Green Roof Incentive in New York

Photocredit: dreamymo
Folks love the green incentives that have immediate, easily calculated cash value.

Environmental Leader (a green newsletter we dig) has put out the word on New York’s new green roof tax credit of $4.50/sf, up to $100,000 for installing a green roof. It’s structured as a one year credit off property taxes.

It comes out to an approximate 25% reduction off the cost of the roof — a significant value. I checked around with a couple of sources who said that this is a “decent estimate” of the savings. Which we took to mean that you need to factor in variability in the roof pricing — and hence, the credit’s actual value.

Not bad — a green roof in New York for 75% of the price. And that’s not including the heating and cooling benefits the roof brings to the building as well as the reduction of the heat island effect in the city.

Go Big Apple!

Carbon March Tempo Quickens: California Cap-N-Trade Plans Announced

The photo by Mick Montara is not a sci-fi special effect. Its the sun seen through the thick wildfire haze in mid-daytime here in NoCal yesterday. No kidding! The haze blanketing many cities comes from over 100 wildfires that we are having here in California.

And a day of severely reduced air quality is also an ominous backdrop for yesterday’s announcement of a proposed carbon cap-and-trade program by the California Air Resources Board (CARB). It’s not a done deal yet, but for the first time, we are all getting a peek at California’s announced implementation plans for the famed AB 32 greenhouse gas reduction legislation.

The Plan
Over multiple coffees, I’ve perused several stories plus an in depth legal analysis of the plan (only received via email; will send subscribers a copy if you email me). The basic gist for commercial property owners is this:

• Excessive emissions will cost you: Businesses which exceed their emissions allowances will have to buy those emissions on the open carbon market. Over the years as the caps are reduced to achieve compliance with set targets, businesses purchasing emissions credits may have to pay more. That’s the state’s vision.

• Property is high on the state’s hit list: Buildings and appliances combined rank #2, behind auto fuel efficiency, in targeted emissions reductions. Total reductions of 26 million metric tons of CO₂, or 15% of total 169 million metric tons of targeted reductions are expected by 2020. All of that is to be achieved by property owners increasing the energy efficiency of their buildings and appliances as well as a new vehicle miles traveled-angle: new housing developments being located so that driving commute times are reduced. Wow. Oh, and more efficient use of water will reduce  emissions by 5 million metric tons CO₂per year.

• But there’s a financial opportunity for emissions outperformers: Businesses which successfully reduce their CO₂ emissions below what is required will be able to sell credits back to the open market. Of course, it’ll be awhile before we all know what that’s really worth.

• And cap and trade strengthens renewable energy: These measures also push expansion of renewable energy markets as a source of clean energy. If you’ve been following the latest kidney punch to the solar industry by the Bureau of Land Management, you’ll agree that this plan starts to position clean energy well during a time when they are not getting any respect from the federal government.

Don’t like it? Well, here’s CARB’s “we mean business” quip:

“If the combination of existing rules and new cap-and-trade regulation fall short of the goal, the state could impose a carbon tax.” said Mary Nichols, chairwoman of the California Air Resources Board. “We look at this (carbon tax) as a back stop”.

Fossil-fuel Spinial
Of course, Big Oil is not relaxed about this at all. CARB has tagged them to reduce, by their own estimates, 60 million metric tons of emissions, or 35% of total targeted reductions. Predictably, they’ve gone on the spinial (spin and denial) offensive with a transparent barrage of FUD (fear, uncertainty and doubt):

“What the air resources board is finding out is that this is extremely complicated. I’m not surprised that we only have a road map, with the details to be filled in later, said Cathy Reis-Boyd, COO of the Western States Petroleum Association…She also said that fuel prices could rise even higher if the plan is not implemented in a way that ensures that refineries can buy credits when they need them.”

Anywho, the cap and trade plan is still subject to public comment and has many features which remain to be worked out. So prepare for more updates here down the road.

It is significant for the Green Journey because it provides a compelling backdrop for green building. In California, it is no longer just the right thing to do; regulators are now in the midst of restructuring away a percentage of your profits if you don’t start now.

Last note: If you want a copy of the legal analysis I received for your own review — and you’re a subscriber — please email me and request a copy.

Galley Eco Capital Joins the greenMix Alliance

Galley Eco Capital announced today that it joins a new alliance with the goodMix and Green Key Real Estate, both leading eco-preneurs in the San Francisco Bay Area. The greenMix Alliance was specifically created in order to make a positive impact on the way developers communicate and sell to the green homebuyer. The goodMix will supply the alliance with public relations and advertising needs associated with green housing development. Green Key Real Estate brings a strong bench of Eco-Brokers and salespeople who are trained and passionate about the quality that green homes can bring to homebuyers lives.

Galley Eco Capital will provide the alliance with expert real estate financial services tailored to green real estate, including helping developers to quantify the savings and benefits their green homes will bring to the homebuyers.

Here is a link to the full press release: Galley Eco Capital Joins the greenMix Alliance

Housing Developers: Preparing for Opportunities During the Downturn?

So I heard Bob Gardner, of RCLCO, give a presentation about the state of the multifamily market and trends at the ULI Multifamily Trends conference today. Turnout was good, albeit with a somewhat subdued mood overall.

One of my friends summed it up this way, ” there’s a lot of folks in this room who are hurtin’ right now”. The more positive statements by the groups who reported that their business and portfolios were still performing well went something like, “we’re building out product that we’ve committed to; beyond that we’re staying on the sidelines”.

All that being said, a couple of mezz guys said that they were getting steady calls to assist with recapitalizations that couldn’t be accomplished through the senior debt channels.

The Sunny Side of the Housing Downturn

The bright side offered by Bob and several of the other speakers was that many real estate fortunes have been made during a downturn. Bob’s example: low land prices in the early 1990’s set up master developers for many years thereafter. Hmm… good point; so I started taking notes.

He pointed to Gen Y as one of the largest opportunities out there right now and that real estate developers and investors would be wise to study up on this group and prepare for the significant impact they might have on how and where real estate will be built in the very near future.

Basic Gen Y 101–> Here is a presentation that will give you the GenY download.

Here are a few notes on Gen Y’s demographic characteristics, which strongly favor green and sustainable real estate investing:

• This group of consumers is willing to pay for walkability and transit. They really value their time, so they are not big on paying for a big house and commuting. These types of issues receive great attention when siting sustainable investments.

• They are very into working from home. Having an office in a corporation is not as much of a big deal for them. (Cuts into their “me-time”.)  This also seems to add support to the low carbon information, communications and technology opportunities, talked about in my telecommuting post yesterday.

• They start becoming homebuyers in 2012 (!!). The green angle here is the “other green”. (Excuse the pun, I couldn’t resist)

Yesterday I wondered aloud about whether developers would start creating more live/work units that cater to home workers and families all in one. If so, make sure they’re sited in a walkable, transit-oriented location.

Based on what I learned today about Gen Y, it appears that this type of product is not some far off fantasy, but could present a mid-term opportunity. In any event, an economic downturn is a good time to study the opportunity and spend time positioning your firm to deal with this emerging demographic trend.

Climate Change “Opportunity”: Work from Home, More IT, Less Real Estate

Commercial real estate has had somewhat of a funny love affair with IT over the years. Remember back in the 80’s, when we were warned about the paperless office? It was still all good with IT, even though the paperless office never really happened — we never took the projected real estate angles seriously, anyway.  How about the 90’s, when folks claimed that the internet would kill the shopping mall? Then IT made us sort of nervous. Now another wave of ‘less real estate/more IT’ ideas are back, but this time with a climate change angle and, also with a smarter sounding term that can get you more attention at the cocktail party — at least until people figure out what you’re really talking about…

The Climate Group has just issued a new report that lays out the many opportunities available to the information, communications and technology (”ICT”) sectors to help reduce carbon emissions. Like many issues associated with reducing carbon emissions, buildings get a lot of attention in this report, too. Hence, my interest in understanding how the opportunities could interact with commercial real estate.

One main concept, called dematerialization, stands for using technology to replace high carbon activities with low carbon alternatives. A simple example of dematerialization would be replacing face-to-face meetings with videoconferencing for example. A farther reaching example would be e-government.  Dematerialization’s attractiveness lies in its ability to be applied to a wide range of business activities.

For the commercial real estate world, the report highlights telecommuting as one of the biggest opportunities for ICT sectors because it is a dematerialization application presenting the largest opportunity for carbon emissions reductions and absolutely requires ICT to be effective:

“Currently the largest opportunity identified within dematerialisation is teleworking – where people work from home rather than commute into an office. Although other dematerialisation opportunities may come to prominence in the future, based on historic trends, the analysis found that teleworking would have the largest impact, up to 260 MtCO2e savings each year (detailed assumptions in Appendix 3). For example, in the US, if up to 30 million people could work from home, emissions could be reduced 75-100 MtCO2e in 2030, comparable to likely reductions from other measures such as fuel efficient vehicles.”

So think about it –

what could happen in commercial real estate if 30 million people eventually worked from home?

The trick to realizing substantial emissions reductions from telecommuting appears to be in how far-reaching the employer’s work-from-home program extends. A company would need to have a significant number of employees working from home more than three days per week to generate substantial energy savings of 20%-50%. Less than that level of telecommuting means that the company still maintains significant office space for periodic office-workers, and therefore, less energy cost reductions.

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