ULI Washington News

Earning Green for Going Green: Revisiting the Business Case for Sustainable Residential Development Event Recap

On May 11, 2016, real estate professionals from across the region attended ULI’s panel discussion entitled: Earning Green for Going Green: Revisiting the Business Case for Sustainable Residential Development. A panel of experts from the federal, local and private sectors offered insights on available incentives for sustainable residential development. Panelists included Pete Zadoretzky (Director of Sustainability, Bozzuto Management), Pam Askew (Senior Vice President, WC Smith), Shane Pollin (Director of Development, The Duffie Companies), Rebecca Hudson (ENERGY STAR Residential Program Environmental Protection Specialist, US Environmental Protection Agency) and Jay Wilson, LEED AP BD+C (Green Building Program Analyst, DC Dept. of Energy and Environment). The panel of policymakers and practitioners offered unique perspectives on the value of sustainability, as well as lessons learned on recent residential development projects.

The panel discussion kicked off by considering the business case for residential projects to “go green.” Private developers Pam Askew and Shane Pollin both shared examples of where sustainable development directly improved their bottom lines either through operational cost savings or through increased marketability of their projects. Jay Wilson noted that the public sector, and city government in particular, also has a financial interest in sustainability. The panelists concurred that, even without financial incentives, a business case exists for sustainable residential development.

GoingGreen.2The panelists shared perspectives concerning available funding programs and the challenges associated with them. Jay Wilson discussed Washington, DC’s Property Assessed Clean Energy (PACE) financing program. Mr. Wilson explained that the District leads the country in green building and currently has the most LEED-certified projects and ENERGY STAR-certified buildings of any city in the United States, on a per capita basis.  DC also is taking a leadership role in providing incentives and support for sustainable buildings and development. EPA’s Rebbeca Hudson discussed federal incentives for sustainable residential development, including assistance offered by EPA partners, such as Fannie Mae and HUD. EPA championed ENERGY STAR as a baseline measurement for the leading sustainability certifications, including LEED.

Despite the cognizable business case and financial incentives available for sustainable development, there are significant challenges to executing sustainable residential development projects. Mr. Duffie explained that, in many instances, there is no way to be certain that a given incentive still will be available at the end of a development project. So, the incentives generally cannot be counted on. Ms. Askew echoed this concern, adding that lenders and appraisers in the affordable housing sector haven’t caught up with the development community when it comes to sustainability – valuations of a project generally will not credit the developer for the operational cost savings or the additional market value attributable to sustainable design. Accordingly, neither financial incentives nor projected cost-savings generally can be relied upon to justify the financial return for a proposed project.

While LEED is the largest, and most well-known green building standard, over the last several years we have seen an increase in other green certifications – such as ENERGY STAR, PassivHaus, Net Zero Energy, Enterprise Green and Earthcraft. Ms. Askew noted that the great public relations boost that comes with having a LEED-certified affordable housing project far-outweighs the cost of obtaining the certification. This public recognition is warranted, as Pete Zadoretzky noted, since the features of living in a green building give residents a better value. Residents realize the benefits in the forms of lower utility costs, improved air quality and a reduction in fossil fuel dependence, Mr. Zadoretzky noted. He explained that there is a need to educate the public on the value of living in a green building to increase the demand for green projects.

The discussion was dynamic and engaging, making the case for sustainable residential development. Whether through incentives or sound business judgment, the public and private sectors are increasingly recognizing value of “going green.”

Event Recap written by Robert T. Taylor

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