Here’s a quick run-down of several energy-efficient projects cited in the article.

Projects at Fairmont Waterfront hotel include a heat-recovery system to preheat incoming city water using heat captured from the hotel’s water system. It saves an estimated 305,380 kilowatt-hours (1,100 GJ) per year and $12,000 per year. Estimated payback is in two years.

In a separate article, Fairmont set a corporate commitment to reduce its greenhouse gas (GHG) emissions by 20 percent from its 2006 levels by 2013.

One caveat: the survey was of only 48 people who are in charge of sustainability for their companies. I think that sample size is too small. And, given these folks’ role in the organization, I am afraid their viewpoint is a bit slanted so to speak. But there are lessons to be learned.

My takeaways included:

+ “The green workforce is the general workforce.” – they believed that sustainability would be integrated into existing roles and job descriptions as a prerequisite for employability: Jobs in the future, respondents thought, will require people to bring a certain basic level of familiarity with sustainability issues and competence in skills related to sustainability to the table.

Interesting. I’ve never heard it put quite that way, but I agree with the premise wholeheartedly.

+ “Sustainable products can be competitive – with the right marketplace approach.”

Thumbs up from me.

+ “Sustainability’s bottom-line results might be better if you broaden your view of ROI.” – But to improve its performance, a company needs to do more than reap an immediate financial ROI on its sustainability initiatives. It also needs to consider managing risk, building its brand and reputation, complying with regulatory requirements, and investing in developing future products and services that will be viable in a world where sustainability plays a greater role in driving buying decisions.

There are definitely qualitative benefits that should be considered that are difficult to incllude in your CFO’s spreadsheet.

+ Primary owner of sustainability efforts? COO was 6%, Head of Environmental Health and Safety 6%, Board of Directors 4%, CFO 2%, other = 91%.

Two things: 1) It’s odd that Deloitte did not list Chief Sustainability Officer as one of the options (they were part of the others), and 2) quite obviously the multiple people selected as an owner leads to a lack of accountability, which is not good for results.

+ There is a clear lack of understanding between these sustainability owners and the ARRA funds that are available to them.

That’s bad news for policy makers and even worse news for those heading up these sustainability efforts. I would have guessed the sustainability folks would have been more aggressive in understanding the grants, tax credits, tax deductions, and rebates that are available to them and their projects.

+ Energy efficiency was the across-the-board winner as the most important environmental issue to the business.

EE rated 9 on a scale from 1 to 10 in importance and was the leader in every business sector. Wow, that’s impressive and surprising at the same time. Efficiency does not get near the publicity as other answers like alternative energy and transportation. Someone has been listening and reading this blog.

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.

Andy Smith, our Chief Engineering Officer, and Bobby Bragg, our President, will lead the discussion.

Here is the complete release: CREW DALLAS TO LEARN ABOUT GREENING EXISTING BUILDINGS.

Here is the skinny:

Topic: “Cost Effective Strategies for Greening Existing Buildings”
When: 11:30 a.m. to 1 p.m. on Wednesday, August 18
Where: Park City Club, 5956 Sherry Lane (Dallas, Texas)
Cost: $50 for pre-registered guests and $55 for walk-ins.

For more information, contact Kim Hopkins at 214/890-6490 or email khopkins@crew-dallas.org.

ABOUT CREW DALLAS

CREW Dallas (Commercial Real Estate Women) is comprised of more than 300 commercial real estate professionals affiliated nationally through membership in the CREW Network. Now celebrating its 30th Anniversary, the non-profit organization provides opportunities for networking, education, leadership development and civic/philanthropic involvement. CREW Dallas promotes the highest standards of ethics and integrity and seeks to positively influence the direction of Dallas. For more information, visit www.crew-dallas.org.

Those four are San Antonio, Austin, Houston and El Paso. The CenTex cities of Austin and San Antonio were widely regarded as the most likely candidates as Austin already is the most progressive with its green building codes and much of the push to pass the state law came out of San Antonio.

Houston, the “Oil Capital of the World”, has a recently appointed Director of Sustainability, Laura Spanjian, and she told the Texas Tribune that her city was “not going to wait” for the PACE problems to get solved. “We have set aside funds to help commercial property owners with the upfront costs of energy efficiency improvements,” she said in an e-mail. “We’re going to find another model in the short-term while the issues with PACE are being worked out.”

Kudos to Ms. Spanjian on her aggressive approach.

*******

If you have missed some of the prior discussion on PACE on this blog, I recommend the following reading:

The Case for and the Concerns of PACE Financing

What is PACE Financing?

PACE 101 video

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.

That is Green Squared’s tagline if you didn’t know.

In a new healthcare study reported by FMLink, nearly four out of five (79%) hospitals surveyed cited cost savings as the top reason their facilities are committed to environmentally sustainable operations.

Also, very interestingly, at least to me, nearly 70% of the respondents say they measure their energy savings and half (50%) conduct energy audits. 41% say their facilities measure water savings.

I love the notion that they are trying to aggregate data on the energy savings that are being retrofitted.

More interesting to me is the discussion further into the article that touches on what might be Deutsche Bank’s ultimate motivation.

Mr. Hattem, who said Deutsche Bank would have no proprietary stake in the data, hopes that lenders will not only finance more retrofits as a result of the project, but also use the information to create a new securitizations market.

“The idea here is that if underwriters can determine a predictable savings from retrofits,” he said, “then they can create a financial instrument backed by these savings to sell on the open market.”

Now this type of thinking will jump start the retrofit business as capital for the improvement projects has always been the biggest impediment.

I also found this quote from a project manager at the New York State Energy Research and Development Authority and a member of the advisory committee spot on:

“There is an almost universal lack of understanding of building energy usage,” said Luke Falk.

I agree wholeheartedly, Luke. More building owners and managers need to wrap their heads around that usage and controlling the costs surrounding it.

Why?

Well, we only recommend retrofit projects that payback in a short time frame in operating savings. Those operating savings result in increased Net Operating Income (NOI) for commercial building owners. That increased NOI results in increased property value.

How?

The income approach is one of three primary approaches to appraising commercial properties. In the income approach to appraisal, the value is determined on the stream of NOI that an investor will receive as a result of owning the property. As such, the retrofit that lowers operating costs, increases NOI, and increases appraised value.

There are multiple studies supporting this benefit in the real world.

Video from Bob Harper from Biggest Loser introduces Energy Fitness for Buildings

WASHINGTON – The U.S. Environmental Protection Agency (EPA) is sponsoring the first national energy efficiency contest of its kind, featuring 14 commercial buildings from across the country. While trimming kilowatt hours off is their bottom line, they’ll also save money and help fight climate change. The building that sheds the most energy waste on a percentage basis will be declared the winner at EPA’s final weigh-in on Oct. 26, 2010.

“It’s time for buildings to tighten their belts and we’re happy to help them go on an energy diet,” said Gina McCarthy, assistant administrator for air and radiation. “Cutting energy use will reduce their monthly expenses and their carbon footprint, showing that environmental protection and economic growth can go hand in hand.”

Nearly 200 applications were received for EPA’s National Building Competition and the 14 finalists will be judged on their energy performance from Sept. 1, 2009 to Aug. 31, 2010. The energy use of each building is being monitored with EPA’s Energy Star online energy measurement and tracking tool, Portfolio Manager. Television personality Bob Harper will also provide energy fitness tips for the contestants through a series of videos that will be available on the Web site.

EPA’s National Building Competition contestants are:
· 522 Fifth Avenue Building, New York, N.Y.
· 1525 Wilson Boulevard Building, Arlington, Va.
· Crystal River Elementary School, Carbondale, Colo.
· Courtyard by Marriott San Diego Downtown, San Diego, Calif.
· JCPenney Store 1778, Orange, Calif.
· Maplewood Mall, St. Paul, Minn.
· Memorial Arts Building at the Woodruff Arts Center, Atlanta, Ga.
· Morrison Residence Hall at UNC Chapel Hill, Chapel Hill, N.C.
· Sears, Glen Burnie, Md.
· Sheraton Austin Hotel, Austin, Texas
· Solon Family Health Center at the Cleveland Clinic, Cleveland, Ohio
· Tucker Residence Hall at North Carolina State University, Raleigh, N.C.
· Van Holten Primary School, Bridgewater, N.J.
· Virginia Beach Convention Center, Virginia Beach, Va.

The competition Web site will provide profiles of each contestant and chronicle their progress as well as feature advice for contestants from EPA and leading building efficiency specialists. Each building will also participate in mid-point and final contest weigh-ins and the results will be posted online at the competition Web site.

Energy use in commercial buildings accounts for 17 percent of total U.S. greenhouse gas emissions at a cost of more than $100 billion per year. On average, 30 percent of the energy used in commercial buildings is wasted. Thousands of businesses and organizations work with the EPA’s Energy Star program and are saving billions of dollars and preventing millions of tons of greenhouse gas emissions from entering our atmosphere each year.