Page 132 - The Green Building Bottom Line The Real Cost of Sustainable Building

GREEN IS THE COLOR OF MONEY 111

certified or LEED Silver certification, no additional cost premium is called for. To
achieve Gold certification, there is a cost premium of around 2 percent, and a Platinum
certification entails a cost premium of around 7 to 8 percent.
Those numbers, though, tell only a part of the story. Those familiar with the LEED
program and its flexible point system are well aware that there are “cheap” points (such
as bicycle racks) and considerably more expensive ones (a green roof), such that a
developer simply chasing the least expensive points purely for certification can develop
a LEED building more cost effectively than a developer who is more focused on the
more profound impacts of a project on the environment and on future costs of opera-
tions. Adding to the complexity, any exploration of the first costs of green development
needs to consider the overall objectives of a project. For instance, our company has
recently signed on to the 2030 Challenge, involving a commitment to aggressive reduc-
tions in carbon emissions over the next two decades. The commitment impacts how we
intend to allocate our overall expenditures on construction. While the LEED program
provides for the tallying of points in five main areas of development (Site, Water,
Indoor Air Quality, Materials & Resources, and Energy & Atmosphere), our company
has decided to place particular emphasis on energy, which is a more expensive route to
take—particularly given our twenty-year objective of developing zero net energy build-
ings. That commitment is likely to entail a lower LEED rating at a higher than average
first cost—at least until higher performance energy systems (including use of alterna-
tive energy) become more price competitive owing to greater market demand and gov-
ernment subsidies in this area (desperately needed, by the way).
There is the learning curve associated with developing a green project. If a company
develops its first LEED project and someone from that company says that it did not
cost anything more, that person is probably not a finance guy, has found a clever way
to “dress up” the numbers, is flat-out lying, or a combination of all three. As with
learning anything new, there is most certainly a cost premium associated with adapt-
ing to a new set of processes. There is the additional time involved in doing things dif-
ferently, including the time it takes to get one’s hands around the LEED program. This
is true even if a company hires a consultant to expedite matters. There will still be
members of a company’s development team that have to understand and implement
what this consultant is talking about. There is also a learning curve associated with
changing from a linear approach to development to an integrated approach. In a con-
ventional development project, the developer creates an overall vision for the project
and hands off the vision to the design team, which gives shape to the vision, which
then gets handed off to finance for cost evaluation, back to design for refinements, and
then to the contractor who builds the project. A leasing team is brought in to find pay-
ing tenants. And the whole thing gets handed off to the property management group
to make things run smoothly. In a green development, all of these disparate parties are
present from the get-go. Done well, siloed areas of expertise are jettisoned as all work
collaboratively to achieve a high-performance building. Done poorly, turf battles
emerge, various professionals lay claim to their own area of expertise, and collabor-
ation seems well-nigh impossible. It takes time to manage this collaborative process
both creatively and efficiently.