"A few years ago, bumper stickers pasted on the rear of pick-up trucks promoted the "Growth is Good" campaign that was seen all over Lexington when the real estate market was at its peak and new building construction was rampant. However, not all the residents of Lexington embraced that argument. Many were more concerned with protection and conservation of our signature farmland, rehabilitation of our existing neighborhoods, and focusing on infill and redevelopment in our urban core.
Now we face an even greater challenge: protection and conservation of our planet. Perhaps those old bumper stickers should be recycled to read "Green Growth is Good," advocating and promoting sustainable design in every building market.
Green real estate is property developed to be more energy-efficient and ecologically sound than conventional buildings. When finished, these buildings normally use less fuel and water, present more comfortable interior temperatures, better air quality, extra natural light, and are refined with materials designed to reduce or eliminate toxins.
The benefits of utilizing green building practices are numerous, and the environmental impact is huge. Leadership in Energy and Environmental Design (LEED), the nationally accepted benchmark for the design, construction and operation of high-performance green buildings, maintains that it provides certification for building projects that meet performance measures providing both financial and environmental benefits. It considers five key areas of human and environmental health when awarding certification: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality. This results in conservation of resources, reduction of harmful greenhouse emissions, lower operating costs and increased asset value, as well as tax rebates, incentives and zoning allowances in hundreds of cities.
The Lexington Fayette Urban County Government (LFUCG) provides commercial incentives on green technology purchases. The Division of Planning Web site states that it allows businesses that invest in solar, wind, or geothermal technologies to recover costs through depreciation deductions on federal income tax returns. The depreciation deductions are taken over five years, with a 50 percent bonus deduction in the first year that the equipment is purchased. The 50 percent bonus depreciation applies to products bought before 1/1/2005. Easements also must be obtained for solar applications.
Conflicts with local zoning and building codes can be a challenge to green construction applicants. For example, when former Vice President Al Gore filed a plan with the municipality of Belle Meade, Tenn., to install solar panels on the roof of his mansion, the Belle Meade town-building manager rejected the plan because the town only allows power-generating equipment to be placed on the ground level, and he considered solar panels to be generators. The Belle Meade zoning code was developed for safety and aesthetic considerations, and no thought was given to how the code provision would affect solar panels because it wasn't applicable at the time. Green building projects large and small must obtain permits from local governments. Education is the key to facilitate local planning regulations for a green project and recognize the issues and strategies for meeting these requirements.
Green commercial building is rapidly moving forward.The value of green building construction starts is expected to exceed $12 billion in 2007, according to the U.S. Green Building Council, citing McGraw-Hill Construction Analytics. Major corporations such as Toyota, Goldman Sachs, Hearst Corp, BP and JP Morgan have moved into environmentally responsible buildings. The USGBC through LEED has registered almost 8,000 projects. Also, more than 38,000 professionals in the commercial building industry have become LEED-certified, the USGBC reports, indicating a push to go green and stay green.
Government regulations and proposed federal legislation are also having their effect on green building. America's Climate Security Act, if passed, would create a cap- and trade system to reduce greenhouse gas emissions 65 percent below 1990 levels by 2050.
Costs associated with green building are competitive; the single essential extra budget item is the learning curve connected with knowledge of green building products, practices and analyzing the challenges of green construction code approval. Financing of green real estate is quite similar compared to a conventional project. However, according to the Green Building Financing Consortium, there are key differences in the financing package. Potential sources include government (federal, state and local) and utility company programs that provide tax incentives and credits. In addition, some municipalities offer expedited plan and permitting reviews, site density bonuses and waiver of local government fees applicable to many green build projects.
LEED rating does not only apply to new construction, but existing facilities as well through LEED- EB (Existing buildings). It focuses on improved maintenance, with the goal of maximizing operational efficiency while minimizing environmental impacts such as recycling, storm water runoff, exterior maintenance programs and systems upgrades.
Value and sustainability go hand in hand. Economic, environmental and health and community benefits associated with green building are essential to every community. Economically, one can reduce operating costs, lessen the risk that a property will become functionally obsolete, and improve employee productivity and satisfaction in the workplace that figures in on the bottom line when you run a major corporation. Environmentally, it improves air and water quality, reduces waste, protects ecosystems and conserves national resources, and the bottom line is that it contributes to the overall quality of life in the community. Not long ago, environmentally friendly home building was often associated with unsightly, inefficient solar panels and bad water pressure. No longer is that true. According to a story written by Sarah Max, Money Magazine contributing writer, today the majority of houses that meet the U.S. Green Building Council definition of a "green" home — one that uses less energy, less natural resources and fewer toxic chemicals — don't look much different from traditionally built homes. As with hybrid cars and organic food, interest in eco-friendly building and renovating has spilled over to the mainstream. The article quotes Jerry Howard, CEO of the National Association of Home Builders (NAHB): "We're seeing a lot of demand, particularly on the high end of the market."
With rising oil and natural gas prices, thirsty cars and dependence on foreign oil, consumers are looking for energy relief and are embracing the greener environment. Whether it is through hybrid cars, solar and wind power or building green, they must understand we are just renting the planet for the time being, and whatever we do, we are leaving it for the next tenant to pay for.
Jennifer Mossotti, CCIM, is a Realtor with Prudential de Movellan Real Estate and former LFUCG Councilmember. She can be reached at jennifermossotti@insightbb.com