Adam Friedman

No Matter Your Intentions, It’s all About Green

“A few choice pumpkins, squash, and bean plants were simply left on the sand beneath the mother plants to shrivel dry and return to the earth. Next season, after the arrival of the rain, beans squash, and pumpkins sprouted up between the dry stalks and leaves of the previous year. Old Sand Lizard insisted her gardens be reseeded in that way because human beings are undependable; they might forget to plant at the right time or they might not be alive next year.” [Silko, Gardens in the Dunes, P.3]

We unfortunately live in a world where few people have the respect of nature and our environment that Old Sand Lizard does. If only we could live in a place where money and appearances did not matter than there would be no reason for this paper and no reason for governments to have to incentivise people to do the right thing. If we lived in that world then every developer/owner would focus on making their current portfolio green in the best manor possible, through a green conversion to their existing buildings not through new construction. If we take the rate of new construction in New York City and just changed those projects to green conversions there would be a dramatic and long lasting, extremely positive, environmental effect on our city and our world. There is no argument that building green is better for our world and the world of our children. However there seems to be a disconnect when people look for reasons that they or their clients should lead "green lives." It is never about what impact they will have on the environment as a whole or about saving the world for future generations, it is always about what green can do for the individual, both socially and, perhaps more importantly, economically. Not to mention when you read the top ten reasons for going green one can't fail to notice that 6 of the ten items talk about money and cost savings. Its not to say that this is a bad thing certainly all of the costs and benefits, of going green, need to be laid out for the consumer and developer so that he/she can make an informed decision. However only one of the points mentions having an impact outside of your own life and doesn't even speak to the future of "our" earth for our children. When it comes to green building it should not be done for just the wealthiest of the wealthy it needs to be spread out to all the people of the world, especially those in "developed" countries. We need to make a point that living green is not a trend or a fad but a necessity and inevitability if we want our children and our children's children to be able to enjoy the beautiful world that we inherited. In order to do that we must make green building attractive both economically and socially which means that there must be more governmental incentive to both builders and tenants to convince them to go green. If this happens not only will the builder want to build green but also their buyers will demand that they do such.

When we read the quote above we all have something to learn from it. It speaks to so many of the things that we take for granted and abuse, it reminds us that without us the earth would not have so many of the problems it currently does. It shows that the earth can sustain itself without help from the human race. However it also points out that if we are going to continue to use the earth to further our lives we need to be willing to do it in a sustainable way whether you are a farmer or a real estate developer we all need to take the practice of sustainability to heart.

1. Improve the air quality in your home
* The quality of a home's indoor air is the most important feature of green homes.
* Green homes limit the use of chemicals that can off-gas from building materials that can affect allergies and respiratory ailments.
* Steps are taken to control and filter air contaminants during and after construction. All green homes contain passive radon mitigation systems.

2. Make your living space more comfortable
* Green homes offer better humidity control.
* Advanced air-sealing techniques help eliminate drafts and cold spots to keep temperatures in your home relatively even.
* High-performance Energy Star windows are more efficient and help maintain a constant internal temperature.

3.  Reduce energy costs
* ENERGY STAR-rated appliances save an average of 30 percent over standard models.
* Compared with standard homes, ENERGY STAR-qualified homes deliver $200 to $400 in annual savings.
* Advanced insulation techniques and materials increase the R-value of insulation, save energy and help reduce heating and cooling bills, which account for at least half of energy use in the home.

4. Protect water reserves save on costs
* The mean per capita indoor daily water use in today's homes is slightly over 64 gallons. Implementing water conservation measures can reduce usage to fewer than 45 gallons.
* Green homes can have a significant positive impact in areas affected by long- and short-term drought conditions.

5. Reduce time and costs related to maintenance
* Vinyl siding on exterior walls saves money on installation and maintenance; fiber cement siding is termite- and water-resistant and comes with a 50-year warranty.
* Many green materials outlast their conventional counterparts.

6. Reduce home construction waste
* The average single family home in the United States generates between 6,960 and 12,064 lbs. of construction waste.
* Green home building reduces job-site waste by at least two-thirds, reducing the burden on landfill space.

7. Reduce dependence on fossil fuel costs and promote cleaner air
* By using local materials, green homebuilders reduce transportation costs — and our reliance on fossil fuels. It also reduces greenhouse gas emissions.

8. Have a global impact
* The benefits of a green home extend far beyond you and your family. Every year, an ENERGY STAR house eliminates 4,500 pounds of greenhouse gases that a conventional house contributes to the atmosphere.
* One example of an issue having global impact is the selection of paints that contain relatively low or no volatile organic compounds (VOCs). The use of low- or no-VOC paints helps reduce ground-level ozone pollution, which can have a global impact.

9. Reduce landscaping costs and help clean the air
* During construction of a green home, topsoil is removed, stockpiled and then reapplied to the site. Soil amendments and compost can be added to promote healthier lawns and reduce watering requirements
* Green homes preserve trees that grow on the property. Tree preservation reduces landscaping and future energy costs and helps provide winter windbreaks or summer shade. One tree can filter 60 lbs. of pollutants from the air each year.
* Proper planning and engineering of a site minimizes the environmental impact of the house during and after construction.

10.  Qualify for an Energy Efficient Mortgage (EEM)
* EEMs are federally recognized and can be applied to most home mortgages. They provide the borrower with special benefits when purchasing a home that is energy efficient, or can be made efficient through the installation of energy-saving improvements.
* With an EEM, you can:
o Stretch debt-to-income qualifying ratios on loans for energy-efficient homes.
o Qualify for a larger loan amount.
o Buy a better, more energy-efficient home.

There is no activity that has greater impact on human health and the environment than that of building construction and its subsequent use. The quantities of resources that are used during building construction, renovation and operation, is mind-boggling and has serious environmental impacts. In the United States, together commercial and residential buildings are said to be responsible for around 65% of the country’s electricity consumption, 30% of all greenhouse gas usage, and 12% of potable water use. Many current indoor building materials, such as sheet rock, release hazardous toxins, impair indoor air quality and are thought to greatly reduce occupant health. The pollutants that are released from building operations such as HVAC are seen as major causes of respiratory disease, heart disease, smog, acid rain, and climate change in New York City.

There are many things that help to make a building “green.” Perhaps less important to our environment yet still very important socially, is understanding what it means when someone refers to “green building.” A green building has many facets but the most importantly is that it is built using sustainable materials. It must be efficient in using energy, water and other resources that it consumes. It cannot create a large footprint and therefore must not pollute and should put off only a small amount of waste. It should do all of these things while still being aesthetically pleasing and helping promote efficiency to those who enter inside of it or work and live around it. Many of these definitions seem like general terms and that is what has caused green building to become the center of debate. People are unsure of what they are getting when being promised green space and developers of unsure of exactly what to do to fulfill what their clients believe should be green in their new green buildings and developers are beginning to question what it is that they are getting, incentive wise, by building these “green buildings” that have statistically lower margins than the comparable non-green product.

The people and governments of New York and the United States can and must reduce the health and environmental impacts of the city’s buildings by encouraging the design and build-out of “green buildings.” To quote Robert Watson, “Buildings are literally the worst thing that humans do to the Planet. Nothing consumes more energy, nothing consumes more drinking water and nothing consumes more materials.” It is clear that currently both the developers and the government are not making respectively the proper and far-reaching changes that must be made in order to save our city and its inhabitants from any further detriments to its environment. Many other cities throughout the country have adopted LEED or in some cases require city owned buildings to be built according to green building criteria, they include San Francisco, Boston, Austin, Dallas, Portland, Boulder, Chicago, Los Angeles, Atlanta and Seattle. Most cities have created incentive programs for private construction projects that include tax abatements, FAR bonuses and expedited permit approvals. Boston has gone as far as requiring that new buildings over 50,000 square feet be LEED certifiable. LEED (Leadership in Energy and Environmental is a building rating system that was developed by Robert Watson, The United States Green Building Council and The Natural Resources Defense Council to help show both builders and consumers the methods and products that should be used to build a green building focusing on siteing, water efficiency, energy consumption, materials used, resources consumed and indoor environmental air quality.

A recent study showed that, on average, green buildings show a ten times return on the investment in green building design. The analysis of 33 different green buildings revealed an average cost premium of around 2% for buildings that received any type of LEED certification. However when looked at from the developers point of view who may normally only make a profit equal to 10% of the cost of a project that 2% equals around 20% of a developers total profit. In commercial buildings that have multibillion-dollar budgets this could equal a profit loss in the hundreds of millions of dollars. To that end it is obvious that the government must help inspire these developers to build green. There is one easy way to do this which speaks to the bottom line that a developer sees, which is through tax incentives. This action has already been taken by The State of New York, which provides tax credits for buildings that meet certain criteria and, under Executive Order 111, state agencies have been instructed in methods that reduce energy and utilize green building principles. However the current state green building tax incentives were to be in 2 phases totaling $50,000,000 in incentives over 9 years. This may seem like a great deal of money but is honestly nothing more than a joking attempt in reality to encourage green building. If buildings are truly the greatest detriment to our environment than why would we only forgive $50 million of New York State’s tax income over a 9-year period? That is correct over the past 9 years they forgave less than 1% per year of total tax income has been forgiven to help encourage green building. It is rumored that the total tax collected by New York State is now at over $100 billion annually. To make this clear it only took 7 projects state wide to used up all of these tax incentives. New York State should be involved in helping hundreds if not tens of thousands of projects every year go green. This would produce the needed vision of green building in both our city and state. As Rob Watson put it, “Almost twenty years into the green building movement its like we are still in kindergarten.”

To this end when focusing on new office buildings built in the last 18 months in the city of New York we notice that there is the potential for lots of problems. The current system of accountability does not have the proper checks and balances in place to help promote green building into a thriving industry. By early 2008 there were only 11 green buildings in New York City totaling 12.3 Million square feet of space. That may seem like a good deal but when you consider that the city of Los Angeles has over 100 buildings totaling 26.2 million square feet New York is really a newcomer to this market. To date there have been issues as to what is considered a green building and what one must do to achieve different levels of “greenness.” This leaves both developers and buyers at huge risks when one party believes they are delivering a certain product and another party is expecting to receive an entirely different product. This sets the stage nor only for many lawsuits, which in this day and age we already have to many of, but also for a huge discounting of what it means to build, live or work in a green building.

This poses the question, what can we as people do to help encourage the rapid growth of commercial green buildings in New York City: The answer is simple we must focus on the truly green side of this issue, the money. Working in real estate development there is one lesson that is learned quickly 999 times out of 1,000 there is only one thing that matters, that is the bottom line. How much money will the project cost and what will be the leveled rate of return on the investment. I.e. after debt service, all costs, and any possible unforseens how much money will the company put back into its pocket. When it comes to green building the number is almost always without question, over the short term, significantly lower than for the construction of a grey (non-efficient) building. Even the “father of green building,” Robert Watson said, “Market and incentives are very paramount to successfully delivering a green product to the market.” It has become clear that with out the governments intervention on a city, state and federal level the green building movement will never be able to mature to a place where it is changing our world on a personally noticeable level.  The government must change their current tax laws to forgive more taxes on green properties. For New York City they should be willing to give Green tax credits to any building that is larger than 10,000 square feet that goes green. The State must be willing to give tax credits to any building over 100,000 square feet. The Federal Government must give tax credits to any building over 500,000 square feet. This would then drastically change the profits that developers would be able to see by building green. From a developer's perspective they end up getting taxed on large projects about 47% of their profits with tax incentives they could be given back 25% of this taxation thus their return would increase by 50% this speaks to the wallet of any developer in a huge way.

Some might argue that I am taking a one-pronged approach to this subject that I am focusing solely on the monetary issues of this problem not the social ones. However, in recent years it has become very desirable for companies to be green thus if they are given a green product and a grey product at the same upfront cost and lower operational costs every company I spoke with said it would not even be a choice they would absolutely chose the green product. Thus not only are we the people ready to go green but this should show the governments of the United States that this is a movement they must stand behind and help to mature. Another argument against this policy is that they governments would be loosing potential tax revenues. However this is not really the case. The green product will cost the developer about 25% more to deliver to the consumer so the tax revenues would under today’s laws be about 25% higher on a green project than a grey one. So in essence the government is just saying that they will not exploit green builders but rather stand alongside of them as their partners in cleaning up our city and our country.  This tax rebate system has been proven in New York before with the 421a-tax abatement. This essentially made it cheaper to own a new construction building instead of just rehabbing the entire building. In today’s world we must turn away from that and encourage both new green construction and green rehabilitations. Although the rehabs are more desirable in the long run we must rely on the lower cost of a rehab to incentivise builder to create that product if they feel they need the utmost high end product though, the undoubtedly will build green.  Unfortunately when it comes to real estate in New York City its all about the green, and that green is money not the design of the building.


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