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Why green urbanism makes sense

Marc Lefkowitz  |  11/27/07 @ 1:03pm

Cleveland Mayor Frank Jackson's emphasis on sustainable development-last week, the mayor announced he will tie city loans and grants for capital projects to green building standards-is in line with the policy direction of the most competitive American cities today.

Reinvesting in the city's infrastructure with green building is the path to "Restoring Prosperity" that Brookings Institution VP Bruce Katz was discussing this morning on WCPN because it will boost the local economy and restore city neighborhoods hit hard by the foreclosure crisis.

Jackson should be commended for wanting to raise green building standards-particularly since it will improve indoor air quality, reduce lead exposure, and lower energy bills- for the most economically disadvantaged in our region. The mayor's policy will dovetail nicely with the mission of the non-profit community development corporations who renovate hundreds of homes using city-backed funds. Most of the CDCs are already focused on these quality of life issues.

Jackson's green building policy should begin with an assessment of Cleveland's existing stock of buildings and emphasize renovating those offices and homes that have good bones. With new programs such as expedited foreclosure and Housing and Urban Development's Good Neighbor program-which allows HUD to acquire foreclosed homes and sell it to the city for $1 -more renovation projects will start with low acquisition costs, which will help bring the first costs of green building within reach. Reusing existing buildings also preserves city street networks, and both earn points in the popular green building ratings, including Leadership in Energy Efficient Design (LEED) for Homes, Enterprise Foundation's Green Communities program, and the Home Builders Association's Green Builder program.

Even though HBA established its green building program and plans to ride the rising tide of green building populism, the group expressed some concerns about the first cost of green building affecting the price of homebuilding in Cleveland. Yet, green building has multiple benefits that, privately, HBA members would be quick to acknowledge. First, green building is no longer new and untested, so finding contractors and resources is cheaper and easier than a few years ago. EPA and HUD have been building to EnergyStar standards since 2002, and Cleveland's own Entrepreneurs for Sustainability just released its B2B Directory of regional companies that provide products and services to help implement sustainable business projects.

Green building's popularity has made it more competitive, not only among suppliers, but particularly between developers who are looking for an edge in marketing their properties in a housing market that's in a serious downturn. For example, the Wolstein Group embraced LEED's pilot program for Neighborhood Development at its Flats East Bank development, in part, because of the potential to pull ahead of competing downtown developments such as the Avenue District. A cost-benefit analysis conducted by green building proponents Building Cleveland by Design (BCbD) has found that, "a consideration of lifecycle costs and the availability of incentive financing and products and other unique benefits can combine to generate an ROI (Return on Investment) greater than traditional building construction."

The cost-benefit analysis, conducted by Diane Swander, former Vice President of Finance and Operations at ShoreBank, provides a peak at why the Wolsteins and other big developers are bullish about green building.

Swander found that a $4 per square foot investment in building green yields a $62 per square foot return (NPV) over 20 years for a LEED-gold project. The $62 is broken down into: $0.50 in water savings, $5.80 in energy savings, and $8.50 in operations and maintenance savings. The remainder of that benefit is comprised of $1.20 emissions savings and $46 estimated health and productivity benefits .

But, according to accounts from those familiar with the Flats East project, what really enticed Wolstein's top managers was the potential for them to "take a front position in marketing for sustainable design (that) will notably differentiate its product to generate and capture end-user demand."

That market demand for living in a green building combined with the eventual savings should quiet any fears home builders and developers have about Mayor Jackson's policy. In fact, nothing gets developers more excited than capturing market share, because they know that they'll turn "green" into green quicker and, make more deals a "go" by securing traditional financing for their projects sooner.

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