John Knott and Andrew Nelson Show RPI in Action
Greetings from the Miami International Airport Island Grill, which — given my options — is currently rocketing up my three item list of decent airport food!
I had the opportunity to attend a great talk by John Knott, of the Noisette Company, here at the ULI Fall Meeting. Hearing him reminded me that there are a couple of great reports currently in circulation that Green Journey readers should be reading, if you haven’t already obtained them through your other channels. They are must reads for all of us who want to use responsible property investing — incorporating applied approaches to social responsibility within our professional real estate activities.
Item 1: The Noisette Company Sustainability Report
John Knott and his company’s work with the Navy Yards Project is a great living case study in revitalization with social justice at its core. Another cool point to keep in mind as you read is that the Noisette Company is a 100 year old family development business. Knott made it clear that the sustainable and socially conscious principles that they apply are not anything new-fangled or exotic, as many investors fear about sustainable real estate. The approaches are actually as old school as they come.
Item 2: RREEF Research Report: Globalization and Global Trends in Green Real Estate Investment
All of my USGBC-NCC colleagues out there remember the great talk RREEF’s Andrew Nelson gave about global greening trends at our chapter meeting earlier this month. Well, that upcoming report he alluded to is now finally out and official. Download / read / apply / pass it along.
Green Building Finance and Investment Forum New York
Get the Download on Green Real Estate Capital
The Green Building Finance & Investment Forum is where industry pacesetters advance sustainability via their innovations and best practice in energy efficiency, green real estate development, investment, finance and operations. Twice a year, approximately 150 leading green real estate investors, financiers and practitioners come together for an intense 2-1/2 days of workshops, presentations, frank discussions and, of course, dealmaking.
The participants, all senior professionals from high-caliber firms, set the bar high. And the presenters, their equally demanding peers, never fail to deliver hard content and inspire. The result is a productive, memorable experience that we humbly call “the TED of green real estate”.
Galley Eco Capital, in collaboration with InfoCast, is a founding co-organizer of this highly unique event. On the heels of a very successful New York meeting in September ‘08, we decided, together with our friends at Building Energy Performance News, to publish the summary perspectives of the industry pacesetters that are making sustainability a successful, viable investment strategy for the real estate community.
The summaries of the forum topics and individual perspectives will be published here in a series of ten posts on a weekly basis. Here is an advance peek at the lineup (note: if a post is linked, then it has already been published – click on the link to go directly to the post).
- Lessons for Future-Proofing Property Values
- Unlock Hidden Cash Flow and Value with Energy Efficiency Retrofits
- JP Morgan Chase Talks Green Real Estate Investing
- Portfolio Owners Top Advice for Greening Existing Buildings
- Green Building Drives Triple Bottom Line Advantages
- Starting a Green Real Estate Fund?
- Valuation & Risk in High Performance / LEED Commercial Real Estate
- Green Leases: An Important Component of a Green Real Estate Investment Strategy
- Perspectives on Assessing & Financing Portfolios for Energy Retrofits
- Green Finance: Current Trends, Future Outlook
- Carbon Risk Management: What It Means for Real Estate Portfolios
Subscribe to get automatic delivery of these posts
Subscribers to Our Green Journey will be receiving this series automatically. Please subscribe to Our Green Journey either via email or RSS in order to make sure that you do not miss any of these summaries. Clients and friends who are already within Galley Eco Capital’s newsletter community will see special summaries of these posts in future newsletter editions as well. Contact us if you wish to receive our newsletter.
Our special thanks to Building Energy Performance News for helping us to spread the word about this special event and its participants, as well as to InfoCast, which has been an innovative partner in creating and advancing this particular meeting for the green real estate community.
And if you were a participant at these meetings, and wish to share your feedback, by all means contact us.
Renewable Energy Market Status
“Where you stand depends upon where you sit.”
A famous politician might have thought he was dispensing pithy political wisdom when he said this, but he was also, perhaps inadvertently, framing our understanding of the relative potential of renewable energy markets going forward.
Growing renewable energy markets from a staggered start
Remember, it has only been a week since HR 1424 was passed, extending government tax credits for renewable energy and related equipment. And we think it is a good time for Green Journey readers to take a look at where the renewable energy markets have stood recently in terms of installed capacity.
This chart comes from the Commission on Environmental Cooperation for North America, which has put together a fantastic series of map layers depicting all sorts of environmental geographic data. You can dump the desired data into Google Earth with a click and nerd out to your heart’s content.
This particular map is a couple of years old, but still points to the idea that, with these tax credits being extended just now, many markets will be starting to increase their installed renewable energy capacity from very different positions.
Great to understand as we all monitor events in the renewable energy sector going forward.
Federal Energy Efficiency and Renewable Energy Incentives: How They Boost Your Green Business Case (Special Update for GEC Clients)
This is a special update for Galley Eco Capital clients concerning the extension of sunset dates for both federal energy efficiency and renewable energy tax credits. Specifically, these provisions provide significant benefits to investors and developers of sustainable real estate and our incentive and tax benefit studies can help you plan to maximize your use of these strategies.
Want a printable version of this update? Click here for the [PDF].
As you may know, on 3 October 2008, the House of Representatives approved the Energy Economic Stabilization Act of 2008 (HR 1424). This Act contains significant financial benefits for sustainable real estate investors and property owners implementing energy efficiency retrofits to their existing properties.
Galley Eco Capital provides property owners with incentive and tax benefit studies that include specific IRS-approved strategies that can assist the green real estate investor in boosting the returns on their investments. They are an essential part of an integrated finance approach, which we recommend for developers and investors.
Last week’s passage of HR 1424 means that, in our work with you, incentive and tax benefit studies that we prepare will analyze the potential benefits to your investment strategy that will come from these federal incentives:
- The Commercial Building Tax Deduction, which will remain in effect until December 31, 2013. This will benefit those clients wanting to apply for the available energy tax deductions for their project(s) with occupancy in 2008 and beyond to 2013.
- Energy Tax Credits will remain. The tax credits are valued at $1.80 per square foot, and are in addition to any state, local and utility incentives. Energy Tax Credit Certification from Galley Eco Capital includes the required certification of a third-party qualified and licensed engineering firm, as well as energy tax deductions from the state and local utility companies.
- The Energy Policy Act (EPACT), which in cases of building and retrofitting government property, can be taken by your architect/contractor. This particular approach is one of the most overlooked tax strategies for professionals involved in the construction of public buildings.
Note that the above information is a summary and does not represent the scope of the incentives in their entirety.
For those of you who follow our blog, Our Green Journey, we also published a short overview on the extension of valuable renewable energy tax credits within HR 1424, as well. Here are the highlights:
- The Investment Tax Credit (ITC) provisions extend the sunset for solar, fuel cell and microturbine property until December 31, 2016, and have been expanded to include combined heat and power system property, qualified small wind energy property, and geothermal heat pump system property. Additionally, the ITC has become increasingly valuable to residential developers who include solar property within their green homes. The $2,000 federal cap on residential solar incentives has been raised to $4,000.
- The Production Tax Credit (PTC) provisions extend the sunset for placed-in-service wind facilities until 31 December 2009.
Our estimates indicate that these latest provisions can provide for a nearly 75% offset to the cost solar property alone — a significant benefit.
You can also access additional examples of the application of some of these incentives within our educational and training materials, located within the Green Building Resources section of our website.
We have talked with some of you, who have been reluctant to incorporate an incentive strategy within your green real estate equity investment and development strategies, mainly due to the uncertainty surrounding the extension of these provisions.
Please contact us at Galley Eco Capital to discuss how you can put the federal government to work for you within your future sustainable investment and capital expense funding plans. Any initial review of your particular investment case is complimentary.
How Oil Prices Literally Drive the Mortgage Crisis
We’ve blogged before on the disastrous connection between fuel pricing, vehicle miles traveled and residential foreclosures. And after those posts, it was interesting to see some economists shift away from discussing this problem, focusing almost exclusively on the impact of oil speculators.
Nonetheless, we stayed on the case, since advancing true green real estate finance has to include the overt acceptance that there is a relationship between fuel pricing, auto transportation, responsible urban planning and a community’s long term viability. And a community’s long term viability is what should unite lenders, investors and policymakers to act responsively on this topic.
In light of the bailout announcement last week, environmentalists are pointing out that Wall Street and many economists have been curiously silent about the interaction between oil prices, energy consumption, fuel costs and foreclosure rates around the country. This silence is undermining constructive policy leadership needed for these problems. Case in point, sent over by Jason Keehn, of InfoCast, Inc., who birddog’s community-level sustainability more intensely than anyone else we know:
The NRDC’s David Goldstein via his high-protein blog, Switchboard, discusses how pundits and policymakers have been ignoring the overwhelming evidence that increasing vehicle miles traveled literally fueled a significant share the foreclosure wave. Goldstein’s lays out the case as follows:
“Mortgage defaults occur in places where the need to drive is very high — strolling suburbs with little or no transit service. Urban areas with compact, walkable neighborhoods and good transit services have been largely immune from the credit crisis. What dat[a] we have suggests that the lower the auto transportation cost associated with living in a certain neighborhood, the lower the probability of default. A rational energy policy would consider transportation expenses in underwriting loans, and could have avoided a substantial if not dominant portion of the risk that is now afflicting the economy. Concerning the low savings rate, for the past 35 years, since the energy crisis of 1973, median incomes of Americans have hardly changed, yet the trend of ever-increasing need to drive cars has continued unabated. At the same time, cities and suburbs were growing in ways that reduced compactness, walkability and transit access, apparently leading to this increased need to drive to maintain the same quality of life. Driving is expensive — it was 18% of household expenditures even when gas was $1.50/gallon. This compares to only 21% for housing itself (considering only paying for the house, not the utilities or furniture, etc.). So if expenses go up, it’s not surprising that savings would go down.”
This also leads to his discussion of his work on showing the potential benefits the US economy could experience if energy policy favored greater energy efficiency — and the green real estate finance angle; that real estate loans should assess the interaction between transportation, the asset type and location under consideration.
So now you’ve got three things to put on your to-do list: read Goldstein’s post, subscribe to Switchboard and get on his book list. This research is sure to be a pointed challenge to business as usual for a huge swath of real estate lenders, investors and appraisers.
Oh, and if I’ve moved you enough to check him out, do us a favor and make sure you write Goldstein a comment letting him know that ‘Our Green Journey‘ sent you.
