It’s not always thrifty being green: The cost of sustainable building certification

by Michael Sarko
- Capitol Hill Times Magazine - 

‘The Jefferson,’ which is being built under Evergreen Sustainable Development Standards. Angela Nickerson / The Capitol Hill Times

This is the story of three buildings – one that currently stands, one about to open and one that only lives in pictures.

At the intersection of 5th Avenue and Columbia Street, an ornate, former church stands with a massive hole in the ground just behind it. This is the site of the 5th and Columbia Tower, a glass giant that if built, will contribute a stunning example of green architecture to the Seattle skyline.

Daniels Development, the company in charge of this ambitious project, put the construction on hold in 2010 and hasn’t made any indication of restarting any time soon. Occupancy rates in the Class A office towers of Seattle and Bellevue have only just started recovering from the hits they took over the past decade, but 5th and Columbia’s neighbors aren’t enjoying the swing back to stability. Columbia Center, Seattle’s tallest building and just a stone’s throw from the 5th and Columbia site, was hovering at around 36 percent vacancy in the first quarter of 2012.

The building at 5th and Columbia would be Seattle’s first gold-certified building under the codes of LEED (Leadership in Energy and Environmental Design). It would be 43 stories of energy-saving windows, tens of thousands of tons of recycled steel, and a vast array of light sensors, non-toxic tiles and local flora. It would be, if Fifth and Columbia Investors, LLC decide to turn on the green light and finally put the tower in the sky.

But what does it cost to make a building certified green?

That’s the question asked by countless land developers across the nation and especially in a sustainability-minded city like Seattle. While the price tag on traditional construction isn’t exactly obvious, considering unexpected costs associated with everything from a change in the zoning application process to fluctuations in the materials market, it’s downright straightforward compared to building green.

Sustainable building is less standardized territory with fewer experts in the field than in their standard construction counterparts. The technology and architectural techniques associated with green development are evolving rapidly, though there are some standardization practices that take the edge off the learning curve. Namely, certification systems like LEED and, locally, the Evergreen Sustainable Development Standard give developers clear goals and prescriptions for green construction.

The money of certification ends up being a matter of available capital and the subjective willingness to invest in sustainability. In short, building green costs more up front, so developers who want to make back their investment quickly, as well as small-budget projects like low income housing, often shy away from sustainability for the adverse effect it has on their pocket books.

LEED is one of the most prominent green certification systems in the country but it is also one of the most costly at the start. Developers will pay several cents in fees per square foot of a finished building to register and certify that building. A developer’s green construction consultants will log tens, if not hundreds, of hours to research, compile and submit LEED documents. Energy and water compliance modeling can cost anywhere from several cents to $1 per square foot. Construction costs will also be higher for green structures, if only for rarer materials.

What’s more, a building isn’t guaranteed to get LEED approval. The United States Green Building Council, the organization that created and administers LEED, only awards certification after construction is finished and the building has been reviewed by an independent, third party organization known as the Green Building Certification Institute. In other words, there won’t be a representative of the USGBC or the GBCI looking over the architect’s shoulder and walking through the construction site daily to make sure all the solar panels are in line. If a developer spends extra time and money pursuing a sustainability-focused building but the inspectors from the GBCI aren’t satisfied with the building’s performance after it’s finished, they take their LEED stamp elsewhere.

One notable building in Seattle to achieve LEED certification (and there are many) is the Starbucks at 1st and Pike. It’s a landmark wrapped in wood from fallen trees, coated in non-toxic paint and lit with LED and CFL bulbs. The paper cups are still there, but there are recycling bins and the house’s ceramic mugs. There’s a place beside the tables where used coffee grounds are given away as free compost. In 2008, when Starbucks was first in line at the LEED pilot program for retail development aimed at “volume build” projects, the company had 16,680 operating stores and annual net earnings of $10.4 billion, $315 million of which was profit. This was a sharp drop from previous years and came on the heels of a significant amount of company restructuring. Starbucks spent millions in 2008 on research and development, new store fixtures, and establishing business connections with fair trade coffee growers.

Proper planning and independent inspection consultation is where a lot of the cost of green building certification hides. Above and beyond the higher price of physical elements like energy-efficient windows, solar water heaters and certified non-toxic materials, developers can end up denting their budgets with the premiums asked of them by experts.

Construction on ‘The Jefferson,’ which is being built under Evergreen Sustainable Development Standards. Angela Nickerson / The Capitol Hill Times

This is also why it’s functionally impossible to put more than a broad, ballpark figure on the cost of LEED. The price of consultation, inspection, research and materials tracking are all highly subject to the scale, location and starting knowledge of the developer. The USGBC doesn’t leave LEED-seeking developers in the dark, but it also doesn’t pretend to predict the unpredictable. While it’s reasonable for the organization to create a thorough table of the costs associated with water use reduction features, it’s another matter entirely to tell developers how their costs will change if they limit their siting process to locations near mass transit. Some elements of green building are simply too dependent on local factors to fit into a clean chart.

But LEED isn’t the only way to make a green building. The United States federal government has a number of housing development standards, including one for sustainability, and there are local analogs in many states. In Washington, that is the Evergreen Sustainable Development Standard, overseen by the Washington State Department of Commerce. ESDS is designed to benefit affordable housing projects by tying Housing Trust grants to prescriptive criteria for green construction and retrofitting of low-income residences. The criteria aren’t as stringent nor are the listed technology alternatives as innovative as those found in LEED, but Evergreen standards are still a cut above regular building codes.

The ESDS connects directly with funding contracts the Housing Trust makes with low-income housing developers. These contracts last around 40 years. Throughout the construction or refurbishment process, a third-party organization called the Washington Community Reinvestment Association verifies that the applicable ESDS criteria are being met, using a point system that mixes mandatory elements like proper documentation and infrastructure connections with optional things like solar heating and the establishment of smoke-free environments. The list of green building elements, which grows on an almost yearly basis, is the product of consultation from the likes of SMR Architectural Hardware, O’Brien and Company sustainable realtors, and Habitat For Humanity.

One Seattle building constructed under ESDS is the 12th and Jefferson Workforce Housing building. Affordable housing non-profit, Capitol Hill Housing, transformed the lot, previously occupied by a gas station, into 40 units for people making 60 percent of the area median income, as well as commercial space on the first floor. The Jefferson, as it is being called, is set to open its doors this year.

The cost of green building certification is not a static thing. Programs like LEED and ESDS have become widespread enough to influence market conditions in construction and home fixtures, especially by increasing demand. Where once things like energy-saving appliances and low-volatile organic compound paint were optional, now they are mandatory in many state and city building codes. Demand for everything from recycled metal doors to locally sourced stone and sustainably-farmed wood has gone up with the prominence of green building certification. As planning expertise, green materials demand and green housing demand rise, the premium associated with sustainable construction is set to fall.

For an analog from another industry, consider the Toyota Prius, the first mass-produced hybrid gas/electric car in the world. Upon its first, exclusive release in Japan in 1997, 300 units were sold. It came to the United States and other countries in 2000, selling the first U.S. Prius in 2001 for approximately $20,000. Thirty million of these cars sold worldwide. A decade later, Toyota sells hundreds of thousands of units every year and its new Prius costs the same amount of money as its Camry, and just slightly more than its chief competitor, the Ford Fusion. Its cost falls several thousand dollars short of the average luxury car. The premium on sustainability isn’t imaginary, but it also isn’t unmovable.