1. The Cost Implications of LEED A Presentation By Hanscomb Faithful & Gould September 29 th – 2005 Ms. Carin Rautenbach – Vice President, LEED AP Ms. Minna Gerard – Senior Estimator, LEED AP John Merkler AIA

2. Our presentation today  Understanding Cost Constraints  Where the data comes from  Life Cycle vs First Cost  LEED Point Analysis  Sharing our Lessons Learned  Questions and Answers  Sharing Best Practices from Audience Members

3. What is the Cost of Green Building? 1. Initial Cost, i.e. Construction Cost 2. Life Cycle Cost, which covers not only construction cost but also operation and maintenance cost during the building’s usable life.

4. LEED Project Locations

5. Where does the data come from?  Hanscomb Faithful & Gould’s nationwide database  GSA’s database of recent work  State of California Study – 2003  Supplemental data

6. LEED Rating System  Four (4) levels of Certification LEED Certified26 - 32 points Silver Level33 - 38 points Gold Level39 - 51 points Platinum Level52+ points (69 possible)

7. LEED Rating System Major CategoriesPrerequisitesMaximum Points Sustainable sites114 Water Efficiency5 Energy and Atmosphere317 Material and Resources113 Indoor Environmental Quality215 Innovation and Design Process5  Attainable Points Distribution

8. Life Cycle Cost Saving for LEED Projects  Energy & Lighting Efficiency  Water Efficiency  Materials Efficiency  Employee Productivity  Employee Health  Construction & Debris Recycling

9. Sensitivity to Life Cycle Cost Energ y (2%) Educational Staffing(31%) Support Staffing(11%) Furnishings / Fitout(4%) Fees (1%) Construction Contingency 1% Other Project Costs School Allotment(1%) Textbooks(1%) Benefits Overhead(14%) Other Support Costs(2%) Major Capital Replacements Maintenance(3%) Transportation(5%) C onstruction (18%) (1%) (5 %)

10. The Study – The Costs and Financial Benefits of Green Building  Commissioned by California’s Sustainable Building Task Force  Led by Greg Kats, Capital E with Contributions from California Department of General Services and Lawrence Berkeley National Laboratory  Findings  Green Buildings have an average 0 to 2% increase in first cost over their conventional counterparts, but over 20 years, they will recoup 20% of construction costs —more than ten (10) times the original investment in green building features.

11. The Study – The Costs and Financial Benefits of Green Building Financial Benefits of Green Buildings per ft 2 CATEGORIES of VALUES20-year NPV Energy value$5.79 Emission value$1.18 Water value$0.51 Waste value (construction only) 1-year$0.03 Commissioning O&M value$8.47 Productivity and Health Value (Certified and Silver)$36.89 Productivity and Health Value (Gold and Platinum)$55.33 Less Green Cost Premium($4.00) Total 20-year NPV (Certified and Silver)$48.87 Total 20-year NPV (Gold and Platinum)$67.31

12. The Study – The Costs and Financial Benefits of Green Building  Contributors to increased value Percentage Breakdown of Green Building - Financial Benefits LEED Certified & Silver Buildings

13. Capital Cost for Building Green  First cost vary significantly  Nature, location, size of projects  Timing to introduce LEED goal  Level of LEED certification desired  Process used to select LEED credits  Local and regional design standards, including codes and initiatives  Experience of design team  Experience of contractors  Rebate and incentive programs

14. Is there any Premium Cost for Building Green?  Historical Information  Our Findings  LEED Certified Building fall into the same range of cost as Building not LEED certified  It is possible to achieve Design Team and Owner’s goals by making value decisions without adding to the budget. Each Building is Unique No one-size-fits-all Answer

15. Trends  Cost ($) for building green decreases as  Consultants and contractors gain more experience  Newer, cheaper and better availability of green materials  More local policy incentives

16. Ref.Points DescriptionCost Implication ($) SSp1 Erosion & Sedimentation Control No or minimum additional cost, typical to project requirements SSc1* Site SelectionHigh credit attainment % SSc2 Urban Development Density SSc3 Brownfield DevelopmentCost can be significant SSc4.1* Alternative Transport Public Transportation Access SSc4.2* Alternative Transport 5% Bicycle Storage & Change/Shower Room Relatively inexpensive Points Analysis  Sustainable Sites (SS) *( yellow categories) / most achieved points

17. Ref.Points DescriptionCost Implication ($) SSc4.3 Alternative Transport Alternative Fuel Refueling Cost depends on types of fuel etc., may become obsolete. SSc4.4* Alternative Transport Parking Capacity Reduction, Vanpools Minimum cost SSc5.1 Reduced Disturbance Protect / Restore Open Space Minimum cost; Expensive if underground parking is used SSc5.2* Reduced Site Disturbance Development footprint Minimum cost or not achievable at all Points Analysis  Sustainable Sites (SS) *( yellow categories) / most achieved points

18. Ref.Points DescriptionCost Implication ($) SSc6.1 Stormwater Management no net increase in Rate & Quantity of Stormwater run off Cost depends on method  smaller footprint, pervious paving, relatively inexpensive or even save money  green roof, more expensive ( up to $100 / square foot) SSc6.2 Stormwater Management Treatment - remove TSS and TP contaminants Swales – minimum cost impact; Retention / Detention Ponds - more expensive; Stormwater Collection Tank - costly SSc7.1* Landscaping actions to reduce heat island effect Non-roof Relatively low cost for adding shade trees etc. Points Analysis  Sustainable Sites (SS) *( yellow categories) / most achieved points

19. Ref.Points DescriptionCost Implication ($) SSc7.2* Landscaping actions to reduce heat island effect, Roof Energy Star compliant roofing – relatively inexpensive Green roof – can be costly SSc8* Light Pollution Reduction by eliminating light trespass from site Some premium cost – external lighting, added cost for sensor or light shades Points Analysis  Sustainable Sites (SS) *( yellow categories) / most achieved points

20. Ref.Points DescriptionCost Implication ($) WEc1.1* Water Efficient Landscaping less potable use High efficiency irrigation and indigenous plants, minimum cost; rain water collection system can be more expensive WEc1.2* Water Efficient Landscaping, no irrigation Use reclaimed water supplied by local water district – low cost WEc2 Innovative Wastewater Technology Low flow or waterless sanitary fixtures – premium cost WEc3.1* 20% Water Use ReductionSensors to plumbing fixture – premium cost WEc3.2 * 30% Water Use ReductionWaterless sanitary fixtures & reclaimed water system, either on site or through local water district Points Analysis  Water Efficiency (WE) *( yellow categories) / most achieved points

21. Ref.Points DescriptionCost Implication ($) EAp1 System Commissioning0.1-1.0% of total construction cost EAp2 Minimum Energy Performance per ASHRAE/IESNA 90.1-1999 EAp3 CFC Reduction in HVAC&RNo additional cost, standard practice EAc1.1-5* Optimize Energy Performance 20 - 60% new 10 - 50% Existing Building Cost varies – energy efficient lighting fixtures & HVAC equipment; efficient control system; low - E glazing; shading devices; soft cost for energy modeling Points Analysis  Energy & Atmosphere (EA) *( yellow categories) / most achieved points

22. Ref.Points DescriptionCost Implication ($) EAc2.1-3 Renewable Energy 5 - 20% of total building use PV panel: 1KW - $8,000 - 8,500 EAc3* Additional Commissioning including during design process Reasonable additional cost compared to system commissioning pre-requisite EAc4 Ozone Depletion, no HCFC’s or Halons (including at Central plant) No additional cost, standard practice for new construction EAc5 System Measurement & Verification for accountability / optimization Can be costly EAc6 Green Power, 2-year utility contract to buy energy from renewable sources Reasonable cost based on annual energy usage; operation cost rather than first cost Points Analysis  Energy & Atmosphere (EA) *( yellow categories) / most achieved points

23. Ref.Points DescriptionCost Implication ($) MR p1 Recyclable Collection / Storage Reasonable cost MR c1.1-2 Maintain 75 - 100% of Existing Structure For renovation projects only, might affect achieving energy use reduction MR c1.3 Reuse, maintain 100% shell, 50% non-shell MR c2.1-2 * Construction Waste Management, Divert 50-75%, measured by weight Cost varies depending on project location and waste recycling program MR c3.1-2 Resource Re-use, Specify 5 - 10% salvaged / refurbished, by cost. May not achieve due to the high percentage, cost impact normally minimum Points Analysis  Materials & Resources (MR) *( yellow categories) / most achieved points

24. Ref.Points DescriptionCost Implication ($) MR c4.1-2 * 25-50% total materials have Recycled Content post consumer/ post industrial - by cost High level of attainment on certified projects. Possible initial material cost premium. MR c5.1 * 20% total materials are Manufactured Regionally measured by cost High level of attainment on certified projects. Possible material cost premium due to limited resources. MR c5.2 * 50% of above Regional Materials were locally sourced / harvested High level of attainment on certified projects. Possible material cost premium due to limited resources. Points Analysis  Materials & Resources (MR) *( yellow categories) / most achieved points

25. Ref.Points DescriptionCost Implication ($) MR c6 Rapidly Renewable Materials - 5% of total materials measured by cost Few achieved this on certified project. Difficult to get percentage requirements MR c7 50% of wood-based materials to be from FSC-Certified wood More expensive than non-certified wood. 5 - 18% higher. Points Analysis  Materials & Resources (MR) *( yellow categories) / most achieved points

26. Ref.Points DescriptionCost Implication ($) EQ p1 Minimum IAQ Performance per ASHRAE 62-1999 No additional cost EQ p2 Environmental Tobacco Smoke Control No (prohibition) or additional cost (designated smoking room), standard practice in CA EQ c1 * Carbon Dioxide MonitoringPremium cost for sensors EQ c2 Ventilation Effectiveness per ASHRAE 129-1997 EQ c3.1 * IAQ Plan During Construction Additional cost for temporary storage, replace filter, dehumidification equipment Points Analysis  Indoor Environmental Quality (EQ) *(yellow categories) / most achieved points

27. Ref.Points DescriptionCost Implication ($) EQ c3.2 * IAQ Plan Before Occupancy 2 - week flush out needs to be integrated into the construction schedule, additional cost EQ c4.1 * Low-Emitting Adhesive Sealant No or minimum cost High level of attainment EQ c4.2 * Low-Emitting Materials Paints No or minimum cost High level of attainment EQ c4.3 * Low-Emitting Materials, Carpets No or minimum cost High level of attainment EQ c4.4 Low-E Composite WoodMinimum cost EQ c5 * Indoor Chemical / Pollutant Control Minimum cost Points Analysis  Indoor Environmental Quality (EQ) *(yellow categories) / most achieved points

28. Ref.Points DescriptionCost Implication ($) EQ c6.1 Controllability, PerimeterOperable windows / traditional air-conditioning (AC) system EQ c6.2 Controllability, Non-Perimeter Difficult to attain credit / raised flooring system EQ c7.1 * Thermal Comfort Compliance Design issue EQ c7.2 * Thermal Comfort, Permanent Monitoring Some added cost EQ c8.1 Daylight, 75%Design issue EQ c8.2 * Daylight and Views, 90%Design issue Points Analysis  Indoor Environmental Quality (EQ) *(yellow categories) / most achieved points

29. Ref.Points DescriptionCost Implication ($) ID c.1 * Innovation in DesignVaries ID c.2 * Innovation in Design ID c.3 * Innovation in Design ID c.4 Innovation in Design ID c.5 * LEED Accredited ProfessionalNone Points Analysis  Innovation and Design Process *(yellow categories) / most achieved points

30. Other Cost Factors to Consider  Documentation cost ($) during Design and Construction  Extra Design Fees  Rebate Programs Solar incentive program by LADWP  Local Green Building Incentives such as expedited permitting, low inspection fees, tax credit, and Savings by Design Program

31. Experienced Design Team Fees (Source: GSA)

32. Savings by Design  Program is  Founded by California Utility Customers  Administered by Pacific Gas and Electric (P G&E), San Diego Gas and Electric, Southern California Edison Company and Southern California Gas Company.  Whole Building approach  Systems approach  Daylight saving  Interior lighting system  Heating, ventilation, and air conditioning (HVAC) system  Service Hot Water  Other Systems

33. Savings by Design  Incentives  Maximum incentive for the Owner is  $150,000 under the whole building approach  $75,000 under the systems approach  Maximum incentive for the Design Team is $50,000

34. Cost Implications of LEED  Understanding Cost Constraints  LEED Point Analysis  Sharing our Lessons Learned  Questions and Answers  Sharing Best Practices from Audience Members Thank you for attending