More on Mortgages

Yesterday I posted a conclusion that the subprime lending debacle was going to make securing funds for green building projects more difficult. There was one more observation that needs to be made as a result--the tightening capital market puts the onus on the government to keep the green building momentum growing. It is really up to states, municipalities and even the Federal government to mandate green building practices which might otherwise get "value engineered" out in a tight money situation.

Unfortunately, Even Green Buildings Still Have To Have Mortgages

I am always fascinated by the fact that the financial services industry loves ponzi schemes, like the Savings & Loan debacle and the sub-prime mortgage mess. GreenbuildingsNYC has an interesting bit on the effect of the sub-prime mortgage situation on green building here http://www.greenbuildingsnyc.com/?p=287.

I spend quite some time thinking about mortgages, because the governmental framework which supports them has such a significant impact on what--and where--buildings are built. For example, the fact that home mortage interest is tax deductible allows people to build bigger houses. Because that interest deduction is applicable wherever your house is located, there is no disincentive to building ever further out from the urban centers.

Here, I think the subprime mortgage debacle will have a two-fold result: 1) banks will be less likely to lend to projects in general, and 2) to avoid risk, perceived "experimental" green building projects with a less reliable set of financial pro formas may be even more difficult to fund than traditional projects.

What's new is risky, and what's risky in the real estate world is rapidly going out of fashion.
This could put a dent in the nacent green building boomlet, but it will force projects to be sound financially, as well as ecologically.

Rival Green Building Standards, Part II

A month or so ago I posted on the various emerging green building standards. http://greenlaw.blogspot.com/2007/07/proliferation-of-standards.html

There was a nice analysis of the NAHB (National Association of Home Builders) and LEED for Home rivalry in the Sarasota Herald Tribune: http://www.heraldtribune.com/article/20070819/REALESTATE/708190677

Bureau of "Land" Management

The new director of the Bureau of Land Management, the government agency that controls Federal lands, has done something pretty appalling. He has exempted certain activities--like grazing, oil exploration and forestry--on Federal lands from the requirements of the National Environmental Policy Act. See a full article from Daily Green here http://www.thedailygreen.com/2007/08/14/gov-exempts-258-million-acres-from-environmental-review/5194/.

My question--does he have the authority to do so? I think it would certainly be up for legal challenge--can an executive branch official relieve obligations under a legislative branch mandate?

Title IX of the House Energy Bill--The Green Building Provisions

I have spent the last few days parsing the hideously convoluted legalese which is Title IX--Energy & Commerce of the House's recently passed--and much touted--Energy Bill, which I wrote about generally earlier in the week. http://greenlaw.blogspot.com/2007/08/at-long-last-energy-bill-post.html

Title IX contains most of the provisions related to green building. Below is a non-comprehensive tour through some of the provisions of interest to me.

Sections 9001-9020 relate to the energy efficiency of appliances, raising the required energy efficiency for dehumidifiers, washing machines, dishwashers, refridgerators, etc.

Sections 9021-9030 relate to energy efficiency of lighting. There is some neat provisions in this section, including 9021 which requires the Secretary fo Energy to issue regulations prohibiting the sale of 100 watt general service incandescent lamps after January 1, 2012, and specifying ever increasing efficiency ratings for other lamps. However, three way lamps are exempted from the requriements. I have a problem with this--many, many lamps are three-way. What is the point of this exemption? Is there a three-way lamp lobby? Section 9023 mandates the use of energy efficient lighting fixtures and bulbs by the Federal government.

Sections 9031-9040 relate to residential building efficiency. Section 9031 requires states to update their building codes to be more energy efficient. THIS IS A BIG DEAL! It provides funding, support, etc. for the states to do so. Section 9034 provides additional financial assistance to consumers for home weatherization.

Sections 9041-9060 relate to commercial building efficiency. Section 9042 establishes an Office of Federal high-Performance Green Buildings to, among other things, coordinate the green building activities in various Federal agencies, identify and develop Federal high performance green building standards to be used for Federal facilities and research budget and contracting practices that affect achievement of green buildings. In an effort to employ more of us green-building types, Section 9043 establishes an Office of Commercial High-Performance Green Buildings. This Office is tasked with managing a public-private partnership program (Section 9043 (f)) which shall, among other things,further development of green buildings, study and refine a national goal to reduce commercial building energy use (Section 9044), and create a national high-performance green building clearinghouse of information. Sounds like a nice job, perhaps they will hire me. Section 9052 provides up to $100,000,000 for loan guarantees for renovation projects that will result in a building achieving LEED "certified" level. Several other provisions in these sections provide funding for the establishment of various green building pilot programs.

All in all, there are many good-sounding programs in Title IX, but we shall see what remains when the House and Senate bills are reconciled.

Green Sprawl

I have a problem. My problem is green sprawl--green buildings in acres of impervious parking lot, located in far flung suburban locales. There have been two recent articles that exemplify this issue: PNC Bank is developing green bank branches http://www.philly.com/philly/business/20070815_GREEN_are_its_BRANCHES.html and Best Buy is developing green stores http://masshightech.bizjournals.com/masshightech/othercities/twincities/stories/2007/08/13/focus3.html?b=1186977600%5E1504926. Much though I appreciate the goal of building green, without a larger perspective on the context for the buildings, it is nothing more than greenwashing. A green big box store on a greenfield requiring miles of infrastructure is simply not sustainable. The USGBC is attempting to remedy this situation through its LEED for Neighborhood Development, but all LEED rating systems should incorporate prohibitions on developing in an unsustainable fashion. In addition, green building regulations from government entities must also incorporate context into their requirements.

Nice Article On Infrastructure

The Christian Science Monitor had a nice piece on infrastructure funding. http://www.csmonitor.com/2007/0810/p03s01-usec.htm

At long last--The Energy Bill Post

I apologize, readers, for the 10 day hiatus in posts, but I have been on vacation, and then thinking about what to say about the Energy Bill passed in the House on August 4, 2007.

Earth2Tech has a nice summary of the features of the bill here http://earth2tech.com/2007/08/05/house-passes-energy-bill/.

I want to disuss what the bill doesn't do. The Bill does not remotely address our dependence on fossil fuel and coal. It basically just nibbles around the edges, establishing programs like the Advanced Research Projects Agency-Energy, for energy research, and requiring the Department of Energy to establish a green building clearinghouse, and providing funds and incentives for alternative fuel research and use. An increase in the fuel efficiency standards for cars, for example, was removed from the bill.

What really needs to happen is large scale, expensive change--a carbon tax, and a cap-and-trade program for emissions. The Federal government needs to create legislation to build the actual cost of environmental damage into each and every energy transaction to effect real change. Now that Democrats have some governmental power, they must push for the large scale change that will really make a difference, as opposed to wasting political capital on band-aid pallitives.

The bill does have some positive aspects--it cuts the $16b subsidy to Big Oil, and it creates milestones for the Federal government to reduce its carbon footprint. But we need to stop playing around, global warming is not a problem that lends itself to partial solutions. It requires large scale political change which will impact large corporate players. The Democrats in Congress do not appear to be ready to think big.

A word about infrastructure

I have posted before about the need for the 2008 presidential candidates to develop an infrastructure plan. http://greenlaw.blogspot.com/2007/07/i-want-hillary-clintons-50-billion.html

This country simply cannot go on allowing our infrastructure to age and fail, as has happened twice in the past two weeks--the explosion in New York and the bridge collapse in Minnesota. Years and years of cutting taxes and underfunding capital infrastructure like sewage, rail, etc., is going to create more failures--and potentially more tragedies--until the issue is addressed.

Considering Global Warming In Environmental Review of New Projects

As of September 1, 2007 King County, Washington is "requiring County agencies to consider climate change impacts as part of their project review under Washington’s State Environmental Policy Act (“SEPA”)." http://www.metrokc.gov/exec/news/2007/pdf/climateimpacts.pdf

In short, King County is on the leading edge of local governments starting to mandate consideration of global warming as part of development projects. A good, in depth article on the King County legislation is available from the Marten Law Group. http://www.martenlaw.com/news/?20070801-climate-sepa-review

Effective Green Incentives

Sunnyvale, California, home to Yahoo! Headquarters, among other big tech compannies, has enacted regulations which allow builders who decide to build green to increase the allowable height of their buildings. http://www.mercurynews.com/realestatenews/ci_6501546

The Sunnyvale incentive, like fast-tracking permitting for green buildings, is an effective way to encourage developers to build green.

Experiments in Open Space

I read an interesting article in today's Dayton Daily News about a township which allows private open space conservation easements. http://www.daytondailynews.com/n/content/oh/story/news/local/2007/07/29/ddn072907easement.html
Essentially, the concept is that an individual homeowner commits, via easement, to preserve a certain portion of their property as open space (pastureland, farmland, etc.). This is an innovation insofar as most open space preservation schemes reserve the open space in a public or semi-public entity, like a townshuip or homeowners association. Here, the preservation is private, and, as the article states, is essentially a very large backyard.

The article seems a tad outraged at the concept of private preservation of open space. However, in its current context as farmland it is open space belonging to a private owner. Therefore, to the extent that open space can be "sold" as part of private development, I believe it could be an effective tool in balancing development and open space. However, to what extent people will pay to be obliged to maintain part of their property as open space remains to be seen.