Building Nevada - July 2011

Green Building

We Have the Technology, We Still Can't Build it.

by Adam Candee

 In the past few years, the cost of building green came down and awareness of its benefits shot up. With years of education and experience now in hand, professionals in the design and building industries possess the savvy to do it better, faster and cheaper than ever.
 Now, if only someone would build something.
 The same themes of weak residential demand, oversaturated commercial properties and locked-down credit that plague the industries surrounding construction in Nevada rear their ugly faces in the green building discussion.
 “There’s been a lag the last two years because there’s been virtually no building,” said Rick Van Diepen, President of the Nevada chapter of the U.S. Green Building Council (USGBC). “When things get going again, my prediction is there will be a greater need and greater market for green building. These new projects will be looking for additional value and higher performance.”
 In fact, that desire for value and performance already looks strong. What has been built during the recession incorporates sustainability at a rate not seen before the financial swoon.
 With a provenance once thought of as hugging a tree, the concept of green building received a helping hand into the mainstream by a desire to cut costs not by slapping up the fastest four walls possible, but by incorporating energy efficiency and other elements of sustainability.
 While few shovels go into the ground these days in Nevada, a green or sustainable project likely will be the result when they do. Nevada led all states in LEED-certified commercial and institutional green buildings per capita in 2010 with 10.92 square feet per person. Only Washington, D.C., with 25.15 sq. ft. per person, featured more LEED space, according to Census data.
 “Using per capita, versus the more traditional numbers of projects, or pure square footage, is a reminder to all of us that the people who live and work, learn and play in buildings should be what we care about most,” said Scot Horst, USGBC Senior Vice President of LEED. “2010 was a difficult year for most of the building industry, but in many areas, the hunger for sustainable development kept the markets moving.”
 Sixteen projects within Nevada received some level of LEED certification in 2010, including eight Gold and five Silver designations. Overall, 55 Nevada projects boast some level of LEED certification; through the end of 2008, USGBC showed 29 LEED-certified facilities in the state. The most well-known of all these is CityCenter, which received six separate LEED Gold certifications for its buildings but might also be the last of its breed in the green or the general market in Nevada.
 Building green through sustainable materials and energy-saving measures certainly can be accomplished without receiving LEED certification, but the system stands as the most widely accepted and only third-party verifiable measure of relative green merit.
 “You don’t have to prove anything if you just say (to someone), go build me a green building,” Van Diepen said. “You can lose all the benefits to getting a green building. It’s kind of like you’re giving up the insurance plan if you don’t go through the certification.”
 The USGBC defines LEED certification as “a building or community was designed and built using strategies aimed at improving performance across all the metrics that matter most: energy savings, water efficiency, carbon-dioxide emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts.”
 There are four increasing levels of LEED certification: Certified, Silver, Gold and Platinum. The level attained is based on a scoring system that awards points for a wide-ranging set of criteria, taking local environmental situations into consideration. Earning LEED points can come from improvements as small as installing energy-efficient lighting and lighting controls or as big as designing heating and cooling systems to use energy more efficiently. Many LEED improvements involve the inclusion of “smart” systems that reduce energy consumption in parts of buildings that are not being used, primarily heating, cooling and lighting.
 The green market was 2 percent of non-residential construction starts in 2005, 10-12 percent in 2008 and will grow to 20-25 percent by 2013, according to the USGBC.
 For companies like United Construction, green building weaves into the fabric of the work. Michael Russell, Chief Operating Officer based in Reno, points to a handful of projects on which his company is working right now as proof that even in down times, building green still holds a place in the market.
 “It’s become embedded in the industry,” Russell said. “It’s taken five or six years to get there. Over the years, the percentage of customers that do look at sustainable factors is growing. They walk in the door looking for it these days,.”
 United is building an Urban Outfitters facility in Northern Nevada that is seeking LEED Silver certification and a natural foods store that is going for LEED Silver as well. In fact, United’s own office building received LEED Gold certification in 2009.
 “For the most part, everyone looks at sustainability these days in the buildings that we build,” Russell said. “Everyone’s got to be concerned about efficiency and operating cost as we move forward.”
 John Atwell, COO and Director of Development for Dermody Properties, took the thought a step farther. “It’s a foregone conclusion that we’re going to build at least (LEED) Silver,” Atwell said.
 More than 1,000 Nevada-based professionals in design and construction-affiliated industries possess some level of certification through LEED. USGBC oversees the national certification process, which requires passing a comprehensive exam to become an LEED Accredited Professional (LEED AP). The LEED 3.0 system requires a significant amount of time logged working on a LEED-accredited project before being allowed to take the exam. People are then required to take ongoing education classes to stay up on the latest developments in green and sustainable design.
 Russell, who came to Nevada after working for ProLogis in Denver, points to greater education about and understanding of green as reasons why it is easier and cheaper to do it now.
 “When LEED first came out six or seven years ago, it was an unknown for the construction industry,” Russell said. “People threw a lot of money at it because they just didn’t understand it. It’s become more of the norm than it is the unknown.”
 Upfront costs form the first and usually most formidable roadblock to small and midsize project businesses incorporating LEED elements, let alone seeking certification. Those in the industry insist that the investment returns in short order through extra government inducements, reduced energy costs and healthier employees.
 “Any customer with any economic smarts is going to sit down and do a return on investment on those increased costs,” Russell said.
 Russell said United can do a LEED-certified project for an additional price of between 1 and 5 percent of the total project cost, depending on the level of certification a client desires, as compared to a minimum of 5 percent just a few years ago.
 From the design side, Van Diepen, an Associate Prinicpal at PGAL, echoed a premium of 1 to 3 percent. The USGBC estimates about another $2,000 for the paperwork of certifying the project.
 “For a while with the additional cost, (people asked) do we really want to do it,” Atwell said. “The cost has come down. We just don’t need that much help to get it done.”
 Additional financial incentives exist in the form of property tax abatements and energy rebates from government bodies and utilities. For example, the City of Henderson received a $150,000 check from NV Energy in 2009 for its use of solar panels at its North Police Substation. While generous state incentives first passed in 2005 were scaled back in 2007 under threat of Nevada losing close to $1 billion for abatements that originally went up to 50 percent, the state still offers a significant break on property taxes for non-residential projects that achieve at least Silver status.
 For all its reported potential in solar, geothermal and wind energy production, Nevada still is not seen as a state leading the revolution when it comes to green building.
 “We’re in the middle of the pack,” Russell said. “We have a lot of opportunity to do things that are green energy here that aren’t sustainability-related. We’re definitely not leading the country in cutting-edge green technology.”
 In his role leading the local USGBC chapter, Van Diepen works to change that through educating everyone from school district officials to legislators about the benefits of building green and providing companies with the right incentives to do so.
 “There’s so much more that we could be participating in here as a young state that’s poised to be a net producer of renewable energy in the near future,” Van Diepen said. “Overall, we’ve been lagging. The development industry, casino corporations and larger development organizations and companies have been pushing it more than our design industry. The design industry is quickly catching up.”
 Incentives and the like do not tell a complete story. Van Diepen notes a project for the Marines’ 29 Palms facility in California as proof of green building’s impact on a Nevada company’s bottom line.
 PGAL bid on the $110 million job with plans to build the needed barracks facility exceeding basic LEED certification at no extra cost. The company won the bid. There would be a gray water system for the remote base to irrigate its golf course and ultimately a large solar energy component as well. In fact, the project could ultimately be close to a net zero energy consumer, a model Van Diepen calls “a nationwide model for all Marine housing.”
 The design and work earned PGAL the chance to add a dining facility at 29 Palms as well, and it helped PGAL avoid some of the pressure crushing the Nevada economy.
 “It set us up for future projects,” Van Diepen said. “We essentially kept our office from having to lay off.”
 That’s not to say green building is the golden ticket out of Nevada’s recession. For some, building green is nothing new and no more profitable now than in the past.
 “The direct effect hasn’t been terribly evident,” said Don Clark, president of the architecture firm Cathexes. “We were doing sustainable projects way before it was cool. People say green and say sustainability, but they don’t really know what that means. In the last throes of the devastation that’s been going on, the resistance has been going away a little more.”
 Not every company wants in on green and it might not be right for some.
 “There are companies that have truly adopted corporate and social responsibility and ethics,” Russell said. “There’s a middle of the road group of companies that weigh the cost of it. I think there’s other people, a third tier of people, that really don’t care. You’ve got the whole gamut.”
 Russell went on to add, “we’re going to build responsibly. We’re going to do the most efficient building that we can. We still have a responsibility to look at energy efficiency and other opportunities to build sustainably.”
 The success story for Nevada is this: what is being built in this devastated market trends green and, per capita, we are among the nation’s leaders.
 “The developers doing projects now and in the past two years have built more substantive projects,” Van Diepen said.
 But before green building translates to major green for companies looking for a way out of trouble, the volume of the building needs to increase, no matter how fashionable the field looks today.
 “It’s kind of tricky because there haven’t been that many buildings built,” Atwell said. “Both Las Vegas and Reno really got hammered. As the economy improves, we’re just going to have to wait and see how many guys come out and build LEED or not.”