Page 211 - The Green Building Bottom Line The Real Cost of Sustainable Building

EXISTING BUILDINGS 189

people about air pollution and traffic congestion issues, and encourages carpooling by
linking interested commuters. We inform tenants about the service and host presen-
tations about carpooling for interested tenants. The program offers financial incen-
tives and guarantees rides home in the form of taxi vouchers to those who carpool but
find themselves unexpectedly unable to participate in their carpool arrangement due
to unforeseen events (e.g., a child’s illness or unscheduled overtime).

Assessing the Financial Aspects

of LEED Certification

Record-keeping and documentation can be difficult and tedious, but it’s necessary so
we can monitor and document our progress over time, determine the financial benefits
of the choices we make, and maintain records for re-certification, which, to maintain
LEED for Existing Buildings, is required every five years. For tracking purposes, we
know it’s important to establish procedures that allow us to control the materials that
come into the building. Doing this yields better, more involved relationships with ven-
dors and suppliers. We know we need to check everything. Our Mark of a Difference
program aids in these efforts, providing written standards and methods and proce-
dures, and keeping us focused on particular goals.
Much of the work required for obtaining LEED for Existing Buildings involves
choosing appropriate materials for improvements and working with suppliers, contrac-
tors, and vendors to be sure the specified materials are properly installed and properly
maintained. Some changes, such as water-conserving plumbing fixtures and higher-
efficiency lighting are investments that save money over time. Depending on the struc-
ture of the lease, it can (and will) be argued that the cost savings accrues to the benefit
of the tenant. It can also be argued that a full-service office building lease is based
on the premise of total occupancy cost (rent + common area overage + RE tax over-
age + insurance overage). A consistent increase in the overage payments by a tenant
will lead to a rollback on rental rates (assuming an annual increase in base rent) and/or
a dissatisfied tenant. Limited or no overage should allow for an increase in rental rates.
Other changes, like using sustainable cleaning products, don’t save any money (al-
though they don’t cost more, either), but they do contribute to everyone’s health and
well being.
If we refer back to Table 6.1, we see that the Crestwood Building was acquired for
$9.4 million and that an additional $1.346 million was invested early on for various
upgrades, for a total initial investment of $10,746,000. Total gross income amounted
to $1.2 million, net operating income annually was approximately $910,000, and the
cap rate for this building was about 8.47 percent. We now need to update these num-
bers with data that reflect upgrades to the building.
Before entering the LEED for Existing Buildings program, we pursued an Energy
Star rating for zthe building, entailing $62,664 of investment. We followed that