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Considering Green Opportunities  Hamer
 

Considering Green Opportunities Hamer

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Considering Green Opportunities  Hamer Considering Green Opportunities Hamer Presentation Transcript

  • Green for Green:
    financing for green buildings
    Janet Hamer, Federal Reserve Bank of Atlanta Jacksonville Branch, Community Affairs
    September 22, 2009
    The comments in this presentation are those of the presenter alone and do not necessarily reflect the views of the Federal Reserve Bank of Atlanta or the Federal Reserve System.
  • Why green, according to New Ecology
    Average construction cost: $181/SF
    Greening cost: $2-6/SF
    Percentage increase for greening: 1.1%-3.3%
  • Green financing, defined
    A system of public and private sector financing mechanisms that promote sustainable development
  • Green v. traditional financing
    Traditional
    Short to midterm financial outcomes
    First costs focus
    Income & expenses
    NPV, ROI, IRR, NOI
    Green
    Socially/environmental expectations
    Life cycle cost analysis
    Income & expenses
    NPV, ROI, IRR, NOI
    Savings
  • What are lenders doing?
    • Commercial:
    • Underwriting that accounts of improved NOI, green-trained staff, encouraging greening
    • Retail:
    • Green mortgages, reduced closing costs, climate-themed credit cards, car loans with reduced rates for environmentally friendly cars
    • Operations:
    • Paperless checking, headquarters and branch greening, employee education
  • What are appraisers doing?
  • The components, benchmarking and ratings
    Focus on:
    Energy use
    Water consumption
    Waste
  • Components, benchmarking and rating systems
    Rating systems:
    In-house systems
    Third-party systems
    LEED
    NAHB
    Earthcraft
    Energy Star (recently expanded to multifamily)
    Florida Green Building Coalition
    Many others
  • Components, underwriting
    Green cash flows
    Energy cost savings (operating)
    Water cost savings (operating)
    Faster absorption (if you can prove market demand) (income)
    Rental premiums (more true for commercial than for residential) (income)
    Enhanced retention (income)
  • Components, incentives
    Source: 2007 Green Building Survey, National Real Estate Investor and Retail Traffic
  • Components, incentives
    Equity/endowments/mission-based capital
    Traditional financing
    Real estate development
    Federal
    New Markets Tax Credits
    Community Development Block Grants
    State
    Energy Efficiency (http://www.dsireusa.org/)
    Federal
    DOE Weatherization
    American Recovery Act Program
    New Markets Tax Credits
    EE Conservation Block Grants
    HUD (NSP2 and technical assistance)
    Tax credits
    State and local
    Utility company rebates/incentives
    Water conservation
    State and local
  • Barriers to more green buildings
    Source: Energy Efficiency in Buildings, World Business Council for Sustainable Development, July 2008
  • Thank you.
    Federal Reserve Bank of Atlanta
    Janet.hamer@atl.frb.org
    904-632-3588