On the Mandatory Greening of Existing Buildings + EcoTuesday Reminder
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Did you catch that hint about possible mandatory measures to require the greening of existing buildings?
In case you missed it, the Examiner put out the word that Mayor Gavin Newsom and San Francisco Supervisor Eric Mar will introduce legislation this week which, when passed, would authorize San Francisco’s own version of an energy efficiency financing district.
Called a “green loan” plan in the article, the loan fund would allow homeowners to receive loans to make environmental improvements to their properties and then pay back the money through extra property taxes.
But you have to read that overwhelmingly positive article a little slower, to absorb the hint buried in a couple of innocent sentences several paragraphs in.
The article focuses on how the upcoming energy efficiency and renewable energy financing plan builds on momentum created by San Francisco’s mandatory green building codes, and also hints at the City’s future actions on greening existing buildings:
Newsom has already pledged to tighten those rules to apply to existing buildings. This latest green idea may provide a way to finance improvements that could soon become mandatory.
Are mandatory energy efficiency requirements really a good idea?
Professionals throughout green building construction, retrofits and public policy have been wringing their hands on the topic of mandatory energy efficiency standards for existing buildings. Many green building colleagues and supporters want mandatory measures to address the problem of owners with “energy hog” buildings, who simply ignore the impact of their wasteful operations on the community.
There are also concerns about mandatory energy efficiency measures unfairly impacting smaller or much older projects, since the owners in both cases might only accomplish the most limited actions to address energy efficiency problems. Essentially, retrofitting these buildings might be too cost prohibitive for those owners.
Finally, the real estate trade associations and other professional bodies have been trying to send tough signals against any form of mandatory anything when it comes to building operations. Fighting any type of cost or administrative burden on owners at any opportunity.
Then there’s the flip side.
We also speak regularly with owners who introduce energy efficiency and green O&M to their existing buildings — only to have tenants blatantly ignore them. They express hope that, in a market with mandatory energy efficiency measures, they can more easily obtain tenant cooperation on O&M, plus they think they will look like heroes to their equity capital partners — who now struggle over how to assess and transmit some form of energy efficiency standards across behemoth national property portfolios run by thousands of local managers and JV operating partners.
The Green Journey Take?
While the retrofit cost concerns of small and very old properties are real, legislation can be crafted which addresses the potential energy efficiency limitations within their projects. They can, and should, get a fair deal.
As for the rest of the industry — we think that mandatory energy efficiency standards — with an appropriate, accessible, cost-effective financing mechanism — can provide real opportunity for competitive owners who “get it”, and need not be as problematic as some groups fear.
What do you think?
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Reminder
Let’s meet next week re: Green Finance for Communities, Campuses & Power
I noticed that several Green Journey readers are already signed up for my upcoming talk at EcoTuesday, next Tuesday, 28 July.
Exciting! You’ll all finally get to meet each other!
I’m talking green finance and how it’s changing our communities, flowing through our science and innovation parks and accelerating the growth of clean energy. And most importantly, how green finance trends can help our businesses and help us to help others.
Are you coming out?
I look forward to connecting with old friends and meeting a few new ones.
Most importantly –> We never accomplish anything alone. A summer cocktail hour is a great time to thank friends and colleagues who inspire us and to encourage them to continue the excellent work they do in transforming our communities and country.
Meeting Details
Date: 28 July 2009
Time: 6:30pm
Location: The W Hotel, 181 Third Street, San Francisco
Sign up here!
Isn’t performance contracting already a viable way for building owners to finance energy efficiency retrofits?
As for the cost implications, the argument that is most salient is the fact that retroactively requiring some level of energy requirement is extremely unfair for building owners, and may worsen the real estate crisis. The current environment has already made it extremely difficult to do any capital projects, and layering in required retrofits, which you correctly identify as extremely costly, may make owners throw their hands in the air and walk away from their investments (many of which are probably underwater as is).
The second question I have is what would the standard look like? Would buildings have to reach a certain power intensity (which may be impossible) or improve versus their own baseline?
Finally, what would the enforcement mechanism be? Is the City going to conduct and manage energy audits to review the buildings’ performance? If so where does the money come from to implement that beuracratic nightmare?
In the end I believe that the market will work itself out. We are already seeing it here in Atlanta, where we have had 4 buildings achieve LEED EBOM certification in the last 60 days, and approximately 20% of the core building stock is registered. Our consulting practice is receiving more inquiries since that happened than we did the previous 6 months.
Two towns in New York’s Westchester County, New Rochelle and Greenburgh, have implemented a town inspection requirement for all renovations and new construction. The inspectors will have HERS ratings and will review your project just as a plumbing or framing inspector would. I applaud their forward thinking.
The day is coming when all homes in America will have ratings showing how energy efficient they are. These ratings will be weighed in the balance when homebuyers decide which house, condo or townhouse to buy.