Once considered the exclusive territory of granola eaters and tree-huggers, recent years have seen environmental concerns become increasingly mainstream for people in all walks of life. In the construction industry, it’s reflected in the rise of “green” or environmentally-friendly projects springing up all over the country. According to the National Association of Industrial and Office Properties (NAIOP), commercial green building is expected to grow around 30 percent by 2010. For the immediate near-term, green building methods within specific commercial markets are estimated to increase by 65 percent in education, 62 percent in government, 58 percent in office, 46 percent in healthcare and 22 percent in the hospitality sector.
In Nevada, the number of sustainable projects has grown from a scant few just a couple of years ago, to several dozen today, which, in turn, has sparked an influx of professionals certified to plan and execute all phases of this specialized construction. Referring to the growth of green construction, Rita Brandin, senior vice president, development director for Newland Communities, explained: “We have serious ripples beginning to hit the shoreline. It’s becoming the wave of the future.” Newland is partnering with the city of Las Vegas to build Union Park, a 61-acre, green mixed-use project scheduled to revitalize downtown Las Vegas between now and 2012.
The green building movement has taken off in part due to the federal ENERGY STAR program, which gives recognition to energy-efficient buildings, and to the LEED (Leadership in Energy and Environmental Design) program, that certifies projects as using sustainable construction. Developed and administered by the U.S. Green Building Council, LEED promotes construction that benefits the environment and the well-being of building occupants. Builders use products, technologies and practices to earn points toward certified, silver, gold and platinum rating levels. The categories that are rated include:
• Sustainable site• Water efficiency
• Energy and atmosphere
• Materials and resources
• Indoor environmental quality
Tax Incentives Stir the Pot
In addition to these programs, tax incentives enacted by 25 states have given another boost to promoting sustainable building practices. Referring to Nevada, Jason Geddes, business development manager at the Economic Development Authority of Western Nevada (EDAWN) in Reno said, “The legislature showed foresight in making Nevada the first state in the nation to offer incentives in 2005.” What seemed like an affordable jump-start to green building at the time, however, became a legislative nightmare in this year’s session when number crunchers revealed those tax breaks could cost the state $900 million in much needed revenues over the next 15 years. The legislative response was AB621 which is designed to cut the original incentives in half by backing out the value of the land and the tax due to school districts from the amount eligible for the property tax reduction. Tax breaks for new LEED-certified construction are 25 percent for silver, 30 percent for gold and 35 percent for platinum.
The devil is in the details as the Nevada State Office of Energy and the Nevada Tax Commission continue to hammer out regulations that will meet the intent of the statute. Although developers acknowledge the value of incentives, they don’t want green building to disrupt social services. “We don’t want to be burdensome on government, but we need to strike the right balance,” explained Ralph Murphy, chair of the government affairs committee for the National Association of Industrial and Office Properties (NAIOP), which promotes sustainable development.
Tax breaks may sweeten the financial pie in deciding to go green, but they aren’t the only determining factor in the ultimate decision.
“GSG Development was building sustainable developments prior to any available tax incentives. We applaud Nevada for being one of the few states that has pursued this type of legislation. Any tax incentive is just an added benefit for doing the right thing,” said Kenneth Smith, founder of Glen, Smith & Glen Development in Las Vegas. As more businesses express concern for the environment, the demand for green buildings will increase. “The new generation is more socially conscious,” said Eric Roberts, vice president of SH Architecture in Las Vegas. “Global politics show that we have limited resources.” Ideally the tax incentives should have a sunset of 10 years or so, according to Roberts. Once the financial, social and environmental advantages of building green become generally understood, tax incentives should not be necessary.
Going Green is Socially Responsible
From a financial point of view, building green can result in annual savings of around 30 percent in operating costs, according to Todd McKenzie, whose family has owned and operated McKenzie Properties in Reno since 1953. The company constructs commerthe environment, but leads to increased building efficiencies and fiscal savings for tentants.”
In analyzing the importance of building green, it’s clear that the construction industry is changing the way it does business in response to the growing trend. “We’re heralding the arrival of a new way to live and do business in Las Vegas with mixed-use communities,” said Smith. Building green is not about simply adding waterless urinals to the restrooms to save on water usage. Rather, it is a systematic approach to a project that involves green thinking and acting from the initial planning to the final execution. The key word is collaboration instead of segmentation, according to Roberts. “It’s absolutely critical for contributors to work together all along the way. You can’t just add [green certification] at the end,” he emphasized. As the industry continues to feel its way along the sustainable path, developers rely upon learning by experience, as well as educating each other and the general public. “The trick is to identify what works and then educate people about it,” Murphy said. As time passes, many green practices are expected to become standard in the industry. “In the near future, LEED certification requirements will more than likely be written into building codes. Many of these requirements are affordable and easily done,” Smith said.
Enter the Insurance Agent
As more and more sustainable projects are built, the need for green property insurance also increases. Traditional insurance policies don’t necessarily give the protection needed for a green building, according to Jeric Leavitt, account executive with Leavitt Insurance Company.
A “normal” property insurance policy will replace losses with items of “like” kind or quality, Leavitt said. In the case of a green building that is LEED-certified green building, however, losses must be duplicated exactly, including employing LEED-certified personnel to do the work. “Green building has extra costs involved,” said Greg Pike, vice president of McFadden Insurance. “Developers typically spend 15 to 20 percent more to build to LEED certified standards.” In addition, green insurance policies can be written to include such things as loss of revenue that a property may suffer by losing its ability to sell the surplus power it was generating.
Because green buildings are designed with professionally-certified, state-of-the-art technology, insurance companies see them as better insurances risks. Most commercial property losses involve heating and air conditioning, plumbing or electrical systems which, in the case of green buildings, are less likely to create a loss than in other types of construction. The good news is that the cost for appropriate protection for a green building isn’t out of line with other insurance costs, according to Pike. “It is similar to the difference in insuring a Volvo versus a Ford Pinto – it costs less to insure something that is made with the best materials,” said Pike.
A Sampling of Projects
CityCenter Las Vegas
At a cost of $7.4 billion, CityCenter Las Vegas is currently the single most expensive privately-funded project in the Western Hemisphere. Developed by MGM Mirage, the first phase of the 76-acre mini-city is now rising between the Bellagio and Monte Carlo along the Las Vegas Strip. This new community will offer entertainment and shopping mixed with a collection of urban residences, all designed by some of the world’s most renowned architects. With around 18 million square feet of new construction, CityCenter will be the largest LEED-certified project in the world when occupied in 2009. Green aspects of the project include annually eliminating 48,000 tons of greenhouse gases (GHG), diverting more than 80 percent of construction waste through reuse and recycling, and improving indoor air quality with low-volatile organic compounds (VOC) and non-toxic materials. Construction will make use of energy efficient glass, carpeting made from recycled fibers and reused materials from the Boardwalk casino that was imploded to make room at the site.
Spanish Springs Shopping Center Phase III
Constructed by McKenzie Properties of Reno, the third phase of Spanish Springs Shopping Center in Sparks is one of the first LEED Silver-certified retail projects in Nevada. With rental space available from 1,800 square feet to 3,600 square feet, the addition boasts the following green attributes:
• Reduces landscaping water usage by 70 percent and building water usage by 30 percent.
• Improves energy efficiency by 25 percent.
• Employs a full recycling program.
• Improves indoor air quality with low-emitting materials.
Tenants will save money through lower utility bills and reduced maintenance charges, plus offer customers and employees a healthier, more pleasant indoor environment.
Union Park
Envisioned by Las Vegas Mayor Oscar Goodman as a “city within a city,” Union Park promises to give Las Vegans a place where they can live, work, shop and entertain all in the same neighborhood. Anchored by the Lou Ruvo Brain Institute and The Smith Center for the Performing Arts, Union Park’s 61 acres in downtown Las Vegas will encompass hotels, restaurants, retail stores, residences, offices and medical facilities. “The key goal of all the stakeholders is that we wanted to create an urban community,” explained Newland Communities’ Rita Brandin. A $6 billion joint project of Newland and the city of Las Vegas, Union Park has been selected as one of 238 green projects in the country (and the only one in Nevada) to participate in a pilot program to develop criteria for LEED-certified neighborhoods. Certification is applicable only to buildings at the present time.
Some of the many factors to be considered in creating sustainable communities include the use of shade trees, wide sidewalks, traffic calming devices, solar shading with proper building placement and integrating overlapping neighborhoods. Brandin believes that the timing is right for this project because many people are interested in moving back to city cores if the quality of life remains high. “People are now acknowledging, more than ever, quality of life issues,” she said. With the first phase of infrastructure scheduled for December, Union Park is due for completion by 2012.
Sullivan Square
Sullivan Square is a mixed-use development in southwest Las Vegas dedicated to green living. When complete, its 16.5 acres will offer a variety of residential living options, a community park, as well as shops and services along Market Street. Co-developed by Glen, Smith & Glen Development of Las Vegas and Harcourt Developments of Dublin, Ireland, the project is scheduled for its first occupants in 2009. Residents will live healthier lifestyles and realize a 25 percent to 30 percent reduction in energy bills and a 42 percent tax abatement for seven years through incorporation of the following:
• An on-site water treatment facility that will conserve 45 million gallons of water a year.
• Vegetated roofs used in concert with cool roofs to reduce glare and heat.
• Low-emitting materials to reduce indoor air contaminants.
• Construction materials with a high-recycled content to reduce solid waste.
Clark County School District Northwest Career &Technical Center
The first LEED-certified school in Nevada, the Northwest Career & Technical Center was designed as a collaborative project to integrate core academics into each industry-specific technical academy. With its tinted glazing, anodized aluminum panels and integral color accents, the facility resembles an office building rather than a public school. The sustainable campus makes use of such green technologies as natural lighting, geothermal heating and cooling and natural materials. The fitness trail, ample open spaces and outdoor amphitheater add to the pleasant surroundings which are expected to enhance student performance. In terms of its energy savings, the center is already outperforming design expectations, according to Roberts whose firm designed the facility. “We were told to create a building that used 40 percent less energy than a typical high school,” he said. “When it was finished the building was performing at a savings of 60 percent.”
