Tips on Selecting a Green Certification Program for Multifamily Housing
With the availability of pricing break incentives and the increased operating cash flow that results from reduced energy usage and other improvements, green certification is desirable for property owners. The first step is to determine which certification program best suits the needs of your property. Investor preferences, building type and size, and the experience of your contractors and architects will dictate which program is best-suited to your property.
There are seven nationally recognized entities that offer green certification: EarthCraft, ENERGY STAR®, Enterprise Green Communities, Green Globes
GreenPoint, Leadership in Energy and Environmental Design (LEED), and National Green Building Standard (NGBS).
Determine Investor Preference
Nationally recognized programs such as LEED or Energy Star may be preferred by investors. If they do not have a preference, it is possible to consider a regional or local program that operates in your market, although national programs may qualify your project for pricing break incentives from government-sponsored enterprise programs such as Fannie Mae Green Rewards, or Green Preservation Plus. Even if you opt for a national program, explore any tax and utility incentives for which green certification may make you eligible. The same documentation that is provided during the certification process likely can be used to apply for these incentives.
Consider Building Type and Size
The best green certification program for your property depends on whether it is new or existing construction and how many stories it has. Most new buildings can receive green certification from LEED and other nationally recognized programs. Moderate or substantial rehab to existing buildings is covered under different conditions by each program. LEED distinguishes low-rise buildings as those comprised of three or fewer stories, and mid-rise as those comprised of four to six stories, while Energy Star considers buildings with four or five stories to be mid-rise. Under LEED guidelines, rehab projects for the low-rise and mid-rise categories must have walls and ceilings exposed so that air barriers and insulation can be inspected. In contrast, NGBS applies the same set of requirements to all buildings and does not factor size into certification criteria.
Leverage Team Experience
The architects, contractors, and other team members who will be working on your green certification project likely have a majority of experience in one particular program. Leverage the skills of your team by selecting a program that will be easy to navigate, as the certification process can be cumbersome. As long as the program that you select has fees with which you are comfortable, and qualifies your property for good incentives on commercial real estate loans, this is often the wisest choice.
A green-certified multifamily property affords many benefits for owners and those who live there. Whether you are seeking multifamily refinance, acquisition, or supplemental loans, make sure to factor investor preference, building type and size, and team experience when selecting which green certification to pursue.
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