RebeccaRegan
Boston
Community Capital has been around for over 20 years. Our mission
is to build healthy communities where low-income people live and
work. We’ve lent over $200 million in Boston
neighborhoods and throughout Massachusetts primarily for affordable
housing projects but also for community facilities such as day-care
centers, preschools, and charter schools. Healthy communities include
healthy buildings. We’ve been looking at the green
standards of other organizations and have used bits and pieces of
them to create our own. We wouldn’t necessarily refuse to lend
to an organization because its project doesn’t pass our green
screen, but we are heading in that direction.
DeWittJones
The state has begun to impose green standards on projects with
affordable housing financing. In the city of Boston, larger projects
essentially must meet LEED standards, though they don’t have
to be certified. We think the best initial approach is to have the
public sector create standards so that everyone adheres to the same
ones. Having an absolute standard that everybody has to meet creates
a higher threshold. We are encouraging people to anticipate that
standards are
going to happen.
People will grumble but ultimately business people like predictability.
This will work as long as it’s not voluntary. If it’s voluntary we could
end up with environmental apartheid. Wealthy communities will be able to protect
themselves from rising energy costs by investing in green features while poorer
communities — which face greater impacts of higher costs in the future — will
say they can’t afford them. I think part of the organizational reason why
we started focusing on green building is that we realized this could be another
issue that divides people. As an institution that sits at the intersection of
these two interests — healthy environments and affordable housing — we
decided that if we weren’t trying to figure out how to make this connection
nobody was going to do it.
RebeccaRegan
As a lender we currently find we can have the most impact
simply by asking questions. When developers propose projects we ask
them about site orientation, solar opportunities, window types, recycling
of construction waste, and other green-related questions. We think
a lot about the building envelope, the insulation, the roof, and
the heating system.
More and more we’re convinced that it’s not necessarily the higher
technologies that make the difference in performance.
DeWittJones
We see lots of buildings where the developers didn’t pay attention
to basics, like the ongoing costs of operating and maintaining a building. They
built to code and their utility costs — the biggest operating expense that
can’t be controlled — ends up rising. We find that it’s important
for a developer to have a team in place early on that can manage the architect,
set specs, make sure the contractor is doing what he is supposed to be doing,
and generally make the right decisions.
We’ve learned over time that many green requirements focus more on design
than performance. We see award-winning green buildings that perform poorly over
time and use more energy than anticipated. We know of one affordable-housing
project that received LEED certification but had several systems fail for which
it received points. Before we implement green requirements, we want to make sure
these technologies work.
An example of a building that has done well is the Visiting Nurse
Association’s
assisted living facility on Lowell Street in Somerville (the recipient of an
AHP award). Its energy use for heat is about a third of what many typical affordable-housing
developments require. The contractor paid attention to sealing, insulation, and
properly ventilating the building. The building envelope was critical.
RebeccaRegan
As we encourage more developers to do this kind of work
and as the public sector implements green standards, developers and
builders start to accept that this is the way the industry is going
and that it really doesn’t cost
as much as they thought or that the tradeoffs are worthwhile. People are starting
to understand that reducing long-term operating costs is beneficial, and they
are willing to pay a bit of a premium to do it.
DeWittJones
We’re still at an early stage of what works and doesn’t
work. An architect or developer may request an efficient — but more costly — heating
and cooling system, but the public sector, which is funding the development,
may say it’s too expensive. As a result, they install window air-conditioning
units that leak air. If the tenants are paying for electricity, they will be
saddled with that extra cost. It’s a shortsighted approach. If a tenant
is unhappy in a building because it is heated poorly, has rugs that exacerbate
asthma in children, smells, or has bad lighting, there’s a good chance
the tenant will move out.
There is also a general assumption that green building is more expensive.
It’s
true that six inches of insulation is less expensive than 12 inches
of insulation, but many green features don’t
need to be more expensive. For example, low-VOC (volatile organic
compounds) paint doesn’t cost more. There’s also the
issue of how you capture the value of features — heating systems
in particular — that are
more expensive today but are going to be less expensive over time.
RebeccaRegan
The Boston Builders Association is very focused on educating
the trades in green building. For example, if an electrician drills
a one-inch hole for wires when only a half-inch hole is needed, the
building will lose energy through those holes. If the builder paid
attention to that and sealed those holes there would be substantially
less energy waste.
DeWittJones
Educating builders is important. Take, for example, the
recycling of building materials. Recycling reduces waste, but it’s
something new the contractor has to pay attention to. If the contractor
doesn’t have
a system in place to handle it, it’s going to be a huge burden.
But once the contractor puts in place an onsite waste management
system, he finds that the initial upfront costs of recycling save
money on subsequent projects because he doesn’t need to redesign
the system.
RebeccaRegan
Sometimes
there’s tension between the increased cost of green
features versus the desire on both sides to build an energy-efficient building.
If there is a premium — and in many cases we dispute that there is one — reduced
operating costs over time increases the net operating income of the building,
which the developer could then use to convince the banker that the financing
makes sense.
DeWittJones
A very efficient heating system may cost a little bit
more — maybe
even a good deal more — but it would be 30 percent more efficient than
a regular system. You could run some numbers based on the projected rise in utility
costs and then project that the payback would be five to 10 years, and write
that into the mortgage.
The problem is that developers, tenants, and management companies
generally don’t
have expertise in maintaining a high-tech heating system. A lender may say, “Well
on paper it looks fine, but I think we find from experience that the systems
don’t perform as well as they should.” But if you demonstrate to
the lender you would be hiring experts to maintain the system and fix it when
it wasn’t performing efficiently and had experience showing that these
relationships achieved the projected savings, the lender would conclude that
he wouldn’t need to set aside reserves or reduce his underwriting criteria
because the borrower had a fixed contract for heat. I think consumers will become
more interested in this kind of approach in the future.
Today we have LEED and Energy Star buildings, but in the future we
may have labels for energy-efficient buildings. In the future I think
we’ll start seeing
more focus on how much heat a building uses compared with other buildings. Such
a building would presumably be worth more when
the owner tries to sell it.
RebeccaRegan
I think there is currently a leadership gap regarding
green building. If architecture students were educated to meet certain
energy standards every time they designed a building, energy-efficiency
would become part of the design. Almost 48 percent of energy costs
in the United States come from buildings. We are not designing buildings
with energy use in mind. We have to drive the building industry in
a different direction to solve this problem.
DeWittJones
Most publicly
owned affordable housing has to be upgraded every 10 to 15 years,
but many of those upgrades are fixing mistakes that were clearly
trade-offs when the building was constructed. Upgrading the insulation
of an existing building is more expensive than installing it during
the initial construction. I think that the public sector is starting
to think more about issues like this. T |
