In April the FHA Office of Multifamily Housing Programs announced a change that will benefit certain FHA-insured loans through reduced upfront and annual insurance rates. For new or renovated LEED-certified multifamily properties, annual rates will drop to some of the lowest levels that FHA is allowed to offer.

“By reducing our rates, this Administration is taking a significant step to encourage the preservation and development of affordable and energy-efficient housing in communities large and small. This way, hard-working families won’t have to make the false choice between quality or affordable housing,” said U.S. Housing and Urban Development (HUD) Secretary Julián Castro in announcing the changes.

This change is extremely beneficial to LEED-certified (and other green-certified) apartments and co-ops. Specifically, properties that certify with LEED and use FHA multifamily financing will have their insurance rates reduced from between 45 and 70 basis points to 25. Similar moves from Fannie Mae demonstrate that reducing insurance rates for green certified properties can save projects hundreds of thousands of dollars over the life of a loan.

The scale of this change holds the promise of rapidly altering the landscape for new and rehabilitated apartments. The Office of Public Engagement at HUD estimates that in 2015, FHA originated nearly 1,000 multifamily loans, totaling $10 billion and over 100,000 apartment units around the country. They expect to replicate similar numbers for 2016.

Families and individuals stand to benefit the most from these changes. Oftentimes residents of limited means spend a disproportionate amount of their monthly income on utility expenses. In 2014 the United States Bureau of Labor Statistics reported that families with incomes in the lowest 20 percent spent nearly double the percentage of their income on heating and electricity than families in the highest 20 percent.¹ Building and renovating housing to be more energy- and water-efficient lowers monthly utility bills with the effective result of families retaining more take-home pay for discretionary expenses.

By incentivizing certification, HUD and FHA recognize the value third-party certification has in yielding quality places to call home that reduce operating costs, improve indoor air quality, and reduce overall impact on the environment.

For more information on the new financing options, please visit the websites of the Office of Multifamily at HUD and the Federal Register.

Top Left: Avena Bella incorporates solar power, energy-efficient heat pumps for heating and cooling, and a continuously running energy recovery ventilation system brings in fresh, filtered outside air. Residents have access to a community center, community garden, play area, technology lounge, swimming pool, and landscaped walkways between buildings. Top Right: Built by EAH Housing with sustainability in mind, Avena Bella is an 80-unit affordable housing community in Turlock, California.

1. Quintiles of income before taxes: Annual expenditure means, shares, standard errors, and coefficients of variation, Consumer Expenditure Survey, 2014 available at: http://www.bls.gov/cex/2014/combined/quintile.pdf.

PREVIOUS | NEXT

Workshops held at the congregations spread the word about mitigating waste, growing vegetables in the church gardens, and carpooling. Top right photo: Kathy Arnold; Left and bottom right photos: Kari R. Frey, FREYtography

Building codes in many areas of the country are becoming incrementally greener, with the state of California in the lead after the 2010 adoption of the nation’s first and only statewide mandatory green building code, called CALGreen.

CALGreen is considered so eco-friendly that the LEED Steering Committee ruled this spring that a handful of their building measures are aligned enough with LEED credits for building professionals to use a streamlined documentation path for LEED certification.

As of July, projects in California subject to the mandatory 2013 CALGreen requirements and registered under the 2009 or v4 versions of LEED BC+C or LEED ID+C can use the streamlined path for select credits and prerequisites.

“The streamlining of paperwork has obvious benefits,” says Wes Sullens, green building program manager at StopWaste, a public agency responsible for waste reduction in California’s Alameda County. “However, this is also the start of something bigger, which is an overall alignment between LEED and green codes.”

Sullens is chair of the LEED and CALGreen Task Group, which worked since the summer of 2014 to investigate LEED and CALGreen alignment in technical detail and explore opportunities to reduce the costs of documenting LEED. The group, and ad-hoc group of statewide technical experts coordinated under the USGBC-California banner, found that six LEED measures concerning indoor water use reduction, refrigerant management, the storage and collection of recyclables, construction waste management, and the use of low-emitting paints and adhesives were functionally equivalent to a corresponding CALGreen requirement.

Engineers, architects, and other building professionals in California were inspired to learn about the streamlined documentation path for CALGreen projects.

“When we shared this news around the office, people were pretty happy and thought ‘Wow, that is great news,’” says Andrea Traber, a principal with Integral Group, a green engineering firm in Oakland. “It’s a removal of confusion that’s really helpful. We still all have to design well and pay attention to all the details, but the streamlining is really what’s so important.”

Joseph Marfi, the director of sustainable design and construction with Turner Construction Company in Anaheim, said it will be easier and less expensive to achieve LEED certification by saving time in the documentation process.

“I suspect this will increase the number of LEED certifications in California in the near future,” which has positive ecological implications, Marfi says.

“Everyone knows the fragile environment in California is in dire need of help,” he says, “from air pollution and snarled traffic caused by cars to droughts and water shortages caused by old, inefficient infrastructure and outdated buildings that also fuel climate change.”

Sullens says that as California’s building code has become greener, a debate has been ongoing in the state as to whether LEED is still necessary to achieve eco-friendly buildings. Yet, while some other measures are close to alignment between CALGreen and LEED, many are not, he says.

“This clearly shows that there is a lot else that isn’t able to be streamlined so easily, because LEED does it quite differently and exceeds CALGreen in many ways,” Sullens says. “So it helps solidify that codes and LEED are not necessarily equivalent.”

Nevertheless, there are still other parts of LEED and CALGreen that are similar, and work will continue to reduce required documentation, says Ryan McEvoy of Gaia Development, a green building consulting company in Marina Del Rey.

Dan Burgoyne, sustainability manager for the state of California’s Department of General Services, who also sat on the task group, said that, specifically, the energy standards used in LEED (ASHRAE 90.1 – 2013) have similarities to California’s Energy Code (Title 24, Part 6) and may also be a candidate for streamlining. In fact, USGBC issued two LEED addenda on July 1 that do just that (#10419, #10421).

“California continues to make large strides in energy efficiency with each code cycle,” Burgoyne says. “By comparing these two code standards, and determining how they align, this will save California building professionals additional engineering costs to run two energy models and will reward California buildings appropriately for higher efficiency.”

Terminal 3, boarding area E of San Fransisco International Airport. Natural updrafts will create a fresh-air feeling, more like being outdoors. Photovoltaic panels, solar water heaters, and radiant ceiling panels are also expected to help SFO achieve LEED Gold certification. 

Los Angeles International Airport (LAX) incorporates sustainable design features that promote energy efficiency while mitigating adverse environmental impacts.

Marfi, also a task group member, notes that California’s building codes and LEED continue to evolve and “codes change usually on a three-year cycle…We will have to restart the analysis when these updates are released.”

One potential stumbling block in California is that, while the CALGreen requirements may be mandatory, they’re not necessarily understood, adhered to, or enforced equally in the state’s hundreds of jurisdictions, says Bill Worthen, a founding principal of Urban Fabrick Inc., a consulting architecture firm.

“How [the new codes are] being implemented is in no way consistent, and that’s a real risk right now,” Worthen says. “There are a lot of things that were in the building codes even before CALGreen that are still never really enforced, so this just adds another layer of complexity.”

Worthen, who sat on a preceding task force effort also chaired by Sullens, contributed to a report released by USGBC and USGBC California in April. The report acknowledges these challenges in code implementation, makes other observations on progress to date, and offers recommendations for how green building codes and rating systems can evolve and harmonize in California.

While California is the only state with a mandatory green building code, a handful of U.S. communities have adopted the International Green Construction Code (IgCC). The so-called “IgCC Powered by 189.1” is also being analyzed for overlap with LEED, says Sullens, who sits on the standards body working on the alignment of LEED, the IgCC, and Standard 189.1.

“The U.S. Green Building Council committed years ago to green codes and seeing their alignment with LEED to help encourage the benefits to the environment that they provide,” he says. The new LEED documentation path for California projects “is the first stab at actually doing that and showing what an overlay looks like…so it’s really the start of something much bigger happening,” Sullens says.

In honor and appreciation for this foundational work, and also for many other exemplary contributions, Sullens was recognized at USGBC’s annual volunteer meeting this summer with the organization’s annual Astounding Advocate award.

Several members of the LEED and CALGreen Task Group agreed that what happens in California often has a way of happening across the country.

“This is a real message to other states, and I hope it will accelerate the development of green codes nationwide,” Marfi says. “No longer can codemakers turn a blind eye on inefficiencies for which society will have to pay a very high price throughout the life of our new buildings.”

PREVIOUS | NEXT

Atlanta’s Commercial Buildings Energy Efficiency Ordinance is bold in its scope. It is only the fourth to have a policy inclusive of the powerful triumvirate of benchmarking, transparency, and commissioning, with a retrocommissioning option and the first city to include water audits.

“Cities can be powerful incubators for ground-breaking policy, especially on the energy front,” remarked Stephanie Stuckey Benfield, newly minted director of Atlanta’s Office of Sustainability. “Atlanta’s ordinance is particularly innovative since it includes water efficiency as well as energy efficiency.”

Benchmarking and transparency policies, now in 14 cities, two states, and one county, are the embodiment of the aphorism “you can’t manage what you can’t measure.” The building area covered by benchmarking and transparency (in multiple forms) across the country is equivalent to approximately 6.6 billion square feet of floor space.  In its basic form, the first component of these policies, benchmarking, does exactly what it sounds like it might: sets the base against which the progress toward energy efficiency will be compared. Buildings then report their benchmarked consumption, and progress over time, to the administering authority via the transparency portion of the policy.

The third part of the policy puzzle is the energy audits, and in few cases retrocommissioning. The energy audit is defined as a professional appraisal of the existing equipment, operations, and opportunities for improvement. Retrocommissioning is an extension applied to existing buildings, in Atlanta’s policy this is a voluntary add-on, and ultimately was a concession to stakeholders looking for a more “iterative” approach to efficiency upgrades.

The version that Atlanta’s City Council was able to pass is on the high end of the spectrum in terms of its requirements and expected outcomes. Specifically, all city-owned or operated buildings and all commercial buildings over 25,000 gross square feet must comply with benchmarking and disclosure using ENERGY STAR Portfolio Manager, and all city-owned or -operated buildings and all commercial buildings over 25,000 gross square feet must submit energy audits once every ten years. Notice of compliance went out early this spring; city-owned buildings had to comply first (by April 2015) and privately owned buildings have until July 20, 2015 to meet the requirements.

When asked about the expected impact, Matt Cox, Buildings Energy Efficiency Project Manager for the city, said, “At full implementation, we’re expecting this policy to provide significant across-the-board benefits, not just to building owners, but also in terms of public health benefits from reduced emissions and more jobs that will contribute to Atlanta’s economic well-being.”

Passing this type of ordinance, though gaining momentum in municipalities across the country, like most innovative ideas, faces resistance. The Institute for Market Transformation (IMT) has been working with governments to overcome challenges and create opportunities for benchmarking and transparency policies.

“One challenge that owners often voice is that they can’t control the entire building themselves and that tenants have a big impact on energy use in a building. This points to two market needs and opportunities,” describes Cliff Majersik, executive director at IMT. “One, a need and opportunity for green or energy-aligned leases. These tools align the incentives for both tenants and owners to invest in energy efficiency so that both parties come out ahead when a building becomes more energy efficient. These leases also allow owners and tenants to set goals jointly and find pathways to reaching these goals together. Having a numeric score, such as an ENERGY STAR score, provided through benchmarking, creates a helpful, measurable target for everyone. The other need and opportunity is for whole-building data access. To fully benchmark a building, you need access to all of its energy use data.”

Despite challenges, IMT states that governments across the country are actively pursuing benchmarking and transparency to confront increased attention to water and energy management. In fact, the trend toward even more rigorous add-ons, like retrocommissioning and mandatory audits is becoming more popular as a policy option.

Atlanta is one of those governments. With 2,350 buildings (88 percent of the total commercial building space in the city) required to participate, Atlanta is well positioned to earn the moniker of the new capital of conservation in the southeast and beyond.

PREVIOUS | NEXT

released in March of 2013. Key successes from the first year have already been reported this past June.

“For a new office of sustainability like ours, leadership means bringing the right pieces together and building from there, rather than trying to ‘reinvent the wheel,’” Koetter says. “We are fortunate to be able to reach our goals faster and better because of the organizations that already exist. For example, one of our nonprofit partners, the Louisville Sustainability Council, coordinates monthly working groups for five action teams dedicated to the initiatives we set in Sustain Louisville.”

Sustain Louisville outlines goals along six sections: energy, environment, transportation, economy, community, and engagement. Within these goals, 69 individual initiatives are set, each on a path to move from planned to completed (four of which have already been completed since the initial 2013 plan was released). The city has reported on the plan’s outcomes, which include an energy savings performance contract expected to result in $27 million in energy efficiency upgrades for city-owned buildings; 83 ENERGY STAR commercial buildings in the city; an update to the Land Development Code to allow for more community garden space; and grant funding to complete the most comprehensive heat island effect study in the country.

The study, conducted within the Georgia Tech School of City and Regional Planning, is the first step in addressing concern that the city has one of the fastest growing heat islands in the country. To address the issues Koetter says, “We set out to identify ways we can improve. The initial results of the heat island study show that we have lots of work to do. Much of this work is related not only to tree canopy but also to the built environment as well.”

The University of Louisville is also taking its sustainability initiatives to a new level. Dr. Shirley Willihnganz, provost of The University of Louisville (UofL), oversees all aspects of university academics and operations. Her goal is to fulfill a state mandate to become a premier, metropolitan research institution. She interprets this, in part, to be an imperative to strengthen the community surrounding the walls of the university as much as the community within—enumerating sustainability as a priority in this mission.

To start, UofL has committed to actively reduce greenhouse gas emissions and achieve climate neutrality by 2050. Their Climate Action Plan outlines sustainability goals across the spectrum of the university’s activities from purchasing practices to behavior change, and from green buildings to food and transportation options, and everything in between.

At the beginning of 2014, UofL reported in the plan that they estimate an emissions drop of over 27 percent—from 246,929 to 178,679 metric tons (equivalent to taking 14,167 cars off the road) from 2006 to 2013. Currently nine Leadership in Energy and Environmental Design (LEED)-certified buildings—almost one million LEED-certified square feet—exist on campus. Willihnganz affirmed the university’s ongoing policy to stick to LEED guidelines even after 14 years of budget cuts, a decision that predates the state requirement that new public buildings receiving more than 50 percent investment from the state achieve LEED certification.

“Every building that we have built since we made that commitment has gone forward with the intention and gotten LEED certified. Even a building that’s basically a computer, can do that,” says Willihnganz. “I also think that policy is really important, because policy helps guide behavior.”

For Louisville’s Nucleus Innovation Center, the emphasis on an innovation “ecosystem” cannot be overstated. Vickie Yates Brown, president and CEO at Nucleus, is the force making Louisville’s aspirations for innovation a reality.

She attributes the development of this ecosystem, officially serving as the economic development extension of the University of Louisville Foundation, to partnerships and a shared vision between the city and state government, university, private sector, and the entrepreneurial spirit of the city.

“We felt that we needed to lead by example. So if you’re in an innovation park and you have the local and state government, and everyone coming together in a partnership to work together to build an innovation park, you are expected to embrace best practices, you are expected to lead by example,” describes Yates Brown.

Housing office space, dry labs, and even a test kitchen, the new 197,000 LEED-Silver space on the edge of NuLu, a LEED-registered neighborhood, seems to epitomize Nucleus’s quest. The building offers some impressive green building strategies such as the 6,000-square-foot roof with reflective pavers and an expansive native plant garden. The 100 percent reflectivity of the roof is especially important to the city’s heightened awareness of heat island effect. The Nucleus is modeled to achieve a 35 percent reduction in indoor water usage and captures 90 percent of stormwater run-off via a retention basin under the building made possible via a partnership with the Metropolitan Sewer District.

Willihnganz synthesizes what is happening in Louisville best, “The world needs all of us, we all have gifts, all have things to bring, and everybody should be counted for what they can bring; [we need to] find the very best, biggest use for that.”

PREVIOUS | NEXT

Initiative, now in its third year under the auspices of the U.S. Green Building Council’s (USGBC) Inland Empire (IE) Chapter. It’s a plan aimed at exposing the benefits of energy efficiency and environmental consciousness using a simple principle: Show—don’t just tell. By partnering with other organizations, the initiative has upgraded more than a dozen homes in the area, given unemployed volunteers skills and experience to build new careers, and brought sustainability education to schools and other local institutions.

“I think our members were thirsting for an opportunity to get out and apply those principles of sustainability in a real way that would help our community,” says Rick Fochtman, chair of the Sustainable and Healthy Communities Committee that oversees the program. “This is the perfect venue to do that: We’re furthering the message, but we’re doing it in a way that’s really helped people out and has made an impact.”

Michael Peel, the committee’s past chair, started the initiative in 2011 as an outgrowth of his day job at a nonprofit that centered on bringing jobs, healthcare, education, and other services to underserved communities in the Inland Empire. “Mike had strong ties to the different organizations that were working with him, and as a project for our chapter, we started to figure out ways we could bring the green message to that community,” Fochtman says. The overarching goals of the initiative involved spreading a series of green development zones throughout the Inland Empire—areas that concentrated investments in energy efficiency, renewable energy, and other practices.

The following year, when USGBC-IE teamed up with the city of Rancho Cucamonga—which had instituted its own program linking environmental consciousness with healthy, active living—the Sustainable and Healthy Communities Initiative took off. In particular, the initiative geared its efforts toward a Hispanic audience—a large demographic in the Inland Empire, and one often overlooked when it comes to spreading the message of sustainability. “It’s extremely difficult to find anything having to do with sustainability conveyed in Spanish,” Fochtman says. After partnering with a civic group in the city’s Northtown neighborhood, they began hosting presentations and seminars on basic energy efficiency practices for homeowners.

“But rather than just talking to people and putting on another class, we wanted to actually demonstrate [how to do these things], and that’s how our program got some great attention,” Fochtman says.

Thirteen homeowners volunteered their homes for no-cost energy audits and energy-saving upgrades. Using grants from USGBC, the Southern California Gas Company, and Home Depot, a coalition of community members and contractors ferreted out inefficiencies with rented heat guns and blower doors, then made an average of $2,000 worth of improvements to each home to reduce their monthly energy bills. “More importantly, we taught the homeowners and their neighbors what the process was and why it was important,” Fochtman says.

At the same time, these projects boosted the résumés of roughly 50 out-of-work volunteers in a region with unemployment rates higher than the state average. The Inland Empire Chapter helped organize classes on sustainability, the Leadership in Energy and Environmental Design (LEED) rating system, and technical training, and the workers put their education into practice doing modest tweaks to insulation and air tightness, like adding weather stripping and insulation. “We provided them basic training in the principles of sustainability, and then through these workshops and employing energy efficiency measures on houses, we gave them job experience,” Fochtman says. On one project, USGBC-IE partnered with GRID Alternatives to outfit a home with solar panels. The program has produced a few notable success stories—one alumnus from Northtown who completed the training program even started his own home energy auditing company.

More recently, the Sustainable and Healthy Communities Initiative has spread to community institutions elsewhere in the Inland Empire. Fochtman himself has led four presentations on energy efficiency, waste management, and other topics at different churches. “We’ll start with a general interest topic, like sustainability or global warming, and from there we follow up with more practical, applied seminars, like how to change out fixtures in your home to improve water efficiency,” he says. “The idea is to intrigue them with concepts, then come back with concrete ways that they can make improvements in their own lives.”

Underscoring the Sustainable and Healthy Communities Initiative is a simple, crucial truth: Outreach only
resonates when it speaks to the demands of the residents. “It’s a matter of really getting in, finding out what the group wants, and being adaptable,” Fochtman says. “Some people don’t want to talk about global warming—well, then we don’t need to. We can talk about other things.”

Fochtman talked about other things in spring 2013, during an assembly in front of his children’s elementary school. In response, he received a book full of handwritten thank-you notes. One message read: “Thank you green speakers for coming to our school. I promise I will save electricity.” Later on, at his kids’ soccer game, children ran up to Fochtman and boasted about the lessons they took home to their parents. “It was really fun hearing how they asked their mom to put out a new trashcan for the recyclables,” he says.

Saving electricity and recycling are simple gestures, but the assembly clearly made an impression on the pint-sized audience. It was exactly what this crowd needed to hear—and it embodies what the Sustainable and Healthy Communities Initiative does to make a lasting impact.

PREVIOUS | NEXT

By Eric Butterman

A sustainable rating system for multifamily dwellings is a win-win for residents and real estate investors alike.

 

The opportunities abound—if you know the score. That’s the thought behind the ENERGY STAR rating system 1 to 100 scale finally being applied to multifamily buildings as it’s been for so many other structures. Available through Portfolio Manager this September, owners can assess their building for this official rating. Previously, multifamily buildings were not able to show their green value in this way.

Team Effort

With the EPA’s ENERGY STAR recognized by 80 percent of the public as high-brand recognition, that label can change the conversation, says Chrissa Pagitsas, director of Green Initiative Multifamily for Fannie Mae. The problem was multifamily was left silent without a rating system. “It hurt multifamily’s ability to assess their property’s performance,” she says. “It wasn’t viable to do it before because the EPA didn’t have anyone to collect data to do the analysis.”

Fannie Mae agreed to fill that role. With over 39,000 properties in their arsenal across the U.S., they volunteered to gather data to change the multifamily landscape. The survey, which took place in 2012 and 2013, also resulted in garnering valuable statistics to further bolster that green could equal savings.

But there are certain qualifications. According to the Portfolio Manager website, this rating will only be available to properties with 20 units or more. To receive an accurate score and ENERGY STAR certification (given to buildings scoring 75 and above), more than half of the units on a property will need to be located in structures that have five or more separate living units per structure.

A Boon to Investment

Beyond its positive effect on improving the green status of buildings, Fannie Mae believes this will be a financial boon to affordable housing. “With an ENERGY STAR score affordable housing owners can prioritize where they invest capital,” Pagitsas says. “If you have 100 properties in a portfolio and limited capital to invest for improvement, how do you begin that assessment? This score gives owners a tool to assess where to best make those capital investments to reduce water and operating costs and increase net operating income.”

Roger Platt, senior vice president of Global Policy and Law for the United States Green Building Council (USGBC), also sees the advantage for real estate investment trusts. “They’re increasingly trying to position their particular companies as being committed to broader sustainability goals,” he says. “Investors are often asking what the sustainability aspects of these projects are. To be able to say this portfolio has an average ENERGY STAR score of ‘xyz’ is vital. They can tell their shareholders about their commitment and it goes with the whole premise of [Real Estate Investment Trust] REIT, the idea that it’s the most transparent form for real estate.”

Mike Zatz, chief, ENERGY STAR, Market Sectors Group, offers that we can’t say for sure what will happen with real estate investment trusts from the rating system, but notes studies on the effect to the office sector say we can anticipate the same might hold true.

However, it also benefits Leadership in Energy and Environmental Design for Existing Buildings (LEED EB). There has been a credit linked to the ENERGY STAR score but multifamily buildings couldn’t previously access it since there wasn’t a score for that category, says Pagitsas. Platt also sees a more focused and committed market for the LEED EB rating system after September. “If you are a company that has already done what is necessary to make your building an ENERGY STAR building, it will be much easier to make an additional investment when you’re talking about a LEED for existing buildings,” he says. “It can bring in the apartment building industry in a similar way to other industry.”

An Affirmation to Affordable

Shauna Sorrells, director of the Office of Public Housing Programs for HUD, believes the establishment of a score can push housing authorities to redevelop at a higher level. “It also encourages housing authorities to do their own internal assessment, identifying energy consumption hogs within their own portfolio, and prioritizing their limited resources to make improvements in that space,” she says. “Anything that increases the resonance of this conversation to our owners and gives them specific tools to help prioritize their resources to make these types of improvements we see as a strong benefit.”

Platt says the improvements also will likely be passed on in much-needed savings to tenants in affordable housing. “If this could create a reduction in someone’s energy bill of $1,000 a year, that’s a big difference,” he says. “The opportunities are there and now the data helps back it up.”

Moving Forward Together

The USGBC, a strong supporter of the initiative from early on, is excited to push its collaboration further now that the rating system is going online. “With our huge audience of 13,000 member companies and 30,000 individual members of our chapters, this is a benefit everyone needs to know about,” Platt says. “Our role will be to build on this score and encourage as many building owners as possible to go beyond energy and water performance and go into environmental details and lifecycle of buildings.”

The easiest message to spread is one that’s simplest. That, more than anything, is the beauty of this one. “The value is that you bring together the energy auditors, the energy efficiency and sustainability community with a common language that can speak to the finance people,” Platt says.

And, in the end, that value’s score just might be immeasurable.

PREVIOUS | NEXT