Smart Buildings Done Easy !

Take an old technology which has not seen any real updates in decades, make it internet connected and add a few semiconductors (to make it smart) and radically change the way offices and homes consume energy !  That is what the Nest Learning Thermostat promises to do. See the video below.

 

Financing Renewable Energy: Protect the Planet, Boost your ROI

Protecting this planet’s natural resources for future generations is a moral obligation; unfortunately, moral obligations do not pay the bills.  Coal is a nonrenewable resource that causes pollution. But it’s cheap. Renewable energy is often a more expensive alternative to using coal, oil, or natural gas to produce energy. Recognizing that renewable energy must be financially viable for individuals and businesses to shift away from nonrenewable sources, the Federal Government has bridged the financial gap by implementing a 30% tax credit for renewable energy projects. As an additional incentive, for 2011 only, installers can opt for a grant instead of a tax credit, and the Federal Government will simply cut a check to the installer for the eligible expenses. Eligible projects include solar power, wind energy, biomass, among other types of renewable energy.Coupling the renewable energy tax credit with other federal and state incentives, people have the opportunity to dramatically reduce the break-even period for renewable energy equipment and increase the profit potential. One example is new market tax credit, which offers installers the opportunity to obtain an additional 39% tax credit. Not all projects are eligible for both credits, but utilizing them together for eligible projects will substantially improve an installer’s return on investment. Because of these benefits, tax laws play an important role in financing renewable energy projects.

Renewable energy projects pay for themselves in a couple of ways. First, the projects will produce “free” energy for the user. Once the equipment is in place, the only cost for the energy will be maintenance expenses to keep it in good repair. Alternatively, installers that do not want to use the renewable energy can enter into Power Purchase Agreements (PPA) with other users for the sale of the renewable energy. An example of this scenario is an entity that owns solar panels leasing roof space to install the solar panels and then selling the energy produced by the solar panels to the owner of the building pursuant to a PPA. Since PPAs often last from five to fifteen years, they create the equivalent of an annuity for the installer.

 

Second, renewable energy produces an intangible, transferable benefit called a Renewable Energy Credit (REC). A REC represents the environmental benefits of 1 megawatt hour of electricity that can be sold to Ohio utilities and service companies, which can satisfy their legal requirement to produce certain amounts of renewable energy by purchasing RECs. RECs are thus a second source of revenue from renewable energy projects.  

                                                                                                                                                                        

While many people recognize the value of renewable energy, cost remains an important consideration in choosing a source of electricity. Tax credits are a powerful tool to enable people to have the best of both worlds: higher profits and a healthier planet.

Green Leasing Unveiled - Part II

In Part I of our series on the particulars of Green Leasing, we discussed Lease Term and Operating Expenses. Now we turn to a robust area for implementing sustainable processes between Landlords and Tenants:

Interior Alterations and Repairs

 

A typical commercial lease will have two separate sections, one on maintenance and repairs, and one on tenant improvements. The green leasing concern is the same in each – what requirements or incentives can be inserted in the Lease to assure that any changes to the premises live up to the parties’ expectations surrounding sustainability and energy efficiency?

 

First, the lease must deal with the minor, day-to-day changes that after move-in are typically the responsibility of the tenant. The perfect example here is lighting. As the landlord, does your third party rating agency require that you maintain certain forms of lighting? If you’re LEED-certified, it likely does. LEED for Commercial Interiors awards points for the percent reduction in lighting power below certain standards. If the tenant were to insert lighting that was not motion sensitive, for example, your lighting power reduction would be reduced and your LEED level of certification jeopardized. A simple insertion in the appropriate lease section requiring tenant to comply with landlord’s sustainability practices and any third-party rating system can give landlord some control of tenant’s actions in this area.

 

Second are those more major renovations undertaken by a tenant. Here, the lease needs to assure landlord and tenant cooperate and communicate to either (a) maintain any sustainable systems or third party ratings already employed for the project; or (b) for an initial build-out, agree on a level of sustainability or certification that is reasonable and desirable for each party. One major concern at this level is the contractors employed by tenant – a green lease should spell out that any professional engaged for tenant’s work must be LEED qualified (or a similar certification assuring the contractor is familiar with sustainable design). The lease may go so far as to specify the specific level of LEED certification to be sought for the interior design, although such a section would need sufficient caveats and waivers to assure neither party was accepting undue risk if the desired certification was not achieved.

USGBC AND ITS FOUNDERS SUED OVER THE LEED™ GREEN BUILDING RATINGS SYSTEM

A federal lawsuit in New York that involves Racketeer Influenced Corrupt Organizations Act ("RICO") claims is one of the latest developments in the United States Green Building Council's ("USGBC") development and administration of the LEED™ building ratings system.  The lawsuit appears highly contentious to say the least.  Plaintiffs Henry Gifford and Gifford Fuel Saving, Inc. initiated a class action lawsuit against USGBC, USGBC's founders (David Gottfried and Richard Fedrizzi), and the designer (Rob Watson) of the Leadership in Energy and Environmental Design ("LEED™") green building ratings system.  The alleged class members include consumers and taxpayers whose dollars have been used to obtain LEED™ certification. 

 

The lawsuit paints LEED™ as a farce that is not based on supportable science.  Plaintiffs set forth six claims: (1) violation of the Sherman Antitrust Act for an alleged fraudulent monopoly of the green building market; (2) violation of the Lanham Act for alleged unfair competition by deceptive marketing; (3) deceptive trade practices and (4) false advertising for alleged misrepresentations and concealments in advertising; (5) RICO claims for defendants' alleged deceptive scheme; and (6) unjust enrichment for alleged fraudulently induced profits.  

 

We will update the blog as we receive more information concerning this lawsuit.    

Get Informed: Green Building is Here to Stay

Green building is quickly becoming the "norm" across America, and those who are not familiar with it could be missing important opportunities in today's construction climate.  The United States Green Building Council ("USGBC") is a non-profit community of leaders working to make green buildings available to everyone.   USGBC developed the Leadership in Energy and Environmental Design ("LEED") process for green building.  LEED  is an internationally recognized green building certification system, providing third-party verification that a building or community was designed or built using strategies aimed at improving performance across metrics for green building: energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental air quality, and stewardship. 

 
Before considering whether to "go green" on a given project or to bid a public job that is required to be LEED certified, owners/developers, architects, and contractors alike should conduct a "cost-benefit" analysis.  Many projects "pay for themselves" through tax credits and cost-savings throughout the life of the green building, but it is a delicate, niche process with slim margins.  Perhaps the most prominent difference between conventional construction and green building is the integrative approach, which is required for LEED certification.  Conventional construction is a linear process: first, there is an owner/developer with an idea, the architect then designs the idea, and the contractors follow the architect's plans to construct the idea.  With green building's integrative approach, all major players get together during the pre-design phase of a project to discuss the level of LEED certification they can achieve (LEED Certified, LEED Silver, LEED Gold, or LEED Platinum) and how they can best work with one-another to achieve or surpass that goal. 
 
The integrative approach to green building is a special process that poses its own considerations.  These considerations can be spelled-out in AIA contracts with special provisions requiring "green meetings."  Although every green project is different, "green meetings" are excellent starting blocks for obtaining LEED  certification.  For more information on green building, go to www.usgbc.org; for more information regarding "green meetings," go to http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aiab082635.pdf.      

 

ODOD Announces Start of "Making Efficiency Work" Funding

The Ohio Department of Development has announced the availability of $8,000,000 in grant funding for qualifying energy efficiency projects undertaken at existing multi-family, commercial, and institutional buildings. The goal of the program is to encourage the installation of energy efficiency equipment that will measurably improve the energy efficiency of existing multi-family, commercial, and institutional buildings. The program is competitive, and awards will range from $125,000 to $1,000,000 per project. The funds available under this program were originally allocated to Ohio under the American Recovery and Reinvestment Act of 2009

Individuals and businesses within Ohio may apply for funding, although government agencies, individual residential building owners and schools are generally not eligible.  Applicants must have match funding equal to at least 50% of the total project cost. Additionally, projects should demonstrate job creation or retention through: (1) retrofit or installation hours; (2) new jobs directly created through the project; or (3) retention of existing jobs at the site. 

 

Funds may be used on energy efficiency improvements such as:

 

·        Insulation

·        LED Lighting

·        Energy Efficient Lighting Technologies

·        Efficiency Equipment

·        HVAC Upgrades

·        Weather Sealing

·        ENERGY STAR Appliances

·        Replacement of Windows and Doors

·        Installation of Geothermal Heat Pumps

·        Energy Audits/Commissioning/Retro-commissioning

·        Retrofits with Green Energy Techniques

·        Above Energy Code Pilot Projects

 

Applications for funding are filed in two stages. First, the applicant must submit a project summary on the http://recovery.ohio.gov website by April 23, 2010. Next, a complete proposal must be submitted to ODOD by April 30, 2010. Grants are to be announced around May 28, 2010.

 

 

A Fuel Cell for the Rest of US

Recently, 60 Minutes aired a story about Bloom Energy, a Silicon Valley  alternative energy start-up, which has developed fuel cell technology capable of taking us off of the electrical grid.  The video speaks for itself so watch it below.  As you watch it, think about how technology such as this will transform the real estate industry.  Besides the reductions in electric costs, how power is brought into a facility or development changes with this technology.  Green energy/alternative energy is only going to make us all better at what we do !

 


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HUD Green Retrofit

In the past, we have spoken about grants and loans available through the Ohio Department of Development for advanced energy residential projects, such as solar and wind energy installation.  Federal funding is also available for residential energy-reduction projects through The American Recovery and Reinvestment Act of 2009 (ARRA).  A total of $250 Million from ARRA was allocated to HUD for its Assisted Housing Green Retrofit Program (GRP).  Under GRP, HUD is offering up to $15,000 per residential unit for projects that reduce energy costs, reduce water use, and improve indoor environmental quality.  HUD expects to fund about 25,000 units (approximately 300-350 properties), with an average $10,000 provided to each unit.

Beginning June 15, 2009, HUD is accepting applications for GRP funding on a first come, first served basis, and subject to allocations for project categories, geographic location and owner/affiliate concentration.  HUD may offer either a Green Retrofit Grant or a Green Retrofit Loan repayable from a share of surplus cash and from sale and refinancing proceeds.  The performance period for completing all Green Retrofits will generally be twelve (12) months, but in no event may it exceed twenty-four (24) months.  The program requirements differ depending on the type of project-based assistance contract and depending on the owner entity (nonprofit or for profit).

The properties eligible to receive GRP funding are the following: Section 202 funded properties that have at least 32 units; Section 811 funded properties that have at least 8 units; properties receiving assistance pursuant to Section 8 with USDA Section 515 loans and which have at least 20 units; and all other Section 8 funded properties having at least 72 units.

 

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