The Green Edge: How Commercial Property Investment in Green Infrastructure Creates Value

Larry Levine, NRDCMarch 14, 2014

NJ Future Redevelopment Forum

Green Infrastructure

• Water quality management

techniques o green roofs

o tree plantings

o rain gardens

o permeable pavement

• Proven to help solve major

urban stormwater problems and

improve the health and livability of neighborhoods

• The Green Edge shows the range of benefits that these practices can

provide to commercial property owners and tenants when use on private

property

Stormwater Runoff & Sewage Overflows

• Each year, urban runoff generates 10 trillion gallons of polluted water that flows into waterways and oceans, often combined with untreated human sewage Newtown Creek, Brooklyn

Image: Riverkeeper

Stormwater Infrastructure Challenges

• Federal “Clean Water Needs Survey” identified $100 billion of infrastructure investment needed over the next 20 years to address stormwater and sewage overflows in order to reach Clean Water Act compliance

• American Society of Civil Engineers gives U.S. water infrastructure a “D” grade

• Decline in traditional funding sources for municipal stormwater improvements (municipal budgets and federal funds)

Green versus Gray Infrastructure

• Traditional “gray” stormwater infrastructure – tunnels and sewage systems – has proven environmentally and economically costly.

• “Green” infrastructure (GI) helps stop runoff pollution by capturing rainwater and either storing it for use or letting it filter back into the ground, replenishing vegetation and groundwater supplies.

• GI mimics the way nature collects and cleanses water, and can be far more cost-effective than relying solely on gray infrastructure.

$0

$3,000,000,000

$6,000,000,000

Estimated Cost of Philadelphia CWA

Compliance

Community benefits of green infrastructure Improving urban quality of Life

Beautifying neighborhoods

Increased property values

Cooling and cleansing the air

Reducing asthma and heat-related illnesses

Lowering heating and cooling energy costs

Recharge groundwater supplies/improve conservation

Spurring economic revitalization

Creating green jobs

Benefits of green infrastructure for private, commercial property owners Increased rents and property values

Increased retail sales

Energy savings

Stormwater fee credits and other financial

incentives

Reduced infrastructure costs

Reduced costs associated with flooding

Reduced water bills

Increased mental health and worker productivity

for office employees

Reduced crime

Higher Rental Rates, Retail Sales, and Property Values• Landscaping adds approx. 7%

to the average rental rate for office buildings– For a medium-sized office

building rental in Philadelphia this could mean an additional $72, 150 in rental income per year

• Consumers are willing to spend more (8-10%), visit more, or travel farther to shop where there is attractive landscaping or green streets– For a mid-sized retail center this

could mean over $1 million in increased annual sales

Higher Rental Rates, Retail Sales, and Property Values

• Landscaping and trees

increase residential property

values 2-5%– Green roofs may add 16% to the

average multifamily unit rental rate

• LEED certification can be

achieved through the use of

green infrastructure– Increase occupancy rates in

office buildings– Increase rental rates in

residential buildings

Lower Energy Costs

• Green roofs and tree plantings save on heating and cooling costs– Better insulation– Reduce solar radiation– Reduce roof surface

temperatures– Improve operational efficiency

of rooftop air conditioning units

• A green roof can reduce daily energy demand for cooling in a one-story building by over 75%

• A single large tree can generate nearly $45 in energy savings annually

Cash Back

• Tax Credits– NYC: one-year credit up to

$200,000 for green roof on at least 50% of a structure

– Philadelphia: credit of 25% (max $100,000) on green roof installation costs

• Rebates– Milwaukee: up to $10 per

square-foot for green roof projects

– King County, WA: pays builders 50% cost of green infrastructure retrofits, up to $20,000

• Floor Area Bonus– Portland, OR: green roof bonus

in its zoning code

Cash Back

• Stormwater Fee Credits– Philadelphia: up to 80% reduction

in stormwater utility fees for installation of green infrastructure

• Grants– NYC: $11 million from the Green

Infrastructure Grant Program committed to 29 green retrofit projects on private property since 2011

– Onondaga County, NY: $3.8 million in grants for commercial properties installation of green infrastructure retrofits

– Philadelphia: $7.9 million in competitive grants for commercial properties installation of green infrastructure retrofits

Reduced Infrastructure Costs

• Reduced life-cycle costs– Green roofs have 40 year life

expectancy (conventional only 20 years)

– Could avoid over $600,000 in roof-replacement costs (net present0-value), in a midsize retail building with a 40,000 sq. ft. roof

– Allow for use of smaller HVAC system – reducing capital costs

• Permeable pavement used in parking lots have significantly lower maintenance costs

• Integrating green infrastructure into site design decreases the amount of required below-ground drainage infrastructure, resulting in net cost savings

Other Hard-to-Quantify Benefits

• Reduced flood damage– Reducing the volume of stormwater

runoff– Flood mitigation can increase

property values (2-8%)

• Reduced Water bills– Rain barrels and cisterns can save

on water for landscape costs and other non-potable uses

• Reduced Crime– Studies found significantly lower

rates of property crime, violent crime, graffiti, vandalism, and littering in urban areas with well-designed green space

• Improved health and job satisfaction– Reduced levels of stress– Direct benefit to employees

RETAIL CENTER

APARTMENT BUILDING

MEDIUM-SIZE OFFICE BUILDING

Acknowledgements: Stratus Consulting, lead report author

Larry LevineSenior AttorneyNatural Resources Defense Councilllevine@nrdc.org

Full report at: go.nrdc.org/greenedge