Feature

by Emily Landes

In August of 2005, San Francisco Mayor Gavin Newsom stood beside a row of solar panels on the roof of the not-yet-completed Plaza Apartments and announced to the city and the nation that San Francisco would make history as the first city in the country to apply high environmental, or “green,” standards to all of its new affordable housing. Since that time, construction on the Plaza Apartments has been completed and 106 very low income individuals have moved into the nine-story complex, which was built, down to its carpet and tile flooring, using 94% recycled or recyclable materials. But, thus far, the city has not passed any laws or changed any building codes to require that affordable, or market-rate housing for that matter, meet higher environmental standards than what was already required before Newsom’s announcement.

Instead, the mayor’s green pledge remains a goal, rather than a mandate, for the city’s affordable housing developers. But it is a goal that is growing ever-closer given the new financial resources for green affordable housing, the advent of green rating systems specifically for these types of projects, and, perhaps most importantly, the nationwide attention on green housing, which has made the political will to mandate these requirements in the not-too-distant future much more likely.

A Sea Change
Technical consultant Nehemiah Stone likes to do a simple exercise before speaking to groups of people interested in affordable green housing. He asks those in the audience who are developers to raise their hands. Then he asks contractors to raise their hands. Then nonprofit staff. Finally, with a glimmer in his eye, he asks the lenders to raise their hands. These, he says, are the hands that really matter. “Quite frankly,” he tells the rest of the audience, “the rest of you can’t do your jobs if the lenders aren’t on board.”

Luckily for all of those interested in green affordable housing, Stone says he has noticed a “sea change” in lenders’ attitudes toward these types of projects since he began working in the industry 15 years ago. When he first started performing his illustrative hand-raising exercise, only one or two hands would go up. But now, they typically make up about a quarter of the audience.

His anecdotal data is backed up by the lenders themselves. Jennifer Somers manages the Green Connection Program, which administers the Bay Area Local Initiatives Support Corporation’s Green Connection Loan Fund. This fund is designed to lend money and support only to housing projects with green components. She says LISC started looking at green housing in 2002 and quickly realized the standards could work for the affordable housing projects it already supported. “A few years ago there was a perception that green building was only for the ultrarich, and that’s simply not the case,” she says.

Somers points to several San Francisco projects that LISC had a hand in funding. It provided $17 million in loans for a 140-unit senior housing project in Mission Bay called Mission Creek Senior Community. Completed in March of last year, the building is energy efficient, has excellent indoor air quality (an important factor since seniors often have weakened immune systems) and has 40-kilowatt solar panels. Indoor air quality was also important at another LISC-funded project, Positive Match in Bernal Heights. This complex was rehabilitated to be suitable for its residents–formerly homeless HIV-positive people with families–with materials that have low volatile organic compounds (VOCs), chemicals found in many building supplies that evaporate easily into the air at room temperature and can be a health hazard for many. PVC piping and vinyl are often high in VOCs, so they could not be used in the Positive Match project, nor many other projects calling themselves “green.”

But LISC doesn’t just provide loans for affordable housing projects. It also helps developers utilize incentives and rebate programs offered by the city, state and utility companies. The most important of these, of course, are Affordable Housing Tax Credits, which reduce the tax liability for owners and investors in affordable housing projects–an often multimillion-dollar incentive. But there are also much smaller programs that still put a dent in the initial up-front cost of going green. PG&E, for example, offers the California Multifamily New Homes Program, which gives $150 per unit for new multifamily construction that beats the state’s current energy-efficiency requirements by at least 15%. It will also pay up to $12,000 per project for Home Energy Rating Systems raters to come out and confirm the energy-efficiency of the project and up to $10,000 per energy efficient consultant involved in the design process. These incentives are available to all new multifamily projects, not just affordable projects.

With these incentives and rebate programs, plus a critical mass of interest in green building bringing down prices, those involved in green housing say that the upfront additional cost of going green is less and less each year, and that the returns, not just environmentally, but financially as well, make the investment well worth it. “If you have an energy-efficient building, you are going to save money,” declares Rich Chien of San Francisco’s Department of the Environment.

Chien says that energy efficiency is one of the key components in green building, and certainly one of the most visible, given the instability in global energy markets. “If you could have a building that consumes less energy, or even creates its own energy on site, you can reduce your worry about the future of energy markets,” he says, adding that because San Francisco has such a mild climate, it is easier to be energy efficient here than in some inland counties.

Chien, who was an architect for many years before coming to city government, also feels that green construction saves money because it requires more communication between the architect and the contractor earlier in the planning stages. He says he’s worked on many projects with “a lot of disconnect between the process of designing a building and actually having it built.” This lack of communication can have a “domino effect,” he says, that can add up to big bucks in change orders down the line. But green building, he contends, “designs out a lot of those problems” by forcing the contractor and architect to work together from the beginning.

In Chien’s opinion, one of the biggest problems in convincing developers of all stripes to go green isn’t even the slight uptick in costs–it’s simply a lack of information about what green building is, particularly among residential developers. “There’s still a huge percentage of developers who say, ‘Oh, yeah, I’ve heard about it, but I’m not interested.’ Part of our job is to convey that it’s easy to do, it’s nonthreatening, it doesn’t cost more and you get a better product,” he says.

Silver, Gold and Platinum Green
One of the reasons Chien thinks green has caught on more quickly in municipal and commercial projects is because of the success of the Leadership in Energy and Environmental Design rating system, administered by the U.S. Green Building Council. LEED gave credibility to green building because prior to LEED, he says, developers could call a building green without any kind of reliable third-party verification. LEED raters look at the actual construction process, as well as the building’s water efficiency, energy efficiency, materials and resources (recycled content and local materials that reduce transportation impact get high marks), indoor environmental air quality, acoustics and lighting before awarding it with one of four levels of certification. The lowest level is LEED Certified, followed by LEED Silver, LEED Gold and LEED Platinum.

San Francisco has about 60 LEED-certified buildings in the pipeline, but almost all of these are not affordable residential projects. The LEED rating system can be used for residential projects (Plaza Apartments will be LEED Silver Certified, and the Folsom-Dore affordable housing complex was recently awarded LEED Silver), but its stringent criteria are more applicable to other types of construction, so it hasn’t been an extremely useful tool for affordable housing developers. Therefore, other groups have come up with their own rating systems, better suited for this building type.

Many in San Francisco have heard of the Green Communities standards; this program was launched in 2004 by Enterprise Community Partners and the Natural Resources Defense Council. The Plaza Apartments, where Mayor Newsom made his remarks, were built by the city’s redevelopment agency according to Green Communities guidelines, and Enterprise has announced that it will provide $300,000 in grants and $60 million in discounted financing for several San Francisco affordable housing projects that can meet its criteria. All of these projects are currently in the planning stages, but should be coming online over the next few years. One example is 275 10th Street Supportive Housing, a 134-unit single-room-occupancy building for chronically homeless single adults. The nearly $33 million in development costs are being paid mostly by tax credit equity and the Mayor’s Office of Housing. But it also received a $55,000 grant from Enterprise to help offset the costs of its green features: it has locally-appropriate plants, low-VOC materials and water-efficient systems, like low-flow fixtures. Rents will be affordable to residents with anywhere between 25% and 30% of the area mean income.

Another green rating standard that is winning praise across California is Build It Green’s GreenPoint rating system. According to Build It Green’s Development Director Bruce Mast, the organization’s goal is to influence the greening of 10,000 housing units throughout the state by the end of 2008. Mast says the GreenPoint rating system is more flexible than other rating systems; it is built upon a large list of possible green upgrades that have different point values. A developer must get 50 points in order to be GreenPoint rated. Very few of its criteria are mandatory and those that are, like diverting at least 50% of construction materials from the waste stream, would likely be things a developer interested in green building would be doing anyway. “It’s designed to be a credible, but accessible, entry point for builders who are coming to green building for the first time. We really stress making the step from conventional building a small step and not a huge leap,” says Mast.

Mast feels that in some ways taking that step toward green is easier for affordable developers, even though they may have more cost restraints. “These developers recognize that utility bills are part of the equation, so they have to make the housing energy-efficient. It’s a core part of their mission. If it wastes energy, it’s not affordable,” Mast explains. “They also recognize that they are serving the most vulnerable segment of the population from a health perspective: seniors, families with small children, low-income populations with no health insurance. So anything they can do to make those living environments healthier, that also is central to their mission.” He says Build It Green has gotten the most traction from owner-operators who have a long-term stake in the durability of their properties. Using building materials that last longer (a key component of green building), and therefore lower lifetime maintenance costs, is a great financial benefit.

A Tipping Point
Mast agrees with Chien’s assessment that the biggest barrier to green building isn’t the additional start-up costs, but simply educating people. Their jobs have gotten immeasurably easier as stories on green building have become increasingly popular topics, not just in construction and housing forums, but also in highly visible publications like the New York Times Magazine, which recently ran a cover story on the topic. Locally, the San Francisco Chronicle has long had a green focus in its “Home and Garden” section, and recently launched a “Green” section as part of its Earth Day coverage. “We’re just riding this huge wave right now,” confirms Mast, who adds that due to the added attention his organization has had to double its staff to keep up with demand for the GreenPoint program.

That wave may get even bigger if cities begin mandating green building practices in their residential developments. San Francisco already has LEED Silver requirements for its municipal buildings, and Chien confirms that his department is currently in the exploratory stages of planning some mandatory green building measures across the entire private sector. He says a task force selected by the Mayor’s Office of Housing has just begun meeting on the issue to determine what a workable policy might look like. As for a time frame for when we might see this issue on a ballot or before the San Francisco Board of Supervisors, Chien says it’s too soon to say. “Like any city government, things don’t always happen that quickly,” he says. “But there has been this momentum in the last five years around these issues.”

So, it seems that Mayor Newsom’s goal of greening all affordable housing throughout San Francisco may actually be attainable in the not-too-distant future. With the financial support of lenders, city agencies and nonprofits, a whole host of green building rating systems to add credibility to the process, and the political and public will to support green building, many in the affordable housing community see a very green future ahead of them. Somers of LISC sums up the dreams of many in the industry when she says, “Hopefully in the future you won’t have to call it ‘green’ construction. You’ll just call it construction because green will be the norm.”

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. Emily Landes is the managing editor of SF Apartment Magazine and Rental Housing. Copyright © 2007 by SF Apartment Magazine. All rights reserved.