Green Building Costs

Green Building Costs

Raphael Bostic, Assistant Secretary for Policy Development and Research In my time at HUD, I have spoken often of disciples. These are people who are true believers in a cause. We come across them in all walks of our professional lives. There are those who are strict adherents to free market principles, who reflexively object to any regulations in the marketplace. Others are more program-specific. For example, there are some who are sure that the Moving to Work program, with its flexibilities for public housing authorities, results in better outcomes for tenants receiving rental assistance. Still others believe that block grant programs are always preferred to more directed federal programs, under the mantra of “local is better”.

Disciples — some might call them “boosters” — are important in the crafting and implementation of policy. They play a critical role of lifting up important ideas and principles, and forcing debate on their merits. They also can be important voices for the voiceless, offering a consistent reminder that particular perspectives must be considered and taken seriously.

One important part of taking these sorts of issues and perspectives seriously is building an evidence base that validates them, refutes them, or clarifies and highlights their nuances. Too often, debate carries on in the absence of this evidence base rendering arguments and negotiations very difficult to resolve. Indeed, the strong thrust of this Administration to develop evidence-based policy is an acknowledgment of this and a purposeful step away from that dynamic.

There is perhaps no area that has a stronger set of disciples than the sustainability field. Advocates of green building, regional planning, “smart growth,” and other sustainability principles are certain that these approaches will result in a better quality of life for Americans. While I think this is true in many cases, there are aspects of sustainability for which much more evidence is needed. One of these is business viability.

If sustainability and green building is to persist and get to scale, there must be a financial argument to support them. Green investments must be true investments that yield returns, or at least break even. Otherwise, green building is charity. And, as I’ve often noted, charity is not a business model.

The evidence base for the business viability of green building is not as robust as it needs to be. While there is a lot of passion about the value of green building, questions remain. There are behavioral ones, like whether people who live in buildings with green features save more or use less energy and, if so, how much. There are market-level questions, such as which green building features are most-capitalized into the sales price of a home or commercial building or whether these features command a rent premium and, if so, under what circumstances. And then there are questions regarding cost-effectiveness. What is the time required for economic payback for particular green building features?

On this last question, I recently asked a PD&R intern, Larry Handerhan, to work with a team of PD&R engineers and architects to develop a list of cost effective sustainable building technologies. I asked Larry to focus on those technologies that have not yet attained a significant market share, as opposed to those with which people are more familiar as obvious cost-savers. Thus, you won’t find high-efficiency compact fluorescence lighting or water-saving low flow toilets on this list. You will find a set of 10 lesser known products that make economic sense in a variety of contexts.

As you can imagine, it is very difficult to write a report like this. Calculating a generic return on investment depends on so many factors, including the type of structure —single-family, multifamily, etc. —and for homes, their size, shape and location. The return on investment for a high-efficiency furnace for a home in Phoenix, Arizona, is going to be very different than a home in Phoenix, Minnesota. As a consequence, in addition to offering insights on some potential new exciting tools and features, this report may lead you to ask a number of additional questions. Motivating extra thought is a clear goal.

I love disciples. I love their passion, energy, and the fact that they make me think hard. I hope you find Larry’s report a nice supplement to this advocacy, with the result being an addition to the evidence base that expands the use of green building tools in economically sustainable ways.

Closing note:

This is my final piece for the Edge. It has been a distinct pleasure and privilege to be able to share with you regular reflections on issues we face every day and on new PD&R and HUD initiatives. I have enjoyed emphasizing the importance of evidence and talking about how housing matters. And I hope it has sparked new thinking about how we, the community of housing and urban development professionals and advocates, work together to help improve lives.

Next stop for me: birdwatching. But that’s a discussion better saved for another venue…

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