When you exit a plane in Boston on a chilly, gray May morning, solar energy is probably the last thing on your mind. The only thing less likely than seeing the sun on a Northeastern spring morning is understanding how it can generate enough power to pay for up to 55 percent of the common area electricity needs in an apartment building. It’s a good thing Samuel Ross doesn’t feel the same way. Ross is CEO of Boston-based WinnCompanies, the seventh-largest manager of apartments, according to the 2011 MFE Top 50 Managers list, with 84,817 units under management (half are for the military and the other half are residential). And he’s all about sustainability.
In 2007, back before the apartment market fell off a cliff and then climbed back up, Ross decided to use $3.2 million from the Connecticut Clean Energy Fund, $1 million from the Massachusetts Technology Collaborative, and $2.7 million in tax credit equity to install solar panels on seven properties. Though those projects weren’t exactly in sunny Southern California (they were, in fact, located in Connecticut and Massachusetts), it was enough to convince Ross, a Harvard M.B.A. who had been at the company more than 15 years, that the idea would be a winning one.
“Our focus on sustainability started with WinnSolar,” Ross says. “Based on the success of those projects, we began to emphasize energy conservation and green business practices throughout the company. When we get focused on something, we tend to be pretty intense about it.”
Since then, Ross has pushed his company, its culture, and its various divisions—WinnDevelopment, WinnResidential, and WinnCommercial—into the business of sustainable development and operations. He assembled a three-person team, led by vice president of energy and sustainability Darien Crimmin, which is focused exclusively on making its properties greener, whether through historic rehabs or upgrades at existing communities. And for the most part, Ross is succeeding, with Winn focused on reaping the financial returns of these eco-friendly investments—and doing good for the planet in the process.
“They’re trying to figure this [green] thing out for their entire business,” says Dana Bourland, vice president of green initiatives for Columbia, Md.–based Enterprise Community Partners, which provides Winn with development capital and expertise. “They’re committed to the environment and reducing energy and water consumption in their buildings.”
Change at Every Stage
At the ground floor, Winn’s green program extends to insulation, solar power, and everything in between, but the green agenda starts at the top of the organization. Winn ties 10 percent of its executives’ compensation packages to green objectives, such as surveying opportunities for energy efficiency through energy audits; conducting HVAC, lighting, and water upgrades; and developing green marketing materials. “We’ve pushed this [green] culture right down into incentive compensation,” Ross says.
Not surprisingly, that culture filters down to operations, as well. Winn has developed a green manual, implementing policies on water assessment, energy assessment, cleaning materials and practices, recycled materials, maintenance products, waste reduction, recycling and disposal, laundry equipment, air-conditioning, best practices in offices, landscaping and watering, pest management, and painting. “We’re making sure that, on the operational side, we have systems and processes in place to monitor how [all our] systems are controlled through the seasons,” Crimmin says.
Maintenance, too, plays a huge role on a number of levels. For one thing, the maintenance staff has to be well-versed in maintaining LEED-quality equipment. For instance, they need to be vigilant about replacing air filters, given the importance of air quality in green buildings.
And Winn has had to train its maintenance staff to understand that not following procedure in an attic, for instance, could have broad implications for a property’s energy bill. “We’ve had mechanics up there to deal with wiring or something, and they just didn’t put the insulation back [after doing the work],” Ross says.
That, of course, can lead to energy loss. Which is why Winn became one of the first property management companies to enroll its on-site staff in courses offered by the Alexandria, Va.–based National Affordable Housing Management Association (NAHMA) and the Arlington, Va.–based National Apartment Association Education Institute’s (NAAEI’s) Credential for Green Property Management (CGPM) program. “With technology changing the way it is, it’s important to continuously refresh everybody’s understanding of how to best monitor energy consumption, since the equipment is always changing and evolving,” Crimmin says.
The Redevelopment Pipeline
For Winn, development doesn’t necessarily mean new starts. In fact, the company hasn’t done a ground-up new development in about 20 years. What WinnDevelopment has done is complete or close on the redevelopment of nine properties in the past two years. In addition, Winn has acquired interests in 66 additional properties with respect to which significant capital upgrades are planned for 2011.
Obviously, Winn’s development model has changed throughout the years. “In the 1990s, we moved from ground-up construction to acquisition-rehab,” says Larry Curtis, president of WinnDevelopment. “In the past decade, we’ve expanded our expertise by converting historic mill buildings into multifamily housing. The adaptive reuse of historic structures allows us to combine historic and low-income tax credits while bringing new life to communities across the Northeast.”
Winn’s focus on sustainability can help the company secure these credits in a very competitive environment. “WinnDevelopment’s focus on sustainability through the installation of energy-efficient features puts them on the right track toward securing additional federal tax incentives and other rebates that further accelerate the return on investment from going green,” says Dori Eden, director of business development for Los Angeles–based KBKG, a specialty tax firm that has worked with Winn.
Crimmin believes using existing structures, often with floors and ceilings that can be salvaged, is a greener approach. “We have so many existing buildings that need renovation,” he says. “From a sustainability perspective, the embodied energy of redeveloping an existing building makes renovating a greener option than investing in a ground-up construction where you’re bringing in new materials and equipment.”
Of course, there can be a fine line to walk in making these old, drafty structures more energy-efficient. One goal is to maintain the character of the old mill building. But another objective is to insulate the building as much as possible. That’s not necessarily easy with old, brick, industrial structures from the 19th century. Take the old windows. To maintain a building’s historic integrity, they need to be kept. But they aren’t very energy-efficient. Large units with brick walls don’t control airflow very efficiently either. “While the characteristics of our mill building conversions—high ceilings, large windows, exposed brick—are aesthetically pleasing and in high demand, these buildings present significant conservation challenges,” Ross says.
Early on, Winn learned the hard way that these structures often bleed energy, pushing up utility costs. “Sometimes we were under-budgeting because of inefficient insulation, terrible windows, and large spaces [in the original building],” Ross says.
But Winn has worked a lot of the kinks out of its redevelopment program to the point where its 62-unit Oliver Lofts mill project property in the Mission Hill section of Boston is slated to be one of the first LEED Platinum–certified historic rehabs in America that’s also affordable. The project includes “super-efficient” heating and air-conditioning systems, is close to transit, and offers car sharing and bike storage in the building.
But those are simply the surface-facing green features in the project. Oliver Lofts also features a two-stage insulation approach with Winn using a spray foam, then building out the wall, and finally blowing in cellulose. “We’re even sealing and insulating the walls in between units to avoid air passing,” Crimmin says. “It’s the idea of compartmentalizing each unit.”
At the 100 percent affordable, 1960s-era Castle Square Apartments in Boston’s South End, Winn is going deeper. It expects the project to be the nation’s largest deep energy retrofit and earn LEED Gold status. The company, which partnered with the building’s residents association (which owns a stake in the building), tapped into funds from the Massachusetts Department of Energy Resources High Performance Grant Program through a High Performance Buildings Grant funded from the American Recovery and Reinvestment Act (ARRA) to add insulation panels to the exterior of the property.
Crimmin says the “super-insulated” envelope will allow Winn to downsize its mechanical system to use less energy. In fact, he expects to save 72 percent in energy costs with the upgrades. Winn is also tapping into a customized line of credit from Enterprise Community Partners. The objective of this pilot program is to create a new “green financing” product for affordable housing in which annual energy savings repay debt service in less than 10 years. One of the projects being considered for the pilot will upgrade the heating systems and convert the fuel source from oil to gas. It is also using 3,000 square feet of solar hot-water collectors to support domestic hot-water production for residential showers and sinks.
Measure, Measure, Measure
One of the ways Winn decides when—and in what—to invest is by running the numbers again and again. The practice is deep-rooted in the company, thanks in large part to Ross, who got his start in multifamily as a rental agent and property manager in Boston 30 years ago. He remembers seeing residents opening their windows in the dead of winter, and he remembers walking through apartments to take the temperature of the flue gases and perform energy-efficiency tests on the boilers. “We would take a building and try to do a study to try to understand how we could get the one-pipe steam system to distribute heat more evenly,” Ross says.
Thirty years later, measurement still matters. Winn is still focused on measuring how much energy the buildings it owns and manages use. “They’re doing a lot in terms of energy auditing and doing a real down-and-dirty analysis,” says Thom Amdur, executive director of the National Housing & Rehabilitation Association in Washington, D.C. “The analysis they’ve done in terms of their water management is probably the item that’s most impressive to me. They did a portfolio-wide analysis of their water usage and did some strategic improvements on these properties.”
WinnCompanies
Loft 27 in Lowell, Mass., began as a failed condo deal before Winn took over and began redevelopment in 2006. The company was able to use state and federal tax credits to complete the project’s redevelopment in 2008.
Credit: Courtesy WinnCompanies
Winn begins this process with an audit, during which the company goes through, looks at existing conditions, and qualifies the savings that might come from making certain energy-saving investments. “They spend a lot of time monitoring data,” says Taylor Caswell, founder of Caswell Strategies, a consulting firm with expertise in the housing and energy sectors based in Hollis, N.H. “They have an enormous amount of data for the properties they own and manage. They can identify properties that are good candidates for various types of activities.”
Winn also tracks its properties looking for outliers in energy performance. If there’s a problem, it will first conduct an audit with its in-house team. The company will inspect HVAC and temperature logs, look at historic consumption, and examine the equipment. If necessary, it will then reach out to outside firms for services such as testing the boilers and conducting blower-door tests. “Having the data is a precursor to understanding whether what we’re doing is working,” Ross says. “Are we saving money, and are we reducing consumption?”
To gauge energy usage, Crimmin uses a unit of measurement called the KBTU (Kilo British Thermal Unit) in KBTUs per square foot per heating-degree day. “When you want to combine multiple fuels, whether it’s electricity or gas, and combine them to get an overall metric for how the property is performing, that’s where the KBTU per square foot comes in,” Crimmin says. “And then, when you want to adjust for seasonal weather variation, that’s where the concept of per heating-degree day comes in.”
At Uncle Sam's Mercy
While Ross has been able to invest around $20 million in greening his apartment stock over the past four years, he also acknowledges that if it weren’t for the existing government support for energy efficiency, a lot of the company’s progress may not have been possible. “The fact that these improvements are being done—and are generally only done with grant money—says everything that needs to be said about the marketplace [for making green improvements],” Ross says. “In many cases, it’s otherwise not efficient and supportable.”
Winn has also received sustainability funds to cover energy efficiency in its projects. Those funds have covered expenses such as growing a staff of employees dedicated to energy-efficiency projects; replacing boilers; replacing electric heat with heat pumps; performing air sealing and weatherization; updating lighting; ensuring water efficiency; and paying for general insulation.
Basically, Winn couldn’t have been as green as it is without the help of Uncle Sam. Its first foray into the green world—solar panels—is a good example.
“Solar is very difficult in this region to make work without some incentive available,” Crimmin says. “To make the economics work, the public policy perspective is shifting to prioritize solar in the economy and to develop a green, clean-energy workforce. As a result, there are incentive programs that are available.”
By providing this energy for its properties, Winn can lock in energy costs over time, and, in a perfect world, reduce costs for its residents. “In some cases, funds are covering their costs of utilities or helping to reduce the operating costs for the property so the rents can be maintained,” Crimmin says. “These are properties that otherwise would not have funds available to undergo these types of energy-savings projects.”
For instance, at Castle Square, Winn was able to lock in a 70 percent reduction in utility costs. Ultimately, that’s going to improve the lives of its residents more than any LEED designation. But with the federal government focused on budget cuts, Ross wonders what kinds of programs will be there to help in the future.
“Obviously, within our existing portfolio, we have been able to deploy funds to do all sorts of weatherization and energy improvements and to make conservation improvements,” Ross says. “Certain things pay for themselves, and are economically efficient, but others don’t.”
