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21 more in Tulsa
This transcript of a discussion between Tulsa highrise managers shows the way the nation is getting to grips with new eco-specifications for buildings.

About 65 percent of the total U.S. electricity consumption each year derives from commercial buildings, Angela West said in opening the Tulsa Roundtable on green construction trends. Commercial buildings also account for 36 percent of the nation’s primary energy use and 30 percent of the greenhouse gas emissions, she added, quoting U.S. Geological Service World Watch Institute data.

The vice president of CB Richard Ellis of Oklahoma pointed out that commercial buildings contribute 136 million tons of annual construction and demolition waste in the U.S., consume 12 percent of the nation’s potable water and 3 billion tons of raw materials – which she said represents about 40 percent of the global use of raw materials.

“Those are very big numbers which lead into the discussion that we’re having today – how can we be more prudent in the allocation and consumption of the resources that we have available,” said West, looking to the four real estate executives around her:

* Richard Winton, River City Development’s property manager of downtown Tulsa’s Philtower office building, which is undergoing a renovation emphasizing environmentally friendly construction elements.

* Jack Crowley, a University of Georgia professor on loan to the University of Oklahoma-Tulsa and to Tulsa Mayor Kathy Taylor as an adviser on urban planning and development.

* Shelby Navarro, a partner in One Architecture of Tulsa and the sustainable residential development firm Tulsa Loft Project.

* Tim O’Dell, a vice president with licensed contractor Key Construction, which has activities in 40 states. He specializes in U.S. Green Building Council Leadership in Environmental Energy and Design (LEED) projects.

“I wanted to kind of kick off the discussion with market demand,” said West, herself an office market specialist. “Oklahoma in general is kind of a late adopter of market trends. It now seems that we are becoming much more aware of what’s happening on the coasts and doing that ourselves. What kind of market demand are you guys seeing?”

Market demand

O’Dell: “As one would expect, on the East and West Coasts we’ve seen for a number of years the push for green building. Our markets in Kansas City and Dallas/Fort Worth are starting to increase, and we’re slowly starting to see it in Tulsa and Oklahoma City. We’ve got a project we’re working on for a local client in Oklahoma City that’s going for LEED Silver certification. It’s slow, but it’s beginning to pick up steam. Since 2000, there’s about 1,500 LEED- certified buildings. Right now there’s over 11,000 projects that are going in for certification. That shows the trend and how much has taken place.”

Winton: “The vast majority being new construction?”

O’Dell: “Renovations as well. We’re seeing it on all different facets. I’ve got a retail project that’s interested in pushing the green design. That’s something we haven’t seen in a long time.”

Crowley: “Everybody recognizes we’ve got to develop smaller to reduce our carbon footprint. People have tried to come up with ways to encourage people to do it because it’s new, it’s different. It has its financial consequences; banks may hesitate to spend extra money on something. But what I’m seeing is actually the development of the LEED system itself. It was cumbersome when it started, but it’s getting better. So what you’re seeing is actually the development of the rating system that’s there to encourage people to do things. But at the same time you’re also seeing more and more technologies coming out, ambient light systems and low-voltage lighting systems. So what happens is you’ve got a system that starts evolving, you get more and more people getting educated on it, the system gets better and better, there are tax advantages to doing these things, and at the same time technology starts developing to sort of back-fill. I think what you’ll see in the future is a lot of buildings will not even bother going for LEED certification. Rather, the technology’s so pervasive, it’s just out there and people start using it.”

O’Dell: “That’s what we’re seeing too. Even in the last few years, the companies are coming out with more innovative materials that are more readily available. Even places that take recycling materials. There’s two and a half pounds of waste per square foot on a new construction project, which is amazing. We did a project out in California that the city is mandating a certain portion of the cities have to be recycled. So we’re starting to see trends that push that.”

Winton: “Sounds like the goal of LEED is slowly coming to fruition. I talked to a guy with the U.S. Green Building Council. He said their eventual goal was for them to disappear, and everything they are promoting now would become part of a building code. And eventually they would become redundant and would just be part of the building culture, if you will.”

O’Dell: “LEED 2.0 was actually established in 2000. It’s going to be revised again in 2009. They’re trying to make it easier to use. I brought a book (lifts up thick oversized paperback). It looks scary but it’s really broken down into steps.”

Navarro: “The thing that’s really nice about LEED is that it’s expanding beyond buildings. There’s LEED for neighborhood development, which addresses things like using existing infrastructure instead of building new, finding ways that better use existing infrastructure, like green roofs that hold the storm water out of the storm water system a little longer. There’s a LEED for existing buildings, for remodels. There’s a LEED for commercial interiors. And LEED’s not the only one, either. We just had a House bill that’s been passed that requires public buildings to be LEED certified or Green Globe certified, which is another rating system, which is another thing that will affect the market. Because if it’s required, people are going to need to learn about that. Being on the mayor’s Green Team, we’re looking at ways to incentivize green building. There are permit processes that can be expedited or have pre-approved plans for green building for residential and infill, things like that which will also drive the market.”

Winton: “Which takes us back to the demand question. With commercial buildings, it’s not tenants. They basically couldn’t care less, because they’re not paying the bills. I think the demand is coming from the property owners.”

Navarro: “It’s operations cost.”

Winton: “Exactly.”

Navarro: “Operations costs can be cut by 30 percent just by doing some nice things to the building and your heating and cooling system. We did a 150-well installation of geothermal on Tulsa Ballet. What they have to get their endowments for is operating costs. And that cuts their operating costs so tremendously. It also makes their building a little more healthy because there’s no internal combustion like a heating system.”

Environment

West: “I disagree a little bit with what Richard said in terms of it’s not being driven at all by the tenant demand or that’s not the focus. What we’re seeing on the commercial realty side is that many, many national companies and larger companies are making that part of their core values -”

Winton: “I agree.”

West (continuing): “- in terms of how they’re going to reduce their carbon footprint and how they’re going to be sustainable. And a lot of that is driven by who they are recruiting for employees and how they maintain them in terms of who they are and what space they provide. Because essentially in companies, 78 percent of their costs is payroll, about 13 percent is usually represented by their IT spending, and then 9 percent represents their commercial real estate spending. And so, you can see that balance. If they can spend that money to make their employees more happy, they become much more productive.”

Winton: “You’re right when you say nationally. I was talking about local Tulsa companies that we see.”

West: “There are a lot of national companies here, and just a lot of companies that have that as one of their core missions, to be balanced.”

Winton: “So do you think that if you have an existing building in Tulsa, an office building that you turned into a green building, that it would have a competitive advantage in this marketplace?”

West: “I think it would. I think that what we’re seeing nationally at the early adoption stage in CB is that tenants oftentimes don’t want to spend extra dollars but if it’s cost- neutral, they will choose a LEED building before a regularly constructed building. What a lot of contractors and architects are telling us is that if you start early enough in the process and you fold that into the construction plan, that a lot of times it comes out fairly cost neutral if not completely cost neutral. And if that is the case, if the green building is equal to what traditional construction is, then -”

Winton: “Are they talking nationally or locally?”

West: “Locally and nationally.”

Winton: “Because I think nationally we are seeing people who are prepared to pay higher rents and to pay more for buildings when they come up for sale if they are green. Do you agree with that?”

West: “Absolutely. And I think it would happen locally if they were developed. Because if your purchase prices are in close proximity, it represents much lower operating costs in the future, so your returns can be much better for the same rents that you achieve in the market. You’ve got that and then the second competitive of that is, if you are much more likely to have the first tenant. If there’s a tenant in the market and you’re chosen first, then your occupancy’s going to be better.”

Navarro: “There are some lenders that will lend more for a sustainable-built home or business because they know your operating costs are going to be lower, so you can afford a higher payment. As well as insurance companies, there is a thought process where non- green buildings and carbon footprints are affecting weather patterns. So that weather patterns that are creating things like (Hurricane) Katrina and things like that that cause huge insurance liabilities, they’re reduced if everyone were building green.”

Winton: “The last thing I heard about that was just the other day, actually. The insurance companies are well aware, but they say they can’t change their rates yet because they don’t have enough actuarial data. But they’re going after that.”

Navarro: “Sick building syndrome was a huge thing. When you shut a school down for a week to tear out walls and take out mold, that’s a huge cost to taxpayers. And it stops the kids; they’re out on the streets and require baby sitters. Whereas if you build clean schools, the children can be 3-(percent) to 6-percent more productive. It’s a better learning environment. Schools are incredible. They’ve got really good data on schools. It’s about $2 a square foot more to build sustainably for a school, and in the long run over the life of the school it can save $12 a square foot. A $100,000 less in operating costs per year for schools.”

Winton: “I think when clients and tenants finally do understand some of these things, like productivity gains of workers in green environments … do you know the percentage of 10-(percent), 15- percent more work?”

Navarro: “I know in schools it’s lower than you think, it’s like 3 (percent) or 4 percent.”

Winton: “But I’m thinking in an office situation, it’s like -”

Navarro: “Yeah, I think you’re right, it’s closer to 10 (percent).”

Winton: “10-percent increase in productivity from your employees by having daylight and fresh air.”

West: “Well, it’s not only the productivity while they’re on the job, but it’s also how much sick time they take and things of that nature, so it really gets multiplied. And then also it’s their sense of well-being and their happiness on the job. I don’t have the statistics with me but when given the choice between a 10-percent increase in salary and a better workplace, it’s surprising, the statistics, that they chose better workplace.”

O’Dell: “We’re constantly looking at areas and bringing young talent in Tulsa. It’s becoming increasingly important to the new generation that is really sensitive to the environment and pushing that.”

Crowley: “What’s going to be the revolutionary side of things, that’s going to be harder to change, is people’s lifestyles in terms of urban pattern. It’s not just fixing the house, it’s fixing the city. You’re really talking about profound changes in the way people commute, the densities of cities and everything else. That’s probably the biggest piece of the carbon footprint. The transportation form’s going to change dramatically. We’re seeing tremendous drive in cities now toward rail transit, and that’s going to completely alter urban patterns. And it’s not being driven necessarily by energy costs. I ran the (state) Department of Transportation in the early 1990s, and we did a price sensitivity test. In 1992, I believe it was, they took fuel prices past $3.50 to $4 a gallon and didn’t find a significant alteration in people’s patterns. That we could translate in today’s dollars as something like $6 to $7. So we’re screaming bloody murder at $3.74, but technically you can go another $1.50 to $2 before people really start to change. So the carbon footprint issue, the big one, is the city itself, and the countryside around it and where people live.”

Construction costs

O’Dell: “We’re starting to see a trend on construction costs. There’s different levels of certification on the LEED process. There’s a lot of things that you do as far as annual pollutants, energy-efficient equipment, things like that that a lot of the building codes are pushing anyway. And so you look at commissioning and different things that contractors and subcontractors are really starting to pull in as a competitive market. It’s truly a market- driven situation now, and so contractors and subcontractors and suppliers are really jumping on the bandwagon and we’re starting to see you can get into a LEED certified building with not a huge increased cost, maybe nothing. As you start going for Gold or Platinum and some of the higher-end buildings, you’re starting to see some of the costs driven up a little bit.”

Navarro: “Green building doesn’t have to cost more. Things like paints that make the interior healthier, no VOC (volatile organic content) paints, cost a couple more dollars a gallon. The painter doesn’t care what he’s rubbing all over the wall, so you just give them the right things. Mostly the big thing is educating yourself, your client, getting the right things, because your labor’s going to be pretty much the same thing. When you get into alternative building systems sometimes there is a little bit of a learning curve, but most of the people who try those alternative building systems, once they learn it they continue it because it’s quicker, it’s better, it’s stronger, less call-backs, better benefit for the client. I do a lot of green buildings that aren’t LEED certified, too, that are just driven to save the client money, make a healthier interior, or … I don’t care really why they’re doing it, but some just want to do it for marketing purposes – because it’s cool now. They’re doing that. I’m good with that because I believe in it.”

Crowley: “The other thing that’s happening now is that technology is catching up with the trend. The more costs or energy-efficient units that Ted buys in the construction process, the more that company’s going to produce, and they’re going to try and improve them. They’re always trying to stay ahead of the previous companies, so the technologies are being brought to bear rather rapidly.”

Disadvantages

Winton: “It’s really difficult in Tulsa right now to recycle building materials, or even the waste stream that comes out of an office building. We’ve been trying to line those things up. We’ve found some of the picture as far as where to send it and who will take it, but by no means all of it yet.”

O’Dell: “I think it’s going to take some time for that to catch up.”

West: “What are you seeing in terms of the availability of green materials for construction, and how has that changed in the last year?”

O’Dell: “Quite a bit, actually. There’s a number of companies out there really pushing high energy-efficient equipment and lighting controls, no VOC paints and carpet, and recycled content. We’re seeing an influx of that, and it’s happened over the last few years. Probably over the last year, year and a half, it’s increased dramatically.”

West: “So that’s no longer an inhibitor to green construction?”

O’Dell: “No. I don’t think the material side of it … there’s new technologies and things coming out constantly. But currently we’re not seeing that the problem. It’s the recycling side of it, like we talked about earlier. Whether you go through the certification or not, there’s a lot of things that make sense to push. Energy efficiency, day lighting, things that are just incorporated in the design. Using recycled materials. The same thing with water consumption. Using low water-flow toilets and fixtures. Using rain water for irrigation and things like that that are relatively easy.”

Winton: “But there’s a problem with that. I just got to pick a bone there, about rain water. A lot of codes are not up to speed about how you deal with rain water. I know some city codes, I don’t know about Tulsa, but they prohibit the use of rain water for things like flushing toilets, and even irrigation, which rain is.”

Navarro: “The DEQ (state Department of Environmental Quality) does not have a definition for the term gray water. I’ve approached that a few times, where I would love to reuse it, run double-piping to every toilet and use it for toilets, but it’s just not doable. We use our rain water for irrigation just for our green roof in the night project.”

Winton: “But you cannot collect rain water and then flush toilets with it. Now, have you ever gone through an appeal process with the code people to see if you can do that?”

Navarro: “I haven’t yet but I’m planning on it, because it needs to happen. It’s happening everywhere. I know of a house that’s in Oklahoma, that I believe is in Osage County, where they’re actually using their rain water. They’re treating it, they’re chlorinating it, and they’re actually using it for their drinking water, because they’re completely off the grid. I know of several places that are like that. Not supposed to.”

Winton: “They may be outside of jurisdiction of the code officials.”

Crowley: “When you go back to the urban pattern issues of green things, we’re looking at who’s going to move downtown. We work a lot with the young professionals through the Tulsa Metro Chamber. It’s pretty amazing. Right here in Tulsa, what is the ideal home for a young person? It’s something near something else that’s stimulating, entertainment, employment. I clearly see a demographic out there, a young demographic and my demographic – which is the old tubes that have already gotten rid of their kids, none of which have boomeranged – but those two groups are looking for the higher density going across the street to have dinner at Cherry Street, that very dense neighborhood that’s growing up between 15th Street and the Broken Arrow Expressway. There’s going to be neighborhoods like that around Brookside, around Central Park, and even the Crosby Heights on the western side of downtown that have been growing toward the center of town itself. We’re going to see that change over the next four or five years rather dramatically. And it’s going to be occupied by young people, the people the city’s trying to attract professionally.”

Navarro: “I couldn’t agree more with that. We’re wanting young people to want to stay and have those cool neighborhoods. They’re wanting those cool, walkable neighborhoods. That goes back to roadblocks. There are some codified roadblocks that are there now where cool things like density just can’t happen in certain places. They’re illegal.”

Crowley: “They’re certainly going to be resisted by the people who are less dense. Not in certain neighborhoods. You’re going to get that kind of resistance. Codes are just clumsy. And then you’re going to get people who don’t want to change.”

Winton: “You’re more familiar with the code people here. Are they getting it? Do they realize that there may have to be a bit of give in order to get these things done?”

Navarro: “A lot of people at INCOG (the Indian Nations Council of Governments) and at the code department get that, but to change they have to have a public hearing, and then usually the people that show up are the people that have one issue. They’re trying to make a change of 30 things that would have a big impact and one person shows up who says, ‘I don’t want people to be able to have garage apartments.’ And there are reasons for what they’re saying, but they stop huge efforts that would have a huge impact and it really wears people down who are trying to make a change. I hope they don’t give up.”

Crowley: “It’s also human nature that if you’re opposed to something you show up, and if you’re for it, you don’t. That makes an impact on the decision makers or it certainly puts a lot of pressure on it.”

Incentives vs. mandates

West: “Chicago’s actually one of the leading communities in terms of green construction and how they’ve done that is essentially through the building permit process. They have moved any project that’s a green project or a LEED certified project essentially to the top of the stack, and so they get expedited review with the city and processed through that. So there’s been no economic incentive other than speed to market, and that’s done very well. Oregon, on the other side of the country, has actually done economic incentives. So should communities create incentives for that, how can they facilitate that, and should it be mandated?”

Navarro: “Oooow, mandated.”

Winton: “That’s un-American.”

West: “Strong word, yeah.”

Navarro: “Yeah, that’s a tough one. There have been some creative thoughts on that in Tulsa. There’s maybe a beginning in where there’s demolition, there’s a deposit that’s paid, and you’re given your deposit back when you get your certificate of occupancy, depending on how much of your construction waste has been recycled or reused. There’s a thought process in that, which also goes back to the question about recycling not really being here for construction waste. I see that as a tremendous opportunity for someone. … Incentivizing is a great idea. There are some now. We already have $6,000 worth of tax credit for each side of the (LEED Platinum) duplex we did over on Cherry Street.”

West: “What tax – Oklahoma state, federal tax?”

Navarro: “There are two, $2,000 state, and one $2,000 one federal. They’re kind of tiered; the better performance you get, you get the next $2,000 level. Incentivizing is the first step, I would think. Maybe a deposit kind of item, but mandating is a little bit scary to me because there’s a lot of pushback on that. I like the thought of expediting the permit review, but we have mentioned that before. Tulsa’s in a great time right now. We are just exploding right now. And the permit guys down there are just slammed. I know a lot of them pretty well and they’re working late, they’re working all the time, and for us at this point to say, well, this one’s green, let’s move it to the top. … But there’s a catch to that. It also would make the people who are waiting longer and longer to want to go green.”

West: “So you would be in favor of that?”

Navarro: “Even for the stuff I don’t do green, knowing what the benefits for the environment and the city are to move that stuff to the top for the sustainability to be there, I would love for that to happen. Mandates are a little bit scary, but I think there are ways to do that.”

West (to O’Dell): “As a contractor, how do you feel about that?”

O’Dell: “You mean a quicker permit? Yeah, I think that’s great. I think having some kind of involvement from government agencies, counties, just helps to facilitate that.”

Crowley: “Speed in development is incredible. I’ve been on the development side and on the government side. Speed of processing and development, it’s time and money, money that’s been held up in the process. That’s much larger oftentimes than the incentives that are offered out there.”

West: “And it’s a new cost proposition to the community.”

Crowley: “Absolutely. And that cost goes into the purchase price or the rental rate or whatever. It’s much bigger than the $2,000 the fed will give you to the incentive. I would much rather give the $2,000 to buy another code enforcement official or permit person to expedite the process. You’re absolutely right – they are slammed down there and there’s a lot of development going on in Tulsa and they just can’t keep up with it all.”

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