Insurance, by popular understanding, hedges against the risk of contingent loss. By varying pricing based on operations, materials, and design, insurance serves as a nudge to encourage lower risk profiles. In theory at least. We’ll leave unresolved questions about whether this risk reduction is always well reasoned or if you really get better pricing through these changes.

So it was unsurprising to read in Ceres’ new report “Risk to Opportunity” that insurers are moving from superficial PR “towards [thinking] more deeply and strategically institutionalized and embedded in the operations of companies.”

Climate change is becoming recognized as an issue of Enterprise Risk Management, spanning underwriting, asset management, and corporate governance.

One of the most constructive developments is more products and services focused on ensuring the quality of the customer’s energy or carbon savings efforts. These include performance insurance for renewable energy systems, coverage for green buildings that don’t deliver promised performance, and products that apply to carbon offset and trading activities. In all cases, loss-prevention takes the form of due-diligence, scrutiny of engineering assumptions, preventive maintenance, commissioning, measurement and verification, and other constructive interventions to help ensure project integrity and success.

Although released in April 2009, the report covers products existing or introduced in 2008. In many ways, the finding that some insurers were moving much faster than others led to the March 2009 action by state insurance commissioners to require that insurers reveal exposures and responses to climate change. How this will be enforced and what the ‘right’ answers are will be revealed when the responses are provided in March 2010.

[Note: The quote above was taken from an interview with study author Evan Mills with Climate and Insurance.org, an arm of industry advocate NAMIC, which does not like (really doesn't like) the new climate exposure mandate. Ceres retorts that "Insurance trade organizations remain relatively disengaged on climate change." Plus ça change, I suppose.]

Why does this matter? Because outside of government and its multiple layers, insurers and financial firms are best positioned to promote the systemic change in the built environment needed to achieve goals like Net Zero Energy, Architecture 2030, or multi-family specific programs like Greener Communities.

Insurers are perfectly placed to make the case for unifying “green” and “disaster-resilient”
practices across many domains (construction, energy, agriculture, land use), yet scant effort has
been exerted in this regard. It will become increasingly incumbent on insurers to demonstrate
the loss-reducing benefits of the green technologies and services that they reward. Loss-prone
infrastructure cannot be truly “sustainable”.

It’s worth recalling this recommendation from “Resilient Coasts”:

“Wise investing will involve asset managers understanding the impacts of climate change on their investments and managing that risk, especially in real estate, infrastructure and other financial instruments. Responsible banks will need to understand the levels of exposure within their investment and lending portfolios by incorporating climate risks into their due diligence.”

Change is coming in a thousand different ways from code changes, insurance, finance, builders, housing agencies, governments, and most importantly, residents. We’ll start addressing the financial world in short order.

Eighteen months makes a big difference as both data and awareness have increased as all participants recognize the necessity of accurate and actionable information. States like California require energy labeling, LEED now requires multi-year access to building performance, and the Federal government is getting into it, either through GSA’s Sustainable Design Program or through better use of existing resources such as HUD financial data.

Just as the brewmaster proclaims that Red Tick Beer “needs more dog“, I say that we need ever more data on building performance. We need building scientists, architects, builders, and engineers to better understand things like whole building design and sustainable construction (and waste) methods. In multifamily, we must understand not only the initial efforts of sustainability, but the ongoing need to consistently review the physical plant, operate sensibly, and dispose correctly.

Most importantly, however, we will need the financial world to come around. That means more information on operating expenses, projections for increased costs and an understanding that building sustainably means building differently. If underwriters and credit officers do not make the effort to understand how the regulation, construction, and operation of buildings have changed, then we cannot move forward with needed haste.

I’ll have more on the best bets to move forward in the next posts.

[Among the many recommendations GAO makes is that HUD collect more and better data about operational costs. The GAO recommendation does not highlight specific data to be collected, but using the LEED v3 "Whole Building Energy and Water Use" requirement: per page 19, it looks like it's just 5 years for LEED-CI. More to come on that.]

GAO wrote the report in part because “[HUD] spends an estimated $5 billion—more than 10 percent of its budget—on energy costs, either directly in the form of public housing operating subsidies or indirectly through utility allowances and contracts for assisted multifamily housing. [HUD] does not have the data necessary to understand the breakdown of these costs or the potential savings opportunities of green building for
many of its programs.”

HUD already provides resources and training and a very, very modest financial incentive to pursue energy efficiency. What I like about the GAO report is its emphasis on using NGO, regional and national sustainability measurements and cribbing the state-level LIHTC incentives for use in HUD projects. This would encompass water use reductions, sustainable material use, and indoor air quality improvement in addition to promoting energy efficiency.

GAO also reminds us that HUD can exercise financial levers: directly through debt financing, Community Development Block Grants, HOPE VI; and indirectly through its support for PHAs and Housing Assistance Vouchers. In addition, HUD’s Office of Policy Development and Research promotes building science and the advancement of durability, energy efficiency, and affordability of housing.

Unfortunately, standard who-pays-for-what conflicts arise in HUD’s relationships with local Public Housing Agencies (PHAs). Writes the GAO:

Some HUD programs offer incentives for energy conservation measures. PHAs receive funds from HUD’s capital fund that may be spent on energy conservation measures, but HUD officials told us that these funds are generally insufficient to cover both the up-front cost of many energy improvements and ongoing repair needs.5 HUD’s operating fund standard rules provide a disincentive to implementing high-cost energy improvements. According to HUD officials, a PHA’s annual operating subsidy is based in part on the prior 3 years of utility consumption, which would be expected to fall in the years following such improvements. This “3-year rolling base” policy allows PHAs to retain 75 percent of savings from reducing utility consumption over a 3-year period, but according to HUD officials, PHAs cannot retain enough savings over this short time to recoup the up-front cost of many large energy efficiency improvements such as high-energy-efficiency boilers.6

It should be noted that these large-scale sustainability initiatives can be met through the use of an energy services company (ESCO) such as Honeywell. Recent regulatory revisions by HUD have improved the processing of these contracts, allowing faster review and longer payback periods. Per the GAO, 195 ESCO contracts were in place in 2007, saving an estimated $50mm annually.

Overall, GAO provides sensible, affordable recommendations for further action. HUD should use third party mechanisms for efficiency benchmarking, collect sufficient information from Section 8 projects and residents, and emphasize (and reward) energy efficiency when awarding grants or in its various lending programs.

These recommendations could have a welcome and systemic impact upon all of multifamily construction, portfolio operation, and lending. We’ll talk more about this in subsequent posts.

The first article summarizes the traditional with a twist methods used by FirstCoast Homes to achieve Energy Star-ratings for all of its starter and move-up homes. Their efforts combine design, construction technique, and appropriate appliance upgrades, which limit the total cost to an estimated $1,000 per home.

[Note: As always, I try to bring additional value via hyperlinks. Take a look at all of them for additional information]

The 5 ways revealed to Builder:
1. Improve upon traditional methods through proper installation and 3rd party evaluation of various systems. Be sure to read this ode to traditional techniques from the February 2008 edition of EcoHome.
2. Build a tighter envelope through foam sealing penetrations, caulking baseplates, and use low-expansion foam around portals. These techniques and more reduce potential air intrusion “by about 30%,” according to FirstCoast. Duct blaster and blower tests ensure that the building is tight before the irreversible work begins. (Johns Manville believes 5-25% of ducted air is lost through leakage.)
3. Correctly install the right insulation by using a mix of foam around penetrations and fiberglass elsewhere. Make sure contractors install it right and protect it from crushing, moisture, and other damage during buildout.
4. True value engineering identifies areas to spend smarter, not just less. By reducing the number of windows, FirstCoast reduces the direct cost of windows, but also the size of the HVAC system, saving an additional $400-800 per house.
5. Identify other revenue sources by working with utility companies, and government incentives to reduce the cost of homes, appliances, and testing.

At sister publication EcoHome, green building consultant Mark LaLiberte highlights 5 common errors made in all construction:
1. HVAC ducting through unconditioned space needlessly reduces the effectiveness of your heating and cooling system. Put the ducts in soffits or between floors to maintain their ambient temperature. Research from WSU provides great detail on HVAC in conditioned spaces.
2. Tightened envelopes without intentional ventilation can cause stale air, odors, or moisture to accumulate. Install a whole house ventilation system to bring about 50CFM of fresh air 3-4 times per hour.
3. Improper flashing and drainage leads to moisture buildup and reduces the effectiveness of insulation and moisture barriers. Multifamily folks know all to well the hazards of moisture and mold growth, so this should be well-trod ground. For additional information, Freddie Mac offers a Moisture Management Plan to help identify sources of moisture build up.
4. Poorly installed/selected installation reduces energy efficiency and adds to costs (see above). Exposing it to moisture during the installation process can cause a cascade of additional systemic failures. Watch out for improperly insulated thermal bridges, particularly metal studs that have contact with exterior surfaces. This can be an unfortunate method of reducing the effectiveness of your HVAC system.
5. Excess waste leads to excess costs and can be offset by better reuse of construction materials but more importantly through increased standardization of all materials. All systems have a ‘commodity size’ and making use of these common measurements reduces the potential for waste and on the interior, unsightly seams.

1. Utne Reader’s “Green Renting Revolution” (January 2009) By the way, failing to include links in your article is just not acceptable in 2009.
2. Green Renter, provides a small (but growing!) database of self-selected ‘green apartment communities’ in major metropolitan areas. I think there’s still more work to be done, but additional information can be found courtesy of Sustainable Industries.
3. National Geographic (!) provides a smooth interface to some useful information at The Green Guide. The Home & Garden section shares useful information about household cleaners.
4. Apartment Therapy posts eclectic items on apartment living. One of their recurring features is a focus on small spaces. You can find more of this vein by using a tag search.
5. Planet Green has a multi-page discussion via one of their “How-to” guides. They include a helpful 10 point list of property tips. (additional How-to guides available)
6. Grist’s Umbra Fisk lists some ways to be a Greener Renter.

(Image by Peter O. Zierlein / www.peterozierlein.com)

In our townhouse, coffee grounds are sprinkled around exterior door and window sills to repel ants for an effective and pet friendly insect barrier.

Two weeks ago, Eric Corey Freed, author of Green Building & Remodeling for Dummies offered tips on a greener home to the New York Times. For “space reasons” the NYT only ran 5 of the tips, causing Joe Romm at Climate Progress no end of distress for highlighting impractical, overly simple, or questionable recommendations. Additional correspondence revealed that the NYT cut Eric’s list of 21 to a random 5. Leaving aside the somewhat heated and holier-than-thou storms that occasionally blow across the green world, Joe also embraced the “Can’t Someone Else Do It?”. He linked to, and critiqued, “100 Ways to Conserve“.

Taking just Freed’s 21, many can be used in a rental situation, including:
1. Insulate and turn down the water heater to 125F. (And use the vacation setting)
2. Reduce the amount of water flushed.
3. Replace incandescent bulbs with CFL.
4. Turn off unused lights and electronics.
5. Replace thermostat with a programmable model. Even on a 60 year old house with 80 year old wiring, it only took me about 15 minutes.
6. Request low or no VOC paints.
7. Caulk or seal around tubs and windows. Weather seal doors.
8. Install a low flow showerhead. I replaced one a few weeks ago.
9. Never buy bottled water again.
10. Install a ceiling fan (sometimes you can get one installed at lease renewal).

(Via Greenversations and Green Building Law Update.)

Image courtesy Tom Phillips, Seattle Housing Authority

Energy Circle’s “Interconnected House” (many good resources here)

Affordable Housing Design Advisor

Green Communities Projects

Seattle Housing Authority provides summaries of projects, including a presentation on their financial model and urban design.

Finally, I purchased ($12 at Target) and installed Waterpik’s EcoFlow 1.5 gpm showerhead this weekend. It took about 3 minutes to install from start to finish and provides excellent pressure by using outside air to improve water flow. I can certainly recommend these for multifamily installation.

The audio of Ms. Bourland’s presentation is now available, as is a PDF of the presentation. The technical details of the program were touched upon in the audio, but the PDF provides additional details on utility allowances (pp. 29-32) and costs for meeting Green Communities benchmarks (pp. 40-42).

The presentation reviews progress made through Green Communities, including the launch of their $40m green equity fund to build 500 homes in California. After focusing on grants and capacity building initially, the program is now providing performance details and equity funding for green affordable housing.

Summaries of funded projects.

First and foremost, choose a place to live that is located conveniently for your lifestyle. This means looking at where you work, entertain, and play. So look at a map and start figuring out where your life takes place. If you live in or want to live in a less car-dependent area, be sure to check Walk Score, a great resource for helping to determine how much of your life can be lived without a car.

[Note to owners/managers: Your marketing and leasing efforts should emphasize these benefits. Get to know and love Yelp, Outside.in, and other sites that help define your community. If you don't know what is going on around your property, it's impossible to convey that to your residents. If you can't name three things going on in the next three days, how are you going to convince a prospective resident that you live in a convenient location, that you have an active resident base, or that you're any better than the commodity down the street?]

Once you’ve chosen an area to live in, it’s time to start narrowing down the product types. We’ll get to that in the next entry.

Many of the improvements that homeowners can make can be easily made by renters. While you obviously can’t do anything structural (e.g. no new windows or a green roof), you should also carefully read your lease for proscribed activities. This might preclude changes to shower heads, replacing washer-type faucets with cartridge faucets, indoor composting, excessive caulking, or replacing appliances, there are many other things you can do to improve your sustainability profile.

Easy things to do are living near transit, shortening shower times, washing clothes with cold water only, and replacing light bulbs (not fixtures!) with CFL bulbs.
If you live in a home, it might be possible to
1. install a programmable thermostat
2. replace aerators (reduce GPM from 2.0 to 0.5)
3. flush with less water (other upgrades here).

If you live in an apartment, the following are easily done:
1. Air dry laundry (does not require outdoor drying)
2. Keep curtains and shades open to heat your rooms.
3. Remove window-mount AC units during the winter.
4. Speak to your landlord about installing ceiling fans.
5. Running dishwashers when fully loaded.
6. Set your fridge to 38-40F (4C) and the freezer to 0-5 (-15C).
7. Don’t use plug-in air fresheners. Open windows, sprinkle (then vacuum) baking soda, burn a beeswax candle, use oils + water spritzer, or a potpourri sachet.

We’ll have more ideas in coming weeks and always welcome suggestions.

(HT: The Green Your… blog)

Initially, his sentiment on green focused on the negative aspects: expensive, inconvenient, and difficult to do without professional help. I realized I am not doing enough to share my own message of Shades of Green. In our conversation, he quickly learned that going green is not only the big changes, but all the little decisions we make everyday.

I submit my resolution to you. This year, I will spread the message and teach anyone who will listen, and even some that won’t about Shades of Green. This year, I will move shades closer to the green I want to be.

The idea of Shades of Green is appealing, but following a discussion with a colleague earlier last week, we’re left with a question of why the perception remains “Green is too expensive.”

A recent post from 100khouse.com posits one theory as to why this perception continues to hold sway:

Most of the builders and developers reporting high premiums for pursuing LEED are still trying to build the exact same home they have always built. They are simply adding features to make that same house energy efficient, healthy and sustainable. This addition gets expensive. Rather than redesign the house that has been successful for them in the past, they add solar panels, geothermal systems, high end interior fixtures, extra insulation and other green features. The house gets greener. It gets certified, but it also increases significantly in cost. Since the features are add-ons and extras, the price rises as each one is tacked on.

The 100k house is an attempt by Philadelphia developers to build “a modern and “green” house for a measly $100,000.” The website has extensive information about their choices, challenges, and ambitions. It deserves a long look regardless of your property type.

Tailoring Recycling Programs to Reach Diverse Populations
(California Integrated Waste Management Board)

Setting up a Multi-Family or Apartment Building Recycling Program (document file from Massachusetts Department of Environmental Protection)

Recycling Program for Apartment Buildings
(Cooperator)

Recycling: Multi-family Properties and Recycling for Apartments and Condominiums (28-page guide from Arlington County, Virginia)

New York City’s Apartment Building Recycling Initiative (nyc.gov)

Talking Trash: Launch a Multifamily Recycling Program
(Multifamily Executive)

Panelists Explain How to Properly Run a First-Class Recycling Program (Multi-Housing News)

Multifamily projects typically have a difficult time promoting recycling because of resident turnover (inconsistent resident education), inconvenience (inadequate space within the unit or the building), resident anonymity and incomplete participation, and inability of cities to provide public recycling haulage. There are some very good pointers in these links that discuss how to reach diverse populations, identify areas of probable success, and how to education on-site staff.

Befitting its industry focus, the article from MFE identifies the costs for a company like Post.

“Post pays the waste removal company Conex Recycling a $150 flat-rate fee per property per month. Regardless of the size of the property, that service fee covers pickup and disposal of the recyclables, as well as labor and tipping fees. Post saves an estimated $100 per ton recycled, or about $120,000 a year on landfill costs, explains Shannon Sibbitt, the development director of Atlanta-based Conex.”

(Via Multi-Housing News.)

BuildingGreen.com – HPB Case Study: Project Matrix: “”

(Via Real Life Leed.)

“Energy efficiency makes the difference” highlights CB’s use of energy modeling and BIM, which is becoming a useful addition to CAD.

“A key part of the company’s plan to improve energy efficiency in its space involves using the ENERGY STAR benchmarking tool. To begin, all office buildings larger than 100,000 square feet will be benchmarked; a second round for smaller buildings will follow.”

At a recent internal sustainability committee meeting I made the argument that the industry is headed this way: it’s time to crack the books and then get our hands dirty with the details.

http://www.buildingoperatingmanagement.com/article.asp?id=7363

There’s a much longer discussion of energy modeling in the April 2008 issue of GreenSource. I haven’t waded through it yet, but their continuing ed articles for the AIA usually provide a few new tidbits to those who aren’t otherwise paying attention.

As an owner/former developer, I’m very much of the ‘make it work’ school of thought. Nevertheless, I will concede that whole building integration of HVAC, lighting, LEED, and other requirements is still tricky business. Trying to find someone who understood my desires in the Memphis project took forever.

Here are two DOE-backed modeling efforts:

Oak Ridge Benchmarking Building Energy Performance (http://eber.ed.ornl.gov/benchmark). This website allows you to quickly benchmark energy performance on 16 different building types and approximate energy use and cost savings from energy upgrades.

Energy IQ (http://energybenchmarking.lbl.gov). Currently under way, the pilot version of this tool is being called the next generation of nonresidential energy benchmarking. This “action-oriented” tool provides opportunity assessments based on benchmarking results. The tool supports comparison of the user’s building to peers and the tracking of an individual building or portfolio over time.

It meets the “green multifamily article” standard of mentioning the Solaire at least once with a nice drawing of the water recycling program.

Good stuff, but it overlooks the mundane for the expensive. At my REO properties, our water conservation items follow this scope:
1. Annual inspections of toilet flappers
2. Diverter valve replacement
3. Low flow uniform pressure shower heads
4. Properly sized and cone shaped aerators
5. Annual inspection of water heaters

These are the techniques we use to reduce water usage on the cheap.

“Toward Wiser Water Strategies”

http://continuingeducation.construction.com/article.php?L=5&C=421&P=1

Enterprise describes one of the problems thusly: “In many areas, the utility allowance estimates for tax credit developments are based on older properties with much higher energy costs due to less efficient design and construction than is possible and increasingly common today. This results in higher than necessary utility allowances for many tax credit properties and reduces the incentive for developers to incorporate energy- and water-efficient features into their developments. Owners generally are not able to use alternative sources or methodologies.”

In bullet point form, Enterprise recommends:
• Building capacity to implement low-cost improvements
• Expanding and leveraging funding for weatherization
• Ensuring climate change legislation supports low-income home energy efficiency
• Funding the Energy Efficiency Block Grant and prioritizing very low-income homes
• Investing in green jobs and prioritizing homebuilding and rehabilitation
• Strengthening HUD’s commitment to energy efficiency
• Greening the revitalization of distressed public housing communities
• Improving and expanding federal tax credits for residential energy efficiency and solar power
• Incentivizing major financial institutions to finance energy efficient very low-income homes
• Supporting research and driving innovation