Multifamily is still crazy for green building, energy efficiency, and sustainability projects and retrofits, even if uncertainty remains on how to recoup cost savings that are delivered directly to residents via utility billing.
“We all get inundated in the apartment industry with ‘going green,’” said Champaign, Ill.-based Regency Consolidated Residential president and CEO Robert Pratten, who spoke at the 2011 Multifamily Executive Conference on the panel "Pure Energy: The Insider's Track to the Best in Energy Efficiency Investments."
“Intuitively, we all believe it is the right thing, but how much can you really save? If you can reduce occupancy costs through energy efficiency, you can offer a more economic apartment to prospects. The challenge for all of us is how we get that resident savings back to the bottom line. Through lease up? Through renewal? As a rental premium?” Pratten said, adding that Regency, which just completed a $1.2 million beta test of geo-thermal heating and cooling, is pretty certain they can get some type of premium from the resident, and has considered issuing $15-$20 sustainability fees as opposed to incorporating sustainability savings back into base rent.
“It’s certainly important to include end users in any efficiency project,” agreed Chicago-based AMLI Residential vice president Fred Schreiber, who joined Pratten, former senior vice president of transactions for UDR Doug Walker, and Pasadena, Calif.-based KBKG director of business development Dori Eden on the panel that discussed ROI on sustainability initiatives from simple lighting retrofits to utility rebates and tax credits to deep energy building retrofits.
Schreiber pointed to parking deck lighting retrofits, plumbing fixture changes, and insulation and duct sealing initiatives as great low cost/high return sustainability projects. “It’s about $25,000 to retrofit a standard parking deck, and you’ll see about $11,142 in annual energy savings. That’s a 2.2-year payoff, which can be a pretty compelling investment,” Schreiber said. “Insulation and duct sealing can go a long way as one of the low-hanging fruit, and hot water costs can be cut 12.4 percent on average through the use of low-flow fixtures and Energy Star-rated appliances.”
Walker stressed that operators and developers continue to investigate utility rebates and tax credit programs as a way to quickly recoup dollars invested into energy efficiency retrofits and green building projects. “You can get the 45L tax credit if you’ve built after August 5, 2005. That’s a $2,000 credit per unit, and you may not even have to do any extraordinary things, so don’t let it go: It is real money, and it adds up quickly,” Walker said. “Don’t forget about utility rebates, either. They are still out there; they are easy to do. Understand prescriptive [fixed-dollar] versus custom rebates. Know there are two, know they are out there, and know you just have to be persistent to get them. A ‘no’ from the utility company can often change to a ‘yes’ the next month, or the next quarter.”