘aggressive bland’. The prototype interior is sandbagged by that horrible exterior.

http://www.unicoprop.com/documents/news/2008/052708%20Inhabit%20forming.pdf

Affordable housing from shipping containers

Jetson Green calls our attention to a new venture that turns shipping containers into affordable housing.

For those who are new to container architecture or wonder about the size, they have been used by the US Army, building contractors, and relief organizations for short-term office or housing for many, many years. Two lengths are generally offered, 20′ or 40′ long, 8′ wide, and either 8’6″ or 9’6″ high.

A new group, the New Mexico-based and for profit PFNC has built a demonstration project and hopes to build as many as 3000 units annually. As this article from Fabricator makes clear, shipping container architecture has a lengthy history:

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2006/06/16/carollloyd.DTL
http://www.nytimes.com/2004/08/08/weekinreview/08south.html?ex=1249617600&en=a21ed9a9e345ad96&ei=5090&partner=rssuserland

Looking at the PFNC floor plans (single and multifamily), my first concern is ventilation. The plan is a rough shotgun-style home but I wonder if the door openings are sufficient to provide good ventilation. Certainly the placement of the kitchen and bathroom in the center of the unit would require some type of mechanical ventilation in a multifamily configuration. I would add that the full-size appliances, while sensible for long term, barrack-style housing, take up an extraordinary amount of space and eliminates public space within the unit.

More than anything, the project reminded me of Raines Court, by the Peabody Trust. This fascinating 61-unit, 127-module multifamily project was constructed in 50 weeks at a North London infill location. Many units consist of two modules (one service, one sleeping), which arrive fully built and ready for installation into the skeletal core.

http://www.access-steel.com/Dev/Discovery/LinkLookup.aspx?id=SP026&orfl=en

Using a similar model, the PFNC design could be expanded to provide a dogtrot-style design of two containers separated by a breezeway to provide greater ventilation and a larger social area for residents and their neighbors.

(HT: Jetson Green)

Energy costs of open plenum and dropped ceilings compared

BD + C ran a nice summary of a study comparing the construction and heating costs of open plenum with dropped ceiling systems in retail and commercial settings. The Ceilings and Interior Systems Construction Association (CISCA) conducted the study.
[Note: For those who don’t traffic in HVAC jargon open plenum means you can see the vent work (think warehouses) while dropped ceiling means the ceiling is hung off of the bottom of the upper floor and all the mechanical systems are hidden (think law office)]

Although construction costs were cheaper for the open plenum design regardless of building type, the energy savings generated by the dropped ceiling system generated a payback period of 5 years in commercial buildings and as little as 11 months for food stores.

I’m a little surprised at the stark energy savings, but when you consider that you’re heating and cooling perhaps 20% more volume in an open plenum system it starts to make more sense. In a Memphis clubhouse project, we’re going with open plenums, but that’s largely because we’ve installed some passive cooling designs that would be obstructed by a dropped ceiling system.

Open Plenum v. Dropped Ceiling — CISCA Study

NYC affordable housing goals

As a one-time Manhattanite, I never actually thought they’d come close to reaching the goal. I knew the city could always get the density, but the sclerotic nature of the Buildings Department (late 90s), truculent community boards, and high hard costs would seem to have been insurmountable goals. On the other hand, I did meet some folks from local CDCs who were able to build for about $100 psf. When you’re busy building high rise luxury condos at $300+ psf, $100 psf seems like a dream world.

Anyway, the Mayor and all the many contributors are to be congratulated for progress to date.

Officially known as the New Housing Marketplace Plan, the plan began in July 2003 with a 65,000-unit goal. It was expanded in 2006 to 165,000 units.

About 30 percent of the units created or preserved have been homeownership units, including single-family homes and condo units. Of the 17,109 homeownership units, there have been only three foreclosures so far, affecting a total of five units.

Affordable Housing Effort Reaches Halfway Point – City Room – Metro – New York Times Blog: “”

Future directions of green building policies

New (to me) Green Building Law Update begins a discussion about a potential compromise between the “Efficiency Now” and the “Drill Now” Congressional cohorts.

Entitled Green Building an Election Issue?, it posits that Congressional action could come sooner than expected

“One factor that has significantly increased demand for green building is government regulation that requires green building strategies.’So far, GBLU has focused green building initiatives at the city level.’While there has been some federal green building legislation, GBLU anticipated major federal green building legislation would emerge from Congress in 2009. ‘It now looks like federal green building mandates could be voted on before the 2008 presidential election ever occurs.’

If you read the (in)famous article “LEED is Broken” at Grist, you start to understand the multitude of conflicting, amorphous, or just empty goals of some of this legislation.

I think this arises from two problems:

1. Building types have various energy/utility usage amounts, patterns, and needs.

2. The benefits rarely accrue directly to owners, and must/should be passed through to building owners in one form or another.

I think that 1. will be dealt with largely through owner-driven initiatives and industry guidelines if the regulations allow for some flexibility among usage. I’m very encouraged by the work done by NAHB on the residential green building standards (http://www.nahbrc.org/technical/standards/greenbuilding.aspx). Nevertheless, the type of investment is likely to be high ROI and low payback period initiatives like CFL/LED usage, more careful purchasing for cap ex, and some increase in energy modeling. As a counter-example, I’m not putting Energy Star appliances into many of my affordable housing units because the economics don’t work. The improvements made to even the baseline appliances over the past 10 years is so substantial that the extra money for Energy Star just doesn’t make sense. I’ll try to get some actual figures shortly.

Problem 2. is a larger, more difficult problem that may inhibit systemic change. Stormwater, for example, does not always or easily benefit a land owner. In Arlington County, VA, we can get a 1:1 reduction in stormwater detention if we create a green roof, but in many locales, those types of incentives do not exist. Using graywater is a good solution in some places, but for urbanized development, there’s not always a place to put the non-potable water. I worked on a hotel/office LEED project in Rockville, MD and we had no place to offload the graywater generated by the hotel because the site was so intensively developed. So long as the direct owner benefits are tangential to the societal benefits, very little will change.

For a similar conundrum, look at programs designed to scrap older cars and reduce the amount of CO and NOx released in metro areas trying to comply with Clean Air Act regs. In this example, the driver benefits directly by receiving money to buy a newer car and the locality benefits from reducing the number of outsize polluting cars on the road. It takes direct intervention like this to realize the larger policy goal of reducing air pollution. (http://www.tceq.state.tx.us/implementation/air/mobilesource/vim/driveclean.html)

(Via Green Building Law Update.)

State level treatment of renewable energy

EERE produced a document about 18 months ago summarizing the state-level incentives for renewable energy. It’s a little far afield for me, but makes an essential point that the policies are varied, conflicting, and frequently internally inconsistent.

Key sentence from the executive summary: “At a minimum, definitional clarity should be sought.”

Good policy requires good science. Understand what you want to achieve, understand the science required, then write the statute. I’m looking at you, DC Green Building Code (and here).

http://eetd.lbl.gov/ea/ems/reports/62574.pdf