Perspective: Ride the Green Wave

By Lynn Russell, CGP and Danielle Pruette FMI CorporationMother Nature and global economics are giving us strong hints that green is good. Water shortages, rising fuel costs and deficient infrastructures encourage us to examine the value of conservation and reduction in energy requirements. What would it take you to jump onto the green wave? What if you could reduce operating costs, enhance your property value, optimize building life-cycle performance and increase profits? Leadership in Environmental and Energy Design-New Construction (LEED-NC) and the National Green Building Standard (NGBS) will provide the ride.In the spring of 2008, a CoStar Group study revealed that LEED-certified buildings achieve an additional $11.33 per square foot rent premium over non-energy aware peers. They also have a 4.1 percent higher occupancy rate. If you build to sell, the report identified that LEED buildings sell for an average of $171 more per square footThe U.S. Green Building Council (USGBC), a non-profit organization of architects, building product manufacturers, owners, contractors and environmental groups initiated the LEED Pilot, in 1998. Commercial office buildings were the initial target for certification, and there are eight rating systems today. The rating system utilizes existing reference standards to provide baseline levels, awarding credits for high performance. LEED-NC is the rating system used to evaluate commercial and institutional projects, including multifamily construction.LEED emphasizes design and innovation. There are prescribed paths to fulfill the requirement of the credits, but there is also an option to create a new solution so long as it meets the credit intent and is approved by the USGBC. With this system, the certification is established through a pre-construction plan review, two on-site inspections and post-construction performance testing. A premium is paid for required commissioning and energy modeling for LEED certification.The National Association of Home Builders (NAHB) formed a team of builders, researchers, environmental experts and designers and in 2004 developed the NAHB Model Green Home Building Guidelines, which were designed for single-family construction only. When NAHB determined it was time to move to a more formal standard, they were receptive to requests to include many other interests around the table and follow full American National Standards Institute consensus protocols. In 2007, the NAHB and the International Code Council (ICC) began the consensus process for the ICC-700 2008 National Green Building Standard. The multifamily community was represented on the consensus committees by developers and architects, NAHB’s Multifamily Council, the USGBC, the American Society of Heating, Refrigerating and Air-Conditioning Engineers, and the National Multi Housing Council (NMHC). Paula Cino of NMHC speaks very highly of the NAHB’s willingness to relinquish control to a highly collaborative process, which included mixed-use, manufacturing and representation from the Green Building Council. The stakeholders agreed upon a single system for all residential building types (including multifamily) rather than multiple versions. The Standard was designed for easy administration by third-party certifiers or inspectors. The motivation for the Standard process was ease of regional adaptation and consistency in jurisdictional interpretation. As a result, the system is more prescriptive or developer-friendly than LEED. The NGBS was submitted to American National Standards Institute (ANSI) in early 2008 as the first residential green building standard to undergo the process. According to Cino, this is the only “green standard” program that has solicited involvement from the NMHC. When approved, it will apply to single-family and multifamily construction, as well as land development and single-family remodeling. The NAHB National Green Building Program (NAHB Green) includes a variety of national educational, promotional and technical offerings to builders, remodelers and developers, including educational designations and the annual NAHB National Green Building Conference. One of those services includes a National Green Building Certification that will support the Standard rating system after approval. Working in conjunction with state and local home building associations, the certification process is established through an online self-scoring tool and two on-site inspections.Both LEED-NC and the Standard include point ratings and third-party verification. The areas of concentration for green building ratings are site sustainability, water conservation, materials and resource efficiency, energy conservation, indoor environmental quality, education and innovation in design One key difference however, is in the point distribution. LEED-NC has mandatory pre-requisites before attaining any level of certification. Four levels of certification are attainable by achieving the requisite number from the available credits. Credits are valid in any combination from the six categories up to a total maximum, which allows the possibility for emphasis in some focus areas. The point credits are not currently weighted to account for impact or cost to implement. This adjustment may be addressed in a future version. The NAHB Green ratings method is a weighted system with three certification levels (four after the Standard is approved). There is a minimum point requirement in each of the six categories (mandatory inclusions noted) establishing a more uniform approach across categories. The applicant then selects an additional 100 points in any combination. This allows participants to focus on particular categories but not exclude any. In multifamily structures, points are credited once for the entire building and must be applied to each unit, as applicable. Where there are different points available due to unit size or configuration, the points awarded will be the lesser number.The CoStar report estimates additional costs for LEED compliance to be between 2 percent for minimum compliance and 7 percent for the Platinum level, excluding certification costs. It is too early to report on the NAHB’s Green certification’s financial impacts in multifamily, but preliminary studies in single-family units estimate compliance costs at a wider range of access, starting at 1 percent.Multifamily construction has some built-in sustainability potential such as unit size, density, proximity to public transportation, etc. With thoughtful design, a strong pre-construction process and systematic execution, you are well on your way to higher levels of building performance and return on your investment no matter what rating system you choose.The choices you make today will have ramifications for many years to come. How will your asset’s value stack up to the competitors’ properties constructed five or ten years from now? Will the green wave carry you to success or will you miss the wave and get wiped out?