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Money for Green Building:
Now You See It ---- Now You Don't
As we focus our Green Edge sustainability lens on the pulse of the green building industry, we notice an interesting dichotomy when it comes to money: now you see it, now you don't.
On the "now you see it" side of the ledger, there are billions of dollars lined up for greening the built environment.
These resources contribute to a green building industry that has grown, and is expected to continue to grow, exponentially from humble beginnings a decade ago.
Here are some of the sources:
- $100s of millions are available from utilities around the country to fund energy efficiency improvements in existing buildings and new construction
- Bank of America just announced a $50 billion initiative to invest in green projects involving energy, water and waste conservation, many of which will be green building projects
- Similar plans are in the works at Goldman Sachs to the tune of $40 billion and at Wells Fargo to the tune of $30 billion
On the "now you don't see it" side, we estimate that less than .05% of the 125 million buildings in the U.S. have undergone green retrofits and the most frequently cited reason for this inactivity is lack of capital.
From a strictly financial perspective, it is hard to reconcile the billions of dollars that are reportedly available for green building projects, the billions in savings that will allegedly inure to interested parties and the incredible lack of momentum to reach meaningful scale.
But considering this conundrum from the human capital perspective, it begins to make more sense. We simply haven't unleashed the human capital that is necessary to green the built environment. In spite of the tidal waves of green rhetoric and regulation that have washed over us for years now, most real estate decision makers are not convinced that greening their built environments will make a meaningful positive financial difference.
In our May News Alert we touched on what needs to happen to change this flawed (in our opinion) mindset.
Until a green mindshift occurs, money or no money, the $60B in savings (according to the EPA) that will result from eliminating waste from energy consumption will continue to be a pipe dream. At Green Edge we are working every day to unleash the human capital of green ---- let us help you do that at your company ---- you can't afford NOT to.
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Speaking of Money: What's Next
for PACE?
Property Assessed Clean Energy programs, often referred to as PACE, have been hailed as a massive potential economic stimulus that, according to a recent report by Deutsche Bank and The Rockefeller Foundation, can unlock $1 trillion in energy savings and create 3.3M American jobs.
Here's how it works: PACE programs fund loans to property owners to fund energy retrofits. The loans are typically repaid through a supplement to property taxes out of the resulting savings in energy costs. The loans and repayment obligations attach to the property, rather than the owner. Although residential PACE financing came to a grinding halt in 2010 when Fannie May and Freddie Mac refused to underwrite mortgages on homes with PACE loans, the commercial PACE market is poised to gain traction since Freddie and Fannie aren't involved in commercial mortgages. Large energy service companies such as Lockheed Martin, Chevron Energy Solutions and Johnson Controls indicate that there is a pipeline of billions of dollars of unfunded projects for commercial PACE programs. Hundreds of millions of dollars in PACE funds have been targeted in states with supporting regulatory schemes in place.
Critics of commercial PACE programs charge that the "lien jumping" inherent in the PACE structure is risky and will have ripple effects through the secondary mortgage market. Industry advocates see PACE as a way to foster growth and jobs while enabling property owners to save money instantly through energy retrofits.
Other than 55 projects in Sonoma County California, we are not aware of any private sector commercial PACE projects that have been funded. Again, we question whether the issue is financial capital or human capital. The projects exist, the funds have been targeted, enabling legislation is in place and communities have agreed to participate. What do you think is missing from the secret sauce? Let us know ---- we'd love to hear from you.
Karla Zens, who leads green brokerage initiatives at Capital Pacific, contributed to this article. |
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We Look Forward to Hearing from You
If you have questions about anything you've read in this newsletter or if you are wondering how to meet your own green challenges, contact us and we will be happy to respond via email.
greenedgellc.com 212 317 1131 
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 Hi Everyone!
Our Green Edge Newsletter this month focuses on capital: both the greenbacks that make up our financial system and the human kind that we believe is the real key to making meaningful changes.
As the economy haltingly improves, the financial cost of greening the built environment will continue to adjust downward and organizations will be more apt to consider greening their built environments. BUT unless we unleash the human capital of green, transformational change to a lower carbon economy will not take place.
Let us know where you are on your green journey ---- we welcome your input and look forward to working with you to make our world a greener place.
Enjoy Summer,
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LEED Due Diligence or LEEDigation?
With green building standards literally all over the map, it can be hard to determine just what a green building is, and whether or not you really are buying, renting or financing a green building. LEED certification, a third party affirmation that a building has a mixture of green characteristics, is the closest thing there is to a Good Housekeeping green building seal of approval.
But when it comes to buying, renting or financing an allegedly LEED certified building, how do you confirm the certification prior to closing the deal? To date, standard procedure is to refer to a plaque on the wall, or depend on the owner's representation. Little else is done to complete due diligence in this regard.
The potential for misrepresentation is great, and will only increase as the value of a building's green characteristics become more firmly established and the number of LEED certified buildings increases.
Stay tuned: the need for a third party due diligence protocol to confirm green building and LEED certification status will mature into some interesting options. The consequences of doing nothing are just too great to ignore.
Michele Skupic and Jeffrey Howell, VPs and National Sustainability Directors of FNF Green, contributed to this article.
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Green Edge Opportunity:
Greening Your Real Estate
 Don't miss out on the greatest business opportunity of our time ---- sustainability. Let Green Edge help you identify and leverage green building opportunities to transform your bottom line, strengthen brand reputation, attract positive media coverage, increase market share, reduce operating expenses and mitigate risk.
Our services include:
- Energy Efficiency Retrofits & Financing
- Portfolio Enhancement Plans
- Benchmarking & Data Collection
- LEED Advisory Services
- Green Leases
- Regulatory Compliance
- Roadmaps for Improved Green Company Rankings
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Christmas in July Anyone?
Stay tuned for a unique opportunity to celebrate the holidays in a green kind of way...
Green Edge Newsletter
If you'd like your company to be featured in one of the next issues of the Green Edge Newsletter, we'd love to hear from you. We are always looking for great green stories to share with our community of clients, colleagues and friends. If you missed our previous issues, link to our archives home page or our blog. The Green Edge Newsletter is published monthly by Green Edge, LLC. EDITOR: Ellen Sinreich DESIGN DIRECTOR: Sara Mears Copyright © 2012 Green Edge, LLC |
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