Page 214 - The Green Building Bottom Line The Real Cost of Sustainable Building

192 CHAPTER 6

tenant LEED office building in Georgia. However, this benefit of enhanced reputation
is too abstract to calculate with any degree of confidence. Moreover, since the overall
intent of this book is to make the business case for green buildings generally, the intan-
gible benefit we might see by delivering a first-to-the-state product is not replicable as
more LEED for Existing Buildings projects are developed. As such, we don’t include
it in our cost/benefit analysis here.
The same logic applies to the longer-term intangible benefits that occur as a result
of reducing our overall liability and risk. With conservation measures in place, are we
less prone to be cited for violating outdoor water use regulations? Yes. Can we place
a value on that reduced exposure? Probably not.
With these various costs and benefits of delivering a LEED for Existing Buildings proj-
ect in mind, we can now look at a basic discounted cash flow analysis for Crestwood.
As can be seen in Figure 6.4, total costs of the LEED program amounted to $163,000
($137,000 initially plus the on-going cost of the recycling program of $26,000). Total
benefits are conservatively estimated at $450,000 (with a primary contributor being our
over-market occupancy). The net present value (NPV) of the LEED investment comes to
$135,000, with an internal rate of return on our green investment of 42.3 percent.

Y Years 0 1 2 3
ears
REVENUES/SAVINGS
REVENUES/SA VINGS
3,800
Native landscaping
Native landscaping 3,800 3,800 3,800
3,800
3,800
No external mat vendor 425 425 425
425
425
No external mat vendor
425
3,700
1,700
ater
Water savingssavings 1,700 3,700 4,700
4,700
7,600
9,400
Energy savings 7,600 9,800 9,400
Energy savings
9,800
27,254
Over-market occupancy owing to service/green
Over -market occupancy owing to service/gr een 27,254 27,254 27,254
27,254
27,254
40,779
Total Revenuesotal Revenues 40,779 44,979 45,579
45,579
44,979
EXPENSES
EXPENSES
(33,986)
Window filmindow film (33,986)
(1,600)
Zolatone upgrade (1,600)
Zolatone upgrade
(20,567)
r
etr
Restroom retrofit (water conservation)conservation) (20,567)
oom
Restr
(water
ofit
Lighting retretrofit
(24,824)
Lighting r ofit (24,824)
HVAC retrocommissioning
HV AC r etr ocommissioning (7,128)
(7,128)
Cost of r ecycling pr ogram (5,260) (2,860) (2,860)
(2,860)
Cost of recycling program
(2,860)
(5,260)
(37,840)
HVAC enhancements/repairs
HV AC enhancements/r epairs (37,840)
(3,916)
Entry
grates
Entry grates (3,916)
LEED documentation/submittal (2,000)
LEED documentation/submittal
(2,000)
(137,121)
Total Expenses otal Expenses (137,121) (2,860) (2,860)
(2,860)
(2,860)
42,119
42,719
(96,342)
Total Cashflowotal Cashflow 0 (96,342) 42,1 19 42,719
0.826
Factor
Discount
Discount Factor 1.000 0.909 0.826 0.751
1.000
0.909
0.751
32,095
(87,584)
34,809
PV CashflowCashflow
PV 0 (87,584) 34,809 32,095
NPV 135,573
NPV
135,573
IRR
IRR 42.30%
42.30%
Figure 6.4 Discounted cash flow of LEED for Crestwood.