20% Less by 2020
This Monday--Earth Day--plenty of environmentally minded folks will be out in force hugging trees. In the CRE field, we can't really hug buildings (our arms are waytoo short) but commercial property owners can pledge to save energy by taking the LA Better Buildings Challenge.
Recently, we chatted with Dave Hodgins and Ben Stapleton--you may know Ben as the leader of JLL's global cleantech practice group. They run the LABBC program for the City of LA, which aims to cut energy use 20% by 2020 by providing incentives and support services to property owners in a sort of energy efficiency one-stop shop. Ben says the goal is to enroll at least 30M SF of properties, with 72 buildings totaling 9.5M SF having enrolled since November. Dave says President Obama launched the Challenge in his 2011 State of the Union; the Department of Energy spearheads the program nationally.
The LABBC builds on a separate LA program Dave began in 2009 while with the Clinton Climate Initiative. Using Recovery Act funds, it supported conservation and clean powerinitiativesfor municipal, commercial, and multifamily affordable buildings. (And they told Motel 6 to stop leaving the light on for everybody.) "We ended up touching 35M SF of commercial RE in 91 buildings," a good chunk of which went on to implement projects. No such funding came with the Challenge. Instead, Ben and Dave have put together a partnership model tapping the utilities--LA DWP and SoCalGas--energy retrofit vendors, and business and real estate groups including BOMA and USGBC. Partners also include the likes of Kilroy (which did an analysis of of operating expenses in LEED Gold and Silver buildings vs a baseline building), CBRE, Transwestern, and Legacy Partners.
Ben says the issue is about economic development and creating jobs--if even just 10% of LA Countys 1.8B SF of properties spends $1/SF to reduce electrical use, that's "big numbers invested in our economy. The idea is to build a data set that makes the business case for energy retrofits so that the rest of the market follows the first movers, attracting more capital into the industry. The broker also notes numerous buildings are becoming obsolete as tenants move into creative space, making it important for owners to reposition and redefine their buildings. The 20% reduction equates to getting 7,000 cars off the street (or one million Priuses).
Buildings that have taken the Challenge range from 2000 Avenue of the Stars (above), Sunset Media Tower, Pacific Pointe, Northwestern Mutual Life Plaza, 5055 and 6300 Wilshire, Century Plaza Towers, and Figueroa Plaza to Children's Hospital LA and the Central Library.
Building owners who take the LABBC pledge get to display this sign in their lobbies (it's a great accent piece), though there's no penalty if they fail to meet their energy reduction goals. Ben points out that participants' energy numbers are reported to the DOE in aggregate, not on an individual building basis. On June 6, the LABBC will host a building technology showcase that's free to building ownersat the LA Chamber of Commerce offices, 350 S Bixel St.
How to pay for it? Ben says there are some innovative financing tools now. One such is LA County's PACE (Property Assessed Clean Energy) program, which he and Dave run as well. Launched in December, it's a private placement bond that sits on a specific property, solely for energy efficiency work. It's off-balance sheet--no upfront capital--paid for through a property tax. The LABBC directors also kept up the pace at the Rose Bowl Triathlon. Btw, though advising owners on the technologies and financing methods, they receive no fees from projects.
