October 2015 — Multifamily Properties Quarterly —
Page 25
I
n the midst of a housing boom in
Denver, we are seeing an encour-
aging trend of multifamily build-
ings investing in energy efficiency.
With property costs rising, it
should not come as a surprise. If Den-
ver’s multifamily buildings invested
$109 million in improving energy effi-
ciency, it would result in an estimated
$415 million in energy savings over 10
years, said Katrina Managan, senior
adviser at the Denver City Energy
Project. Many leading multifamily
projects are jumping on the green
bandwagon by voluntarily submitting
their energy usage statistics to the
benchmarking program within the
Denver City Energy Project.
The DCEP is part of a national
initiative to create healthier and
more prosperous American cities by
improving the energy efficiency of
buildings. Other cities participating in
the City Energy Project include Atlan-
ta, Boston, Chicago, Houston, Kansas
City, Missouri, Los Angeles, Orlando,
Philadelphia and Salt Lake City.
The pioneering actions of the 10
cities involved in the project will be
models for communities nationwide
and around the world. The DCEP is
celebrating its one-year anniversary
this month.
The City Energy Project’s goals are
to slash energy use, save money for
residents and create healthier cities.
In Denver that means cutting green-
house gas emissions from large com-
mercial and multifamily buildings by
18 percent through initiatives such as
DCEP’s benchmarking program.When
building owners enroll in the bench-
marking program, they measure and
submit their energy use to the DCEP
and receive formal recognition and
training on how to improve building
efficiency and edu-
cate their occupants
about energy-saving
behaviors.
The benchmark-
ing program, which
recently registered
its 100th building,
counts several of
Denver’s most rec-
ognizable multifam-
ily projects among
its participants.
These buildings
are trailblazers in
improving energy efficiency of apart-
ments and condominiums in Denver.
Nationwide, multifamily rentals
have on average 34 percent fewer
energy-efficiency features than the
number found in other types of hous-
ing, resulting in higher energy costs
for renters, said Managan. Moreover,
in households that earn less than
the national median, 9 percent of a
homeowner’s total income can go
toward energy costs.
Cornerstone Apartment Services
is one of those multifamily projects
leading the pack in terms of energy
benchmarking. Cornerstone recently
enrolled six of the buildings it manag-
es in DCEP’s benchmarking program.
“The energy performance scores
have helped us evaluate and show
our clients how their building’s energy
performance compares to similar vin-
tage properties,” said Cornerstone’s
Chief Operating Officer Charlie Hogan.
“This has resulted in making educat-
ed decisions around energy-efficient
upgrades and capital projects.”
The Prado Condominium, an
18-story condominium tower with 109
luxury residences, recently enrolled in
the program because the condomin-
ium’s energy bills were far too high,
said Nickie Greco, association busi-
ness manager with Hammersmith
Management. After using the Energy
Star Portfolio Manager to get a score
on the energy performance of build-
ings, Greco discovered that the Prado
scored low compared with its peers.
“We’re now on a path to cut the
Prado energy bill significantly with
smart energy-efficiency improve-
ments that will pay back quickly for
owners in energy savings,” said Greco.
“We’ve already upgraded some light-
ing, and we have a recommissioning
project and upgrades to the cooling
tower underway. More projects are in
the works.”
MetroWest Housing Solutions
enrolled five of its buildings in the
benchmarking program. One of the
reasons MWHS, a nonprofit property
developer and manager of apart-
ments in Lakewood and Denver,
prioritizes energy efficiency is cost
savings.
“Energy efficiency helps us cut oper-
ating costs so we can limit rent for
tenants while improving on-site resi-
dent services, such as health services,
child care and economic self-suffi-
ciency training,” said Ryan McCaw,
sustainability and grant programs
manager at MWHS. “Energy savings
also free up funds to undertake criti-
cal capital improvements, enabling
us to continue to operate buildings
at a high-quality level for low- and
moderate-income households for the
long term.”
If a building owner wants to
improve energy performance, the first
step is to understand how much is
currently used. Enrolling in DCEP’s
benchmarking program is simple.
First, gather data for your building,
including the gross floor area of the
building, gross square footage of
parking areas and energy usage data.
(DCEP has a guide explaining how to
gather and upload energy usage data).
Then, start benchmarking the energy
performance of your building using
Energy Star Portfolio Manager. Finally,
enroll in the benchmarking program
by filling out a short enrollment form
and follow instructions on how to
share your Energy Star score with the
DCEP benchmarking program.
Enrolled buildings are recognized
on the DCEP website and their data
will inform the design of additional
building efficiency programs. The
next step, of course, is taking action
to improve the building’s energy
efficiency and Energy Star score.
Nevertheless, by beginning with the
benchmarking program, multifamily
building owners are taking important
steps to make the city of Denver more
efficient and prosperous.
Energy benchmarking is one of
USGBC Colorado’s 2015-2016 advocacy
priorities. Through education and
outreach, we support the 2030 District
and the DCEP, and recently joined the
Coalition for Energy Efficient Denver.
In addition, USGBC Colorado aims to
advocate for energy benchmarking by
directly engaging with local utilities to
facilitate greater data accessibility and
with building owners and managers
to use data in decision-making about
capital improvement projects.
You cannot manage what you do
not measure, and benchmarking is
the first step in good energy manage-
ment. More information on the DCEP,
including how to enroll a building in
Denver’s benchmarking program, can
be found at Denvergov.org.
s
T
here are three major benefits
to making a multifamily prop-
erty green. The first is reduced
operating costs from lower util-
ity bills as well as operations
and maintenance costs. The second
is an increased net operating income
and profitability because happier
tenants result in reduced turnover
and increased occupancy. And third
is increased property value from the
green upgrades and increased NOI.
The influx of new multifamily prop-
erties, most of them built to higher
green standards, soon will cause a
drop in the occupancy rates from the
current highs, and the older proper-
ties will need to do something dif-
ferent to attract tenants. One smart
solution is to obtain an Energy Star
certification because it not only pro-
vides the benefits listed above but
also because Energy Star is an influ-
ential consumer symbol with over 85
percent of Americans recognizing the
label.
The Energy Star certification
became available to multifamily prop-
erties in late 2014 and, perhaps, is
the most cost-effective way to show
potential tenants that you have a
green property (as compared to LEED
or other labels). An Energy Star certi-
fication could cost as little as $1,000.
And because it is a rating system, it
expressly states that a property is
more efficient than its neighbors.
On average, Energy Star-certified
buildings use 35 percent less energy
than similar buildings, which, by the
way, makes a property more afford-
able to you and
your tenants.
The first step to
achieving an Energy
Star label is bench-
marking, which
compares your
property against
your peers. A recent
study by the Envi-
ronmental Protec-
tion Agency found
that benchmarking
a building consis-
tently reduced its
energy use by 7
percent over three
years, at no-cost,
because it allows
managers to pay attention to the
energy and water consumption and
react to negative trends.
Financial Value
Fannie Mae rewards multifamily
properties that earn the Energy Star
certification by providing a lower
interest rate of 10 basis points. This
means that if the market rate is 5
percent, then the Energy Star-certified
multifamily property will receive its
loan at 4.9 percent. In addition, Fan-
nie Mae will increase the size of the
loan, typically by 5 percent, because it
factors in the energy and water utility
cost savings as lower operating costs.
EPA created Portfolio Manager, an
online tool to measure and track
energy and water consumption. The
manager provides a secure online
environment to log multifamily prop-
erty data and obtain a rating for your
property – all for free. The manager
can benchmark the performance of
one building or a whole portfolio of
buildings. Also, it quantifies the ben-
efits from the green upgrades made
to a multifamily property.
The most energy-efficient, i.e., top
25 percent of U.S. buildings, earn the
Energy Star certification. This means
your property has to be in top quartile
to be certified as Energy Star. In other
words, your building must have an
Energy Star rating greater than 75.
Base Certification Requirements
1. Multifamily building must have
more than 20 units and at least 75
percent occupancy.
2. Building attribute data such as
square feet, utility consumption, etc.,
must be for the whole building. You
cannot get an Energy Star certifica-
tion for a portion of the building.
3. The primary function of the
building must meet the definition
of multifamily. Mixed-use properties
typically are not eligible.
4. Building attribute data must be
correct and complete. As the old
adage goes, garbage in, garbage out.
Inaccurate or incomplete data will
not get a building any rating or certi-
fication when an independent third
party completes the required verifica-
tion.
5. Must be a single structure as
defined by EPA; a structure in which
the exterior walls are not substan-
tially and indivisibly connected to
any other structure. For example, a
multifamily property with an atrium
connected to a retail center, all on the
same heating, ventilating and air-con-
ditioning system, will not qualify.
6. Each building is independently
rated and certified. This means a
property with eight buildings will
receive eight individual Energy Star
certifications.
7. Include all of a property’s floor
area in its Energy Star application
including the outside walls.
EPA allows exclusion of actual
energy consumption of structures
that are exterior to and not related to
the operation of the building, such as
parking structures or retail outlets.
Steps for Certification
There are five steps to achieve
certification. First, set up a portfolio
manager account, which requires
basic property information, including
name, address, square feet, etc.; selec-
tion of the correct property type and
use details; and the last 12 months
of utility data. After this, the building
will receive an Energy Score.
If the Energy Score is above 75, the
building can move forward with the
certification requirements by com-
pleting and submitting the online
application to have a professional
engineer or architect conduct a site
visit and audit. After doing so, you
must respond to any clarifications
from the EPA, and then help the
engineer or architect complete his
site visit and audit, and answer his
questions.
s
Patti Mason
Executive director,
USGBC Colorado,
Denver
Ravi Malhotra
Founder and
president,
International
Center for
Appropriate
and Sustainable
Technology, Denver
Sustainability
