By : GINA M. HERNÁNDEZ
gina@caribbeanbusinesspr.com
Edition: November 27, 2008 | Volume: 36 | No: 46
FROM: Caribbean Business

If you think “building green”—i.e., following environmentally conscious building design and construction standards and practices—is only about saving the environment, think again. It’s also about saving your wallet.

Here’s one piece of information you probably didn’t know: The entire $1.3 billion, 113-acre Convention Center District in Isla Grande will be green. That’s “green,” as in environmentally friendly.

By law—actually, an executive order issued last year—every building to be built in the district, including the three hotels, the World Trade Center and every residential development…indeed, every structure in the district will be green. More specifically all those buildings will have to be LEED (Leadership in Energy & Environmental Design) -certified, the industry standard for green buildings.

As a result, engineering and architectural firms, general contractors, construction companies, construction-supply makers and distributors will all have to follow the “LEED” if they want a piece of the district’s $1.3 billion development.

In fact, the Convention Center itself, which was built before the LEED requirement for the district was implemented through executive order, is undergoing a major retrofit to fall into line. The local government is investing $250,000 to reduce the use of electricity and water within the 113-acre district by 50% and 30%, respectively. Key elements in the greening of the Convention Center include installation and use of automated control systems for air conditioning and lighting of the center, as well as incorporating natural light to reduce energy consumption.

The design also includes preferential parking for hybrid cars and contemplates encouraging the use of public transportation to the district.

The José Miguel Agrelot Coliseum of Puerto Rico, also administered by the Convention Center District Authority (CCDA), is turning green as well.

LEED standards were developed by the U.S. Green Building Council to promote a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality. Characteristics of a LEED-certified green building include high-efficiency use of water, energy and construction materials which, at the same time, safeguard environmental and human health.

The requirements of green construction in the Convention Center District are just part of a broader effort by the Commonwealth government, several municipalities and an increasingly large and influential group of private-sector leaders to bring Puerto Rico into the green-building wave sweeping the planet, as concerns over global warming and rising energy costs move companies, governments and the global construction industry to go green.

The trend is sure to receive a huge boost starting in January, since new elected officials from La Fortaleza to the White House—in fact, just about every candidate this election year—promised to usher in a golden era of green-building incentives.

Companies ready for “green” stand to earn the lion’s share of the construction business in the future. There will be plenty of green-building business, particularly if the Regulations & Permits Administration (ARPE by its Spanish acronym) and a persistent group of green-building proponents succeeds in their efforts to change the local building code—which hasn’t been updated in 11 years—to reflect the safety rules of the International Building, Fire, Mechanical, Plumbing, Electrical and Energy Conservation codes.

Different from LEED standards, these codes are merely a set of minimum safety values, codified for easy reference, that embrace all aspects of building construction to create energy-efficient and sustainable communities.

“The U.S. Green Building Council has supported the initiative from day one. Local building codes need an urgent update. The current energy code, for instance, dates from 1989. It’s important that the government updates its information and revises these codes more often,” said architect and U.S. Green Building Council member Jeannette Rullán.

After celebrating public hearings last month, Puerto Rico joined 37 states in adopting the International Plumbing Code, which requires efficient use of water. The adoption of the remaining five codes is still under ARPE’s evaluation. Should Puerto Rico adopt the codes, a safer and more environmental approach to construction will no longer be a matter of choice.

At the moment, Puerto Rico isn’t considering adopting the International Residential Code, to avoid making construction changes too drastic. Nevertheless, it is something ARPE could look at again at any given time.

Recession and energy prices

For the moment, building green buildings—or adopting environmentally conscious building-maintenance practices, for that matter—is a choice, at least in the private sector. However, that choice is driven by several powerful factors. First, there is the issue of sky-high energy costs. Despite recent drops in the price of the barrel of crude oil, experts agree high energy costs will be a reality we will have to deal with in years to come. Factor in the ongoing economic recession and it is easy to see why every company in Puerto Rico and elsewhere is looking for ways to reduce their electricity bill, not necessarily out of love for the environment or concern over global warming, but simply to cut costs.

Businesses and households are discovering the hard way what environmentalists have been saying all along: Green is green, meaning being environmentally conscious helps save money. You can save money and save the planet by turning off the lights and air conditioning when no one is in the room, switching to fluorescent lighting or using natural light to avoid flipping the switch to begin with. Other strategies include installing more energy-efficient air-conditioning systems, installing insulation in walls, roofs and windows to keep interiors cooler and not having to use the cooling system as much, and more.

Given the depth of the island’s recession and the likelihood it will last a good while longer, there’s hardly a business (translation: hardly a building) in Puerto Rico that isn’t going green, at least on this very basic level.

Local contractor and U.S. Green Building Council member Standard Refrigeration went totally green with its new headquarters on PR-1 in San Juan. The 19,200-square-foot structure received LEED Platinum certification—the highest possible (see sidebar)—in 2006, becoming the first building to receive such a recognition in Puerto Rico and the Caribbean.

The Ochoa Building in Old San Juan is yet another example. In this case, the challenge was retrofitting a historic building. As CARIBBEAN BUSINESS reported last year (CB May 10, 2007), Ochoa Realty Corp. invested $175,000 to install optical reflectors, high-efficiency fluorescent lightbulbs in common areas and three capacitors (electrical devices that store electric energy) in the building’s electric substation. All these measures contribute to efficient energy consumption.

For efficient use of water resources, the company changed sinks, toilets, urinals and soap dispensers. In addition to having automatic versions of this equipment, Ochoa Real Estate replaced regular urinals with SineAqua urinals, which use an advanced filtering system and very little water, saving about 40,000 gallons of water a year per urinal.

Ochoa Realty Vice President Roberto Fortuño estimated changes in energy efficiency are saving the company $75,000 a year.

Government contracts

The economic recession and high energy prices aside, the second driver behind the island’s green building trend is government regulation. An executive order issued October 2007 (OE-2007-41) instructed all agency heads to build green buildings from now on. Every new government building larger than 10,000 square feet, including certain infrastructure developments, has to be designed green from the start.

So far, that includes three schools, the entire Portal del Futuro redevelopment in Ceiba and green facilities at Los Capuchinos Forest in Trujillo Alto. The latter would turn this recreational area into the first LEED-certified forest in the world.

In the Convention Center District, the Sheraton Hotel, currently under construction, will be LEED Silver (see box), as will the Convention Center, once retrofitted.

Further, recently, Gov. Aníbal Acevedo Vilá signed into law House Bill 4045, (Law 229 of August 2008) to promote energy and water efficiency in new and existing government buildings. The law, also known as the Green Buildings Law, establishes energy-efficiency standards for government buildings. It also establishes a gradual reduction of greenhouse-gas emissions from now until 2030.

Also under construction is the new headquarters of the Puerto Rico Music Conservatory, which will have the first intensive [deep] green roof built in Puerto Rico. The 45,000-square-foot area over the conservatory’s multistory parking lot will be planted with grass, making it by far the largest green roof on the island. The entire Music Conservatory project is a retrofit of a historic building called Antigua Casa de Niñas that used to be an orphanage.

“We saw a great opportunity in creating a green ambiance for our students and the community. In addition to the green roof, there’s the possibility we will produce our own energy using photovoltaic cells installed on our rooftop,” said María del Carmen Gil, rector of the Puerto Rico Music Conservatory.

The conservatory’s green roof was designed by Landscape Architect Vilma Blanco. “In addition to providing a green area in the middle of the city, we wanted to have some practical elements to it. Using local materials and feng shui in the design, we created a space where students can practice and even perform,” Blanco said.

Feng shui refers to ancient Chinese philosophical principles that seek to harmonize human activity, including buildings and things, with the forces of nature. Feng shui principles have been increasingly incorporated into Western building and interior design in recent years.

Not free of design and material challenges, Blanco worked with engineer Ricardo Colón, from Quality Construction Services, to overcome the logistic challenges imposed by this kind of construction, which is new to Puerto Rico. “We took advantage of a slope between Ponce de León and Baldorioty avenues to build the green roof atop the parking lot’s third floor, which is the structure’s basement,” said Blanco, who visited Germany—which according to experts is more than three decades ahead of Puerto Rico in green-roof construction—to prepare for this project.

Even already built government buildings are being retrofitted to become environmentally friendly. The local government’s environmental agencies’ building in Río Piedras—headquarters of the Natural & Environmental Resources Department, Environmental Quality Board and Solid Waste Management Authority–—and La Fortaleza are taking measures to retrofit their structures accordingly.

Energy Affairs Director Javier Quintana Méndez told CARIBBEAN BUSINESS the environmental agencies’ building will become the first existing government building on the island to become LEED-certified. Furthermore, the installation of a photovoltaic system on the building’s rooftop would also make this the first public building to use renewable energy.

The business case for green

Yet a third force driving the trend is simply that building green is a good investment.

On the one hand, if done in a haphazard way, adding green features to a new building can add as much as 20% to 30% to construction costs on the front end, making it more difficult to justify for the business.

However, if architects include the environmentally friendly features of the new building during the design stage and the structure is built by engineers and contractors who know their stuff as well, the cost isn’t significantly higher than for a non-LEED-certified building. In fact, according to a 2007 study conducted stateside by construction consulting firm Davis Langdon, building a LEED-certified building costs an average of just 5% more than a non-LEED-certified new building.

Constructing a LEED-certified building, though, saves roughly 10% in operating expenses each and every year for the life of the building. This means the 5% in higher construction costs upfront is recovered, on average, in 18 months. After that, the savings just add up which, for some properties, can mean millions of dollars every year.

That’s why green buildings are commanding higher appraised values in the States, as appraisers increasingly consider green savings when setting property values.

To be sure, Puerto Rico isn’t there yet. The number of green-construction professionals remains low compared to the mainland U.S., the local appraiser community has yet to catch on and the availability of green-construction products and supplies available locally still fall short of U.S. mainland standards.

New-construction costs, therefore, while lower than two years ago, remain higher than in the States; likewise with retrofits of existing buildings.

Since the U.S. Green Building Council launched its LEED Professional Accreditation program in 2001, more than 43,000 people have earned their credentials in the mainland U.S. Recently, the Green Building Certification Institute (GBCI) took over management of the program.

As recently as 2005, there were only two LEED-certified professionals on the island. In scarcely three years, the number of Puerto Rico LEED-certified professionals in construction has grown to 25, including architects, engineers, consultants and general contractors. Although still low, the number is growing fast.

Still, that isn’t stopping many building owners and developers from seeing the business case of going green. The list is growing. Empresas Díaz recently announced plans to green its Trump International complex in Coco Beach, and the company’s neighboring Gran Meliá Resort is ranked among the greenest hotels on the island.

As reported recently (CB Aug. 21), the Trump-brand residential, tourism and entertainment complex will include several cutting-edge green initiatives guided by LEED principles. A solar-power plant, hydrogen-powered golf cars and maintenance vehicles, and energy-efficient air-conditioning units are some of the measures developer Jorge Arturo Díaz is incorporating in the project.

As for water, the Coco Beach Utility Corp. owns and operates a water-treatment and -recycling plant with a capacity to produce more than one million gallons of water daily. Used water will serve to irrigate the golf course and will be stored with a two-month capacity for use during dry spells.

Part of the appeal not only is the savings, but also sales. Consumers are increasingly drawn to green buildings. Mainland U.S. reports reveal stronger sales of housing units because they’re green. Building administrators say they have higher tenant-retention rates in buildings that follow green practices.

Then there is image and reputation. Green practices and advocacy make for great advertising and headlines. According to the Green Building Alliance, by 2010—scarcely two years from now—the green building-products market will be worth $30 billion-$40 billion annually.

A new vision

To owners and developers whose math still fails to add up, a solution to their equation is on the horizon. In both the local gubernatorial and national presidential elections, candidates fought over who was the greenest.

As a candidate, Gov. Acevedo Vilá promised, if re-elected, to continue the agenda to promote environmental protection and sustainability.

His main opponent, New Progressive Party (NPP) Gov.-elect Luis Fortuño is committed to incorporating green-building trends to create green-collar jobs and minimize the human impact on the environment.

“We will live in a clean and safe environment and will reduce contamination. We’ll search for solutions to adapt to climate changes. Our goal is to be independent from fossil fuels by conserving and promoting the use of alternative and renewable energy sources, using the wind and the sun to produce clean energy. We will follow the best development practices to guarantee conservation of the environment,” page 86 of Fortuño’s NPP platform indicates.

Fortuño’s “Plan Integral de Desarrollo Estratégico Sostenible de Puerto Rico” (Pides P.R. or Comprehensive Plan of Sustainable Strategic Development for Puerto Rico) establishes the new administration’s master plan for the physical, economic and social development of Puerto Rico, framed in principles of environmental and fiscal sustainability.

The Unlimited Clean Energy Program (ELI by its Spanish acronym), as well as the Agricultural & Energy Credits Market (MCEAA by its Spanish acronym) are two projects contemplated in the governor-elect’s platform to harmonize development with sustainability. With ELI, Fortuño intends to establish centers and networks of unlimited clean energy around the island, and the latter project, MCEAA, intends to create an industry of services and values associated with reaching environmental, agricultural and energy goals.

A national trend

Although his government platform focuses more on energy efficiency than green construction, Democratic President-elect Barack Obama’s comprehensive energy plan aggressively promotes changes to cut the nation’s energy consumption, such as using renewable energy to power commercial, industrial and residential properties. The U.S. is the world’s largest energy consumer, spending approximately $14.5 billion on energy consumption in Fiscal Year 2008.

President Obama has said he would establish a goal to make all new buildings carbon-neutral—i.e., that they would produce zero emissions—by 2030. He will also establish a national goal to improve new building efficiency by 50% and existing building efficiency by 25% over the next decade to help meet the 2030 goal.

According to Obama’s platform, because he says he believes in leading by example, he will make the federal government a leader in the green-building market, achieving a 40% increase in efficiency in all new federal buildings within five years and ensuring all new federal buildings have zero emissions by 2025. In addition, he will invest in cost-effective retrofits to achieve a 25% increase in efficiency of already existing federal buildings within five years.

While it’s unclear in Obama’s platform which initiatives will apply to Puerto Rico, the task of making sure the federal government includes Puerto Rico in as many pro-environmental incentives and initiatives as possible lies in the hands of Resident Commissioner-elect Pedro Pierluisi.

Defining LEED rating systems

What projects are eligible? How to obtain LEED certification?

Characteristics of a green building include high-efficiency use of water, energy and construction materials which, at the same time, safeguard environmental and human health. LEED (Leadership in Energy & Environmental Design) promotes a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.

Recognizing not all buildings are raised with the same purpose, the U.S. Green Building Council developed different LEED rating systems to accommodate the particular needs of each project group.

LEED for New Construction & Major Renovations is designed to guide and distinguish high-performance commercial and institutional projects. On the other hand, LEED for Existing Buildings: Operations & Maintenance provides a benchmark for building owners and operators to measure operations, improvements and maintenance.

LEED for Commercial Interiors is a benchmark for the tenant-improvement market, which gives the power to make sustainable choices to tenants and designers. LEED for Core & Shell aids designers, builders, developers and new-building owners to implement sustainable designs for new core and shell construction.

Given that schools and retail developments have unique design elements, LEED separates these types of construction, addressing the needs of each particular space.

Likewise, LEED for Healthcare and LEED for Homes promote sustainable planning, design and construction of high-performance facilities and green residences.

LEED for Neighborhood Development integrates the principles of smart growth, urbanism and green building into the first national program for neighborhood design.

Developers, architects and engineers work together to decide which elements of the five key areas the project should incorporate to attain a certain level of LEED certification within each system.

For instance, in the new-construction category, 14 points are possible for sustainable sites (for example, Brownfield redevelopment), five points for water efficiency (20% water-use reduction), 17 points for energy and atmosphere (onsite photovoltaic plaques), 13 points for materials and resources (using certified wood), 15 points for indoor environmental quality (air quality-control systems) and five points for innovation in the design process (having an LEED-certified professional on the development team).

Following these guidelines, 69 points are possible. An LEED-certified project would accrue 26 to 32 points, an LEED Silver project 33 to 38, an LEED Gold 39 to 51 points and an LEED Platinum 52 to 69 points.

Because a combination of possibilities is practically endless, the costs of greening a building or developing a new green project vary widely.

Benefits of green building

Environmental benefits
· Enhance and protect ecosystems and biodiversity;
· Improve air and water quality;
· Reduce solid waste; and
· Conserve natural resources.

Economic benefits
· Reduce operating costs;
· Enhance asset value and profits;
· Improve employee productivity and satisfaction; and
· Optimize lifecycle economic performance.

Health & community benefits
· Improve air, thermal and acoustic environments;
· Enhance occupant comfort and health;
· Minimize strain on local infrastructure; and
· Contribute to overall quality of life.