LEEDing by Example
Developers Show How to Make Green Building Pay Off
as published in Multifamily Executive
by Rachel Zoberman
June 2004
Developers have plenty to worry about these days, from the increased costs of building materials to the lack of affordable land. The last thing they want to think about is building green, with its reputation for high cost and hassle. But more builders are discovering that just the opposite is true: Green building can be cost-effective, while offering an array of benefits to your project, from life-cycle savings to a marketing edge.
To receive national recognition for your green work, you can get your building certified through the U.S. Green Building Council's (USGBC) Leadership in Energy and Environmental Design (LEED) Green Building Rating System. Launched in 1999, LEED establishes a voluntary standard for rating the sustainability of commercial, institutional, and high-rise residential buildings. USGBC offers guidelines and support to encourage green building.
But the practice has been slow to take off in multifamily. The council has certified only four multifamily buildings: the Blair Towns, a 78-unit apartment community in Silver Springs, Md., and The Solaire, a 293-unit apartment building in New York's Battery Park City this year; the 255-bed New House Residence Hall at Carnegie Mellon University in Pittsburgh last year; and the 1,850-bed Bachelor Enlisted Quarters at the Great Lakes Naval Training Center in Great Lakes, Ill., in 2000.
Several more are en route to certification, based on the number of projects registered with the council, says Peter Templeton, deputy director of LEED and international programs. After registering, it often takes three to six years before the developer submits the required documentation for the completed building.
Successful examples are the only way to convince more developers to jump on board with LEED, says Charles Segerman, construction manager and director of green building for Tower Cos., a North Bethesda, Md.-based real estate firm that recently received certification for Blair Towns. "We wanted to demonstrate that building to LEED standards was cost-competitive," he says. "Bringing in apartments at market rate shows that building green can be done."
Cost Crunching
With a little creativity, building Blair Towns to be LEED-certified cost only 1 percent – about $75,000 – more than standard construction techniques. "There are trade-offs that you have to do in order to have a no-cost added," Segerman says. For example, he concentrated on the building envelope, using thicker wall sections with better insulation to reduce the mechanical system.
It's also essential to look at the life-cycle savings, he says. More expensive, sustainable materials often save money down the line. Blair Towns relies on energy-efficient low-E windows and balcony doors to maximize daylight and reduce heat loss. Energy Star light fixtures, ceiling fans, and appliances require less energy and save water. Instead of a trash bin, the property uses a trash compactor. Although the compactor cost $10,000, it reduces the number of trips required by the hauler. This not only saves money but also reduces the amount of gas and landfill fees. "If you do all these little examples, they start to add up," Segerman says.
Green building isn't limited to luxury and market-rate communities. Due to the life-cycle savings, Beacon Development Group was able to make green building work for Traugott Terrace, a 50-unit affordable housing community in downtown Seattle. The project serves recovering addicts making 30 percent or less of the area's median income.
While the cost of designing to LEED standards at Traugott ran 3 percent to 5 percent above typical construction costs, these costs will quickly be recouped, says Karen Brawley, a housing developer with Beacon Development. The cost savings of energy-efficient products in Traugott is estimated at about $20,000 each year. Plus, due to a competitive bidding climate in 2002, the developer was able to absorb some of the extra green building costs, like the use of windows with a low U-value rating for better insulation.
The Seattle Office of Housing, which provided financing for Traugott, is also realizing the importance of investing in more durable products from the start, Brawley says. Several nonprofits are coming back 20 years after their projects were built, asking for more money due to escalating maintenance costs. "The Office of Housing's current stance is to try to spend a little more money up front so buildings will last longer and won't have huge rehab costs early in the life," says Bill Singer, an architect at Seattle-based Environmental Works, which designed Traugott Terrace.
"It (green building) hasn't been at the forefront of affordable housing because I think there was a perception that it was a much more costly way to build," Singer says. But Traugott Terrace, expected to receive LEED certification this summer, shows that there's no reason that green design can't become a standard in the affordable housing industry, he adds.
Financial Perks
There is one cost obstacle that is difficult to overcome: soft costs for the documentation to substantiate and attain certain credits. "While it is possible to do a LEED building without increasing your construction costs, it usually increases your soft costs," says Catherine Benotto, an associate at Seattle-based Weber + Thompson, an architecture firm that designs buildings pursuing LEED certification.
But help is out there, she says. Projects pursuing LEED certification are often eligible for local financial incentives, which can cover these extra expenses. Traugott Terrace's developer received $15,000 from Seattle City Light and Seattle Public Utilities to partially cover costs of pursuing LEED certification. Plus, Seattle City Light helped pay for other green features like monospace gearless traction elevators, which use one-third the energy of a standard hydraulic elevator, Singer says.
Marketing Edge
LEED's third-party seal of approval can be an effective marketing tool. "Developers are looking for an edge in the marketplace," Benotto says. "With the growing awareness of indoor environmental quality and demand for energy savings, a LEED-certified building can provide that edge."
That marketing strategy worked for New York's The Solaire. Developed by the Albanese Organization, based in Garden City, N.Y., the building received the second-highest LEED certification. "We focus substantially on the healthier qualities of the building in terms of air quality and water quality, and we focus on the energy efficiency and water conservation," says Russell Albanese, president of the Albanese Organization. As a result, The Solaire can command rents 5 percent higher than typical market-rate buildings. "We believe it to be a higher-quality and healthier building than typical rental construction."
Despite The Solaire's experience, being LEED-certified doesn't guarantee higher rents. Residents at the Blair Towns aren't willing to pay more, but they are intrigued once they learn about all the green features, Segerman says. The company gives periodic presentations on the community's environmentally friendly components, and residents are especially excited to learn that they will save about a third on energy and water bills.
Step by Step
So how does the LEED process work? Multifamily buildings of four or more stories are eligible for certification under LEED's standard for new developments and major renovations. The building council plans to pilot a rating system in 2005 to address low-rise multifamily communities.
"There was a need to establish a common definition of what is a green building within the marketplace because so much of what existed before would address just the energy-efficiency component or perhaps the use of recycled material," says Templeton of USGBC. "LEED created a guideline for projects that are working toward this (green building) and an assessment tool to measure where they have really come in terms of achieving the goals."
The first step is to complete an online registration at www.usgbc.org during the early phases of the project design. Then throughout the design and construction phases, applicants compile extensive documentation and calculations for both prerequisite and credit submittal requirements. USGBC provides technical support on credit interpretations throughout the process. After it receives the documentation, USGBC usually awards certification within three months, Templeton says. During that time, it will audit credits and ask for additional documentation.
To get LEED approval, projects must receive a certain number of credits, which are awarded in five categories of performance: sustainable sites, energy and atmosphere, water efficiency, indoor environmental quality, and materials and resources. Each credit is worth a certain number of points, which correspond to four LEED rating designations: certified (26 to 32 points), silver (33 to 38 points), gold (39 to 51 points), and platinum (52 or more points).
It's just a matter of time before more developers realize the benefits of getting certified, Benotto says. "I think over time, a lot of these green building techniques will become standard practices because they are in the developer's best financial interest," she says. "Owners can reap the long-term financial benefits of the energy savings and improved indoor environmental quality, and that value stays with the building over time, even if ownership changes"