Considering Green Opportunities HamerPresentation 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?
Underwriting that accounts of improved NOI, green-trained staff, encouraging greening
Green mortgages, reduced closing costs, climate-themed credit cards, car loans with reduced rates for environmentally friendly cars
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.firstname.lastname@example.org 904-632-3588