The Green of Green: 25 Ideas to Cut Costs and Turn a Profit with Sustainable Design

Moderator: Rachel Azoff, Multifamily Executive Speakers: Dori Eden, KBKG Fred Schreiber, AMLI Residential

Doug Walker, UDR

Multifamily housing accounts for 18% of nation’s housing stock. Rental housing accounts for 83% of all multifamily housing.

Energy prices are rising faster than overall rate of housing costs in U.S. Between 2003 to 2006, housing costs increased by 110%, while energy costs rose by 126%.

Retrofits can improve energy efficiency by 30-75% depending on the initial state of the building.

Wasteful energy use poses a threat to maintaining affordablerental housing.

Key Sustainability Facts

www.energystar.gov for benchmarking tools > Gather electric bills for past 12 months > Several analytical tools to see baseline energy usage

Members of Building Owners & Managers Association > Compare your building’s performance with other member’s buildings

Idea #1 – Evaluate Your Building’s Performance

Idea #2 – Conduct an Energy Audit

Make sure to use a trained auditor. Several national programs that utilize whole-building approach:

HERS (Home Energy Rating System)

BPI (Building Performance Institute)

Idea #3 – Know Expected Utility Inflation

Property Utility Commodity City RegionStat

e

Potential Rate

Increase (2011)

Date of Increase

AMLI at McGinnis Ferry Gw innett Co. Water Water Suw anee Georgia GA 2.0%

AMLI at McGinnis Ferry Georgia Pow er Electricity Suw anee Georgia GA 10.0% 1/1/2011

AMLI at North Briarclif f Dekalb County Water Atlanta Georgia GA 16.0% 1/1/2011

AMLI at North Briarclif f Georgia Pow er Electricity Atlanta Georgia GA 10.0% 1/1/2011

AMLI at Northw inds Fulton County Water Alpharetta Georgia GA 2.0%

AMLI at Northw inds Georgia Pow er Electricity Alpharetta Georgia GA 10.0% 1/1/2011

AMLI at Northw inds Gas South Natural Gas Alpharetta Georgia GA 0.0%

AMLI at West Paces City of Atlanta Water Atlanta Georgia GA 12.0% 7/1/2010

AMLI at West Paces Georgia Pow er Electricity Atlanta Georgia GA 10.0% 1/1/2011

AMLI Atlantic Square City of Atlanta Water Atlanta Georgia GA 12.0% 7/1/2010

AMLI Atlantic Square Georgia Pow er Electricity Atlanta Georgia GA 10.0% 1/1/2011

AMLI Lindbergh City of Atlanta Water Atlanta Georgia GA 12.0% 7/1/2010

AMLI Lindbergh Georgia Pow er Electricity Atlanta Georgia GA 10.0% 1/1/2011

“What gets measured, gets focused on” Enable (and reward) property managers who can

effectively manage utility usage Can’t drink water out of a fire hose – must make the

utility data actionable

Idea #4 – Measure and Communicate Energy Usage

Idea #5 – Resident Education

Provide residents with context to understand their relative energy usage

Share tips and best practices to reduce resident usage

Effectively communicating is critical when implementing energy-saving or water-conserving strategies

Idea #6 – Partner With Your Residents

Partner with your residents by coupling capital improvements with usage reductions

Streamline the permitting process for building, plan, and site permits on projects that achieve a certain level of sustainability

Cities waive or reimburse application, building, or permit fees for specific levels of LEED & other green building rating systems – excellent for the party funding the construction

Idea #7 – Expedite Permitting

Apartment developers and homebuilders can obtain 45L Federal Tax Credit of $2,000 per energy-efficient dwelling unit

Less stringent $1,000 tax credit available for manufactured homes

Heating and cooling energy consumption must be at least 50% below that of a reference dwelling designed according to 2004 energy standards

Building envelope must provide a level of heating and cooling that is at least 10% below reference unit.

Idea #8 – 45L Federal Tax Credit Reduces Liability

100% of the Units Passed

$412,000 Tax Credits

Key specs include: > HVAC13 SEER A/C 7.7 HSPF Heat Pump > Insulation R-13 wall > R-30 attic Windows U-Factor 0.45, SHGC 0.35

45L Tax Credit Case Study:

206-Unit Apartment Complex in Columbus, GA

100% units passed

$110,000 tax creditsBarely passed 2005 T24

Key specs include: > HVAC13.0 SEER A/CHydronic Heat > Insulation R-13 wall > R-38 attic windowsU-Factor 0.39, SHGC 0.38

45L Tax Credit Case Study:55-Unit Apartment Complex in Danville, CA

100% units passed

$410,000 Tax Credits

Key specs include: > HVAC 9.4 SEER A/CHydronic Heat > Insulation R-19 wall > R-49 attic windowsU-Factor 0.32, SHGC 0.32

45L Tax Credit Case Study:

205-Unit Apartment Complex in Plover, WI

IRC Section 179D allows for an immediate depreciation deduction of up to $1.80/sf for “commercial buildings” that achieve a 50% reduction in total energy and power costs

Building Envelope - HVAC - Interior Lighting

Multiple paths to deduction: > Whole $1.80/sf for 50% reduction in total annual energy cost related to HVAC and interior lighting in comparison to 2001 energy standard > Partially-qualifying property:$0.60/sf for building envelope$0.60/sf for HVAC$0.30 to $0.60/sf for interior lighting > Fractional deduction through interim rule

Idea #9 – 179D Energy-Efficient Building Deduction

The Energy Independence Act of 2007 and its Energy Efficiency & Conservation Block Grant of 2007 authorizes $2 billion in grant money to communities and states

Grants for energy audits & other technical assistance

Idea #10 – Grants Offset Development Costs

Grants and loans: Two ways to help small businesses build green and can be especially effective in jurisdictions that do not have established green building programs

ESCO: Energy Service Companies are performance-basedcontractors; compensation and financing are linked to amount of energy saved

Mortgage lenders: Finance affordable multifamily housing via institutions, pension funds, government, and other low-interest subsidy providers

Special programs: Finance the retrofit of older apartment buildings in low-, moderate-, and middle-income communities

Idea #11 – Loans for Green Improvements

Weatherization Assistance Program (WAP)The rule expressly indicates that income-qualified public housing, assisted housing, and LIHTC properties may be eligible recipients of WAP funds. The rule does not, however, require states or local WAP service providers to set aside WAP funds for these properties.

In 2006, states used WAP funds to provide energy efficiency improvements to approximately 16,000 multifamily units.

U.S. D.O.E.’s State Energy Program (SEP) Funding for energy-related projects including energy audits, retrofits, education, training, and new financing mechanisms to promote energy efficiency and renewable energy. State can create grant or low interest loan programs.

Special Programs Continued …

Rebates from cities:

Example: Pasadena, CA Water & Power High Performance Building Program – Developers who exceed the minimum certification will receive one month’s electricity savings for each percent efficiency better than code the building performs up to $100K.

Example: Elizabeth, NJ offers up to $5,000 in rebates for documented energy saving expenses in low-income housing developments.

Idea #12 – Rebates and Incentives

State Income Tax Credit Example: NY State Energy Research and Development Authority: This program offers rebates on certain Energy Star products. Rebates range from $75 - $150

DOE’s State Energy Program invests $328.5 million to 12 states and territories to support energy-efficiency projects that will lower energy bills

Rebates from utility companies for energy-efficiency

Counties offer rebatesExample: City of Santa Clara, CA water heating program; city offers solar water heaters and lease out

Rebates and Incentives Continued …

Municipalities can purchase energy-efficient appliances in bulk and offer discounted prices

City can provide a rebate for water conservation or energy use

Idea #13 – Discount on Environmental Products

Idea #14 – Install High-Efficiency Lighting

Every 3-watt reduction in lighting power results in roughly a 1-watt reduction in HVAC. Lighting Strategies: More efficient luminaries, ballasts, and lamps, Bi-level switching Interior and Exterior Lighting Case Study: Retrofit Property > Lighting Investment: $64,000 > Reduction in Energy: $1,000 per month > Annual Savings: $12,000 > Payback in approximately 5 years

The application of super insulating panels wrapped around the exterior of the building will increase the thermal insulation of the concrete.

Idea # 15 – Apply Super Insulating Panels to Exterior

30% tax credit for solar energy property PIS by December 31, 2016 Equipment which uses solar energy to generate electricity, to heat or cool a structure, provide hot water in a structure, or to provide solar process heat Equipment which uses solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight Solar energy property also has a 5-years MACRS tax life; depreciable basis is reduced by half of the credit Potential to apply for grants in lieu of credit in 2009 and 2010 Solar water heaters

Idea #16 – Install Solar Panels and Obtain Section 48 Tax Credit

Pool heaters Parking lot areas

Water heaters

Solar Panels Continued …

Idea #17 – Windows & Openings

Doors and windows often causes significant heating/cooling losses:

Install glazing

Caulk and properly seal

Replace w/ low-e windows

Dimmer settings

Bi-level switching

Motion sensors

Timers

Idea # 18 – Lighting Controls

Idea # 19 – Envelope Upgrades

Caulking/Improve air sealing

Add insulation

Improve duct sealing

Idea # 20 – Preventative Maintenance

Develop “green” maintenance program with best practices approach to sustainability of building and systems:

Regular cleaning of evaporative coil

Regular filter replacement

Check water heater temperature settings

Install New:

Shower heads Low-flow toilets Aerators Flush valves Dual flush

Idea # 21 – Low-Flow Plumbing Fixtures

Leak detection is also critical!!

Water and drought-resistant landscaping

Reclaimed water

Irrigation sensors

Timers

Pest control, landscape & pool vendors use green products

Idea # 22 – Landscaping

Idea # 23 – Reflective Roofing Reduces Heat Island Effect

“Cool roofs are one of the quickest and lowest cost ways we can reduce our global carbon emissions…”

Dr. Steven ChuUS Secretary of Energy

Idea # 24 – Programmable Thermostats Put Residents

in Control of their Energy Use

ENERGY STAR programmable thermostats can save up to 33% in annual electric bills

Precise, accurate control results in greater comfort

Sullivan Place Energy-Efficiency Experiment

McGinnis Ferry Recycling

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12,000

Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

Lb

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$2,000

$2,500

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$3,500

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$6,500

$7,000

Recycling

Rubbish Fees

Linear (Rubbish Fees)

Idea #25 – Increase Recycling

In many municipalities, recycling is either subsidized or collected at a flat fee

The Green of Green: 25 Ideas to Cut Costs and Turn a Profit with Sustainable Design

Questions? E-mail us!

Dori Eden, KBKG: dori.eden@kbkg.com

Fred Schreiber, AMLI Residential: fschreiber@amli.com

Doug Walker, UDR: dwalker@udr.com