Green building practices took on a new priority, with the release of a new report highlighting underwriting issues related to multifamily housing and an annual list of the top 10 trends that will shape green building practices in 2012.
Deutsche Bank has announced the results of a new study on the ability to incorporate energy savings projections into underwriting practices. The study, ‘Recognizing the Benefits of Energy Efficiency in Multifamily Underwriting,’ analyzed energy efficiency retrofits of 230 affordable multifamily housing projects in New York City and raised questions on the green-hued underwriting of this sector.
According to the study, the key bottleneck for private capital flowing to the sector focused on the lack of confidence in projecting energy savings against which lenders can underwrite loans. The study also determined that energy savings across the building portfolio examined were real, and that the fuel savings (19% across the portfolio) were more predictable and of greater magnitude than electricity savings.
The study also recommends an underwriting methodology that would allow lenders to compare an auditor's savings projections for a particular building with empirical data from past retrofits, to assess whether the auditor's projections should be discounted when making an energy efficiency loan.
The study was researched by Steven Winter Associates and HR&A Advisors under the auspices of Deutsche Bank Americas Foundation with support from Living Cities, a philanthropic collaborative. The report is now available online.
‘Among its many findings, the study discovered that for half the projects examined, savings alone were sufficient to fully support loans for energy efficiency capital improvements,’ says Ben Hecht, president and CEO of Living Cities. ‘That is fantastic news, but now we need to take the next step. To that end, a follow-up grant from Living Cities to the New York City Energy Efficiency Corporation will support a dedicated program to help lenders monetize cashflows from energy efficient building retrofits.’
Separately, the Earth Advantage Institute, a Portland, Ore.-based nonprofit green building resource that has certified more than 12,000 homes, has announced its annual prediction of 10 green building trends to watch. The annual list was compiled from interviews with policymakers, builders, developers, architects, real estate brokers, appraisers, lenders and homeowners.
For 2012, the Earth Advantage Institute is predicting an increased volume in urban density; a rising number of green multifamily housing; home remodeling efforts being driven by energy upgrades; the deployment and testing of new materials in construction; an increased popularity in consumer-friendly home energy tracking devices; a new wave of energy education for commercial tenants; an increased transparency in the marketing of green housing; more accurate appraisals relating to green property; broader adoption of residential energy ratings for homes; and more smart grid-compatible high-performance homes.
‘While the economy has not been kind to most new home builders, we have seen a surging interest in home energy management and energy improvement among homeowners,’ says Sean Penrith, executive director of the Earth Advantage Institute. ‘Those builders and remodelers who have adopted a transparent green message have been quite successful.’
