The city of Houston announced a new initiative called the Green Office Challenge with the goal of getting property owners and managers across the city to reduce their energy consumption, water use and waste, as well as encourage more office tenants to do things like recycle, car pool and use eco-friendly products.

A key component of the initiative includes an energy-efficient loan program that would provide an incentive to those concerned about the costs of going green. Later this fall, the city plans to offer low-cost loans to property owners and tenants, providing the money goes to reducing their energy usage. This will be part of Houston’s answer to some of the issues surrounding PACE financing. (See earlier blog article titled, “Four Texas cities eye PACE program”)

“People like the idea of doing energy-efficiency improvements, but they still get nervous about that upfront capital,” said Laura Spanjian, the mayor’s director of sustainability.

The details of the program are not yet finalized but it sounds as though the city will have about $7 million to make energy-efficiency loans at less than 3%.

Other Houston Greening Facts:
No. 8 in the nation in the number of LEED-certified buildings with 89
No. 6 in the nation in the number of Energy Star-rated buildings with 133

For more Houston green facts, see our notes from the recent Clean Air Through Energy Efficiency where Spanjian spoke.

David Roth of gbNYC (Green Building in NYC) nails it with “What happened at 375 Hudson is a smashing success, but it’s also really nothing more than a pretty down-the-middle retrofit done well. It’s tough to imagine a better advertisement for green commercial retrofits than that.”

Roth continues, “This is common-sense stuff, not a revolutionary leap forward. It’s low-flow fixtures and improving fixtures, not slapping on some solar panels and hoisting a wind turbine. It is, in short, a basic green retrofit — one that happens to grade very highly in terms of LEED points and the sort of building performance metrics Energy Star measures, but not one that would be beyond the reach of most Manhattan office buildings. Which, in a way, is what makes it most extraordinary.”

Now you see why I said I love this story.

From the official press release, here are the main items which earned the LEED GOLD:

+ reduced electricity consumption by nearly 110,000 kWh per year by making changes to the HVAC and mechanical systems and installing variable frequency drives on the cooling tower fans;
+ reduced steam consumption by improving heat exchangers and making other HVAC improvements that reduced heating demand;
+ reduced annual water consumption by 1 million gallons by replacing original restroom fixtures with low flow aerators and new water closets;
+ adopted an expanded recycling program that encompassed not only office paper and waste, but batteries, electronic waste and construction debris;
+ implemented a building-wide Green Cleaning policy focusing on improving air quality and ensuring the purchase of sustainable cleaning and janitorial paper supplies.

That’s as basic as it gets…Down the middle of the fairway stuff…things that every building should do, whether they want a LEED plaque or not.

Golf clap for Tishman Speyer and main tenants Saatchi & Saatchi, Penguin Group, and Turner Construction.

Initially, we just explained what it actually is back in February, (What is PACE financing?).

And there is this YouTube video which does some explaining in PACE 101.

We also touched on the new Florida law that was enacted just last month, and also touched on some of the obstacles around PACE spreading.

If you forgot or missed the earlier posts on what PACE financing is, it is simply a program that creates local bond financing districts, which then lend back capital to building and homeowners to fund energy retrofit projects. Owners repay the loan through their property tax bills, typically over a 15- to 20-year term.

Randyl Drummer also recently penned (can you still use that verb in this virtual world?) his own case for PACE financing. Drummer does a solid job touching on not only the promise but also the drawbacks of the plan.

Here are some of Drummer’s high points:

“The opportunities are really tremendous from an energy retrofit perspective,” Florida State House Majority Leader Adam Hasner said. “A lot of the hesitation from building owners comes from the upstream expenses and not wanting to make those expenditures. This type of financing can help alleviate some of those concerns and convince owners to make these types of investments, which are going to be cost effective as well as energy efficient in the long run.”

I love this quote from Hasner too: “It will take time to educate people. We’re still early in the first quarter of a four-quarter game. Everyone is very quick to recognize the innovations in technology in energy efficiency and new technologies. But PACE is really about an innovation in financing. It can be a very useful financial tool for commercial property owners to complete energy efficiency projects that will help them save money.”

Drummer cites a new Pike Research Report which says PACE will continue to grow in popularity in the U.S., with investment in PACE financing for commercial buildings totaling a projected $2.5 billion annually by 2015.

“Until now, private buildings such as these have had minimal access to financing for energy retrofits,” the Pike report said.

Some of the concerns are, according the Drummer’s article:

+ Potential buyers and lending institutions may be wary of existing PACE liens, including whether lenders may one day restrict the ability to tack significant energy projects onto the property tax bill (because they hold superior lien positions to the bank’s debt)

+ The lack of clarity in how GAAP treats (loan or as a lien) on a company’s balance sheet

+ Fannie Mae and Freddie Mac have expressed concern about how the agencies will be repaid if homeowners participating in PACE later default on their mortgages. (Boulder County, CO., canceled its PACE program for residential, although its commercial program is still active.)

In closing, despite the concerns noted about, Drummer quotes Clean Fund CEO John Kinney, “Frankly, taking an inefficient building and making it more efficient is much more valuable than taking a new building that is already highly efficient and simply certifying that it is in fact, highly efficient.”

Kudos, Mr. Kinney, you get it.

And there are just so many more existing buildings than new buildings, that our ability to impact the environment and our bottom line is staggering.

Underlying image CC licensed by Flickr user supafly.

Green Squared admission… I am a Top Chef fan.

So, I was particularly intrigued that Top Chef Master Rick Bayless had two of the highest certifications with Frontera Grill and Topolobampo.

Obviously, this type of information definitely takes some shine off of the Energy Star label, and that hurts its credibility with appliances and with building labeling.

Coincidentally or not (I am not a believer in coincidence), the EPA and DOE announced several items to strenghten the Energy Star brand, including testing and enforcement procedures, and an independent review of 60 products.

From a recent blog from Jetson Green (I told you I found all sorts of great things on his site!), Energy Performance Scores (EPS) is a rating of the total energy consumption of a home with an associated carbon emission score. To get the score, a trained professional conducts an EPS audit by collecting utility bill information; measuring and sketching the home; recording window type and shading, insulation values, exterior and interior lighting fixtures, and appliances; inspecting ducts; and performing a blower door test.

For commercial properties, we have the Energy Star program which was developed as an energy performance rating systems for several commercial building types. The ratings on a scale of 1 to 100 provide a means for benchmarking the energy efficiency of specific buildings against the energy performance of similar facilities. The higher the number, the better the performance against similar buildings. It doesn’t take into account carbon emissions directly.

This type of scorecard reminds me of the benchmarks that we discussed on this blog that could show up on your electric bill.

What gets measured, gets done!

They acknowledge that they may not know why, including whether the premiums observed are due to the benefits of a better image, higher productivity or lower operating costs. In addition, observed premiums may reflect short-run imbalances in supply relative to demand. They only looked at 300 or so transactions.

Either way, I appreciate the effort.