JUNE BIZ FOCUS: DIRT LAW. DOES GOING GREEN PUT YOU IN THE RED?
When 12 West opened in 2009, it was a pinnacle in green design and construction for Portland. The 23-story, mixed-use building on a half block of Southwest Washington Street between 12th and 13th avenues features street-level retail space, four floors of offices for ZGF Architects and 17 floors of apartments called [email protected] West above five levels of underground parking.
The LEED Platinum building, which received a 2010 Top Ten Green Projects Award from AIA Portland's Committee on the Environment, boasts four signature wind turbines on the roof that help reduce lighting, heating and cooling energy, and marked 12 West as the first U.S. installation of a wind turbine array on an urban high rise. Its extensive ecoroof includes a rainwater harvesting system that is used to flush toilets and supply the fire suppression system as well as reduce stormwater runoff and help cool the building during hot months.
Among other notables, Waste Management certified that 91.1 percent of waste was recycled during demolition and construction and energy-efficiency measures, including daylight dimming in offices and occupancy sensor controls for lighting, have helped reduce energy consumption to 43 percent of the amount required by a conventional, code-baseline building, according to a report prepared for the Portland Bureau of Planning and Sustainability.
A slew of ambitious, sustainable projects has since followed, and Portland is renowned as a national leader in green design and construction. But, when all is said and done, is green construction truly a good investment?
Roger Lenneberg, a shareholder with Jordan Ramis, specializes in construction law and litigation and says developers favor green construction because it gives them an attractive product to sell. But, for contractors, there are greater costs and greater risks.
He notes that green construction not only includes the creation of new buildings but the deconstruction of older structures as well. "One of the elements of green construction that people don't usually think about is what do you do when you tear down a building and it has asbestos? People have to consider where they are building and what they are going to have to do to make the property usable," Lenneberg says.
Renovation also is a piece of the investment puzzle when it comes to green construction. In Portland, where many people want to preserve history and value sustainability, owners of older properties who choose to embark on renovation projects often encounter asbestos and lead paint and pipes, among other environmental hazards.
"Another part is that there is a lot of pressure for densification in Portland," he says. "Portland was never designed to be a high-volume city and the denser it gets the more congested it gets, so we have to ask whether it's better to increase density downtown and become more congested."
Whether it's a demolition, renovation or new construction project, the most basic question is how sustainability and green elements fit into the financial feasibility of the project, Lenneberg says.
For example, if someone wants to restore an older house and rent it out, they must consider whether they will be able to ask for a rental fee that recoups the cost of the renovation. And, while LEED standards have been successful in achieving green practices on a commercial level, they are not always a good investment for the DIY community, with the exception of higher-income owners who have more disposable income.
"We could do a lot more about how to incorporate (LEED guidelines) into personal residences and personal projects," Lenneberg says, adding it's relatively easy to find a high-performance furnace or other energy-efficiency appliances, but other LEED categories require hiring professionals who often charge premium prices for their services.
"Where we fall down as an industry is that for the do-it-yourself segment, sustainable construction is often not a financially feasible idea. It's a good investment if it's truly a DIY project, but not if you have to hire someone else," he says.
Contractors face their own set of challenges when it comes to green construction. The industry has become increasingly regulated in the face of rising construction defect litigation and other legal claims. The cost of insurance, which now more often contains clauses specifically addressing green building practices, is on the rise.
Building information modeling (BIM) helps reduce some of the risk, but new technology related to green construction is largely experimental and contractors are reluctant to take on that risk. With many contractors running at about 2 percent margins, they simply don't have the financial ability to take on the risk, Lenneberg says.
"When you have a risky construction proposition and it's hard to know what will happen, the cost goes up automatically because people are trying to cost out the risk," he says. "Part of the equation that people need to be aware of is that it's going to be more expensive. Sometimes it's just the price we pay for doing things the right way."
Public investment certainly plays a key role because the U.S. is a leader in green design and construction and it's not an economic engine that can be sourced out. And, while the financial side is complex for many contractors, green construction in itself is appealing to the commercial sector because it often involves creating something better without necessarily creating something bigger, Lenneberg says.
"It is a good investment but it's not an investment for just one person. It's an investment from the community, and it won't get better if we don't all pay for a piece of it," he says. "The question for society at large is are we committed enough to changing and developing technology that increases sustainability that we're willing to pay the price?"