“…an increased standard for public buildings has the potential to increase city capital costs by $25 to $40 million over the next 10 years.” —Consultant’s report
Toughening the city’s building-related environmental policy could modestly reduce citywide greenhouse gas emissions, but also would require modest to significant costs, according to recently released reports.
City Council established the Green Building Policy Update Task Force last fall to advise on ways to reduce public and private buildings’ environmental impacts. This relates to a larger two-year effort, currently underway, to modernize the city’s 2009 Environmental Action Plan. While the plan addresses several issue areas (open space, solid waste, etc.), the council-appointed commission overseeing the modernization emphasizes combating climate change. That involves mitigating the impact of buildings, which the commission says account for about 40 percent of carbon dioxide emissions nationwide — more than both industry and transportation.
The city hired Integral Group and WSP, consultancies, to analyze potential benefits and costs of stricter standards and enhanced incentives for green development.
Stricter standards, as opposed to “business as usual,” could reduce annual greenhouse gas emissions of new construction by 20 percent, according to Integral Group’s report. That would contribute to an citywide reduction of 3 percent.
“While this number does not sound significant, this is in line with the savings available for new construction policies in most jurisdictions,” according to the report. “To truly meet the overall greenhouse gas reduction goals established in the [Environmental Action Plan], Alexandria will need assistance from the Commonwealth and the utility companies to target existing buildings with a suite of policies to reduce energy use, to dramatically increase the renewable energy supply in Virginia, and to transition residents to electric vehicles, among other action areas.”
Stricter city standards could also reduce water consumption in new construction by 29 percent, and citywide by 9 percent.
WSP’s estimates suggest largely negative impacts on costs and financial returns, often minimal but sometimes substantial.
Increasing the certification requirement for new private development to LEED Platinum, the top rating on one industry-standard scale, would raise upfront costs by an estimated 1-8 percent. Building to even higher “net zero” standards (onsite energy generation offsets consumption) could yield between a 2-percent upfront cost savings and a 13-percent cost increase.
The report suggests generally less pronounced effects on upfront costs for new public development, like schools and fire stations. Even so, “an increased standard for public buildings has the potential to increase city capital costs by $25 to $40 million over the next 10 years.” For comparison, last year’s capital improvement budget estimated $18 million to replace a fire station; $35 million to overhaul city hall; $46 million to rebuild George Mason Elementary School.
No certification upgrade would budge a leasable residential or commercial project’s yield-on-cost, a measure comparing project cost to the revenues a building generates, by more than one percent. That means higher building costs would more or less offset utility savings.
For for-sale residential, increasing to a LEED Platinum certification would reduce a project’s estimated return-on-investment by about two percent.
WSP’s study also considers potential incentives for green building, such as property tax breaks or density/height “bonuses.” The latter, which permit bigger buildings than what zoning otherwise allows, in exchange for greener construction, would be among “the most cost efficient” options for the city. Arlington has employed a bonus density program since 1999.
However, “the critical remaining question is to what extent adoption of a green building bonus density might adversely impact the efficacy of Alexandria’s existing affordable housing bonus density program,” according to the report. If a builder must employ both bonuses together to bring a project to its maximum size allowance, “then [Alexandria’s] new policy is unlikely to hinder participation in the existing affordable housing program. If, however, the 30 [percent] density bonus currently provided through the existing program brings a project to its maximum [allowance] already, then adding a new green building bonus option has the potential to force a decision between one program or the other, and is therefore likely to erode participation in the affordable housing program to some extent. In this case, for both programs to coexist without negatively impacting the current affordable housing program, the maximum allowable density would need to be increased. The program could also be structured so that the green building density bonus is available only to developers who have first maximized the affordable housing density bonus.”
For more, visit www.alexandriava.gov/EnvironmentalPolicyCommission.