As part of an ongoing effort to keep members and partners up-to-date
on trends and developments in affordable housing, the Federal Home
Loan Bank of Boston recently sponsored a forum on the growing importance
of green building in housing construction in New England.
Green building refers to construction features such as energy-efficient
heating systems and appliances, low-toxin building materials, and
building designs that protect the environment. Energy conservation
is a key strategy to reduce the greenhouse gas emissions that scientists
believe are causing global warming.
Last year’s forum included presentations by Paul Epstein, a
medical doctor and director of Harvard Medical School’s Center
for Health and the Global Environment; Ed Connelly, president of
New Ecology, Inc.; and Dan Winters, managing principal at Evolution
Partners. Representatives from state housing finance agencies across
New England reported on the use of green building standards in the
construction of affordable housing in their states.
Dr. Epstein noted that the increased burning of fossil fuels worldwide
is causing an escalation in carbon dioxide (CO2) levels in the atmosphere
and a rise in global temperatures. Higher levels of greenhouse gases
such as CO2 are thought to be causing a rise in deep-ocean temperatures
and alterations in ocean currents.
Scientists believe that rising temperatures are also responsible
for a spike in severe weather such as heat waves, droughts, floods,
and hurricanes.
Air pollution, higher global temperatures, and extreme weather have
consequences for health and the economy. Air pollution leads to a
higher incidence of asthma, lung disease, and heart disease, while
warmer temperatures and melting glaciers increase moisture in the
atmosphere and the incidence of diseases such as malaria.
Use of green building techniques have the potential to slow the growth
of CO2 in the atmosphere and global warming, but governments need
to take action to promote their adoption, said Dr. Epstein, who believes
that a carrot-and-stick approach will be the most effective way to
promote green building in the region.
Mr. Connelly discussed the findings of a New Ecology report titled
The Costs and Benefits of Green Affordable Housing. The report includes
case-study analysis of the costs and benefits of green building in
16 affordable-housing developments around the country.
Mr. Connelly noted that total development costs for green projects
ranged from 18 percent below to nine percent above the cost of conventional
affordable housing. The report concludes that green developments
require a small “green” premium of 2.42 percent in total
development costs.
While some green features have the potential to increase the cost
of housing, major savings from green development are reaped over
a building’s 30-year operating cycle, according to the study.
These costs, Mr. Connelly said, “are real and in some
cases substantial.”
Mr. Connelly said the movement toward green building is likely to
escalate. He said energy-efficient structures improve occupant comfort
and health while minimizing environmental impacts. As global warming
becomes a more pressing social concern, the government will likely
institute new regulations to control energy use. “I think we
should try to anticipate these issues,” he said. “The
key is to have [green building] be part of what you do from the beginning,
from the moment of conception.”
Mr. Connelly noted that green building has been more widely used
in market-rate housing than in affordable developments. He attributes
affordable housing’s slowness to adopt green standards to per-unit
cost caps, regulatory rigidity, and a finance system slow to recognize
the long-term benefits of green building. Although the upfront costs
of green developments may be higher than those of conventional developments,
the long-term benefits of green building should far exceed those
initial higher costs, Mr. Connelly said.
Dan Winters, managing principal of Evolution Partners, a Washington-based
consulting firm, provided an overview of current underwriting practices,
tools, and valuation models to help assess investment and lending
associated with green buildings.
Noting that the five warmest years on record since 1890 have occurred
since 1998, Mr. Winters said global warming is becoming an increasingly
significant issue for developers. He said some investors are requesting
technical information on the amount of CO2 emitted by a building
and an assessment of the property’s risk exposure if new regulations
are imposed in the future.
He said interest in green building continues to increase among real
estate developers and added that green buildings are less risky investments
because they tend to be more attractive to renters, earn higher rents,
and have higher collateral value. The lease-up of green buildings
significantly exceeds pro forma expectations, while occupancy, operations,
and maintenance costs are consistently lower than their nongreen
counterparts.
Mr. Winters said a recent study of LEED (Leadership in Energy and
Environmental Design)-certified properties shows that 41 percent
are owned by government entities, 28 percent by for-profit corporations,
and 21 percent by nonprofit corporations.
Also participating in the forum were representatives from housing
authorities throughout New England, who reported on the use of green
building standards in their housing.
Daniel Brennan, director of development for MaineHousing, said all
developments funded by the agency must now comply with its new Green
Building Standards. The authority developed those standards by studying
LEED and Energy Star standards and through outreaching to developers
and architects (see story on page 6).
“These are good building practices,” said Donald McGilvery, construction
services manager for MaineHousing. He said it’s important to incorporate
green building standards early in the planning and design process.
MaineHousing has concluded that green building isn’t more costly
and provides long-term benefits, particularly if residents are educated
on use of these features. “We have all of these things going
on, and it’s really exciting,” said Mr. McGilvery.
Mark Koppelkam, Low Income Housing Tax Credit Program Manager for
the New Hampshire Housing Finance Authority, said rising construction
costs have made it difficult for the New Hampshire authority to institute
green building standards.
Mark Hirsch, manager of architectural and construction development
for the Connecticut Housing Finance Authority (CHFA), noted that
cost issues had been an obstacle to implementing green standards
in his state. In 2007, however, CHFA implemented Green Design and
Construction Standards for its multifamily rental housing.
Daniel Healey, design and construction manager at Rhode Island Housing,
said his agency is promoting Energy Star standards, the Healthy Homes
Program, and Sustainable Green Standards. He said the agency involves
developers and architects in the early stages of Low Income Housing
Tax Credit initiatives to ensure they adhere to Energy Star standards.
He said 95 percent of Rhode Island Housing’s tax credit projects
are adhering to these standards.
While Rhode Island hopes to eventually publish its own green building
standards, it continues to wrestle with the issue of cost. And while
many sponsors are attracted to green building design, they are also
conscious of upfront costs that could diminish a development’s
affordability.
In Massachusetts, all new buildings that receive funding from MassHousing
must be Energy Star compliant. The agency also has a partnership
with the Massachusetts Renewable Energy Trust, which provides support
for clean energy projects across the state. Massachusetts has also
been a leading promoter of smart growth and recently passed legislation
(Chapter 40R) that allows communities to create special zoning overlay
districts close to municipal centers for new affordable housing.
Pat
Capalbo, vice president at member Wainwright Bank & Trust Company,
said Wainwright Bank has been participating in housing projects that
include green building features. “It’s coming up more and
more, which is why I am here,” she said, adding that her bank’s
mission includes promotion of environmental awareness. T
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