The Los Angeles Business Council hosted the city's first Sustainability Summit last month, bringing together public and private sector leaders currently implementing the principles of sustainability into communities. TPR is pleased to present excerpts from the summit panel entitled "Barriers and Incentives," which was mediated by CARB Chair Mary Nichols. The panel included Jim Atkins, principal of The South Group; Brad Cox, managing director and principal, Trammel Crow Company; Ken Lewis, president of AC Martin Partners Inc.; and Cecilia Estolano, CEO of CRA/LA.
Mary Nichols: I have marching orders from my new job, not just from the governor, but from the Legislature, which passed AB-32. This landmark legislation mandates that the state of California achieve a reduction in greenhouse gas emissions that will take us back to 1990 levels by 2020-a truly daunting task. The Climate Action Team that was assembled a couple of years ago looked at this problem and assigned a very large chunk of those emission reductions to the area of land use and transportation strategies, all of which are tied up in the planning, development, and building we are talking about on this panel...
Jim Atkins: ... if we can't change the world, we can change the environment, and thus we see ourselves as the neighborhood developer; we see ourselves as developing one neighborhood at a time. It was in Portland in the Pearl District and in Downtown Los Angeles, so we can affect change one neighborhood at a time.
We're neighborhood builders first, and home builders second. We focus on building neighborhoods. One thing that makes a successful neighborhood is that it reflects the values of people who live there, and the speaker before talked about green consumers and what they want. We've tried to match what those buyers and those future residents would want as the values in that neighborhood; one of them is sustainability in development and buildings. So we're planning for the people that live there.
Another incentive is pure marketing function–it's product differentiation. How do we make our homes better or different than the builder down the street? A home-buying decision is typically a person's largest decision; they're going to think about it long and hard. We need to give them reasons to buy our product versus somebody else's.
A fourth is the entitlement process. It's not the government's job to make a developer money. Particularly in Los Angeles, when we began the process of developing Elleven, Evo, and Luma, the codes were written really for suburban development. There's a number of modification exceptions, variances, and certifications that were required. So we need to come to them with a better reason than, "Because we need them to build this project." We needed to identify what public benefits will occur because of the project. What is the minority business or woman business hiring practice or the streetscapes for LEED projects. We tried to think about the public benefits we could bring to the table in order to give the public decision-maker reason to say, "I did this for the right public reasons." It's because we can and because we should. One of our tenets in our company is to always do our best, always be challenging ourselves to do whatever we can to do it better the next time, whether that's in the warranty process or in the customer service process; we always want to do it better the second time. And don't just blaze the trail for LEED, blaze the trail so that others can follow.
Brad Cox: ...We already had designed a building that was 15 percent more energy efficient than any office building ever constructed in the city of Los Angeles. We had a thermal energy envelope that utilized over 40 percent of outside air as a primary source of air conditioned air versus a closed building type system. We had a state of the art building systems with lighting sensors. At the time, these types of things were well known in the design community but not the tenant community. So we had a very expensive building. There was probably another $1.5 million in the overall scope of the project at the point, which is about 2 percent. But at that point in time, we were already 15-18 percent over budget. So there was a decision to make, because we didn't think the market would pay us a premium. We would find that the market would pay a premium for the most efficient building, the most efficient system, fluorescent compact light bulbs, all things state of the art.
That project has been extremely successful. As part of that process, you learn and really experience the difficulties of the city of Los Angeles. We have a lot of competing agencies that have jurisdictions in the process: the planning, building safety, you have the public works, you have the firemen, you have the police. It's just a myriad of approvals in the process. So, stepping back and looking at this thing, how do we really roll out a project like this in the city of Los Angeles? How do we create up front opportunity for those that are making commitments to build high-level LEED building standards-to really make the city committed to being held accountable, really being very successful, and really, at the end of the day, being somebody with the authority who really allows the process through all of the approvals that are required for a project. That's real money. If we can make the approval take six months versus 12 months. If we can get it through the EIR in nine months versus fifteen months. If we get through the building and safety planning permit process in a month or two months versus five months, that up front money is real savings to the development community, and translates into real incentives that motivate all of us in the private sector to really deliver the highest level of LEED-certified buildings in the marketplace.
In the investment community today, we realize that. We're working very closely on building a new project we're working on: 300,000 square feet in the northwest portion of the San Fernando Valley with Kennedy, which is a national investor that probably owns 18 million square feet nationally. They are one of the leaders in what's called the responsible property investment group. The RPI movement is a group of investors dedicated to being the profit leaders in energy efficiency and conservation. They want to decrease energy use in their existing portfolio using the Energy Star principles. They want to build environmentally quality buildings. We're going to be building a gold standard, 300,000 square foot building for them. They're very concerned with worker health and increasing daylight and natural resources.
The investment community is going to reward private developers with a premiums in exit values and sales prices, and tenant communities will be rewarded with LEED-certified, energy efficient buildings. A requirement of that up front cooperation is that we have the city there, that is our partner, to deliver real incentives.
Ken Lewis: I think there are several things we did. The Cal MTA is a good example. Typically, in a high rise office building, the air supply is going right through the core, and what that means in a high rise office building is maybe you get 20 percent outside air mixed into that. And Sacramento has a climate that's interesting; they call it diurnal effect, and what that means is, during the day in the summer, it's quite hot, 105 degrees. But at night, it actually cools down rather dramatically, into the 60s, because literally the breeze comes all the way in from the bay. So we placed some fans on the exterior of the building in order to bring the air in at night to chill the building down, and we can actually get 100 percent outside air at the times of the year all through night, we can chill the building's thermal mass down a little bit, so that actually reduces peak energy demand rather dramatically in the summer time. And in the good parts of the year-winter months, spring, and fall-you can turn off the chillers for the building and actually run the fans only, and use 100 percent outside air, which has the benefit of good indoor air quality flushing out all the VOCs of the building, but also you're not running chillers.
For nine months of the year, the building just sips energy. In summertime, it uses a bit more, but it's probably 30-35 percent more efficient than the state's average....
...There are other things we do, and I think that one of the things that people are kind of alluding to is the idea that we're out in front of this idea and not falling behind. So, innovation is a cyclical process where one innovation builds upon another innovation, so if you don't get with it early, you're not going to get benefits....
...[W]hen you look at how a building uses energy, and where the energy use comes from, lighting is part of the story. One of the things that happens with lightbulbs is they create heat, so if we can actually reduce the lighting of electric lights, the firm can actually reduce the amount of heat generated in the building and can reduce the amount of air conditioning required.
So it's not just the energy coming from the outside, it's from people and lights, as well, that cause the energy of a building. We can't do much about the people, but we can do something about the lighting. There are systems, for example, where in an open office, you can actually have motion-sensor light fixture, one above every desk. And in a typical open office environment, the workers are away from their desks nearly 30 percent of the time. If those lights shut off or dim down, you get 30 percent light and energy savings in an open office environment. It turns out that there are also control systems built into that, so that the users can actually adjust their own light fixtures, which adds to their personal comfort, and so forth.
So we added that, getting an immediate 30 percent reduction in electric lighting and tried to get heating down by a similar amount. We saved energy, cut costs, built a smaller mechanical system, performed less deck work, installed less sheet metal-all of those things.
Cecilia Estolano: I've been on board with CRA for a little over a year, and one of the things that I've repeated is that we need to make green urbanism a core value for the agency, but we're also trying to do that at the government level. Our motto in the CRA is that we build communities. We don't just build housing; we don't just build shopping centers; we don't just build infrastructure projects. We actually build communities-well balanced, mixed income, mixed-use communities. Our take on what's sustainable is more than just having energy- or water- efficient buildings. It means maximizing the return on public investment on transit. We have literally spent billions of dollars in this region-public money, taxpayer money, from all income levels-to build a rail system that is robust, but we can't support growth without maximizing that public investment, and the way to do that is to build along transit hubs going forward.
One of the first things for us, in terms of sustainable development, is to identify the transit-oriented districts that are along the rail hub. We want to steer developers into those areas; then we can concentrate on development that mixes use, that mixes income, that creates healthy neighborhoods where you don't have to get into your car to buy a quart of milk. We're a little different than regular agencies because we're not just regulatory; we actually try to anticipate market forces and, if we're really good, steer markets. It's wonderful to hear about leaders like The South Group and Forest City getting at the leading edge of development in green building, but you guys are the exception, and so we wanted to create the incentive packages, and, as necessary, some of the regulatory features to try to get other developers to do the right thing.
The first thing that we do is, we say, "We want you to build there, we want you to build transit oriented development. We want you to go to the Gold Line, we want you to go to the Exposition Line, parts of the Red Line." We've made so much investment in the transit system, we want to see you build there. If you can promise two neighborhood groups that you can retain the integrity of the original all-in-one neighborhood, they may not object to seeing concentrated development along the transit-oriented scheme. So we are creating incentives and going to the state. We've spent a lot of time in Sacramento-the mayor's office, the CRA, and the Health Department-trying to make sure that the Prop 1C money, not just TOD money, but that the $800 million in infrastructure infill money, is going to have be an advantage and, secondly, will encourage more infill development along transit corridors.
That's the big picture. We also have a regulatory incentive wall. We're talking about, "You're taking our money, you've have to do LEED or a LEED equivalent." We need to work out how that functions in a mechanical way.
We also know that we don't want to reinvent the wheel. We're working very closely with all the other activities going on around the city to promote sustainable development and green building. We don't want to have different standards than the rest of the city. But we do think that, because we give a lot of money to developers to subsidize projects, the least we can expect is that you're going to be a good developer-that you're going to follow the example of the South Group, Forest City, and developers like that. And you're going to do it even in a place like South Los Angeles and East Los Angeles and Pacoima, because arguably, those are the places that need sustainable development more than any other place.
You need to have energy efficiency, you need to have water efficiency, we need a lot of trees, and we also need parks. Our livable, healthy neighborhoods policy goes beyond just saying, "We want to be energy efficient;" it says, "We want you to site your project in the right place, we want you to make sure it's mixed income and mixed use, we don't want you to build the parking." We're trying to push the envelope, to say, "We want you to come to this area, but once your project is built, it's there for 75 years." We're not going to get a chance to build healthier. We have to make sure it's sited appropriately, that it has the right benefits.