There's no denying that leaders in the building community are recognizing the importance of 'green' in their buildings and to their future business success. To help builders and developers who have taken the plunge, and still those considering it, identify the most cost-effective way to meet mandatory and voluntary energy-efficiency goals, the National Multi Housing Council (NMHC) and the National Apartment Association (NAA) have produced a new report titled, "Strategies and Costs to Exceed ASHRAE 90.1-2004 Requirements in a Multifamily Apartment Building."

The research, supported by the National Association of Realtors (NAR), the Institute of Real Estate Management (IREM) and the CCIM Institute, was conducted by Newport Partners LLC.

"This is one of the few comprehensive studies examining the costs and feasibility of large increases in energy efficiency for apartments," noted Eileen Lee, NMHC/NAA Vice President of Environment, noting that Newport performed extensive energy modeling of a typical apartment property in three U.S. climates to determine what products and practices would be required to exceed existing requirements by 15 percent, 30 percent and 50 percent as well as the payback for those investments. "As such, not only will it help apartment firms select the most appropriate energy-efficiency investments for their properties, it is also a valuable advocacy tool we can use to help educate policymakers about what is technically feasible and cost effective. For example, the report finds that it will not be possible for most buildings to achieve a 50-percent increase over the ASHRAE 90.1 standard with today's technology."

According to the Newport Partners research, even meeting the 15-percent goal in some cases will require the use of extraordinary technology and practices. For example, it would cost as much as $8,000 per apartment unit for a property in Atlanta and would require a 16- to 25-year payback.

"Most owners would not be able to recoup these costs through higher rents, because they must compete for residents with older, less efficient and less expensive apartments," explains Lee. "Also, unlike other types of buildings, apartment owners cannot recoup these costs through lower operating costs because most savings in new buildings accrue to renters who pay their utilities directly."

"Policymakers considering energy-efficiency mandates need to understand the true costs of meeting those mandates and how the economics of the apartment sector makes it difficult for owners to recoup those costs," says Lee. "It underscores our arguments that mandates need to be accompanied by financial incentives."

The research also finds that there are several things apartment owners can do to significantly improve the energy efficiency of their properties, such as making different water heating and lighting choices or incorporating onsite renewable energy generation. Unfortunately, these kinds of improvements are not within the scope of existing energy codes, so the energy-efficiency gains they produce are not included in the "math" used to determine how much a property has improved its energy efficiency.

"Policymakers need to remember that apartments are already the most efficient and sustainable form of housing that can be developed," said Lee. "They are higher density, use less material per housing unit and have inherently lower utility costs per housing unit. They are also critical in meeting our nation's affordable housing needs. If policymakers impose unrealistic energy-efficiency mandates on the sector, the cost to develop these properties will spiral, which will exacerbate our affordable housing shortage."

Copies of the full Newport Partners report are available from Paula Cino, NMHC/NAA Director of Energy and Environment, by e-mailing her at pcino@nmhc.org or phoning (202) 974-2345.

[Note: NMHC and NAA operate a Joint Legislative Program and represent the nation's leading firms participating in the multifamily rental housing industry. NMHC/NAA's combined memberships are engaged in all aspects of the development and operation of apartment communities, including ownership, construction, finance and management. Together, the organizations operate a federal legislative program and provide a unified voice for the private apartment industry, nmhc.org.]

Published: May 5, 2008

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Peter L. Mosca is president and founder of BAK Communications, Inc. He has over 22 years of communications and media consulting experience, serving a variety of nonprofit organizations, including the CCIM Institute and the REALTOR Association on all three levels – national, state and local. He is the Spokesperson Trainer for the CCIM's Jay Levine Academy and trains hundreds of residential REALTORS nationwide to be effective industry spokespeople. He is consistently ranked as "excellent" by about 90% of those who attend his presentations. While his principal consulting focuses are public speaking and media relations development and content delivery and management, Peter is also the host of the Voice America Network's weekly radio program, "Income Property Investment Talk," a one-hour program that brings the powerhouses of commercial and residential real estate to property investors every Wednesday at 11 a.m. EST. Peter is married 17 years to his wife Barbara. They have two children: Ashley, 15 and Kelli, 12. Hence, the name BAK Communications, Inc.