Here Are Some Ways to Overcome the Landlord-Tenant Split That Hinders Energy Efficiency

Here Are Some Ways to Overcome the Landlord-Tenant Split That Hinders Energy Efficiency

A new report concludes that green leases could deliver $3B in annual savings.

Katherine Tweed
May 27, 2015

Leases that realign the financial incentives of sustainability measures, such as energy efficiency, to benefit both owner and tenant could unlock energy savings of up to 22 percent in U.S. offices, according to a new report by the Institute for Market Transformation.

Green leases, as they are commonly called, could deliver about $3 billion in annual savings. For these savings to be realized, however, green leases will likely have to become the de facto lease in the office-space sector, rather than the exception.

“There is no need to call a lease with aligned energy incentives a green lease,” the study authors argue. “It is a well-written lease that takes the benefits of an efficient building into account, and does not have to presented with an environmental or green lens.”

No matter what they’re called, energy-aligned leases can be attractive to savvy tenants, especially those with stated corporate sustainability goals. Studies have also shown that green buildings command a premium in the marketplace.

Depending on the region and market, there are endless variations on language that can help to solve the split-incentive issue in leasing, where the owner pays for improvements but the energy savings accrue to the tenant.

Here are five clauses the Institute for Market Transformation study suggested can create value by increasing the energy efficiency of the space while benefiting both tenant and owner.

Pass-through cost recovery. Traditionally, many building owners amortized capital expenditures. However, energy-efficiency upgrades will often be paid back long before the amortization payment schedule is finished.

IMT outlines lease language for a savings pass-through, where a landlord can recoup operational savings from energy-efficiency improvements until the capital expense is paid back, and then any further savings go to the tenant. For more than 20 years, Brandywine Realty Trust, one of the largest integrated real estate companies in the U.S., has used this strategy to drive efficiency in its buildings.

Limit lighting and plug loads. Adding in language that requires tenants to adhere to existing green standards, such as LEED, can be too onerous for some tenants, but owners can require tenants to exceed building standards for specific energy hogs.

Lighting can be a substantial part of tenant load, which makes it a reasonable place to start. For example, landlords can leverage the lighting standards from LEED without requiring LEED certification, which calls for lighting to outperform the ASHRAE 90.1 standard by 3 percent.

Plug loads are the fastest-growing source of energy use in buildings and can account for up to 50 percent of total electricity use. IMT estimates that halving a traditional tenant plug load limit, from 4 to 2 watts per square feet, can save considerable energy without affecting tenant experience. Requiring smart plug strips is another way to reduce plug load without limiting a tenant’s use of the space.

Energy Star appliances. One of the least contentious strategies for saving energy is for tenants to only install EPA-rated Energy Star appliances, which already have a market penetration above 50 percent. This one move can save appliance energy use by an average of 20 percent.

Install submeters. Submeters used to be more expensive, but costs have come down, and the U.S. Department of Energy has a goal to bring them down further, to about $100. By providing basic energy-use information, submeters help tenants become more aware of their energy use and therefore more inclined to save. The data can also be used to identify other potential areas for savings.

Retrocommissioning. Building owners can lower their costs, and share savings with tenants, when there are firm guidelines in a lease about the commissioning process. Commissioning not only saves energy — on average, $0.41 per square foot, according to Berkeley Lab — but it also helps assure tenants that the building is being actively managed.

TAGS: energy efficiency, green leasing, high performance leasing

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The Rules of Conduct of a Strata Corporation

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The Rules of Conduct of a Strata Corporation

Before buying a unit for yourself in a strata, you need to stay aware of the fact that everything regarding the strata’s management and policies is looked after by a strata corporation which is established specifically to do all of this work. To help you out in understanding the role of a strata corporation in a strata, we have listed the most common duties of a Strata Corporation below which will more than definitely assist you in knowing your strata corporation much better.

Controls and Looks After the Common Property

The main role of the strata corporation is to look after the common property.  For this, the corporation acts as a governing body that must take care of all issues and problems and deal with any developing nuisances effectively. Simply put, if you happen to find out that there’s something wrong within the strata’s premises, you can report it to the corporation and have them take care of the matter.

Insures the Buildings

It is highly recommended that you opt for a strata which features insured buildings. Speaking of which, insuring the strata’s buildings is also one of the major jobs of the strata corporation. This includes taking care of the replacement cost as well as making regular payments of premiums.

Keeps the Common Property Held

Some sort of neutral body needs to keep the common property held and do this in trust for the owners of all the units. As such, the strata corporation also takes over this role and makes sure it keeps hold of the common property in trust for the unit owners.

Owns a Bank Account Dedicated to the Strata

A strata needs to run properly and it must have a bank account which is maintained and kept safe for the funds of maintenance. Of course, these funds are all contributed by the unit owners for the welfare of their community. The strata corporation plays a leading role in this regard, as well as it collects the maintenance fund contributions given by the owners of all the units and keeps them all safe in a bank account. This bank account is entirely dedicated to the strata’s  maintenance, and the funds inside it are only used in case any maintenance problem arises. The corporation cannot and must not utilize these funds for their own usage. Furthermore, the strata corporation cannot undertake business for profit by using the maintenance fund contributions provided by the unit owners.

The Strata Corporation cannot, in any way, be a profit based business as it is solely present to deal with any developing problems and underlying issues in the strata scheme among a few other tasks. Studying the above mentioned rules of conduct of a strata corporation and understanding them will help you realize the extent to which you can question your strata’s association in case you notice them doing something out of the ordinary.

How to Help Trees Survive the Drought

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California is going on four dry years with no end to the drought in sight. With record low rain and snowpack levels to-date, the state’s soil is severely dry and affecting the natural landscape, including our trees in the state’s natural landscape as well as those in larger urban forests.

Trees growing in nature depend exclusively on rain and snow for survival and because of the prolonged drought, the moisture stored in the soil is now depleted and trees are stressed and in danger of dying or becoming susceptible to pests and diseases. Trees growing in urban forests and lawns may also be stressed and at risk due to unintentional mismanagement of watering; lawn sprinklers will keep a tree alive but it’s not the best way to grow healthy tree roots.

Our trees are valuable resources that provide clean air and shade, homes for wildlife and food, healthy communities and increased property values. We must do what we can to help our trees remain healthy throughout the drought. California Department of Water Resources gathered ideas to help create a strategic plan to keep priority plants and trees healthy with the limited amount of water available:

  • The key to saving water while saving trees is to decide which plants are the most important and dedicate the limited water to them first. Trees are decades-long investments and should get first priority. Next important are shrubs and perennials. Last on the list include lawn and annual flowers.
  • Check the appearance of the tree(s) for potential drought stress damage. At first glance, drought stress and leaf drops may look similar but there are subtle differences: brown crispy edges on leaves or visible wilting are both signs of drought stress along with dieback branches whereas normal leaf drop show even color changes and the leaves are soft as they fall.
  • Determine soil moisture level using a small shovel or large screwdriver. If the tool cannot be pushed in, or the shovel pulls up dry and crumbly soils, the tree needs water. To get moisture to the tree’s roots, do not turn on the lawn sprinklers! Instead:
  • Deep water the tree by laying a soaker hose in a ring around the tree just inside the drip line (marks the edge of the tree canopy) and continue to spiral outward. Let the hose run until the water soaks into a depth of 8-12 inches. But beware of runoff, especially on clay or compacted soils. Depending on the soil type and hose flow rate, this process may take only a few minutes or a few hours.
  • Check soil to make sure you’re not watering too deep or too little. To prevent runoff you can install a simple battery-operated or windup timer to shut off the hose after a certain amount of time. If water runs off before soaking in, turn the water off for a few hours to allow additional time for the water to soak. If the tree is small, start the soaker hose closer to the trunk since its roots are still young and short in length.
  • Recheck soil once or twice a month and water trees when necessary, as long as it adheres to current watering compliance within your region. Dormant (bare) trees need moisture to keep the roots alive and soil should remain moist for broadleaf evergreen and needleleaf evergreen trees that grow year round.
  • As part of a strategic plan to keep priority plants and trees healthy, check with your local water supplier about the days of the week allowed to water landscapes. If you have questions about your trees call the local Cooperative Extension Master Gardeners or your local urban forest or tree foundation.

Although Californians must continue to save water and prevent wasteful water use, it’s also important to be strategic with the limited water available to help priority, native plants and trees survive the drought.

For more information, check out our helpful infographic on water-wise tree maintenance from the California Urban Forests Council.

What would an American “House of Clicks” look like?

by Lloyd Alter (@lloydalter)

In Sweden, the big property site Hemnet designed a house based on consumer preferences and it turned out small, efficient and modern. Wondering what an American version would look like, I contacted Dan Gregory, Editor in Chief ofHouseplans.com, which has been selling complete house plans since 2004, with over 100,000 homes built. They come in all styles and sizes, and people put down real money, about a thousand dollars, to buy a set of plans so I thought they would be a real indicator of what people are really interested in when they finally build a house. And it ain’t small, efficient or modern.

© Houseplans

The most popular plan is this craftsman style house, at 2091 square feet. It pushes almost all the buttons that Dan says people want in their houses; elaborate master suites with bedroom-sized walk-in closets, big porches for outdoor living, kids’ bedrooms on the other side of the house with a shared bathroom between, big open “kitchen hubs”- it is “the heart of the home and opens to a great room, usually across a food prep/buffet.”

In another post, Boyce Thompson notes looks at consumer preferences and finds that the wide open informal living area is by far the most popular, the majority of plans are one-story or have main floor master bedrooms, “a reflection of the aging American population.” They almost all have home offices.

It should be said that people who buy house plans and build their own houses are a very small proportion of the population, and tend to be building out in the country, because the developers control most urban and suburban lots. They tend to be older and richer. But is still a large group building houses from clicks, and this is what they are buying:

  • Between 2,000 and 3,000 square feet
  • Single floor living; ground floor master if two floors
  • Big elaborate master bathrooms with separate tub, shower and toilet in its own room, and big walk-in closets
  • “Jack and Jill” shared bathrooms for the kids
  • “great rooms” where living, dining and kitchen are all combined
  • big porches for outdoor living
  • home offices

© Houseplans

Many of the houseplans are architect-designed and here is where it gets interesting. They have almost all the same features, but are a lot simpler and even modern; this is the third most popular design and there is a lot to like about it, particularly the lack of jogs, the relatively simple form and yes, it even puts the bedrooms in corners with windows that can actually provide cross-ventilation. The dual front doors dumping you into the kitchen are weird, but architect Nicholas Lee has pushed all the buttons in a more thoughtful way. It doesn’t look too bad either.

© Houseplans

But whether craftsman, farmhouse or modern, when Americans build a house of clicks, it’s a bigger single story house on a big piece of land. And they can afford it, because they will probably build it with vinyl windows and siding to American building code standards because natural gas and electricity are a lot cheaper.

© Tham & Videgård Arkitekter

This 2168 square foot Nicholas Lee house probably costs not much more to build than the 1296 square foot Tham & Videgård Arkitekter Swedish house shown in our previous post, which has fancy euro windows, wood siding and Swedish grade insulation, which is probably close to Passivhaus standard.

Swedish house design is data driven (and small and modern)

Lloyd Alter (@lloydalter)

They call it “The House of Clicks”.

This lovely red box is ostensibly designed by Tham & Videgård Arkitekter, but it is programmed by two million Swedes who clicked on Hemnet. The big property site analyzed 200 million clicks on 86,000 properties and asked the architects go create “Sweden’s statistically most sought after home.”

This is data from visits and properties that were for sale on Hemnet between January and October 2014. In addition to this data, we conducted an image analysis of the most clicked properties over a six week period. Each week the images from the 50 most clicked properties were analysed to gather additional data about the interiors. For example: the colours of the walls, floor types or kitchen countertop materials.

It’s a remarkable idea, truly crowdsourcing the programmatic characteristics. And the results are pretty remarkable too, with three bedrooms and two baths in only 120m2 (which they call 1115 SF but I convert as 1296 SF). The house will sell for 2,774,021 Swedish Kroner, which converts directly to US$ 332,458 and adjusted for purchasing power parity is US$ 234,470, which is not bad at all for this kind of quality.

The architects explain how they turn this into a house:

© Tham & Videgård Arkitekter

The house is in short based on two parts: first a direct interpretation of Big Data statistics from all the Hemnet users, an average value that determined the measurable properties of the home, including size, price, number of rooms, bathrooms and floors. To this Tham & Videgård have added a reading of the Swedish house condensed into two iconic types: the red wooden cottage that represents history, local resources, crafts and national building traditions; and the white functionalist box, which stands for modernity, optimism, industrial development, the welfare state and international ideals. The aim was then to create an architecture that combines the statistics with the features of the two iconic types: the rationality of the functionalistic box combined with the quality of craftmanship and material presence of the Falu red cottage.

Wow. The welfare state and international ideals. I somehow don’t think those would show up in a North American design.

© Tham & Videgård Arkitekter

Swedes evidently want big, bright open kitchens (57% of properties clicked on had open plan kitchens) that are in fact the home’s most important social spaces, which the architects have turned into a big double height space. Oh, and Swedes like stone countertops with white cabinet doors. ” The kitchen is now one of the home’s most important social spaces, here emphasized with a double floor to ceiling height and the inclusion of space for both dining and stairs.”

© Tham & Videgård Arkitekter

Swedes also apparently like grey monochrome furniture and natural materials in their living room, and a fireplace is a must.

© Tham & Videgård Arkitekter

Bathrooms are fully tiled; the average of all the hits was 1.6 bathrooms per house, so there are two, one with bath and one with shower only. I cannot imagine a North American house with less than two full bathrooms, one ensuite to the master bedroom.

© Tham & Videgård Arkitekter

Wood floors everywhere! Not a drop of carpet. Bright and airy is the fashion. It looks out to the lovely enclosed deck.

© Tham & Videgård Arkitekter

The deck is great for privacy, particularly if the houses are sited close together in a denser environment. It also can be enclosed if more space is needed later.

© Tham & Videgård Arkitekter

There are many things to love in this house; the light, the private outdoor spaces, the bike locker at the entrance. It is small, efficient, modern and bright. It’s the antithesis of what gets built in North America. Here are the data:

© HemNet

and here is the plan.

© Tham & Videgård Arkitekter

More on the house at Hemnet’s house site, which they kindly produce in English. I would love to know what an American version would look like; probably this:

© Thomas Kinkade

Corporate water risk management strategies

For the first time, the World Economic Forum’s annual Global Risks report has ranked the water supply crises as the number 1 global risk to businesses over the next ten years. Meaning the number 1 risk to businesses is their inability to access, sustainably, good quality water of sufficient quantity necessary for the creation of economic goods and services.

Corporate water risk management is essential

How are companies exposed to water risks?

Companies need to understand the concept of physical and ecological footprints: The physical footprint is the percentage of the Earth’s surface their facilities are located on – the company’s direct operations, while a company’s ecological footprint is the geographical area in which their suppliers (of goods or services) are located in – their supply chain. Therefore, companies are exposed to water insecurity through both their direct and supply chain operations.

Mega-trends and corporate water risks

To mitigate the corporate water risks, companies need to understand the global mega-trends that impact water security of all users including companies directly and indirectly. These mega-trends include:

Rapid urbanisation: Currently 50% of the world’s population is urbanised. By 2050 this will rise to 75% increasing demand for water resources. In addition, water quality is threatened by land-use changes that degrade ecosystems, point source pollution from industrial and domestic waste, and non-point source pollution from organic and inorganic chemicals.

Rapid economic growth: Rapid economic growth in emerging markets will see a significant increase in the percentage of water resources used by industry: In low-to-middle income countries, industry typically accounts for around 10% of total water withdrawals; however, this rises to nearly 60% for high-income countries.

Increased energy demand: World energy consumption will grow by 56% between 2010 and 2040 with most of this growth in non-OECD countries. This trend will result in increased demand for water in the production of electricity.

Increased food demand: Currently, the world’s population is 7.2 billion. This will increase to 8.1 billion in 2025, 9.6 billion in 2050 and 10.9 billion in 2100. Currently, agricultural production accounts for 79% of water withdrawals, but this is expected to increase by 75-100% over the next half-century.

Climate change: Climate change will likely increase the frequency and magnitude of floods and droughts. Specifically, flooding will decrease the availability of good quality water from the contamination of surface and ground water supplies, while droughts decrease the quantity of water available while increasing demand for water for cooling and drinking.

Corporate water risks                                                                                                                                       

If companies do not address water security overall, they will be exposed to numerous risks, which include:

  • Financial – Losses from disruptions to the production cycle as well as increased costs of treating poor quality water.
  • Litigation – Consequences of lawsuits or other legal actions in relation to the company’s impacts on water quantity and quality of other users.
  • Physical – Include both current and predicted change in water quantity and quality that may impact the company’s direct operations, for instance lack of water supply can slow down or stop production.
  • Regulatory – The impacts of current and/or anticipated water-related regulations on a specific company.
  • Reputational – Current or potential conflicts with the public over water issues that can damage the company’s brand image locally, nationally or internationally, or result in the loss of the community’s license to operate within a certain location.
  • Strategic – Failure to incorporate water availability data into strategic planning.
  • Technological – Lack of adequate technology in ensuring the efficient use of water resources, which can hinder production during times of limited water supply.

Corporate water risk management strategies                                                                                      

To achieve water security in both their direct and indirect operations and mitigate the numerous risks of water insecurity, companies can implement a 5-step corporate risk management strategy.

1) Companies can establish a water policy and set quantifiable goals and targets on water-use efficiency and conservation to minimise water-related risks to their direct operations,

2) Companies can assess water conditions and risks to both their own operations and those of their suppliers,

3) Companies can implement best-available technology for reducing water consumption,

4) Companies can factor in water-related risks (droughts, floods, sea-level rise) into their business decisions and,

5) Companies can form strategic partnerships to address water-related problems on a regional scale.

The take-out                                                                                                                                                

Global mega-trends will exacerbate water insecurity exposing companies to numerous risks to both their direct and indirect operations. To achieve water security, companies can follow the prescribed 5-step process.

US moves forward with raising the bar for energy efficiency in affordable housing

 by Elizabeth Beardsley

The Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA) took an important step this week—one that will make a difference in the lives of thousands of families. HUD and USDA issued a final determination essentially adopting the next set of building energy codes for a suite of programs and recognizing LEED certification as an alternative compliance path, which will help streamline documentation for project teams. USGBC filed comments on the proposed rule last summer, and also joined a diverse set of organizations in supporting the proposal. We are pleased that the final rule follows through with the intent to use these codes in the affected programs.

For a refresher on the role of codes, check out three building code questions you should be asking.

Under federal law, HUD and USDA have a responsibility to adopt minimum energy standards for new construction of certain assisted housing, based on periodic revisions of the International Energy Conservation Code (IECC) for single family homes and the ASHRAE 90.1 for multifamily buildings. Specifically, once the Department of Energy (DOE) has studied and found that the revised codes would improve energy efficiency, then HUD and USDA must adopt the revised codes after first determining that they will not negatively affect the affordability and availability of certain HUD- and USDA-assisted housing.

In this action, the agencies determined that adoption of the 2009-IECC and ASHRAE 90.1-2007 will not negatively affect the affordability and availability of covered housing, so, these codes now become requirements for those programs, which include both rental and owned housing.

In addition, LEED project teams will be able to use certification as a recognized alternative path to show compliance with the agency requirements. This means streamlined documentation and less work for projects being LEED certified. The complete list of alternative compliance paths include ENERGY STAR Certified New Homes, ENERGY STAR Multifamily High Rise, LEED–NC, LEED–H, or LEED–H Midrise, and other green building programs, all of which require energy efficiency levels that meet or exceed the 2009-IECC and ASHRAE 90.1–2007. Likewise, HUD and USDA will accept certifications of compliance with state codes that exceed 2009-IECC and ASHRAE 90.1–2007.

The agencies will now take steps to implement the new baseline codes, such as HUD updating its Builder’s Certification Form and handbooks. In order to realize the benefits of the new baselines as soon as possible, HUD and USDA need to expedite these actions. And, the agencies should begin their affordability and availability determination for the next revisions, the 2012-IECC and ASHRAE 90.1–2013, which DOE has already found to save energy.

The impacts of HUD and USDA’s action are positive and significant. Their analysis show that houses will save about 10% in energy over the currently used code versions. Among the benefits of energy savings are potential health impacts with improved indoor environmental quality; reduced mortgage default risks; and many others. Importantly, the families who will rent or own these housing units will see a real and sustained benefit, as well. The reduced utility costs can be a significant boost to low income families, for whom utilities may represent 10 percent of income. For example, a recent study of green affordable rental housing in Virginia found that energy usage was approximately 30% less than new standard construction, saving families $54 per month on average—representing 1% to nearly 3% of gross income. That’s a big deal for any family struggling to put food on the table.

We applaud HUD and USDA for helping strengthen communities across the country, while directly supporting the President’s goal of cutting energy waste in half by 2030, and HUD’s priority goal for energy efficient and healthy homes. We’re excited to see progress towards energy efficient housing for all.