Could these 7 changes save PACE?

Greentechenterprise proposes 7 changes to PACE to ‘save the program’. I’ll have my own ideas shortly, but these are worth discussing:

1. Eliminate the Loading Order. The loading order requires that the owner show that energy efficiency retrofits reduce power consumption by 10 percent to 20 percent in many cases before PACE can be used to pay for solar.

2. Skip Residential PACE for Now.

3. Limit the Types of Repairs. If cutting out homeowners is too politically risky, how about this tack? Limit the size of PACE loans — to say, $15,000 for homes measuring 2,000 square feet or less — and circumscribe the types of repairs that can be undertaken.

4. Make PACE Debt Junior.

5. Threaten Even More Stringent Financial Controls.

6. Change the Investment Tax Credit.

7. Advertise. In the three weeks that San Francisco’s PACE program was up and running, the city received 33 applications and rejected 13 for financial issues. Twenty were completed and one got approved, according to Rich Chien, who runs it.

One in three weeks. Surely some word of mouth could help.

via Seven Ways to Save PACE : Greentech Media.

News: WBJ summarizes LEED v3

The Washington Business Journal provides a quick summary of changes in the new LEED 3.0 standard.

The standard implements and expands upon a few items I’ve written about before, specifically “sustainable sites” as part of a post, “Where does your life take place?” and “Needs more data”.

From an operational perspective energy tracking and reporting requirement (LEED requires reporting to the USGBC for 3-5 years) is the most important improvement from prior versions. Tracking and analyzing energy usage, comparing to baseline, and looking for additional efficiencies should be the most lasting legacy of this LEED version. While the reporting requirements have invited animated discussions, using energy analysis to improve LEED and all building science provides the path toward cost savings and greater loan proceeds (two items close to any developer’s heart).

I’ll have a short post on additional operational implications shortly.

Operations: Capturing rainwater, reusing graywater

Way out West, water use issues are much more pertinent than they are in the East. Well, maybe. [National view from Drought Impact Reporter.]

Regardless of location, water usage will be reduced through legislation, co-option, construction, or consumer choice.

To help us along, Multifamily Water Systems appears in the May issue of Builder News to provide definitions, discuss existing technology, and identify current and proposed legislation. It’s a strong article that covers a lot of ground.

Where should you look for this reusable water? On your structure, upon undeveloped land, and within the units:

More land use changes, VA nixes cul-de-sacs

Last week, Virginia announced it would no longer accept cul-de-sacs in the state highway system. Most intriguingly for developers was VDOT’s connectivity standard, which compels localities to complete linkages between neighboring parcels even if land usage is different. Much, much more is detailed at Greater Greater Washington and via WAMU’s Kojo Nnamdi (iTunes). VDOT Sec. Homer highlights slower speeds, improved connectivity (for residents and emergency vehicles), the inclusion of sidewalks, and reduced paving (for better stormwater management) as justifications for the regulatory revisions.

[Source: Millicent Bystander, flickr.com]

What’s particularly interesting about the connection requirements is that it should increase the accessibility of retail centers to surrounding neighborhoods by multiple means of transit (primarily auto and pedestrian). It will be interesting to see if some of the land use changes highlighted by Galley Eco come to pass more quickly in Virginia.

As a resident of an urbanized area of Northern Virginia, this is welcome news. I also suspect that when combined with a greater focus on reducing car use, Walkscore (see comments for how the NYT fumbled its citations), new funding priorities for HUD and DOT, and most importantly, new lending practices, we will start to see a long-term shift in development patterns over the next 5-20 years.

This is a fascinating real estate topic, so expect more posts.

[Note: For more info on street grid designs, see New Urban News.]
Update: VDOT began public hearings on the connectivity standards in early 2009. Charlottesville Tomorrow recorded this hearing in April.

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.

Green Underwriting Standards

Despite actively looking for these over the summer, I somehow missed the release of the National Green Building Investment Underwriting Standards.

The product of over 18 months’ work, and developed using ANSI-standards, the heavy lifting was done by (among others) Dan Winters at Evolution Partners, Mario Silvestri at Wachovia, and Steve Hoffman of Hoffman & Associates. Their work was backed by a blue ribbon collection of banks (if there is such a thing), NGOs, institutional investors, and governments. The project’s goal was to provide a financial context for various green and sustainable building initiatives. Designed to recognize increasing utility costs, tenant preference, and potential regulatory pitfalls, the Capital Markets Partnership “Green Score” should be used as an overlay within the existing underwriting framework.

More information is available in the actual standards and via Dan’s summary of the project, which appears in the 3Q 2008 Korpacz Real Estate Investor Report.

With college football taking a brief hiatus, I’ll try and read up on the standards and provide some additional feedback.

EERE Webcast December 17th on State Green Incentives

The Department of Energy’s Technical Assistance Program will present “State Policies to Encourage Green Building Principles” via webinar on December 17th from 3-4.15pm EST.

Presenters for this series are:

Brian Lips, a policy analyst for the North Carolina Solar Center at N.C. State University and conductor of research related to the Database of State Incentives for Renewables & Efficiency (DSIRE). He will give an overview of state green government policies nationwide.

Chuck Sathrum, program manager at the North Carolina State Energy Office will discuss the N.C. Utility Savings Initiative, a comprehensive program to reduce utility expenditures and resource use in public buildings.

Angie Fyfe: Fyfe, manager of the Greening Government Program at the Colorado Governor’s Energy Office, who will discuss how executive orders encourage state employees to reduce energy consumption.

Background material can be found in the Energy Office Project Briefs.

Past webinars covered energy efficiency in data centers, solar PV financing, energy efficiency in improving air quality, and several state-level initiatives.

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.)

PD&R Periodicals: ResearchWorks – Volume 5 Number 10

I’ve written before about Energy Efficient Mortgages. The folks I spoke with at HUD felt the product was not particularly successful for reasons such as lender acceptance, difficulty of estimating savings, and general disinterest.

Now comes HUD ResearchWorks to highlight a renewed push via the Housing and Economic Recovery Act of 2008. In addition to the usual ‘tasking of HUD’ laundry list, HERA 2008 increases the approved cost of the energy efficiency upgrades to 5% of the property value from the previous cap of $8000.

I am hoping to catch up with some more HUD folks either at NBM or at December’s EcoBuild and provide additional information.

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.)

Green contracts: learn from ADA/FHA legal history

In the prior post, I mentioned the potential litigation pitfalls that might arise in sustainable or green construction. Thrown in as an aside, it referenced this post at Green Building Law Update.

What spurred my thinking in that direction was an article in the September 2008 Multifamily Executive about the Equal Rights Center and its campaign to enforce Fair Housing and ADA regulations. The article, with the provocative title “Mission from God” describes the ongoing discussion between the ERC and the multifamily industry.

[Disclosure: I know several people at Archstone-Smith, Bozzuto, KSI/Kettler, and Trammell who were involved in these lawsuits. I know attorney Mike Skojec professionally.]

Shorter version:

ERC consulted with and then successfully pursued redress against major multifamily owners for violations of ADA and Fair Housing Act. Companies include: Archstone-Smith, Bozzuto, Avalon Bay (pre-Archstone), Equity Residential, Post Properties, CBRE/Trammel, Camden, Gables, KSI/Kettler. Archstone retrofitted 12,000 units for about $20mm. Multifamily industry very unhappy with ERC tactics.

I know many of the folks involved and I don’t ascribe any nefarious motives (for economy or otherwise) to them. These are all professionals with many, many years in the industry and no desire to be caught short on their compliance, particularly in their home markets. Nonetheless, as developers, there is a strong dependence upon architects and other consultants to identify all areas of non-compliance and deliver a compliant building. Unfortunately, architects and consultants don’t have the bonding capacity or other resources that these larger developers do.

The lesson for green or sustainable building contracts is that even where a clear legislative and regulatory history exists, as it does for ADA and FHA, honest but expensive disagreements will occur. Just Google “reasonable accommodation” and “housing” for a peek at the potential for green litigation.

Non-RE: Trucks and the Coase Theorem

Per the post below about future directions of green building policies and the disconnect between costs and benefits, the well researched and written Environmental and Urban Economics posted a timely item about trucks in Long Beach and the question of who pays for what benefit?

Los Angeles Dirty Trucks and the Coase Theorem: “We know that particulate matter in the air is deadly stuff. It increases death rates in the U.S and around the world. We know that it lowers home prices nearby. We know that older trucks produce high levels of this stuff. So, should older smoke belching trucks be allowed to drive on the roads? Clearly, this pollution externality story is a nice example of the Coase Theorem at work. Who should pay for the cleaning up of the trucks? The trucking industry (and thus the consumers of the goods being shipped) or the ‘victims’ who are exposed to the pollution under the status quo?

My UCLA colleague Arthur Winer has written an excellent background paper on the pollution issues;

http://www.scag.ca.gov/publications/pdf/2004/SOTR04_WinerEssay.pdf

The issue below appears to be whether dirty trucks operated by independent firms will be allowed to keep operating.

Los Angeles port, truckers group head for court

Rick Loomis / Los Angeles Times

Transport trucks head into and out of the Port of Long Beach. Truckers are suing over the clean trucks program, which is intended to reduce air pollution.
National association is seeking an injunction to block the clean truck program on grounds it imposes intrusive regulatory systems’ on motor carrier rates and services.

By Louis Sahagun and Ronald D. White, Los Angeles Times Staff Writers
September 8, 2008

The nation’s busiest port complex and the largest trucking association are expected to face off in federal court today to resolve a vexing question:

Who would suffer more from the landmark clean trucks program set to begin Oct. 1: the trucking industry or residents affected by toxic diesel emissions?

The answer could determine whether the program will launch on time — and whether massive expansion projects will proceed at the Los Angeles-Long Beach port complex, already the gateway for 40% of the nation’s imported goods.

The $1.6-billion program aims to improve air quality by replacing a fleet of 16,800 old, exhaust-spewing trucks with newer, cleaner models.

Beginning Oct. 1, pre-1989 trucks will be banned from the adjacent ports of Los Angeles and Long Beach. By 2012, only trucks that meet or exceed 2007 standards will be allowed entry.

The goal is to rid local skies of tons of carcinogenic pollution and particulates linked to thousands of premature deaths and respiratory ailments. Port officials hope the program’s launch will persuade environmentalists to stop raising legal objections to expansion projects designed to meet future growth at the ports.

The 2007 clean trucks program was crafted by environmentalists, drivers, shippers, city officials, community leaders and the ports after years of often contentious debate.

But now the American Trucking Assn. says it has discovered serious flaws with the proposal.

In an interview, Curtis Whalen, head of the association that represents 37,000 trucking companies nationwide, said his group was seeking an injunction to block the program on grounds it imposes ‘intrusive regulatory systems’ on motor carrier rates and services. He also argued that the program would ‘result in far fewer trucking companies being able to serve’ the ports.

Of particular concern to truckers is a Port of Los Angeles plan that would require formation of concessions, companies that would employ some of the thousands of drivers who currently operate as independent owner-operators.

Concession requirements are designed to give the ports — as landlords — enforcement powers over big rigs entering the harbor area. This, in turn, would give the ports influence over hiring decisions, truck maintenance and driver health insurance, among other issues.

‘Let’s be clear: We are not against clean trucks,’ Whalen said. ‘We are objecting to concession plans that are going to squeeze out a lot of existing motor carriers and thousands of independent owner-operators.’

A ruling from U.S. District Judge Christina Snyder, which could come as early as today, would have a direct effect on the communities of San Pedro and Wilmington, where residents have coped for years with thousands of big rigs rumbling through neighborhood streets and local freeways.

‘The trucking industry believes the status quo works fine,’ said Los Angeles Councilwoman Janice Hahn, whose district includes the Port of Los Angeles. ‘But for us, this is all about making sure that the dirtiest trucks calling at the ports are forever banned, and the creation of a stable workforce of drivers with health benefits and decent wages and well-maintained trucks.’

Janet Schaaf-Gunter, a member of the executive board of the San Pedro and Peninsula Homeowners Coalition, agreed.

‘This much is guaranteed,’ she said. ‘Each day we move forward without a change in the number of clean trucks on the road, we are killing additional people.’

However, the National Retail Federation, which supports the trucking group, worries that the concessions requirement and new fees will add more than $1 billion per year to cargo container costs for goods moved through the complex. These costs would come at a time, the federation says, that the retailing industry is ill-equipped to bear them.

For example, motor vehicle and parts dealer sales are down 5.8%, according to the federation’s monthly figures comparing this July to July 2007. Home furniture stores’ sales are down 4.7%, and department stores have seen their sales fall 2.6% during the same period.

The trucking association ‘raises very important questions about the port plans’ lack of consistency with U.S. statutes that also deal with the regulation of the pricing routes and services of trucking companies,’ said Erik Autor, vice president and international counsel for the federation. ‘These are important issues for many of our members who are concerned about both [clean truck] plans and, of course, about the rates they will have to pay.’

Environmental and health advocates contend that financial losses should not supersede efforts to battle the ongoing health crisis fueled by diesel pollution. State air quality authorities have linked 3,700 premature deaths each year in California to pollution from the transportation of goods — more than the number of people who die from homicide.

Martha Cota, 45, who lives less than two miles from the Port of Long Beach and who, along with two of her four children, suffers from asthma, hopes the association’s legal challenge is swiftly defeated.

‘Environmental rules should be very well designed,’ she said, ‘and they must be delivered on time so that we really do improve our air.’

louis.sahagun@latimes.com

ron.white@latimes.com”

(Via Environmental and Urban Economics.)

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