How Developers Can Build Smarter: A Closer Look at Budgeting with Incentives

Posted by: YijunW

Previously, we've talked about how steel can be a great candidate for green material (Surprise! Steel Can Be a Great Green Building Material). However, due to a recent implementation 25% tariff on steel import from Canada, Mexico, and the European Union by the Trump administration in March, steel price has risen considerably from $300/ ton to $400/ ton (NPR), steel is no longer a cost-effective and high-performance green building material. Already burdened by a rising cost of workers – a construction laborer’s average hourly wage is now $29.71/ hour, representing a 26.85% increase over the past 10 years (BLS)-- developers are in the midst of serious cost hike. So, how to build smart? Skender, a Chicago-based design, manufacturing, and building company that incorporates smart green practices, published “101 Ways to Build Smarter” to guide builders reduce waste and increase value. This discussion is based on Travis Gonzalez's summary of Skender's guide on Bisnow: Even though LEED certifications for sustainable buildings appeal to future residents, certification costs range from $2,250 to over $22,000, depending on the size of the projects (Facilitiesnet). Rather than pursuing a LEED certification without a plan, developers could concentrate on sustainability-oriented goals such as putting on energy-efficient lighting or low-flush plumbing. Sustainable constructions could help lower building operating expenses throughout the life cycle. Builders can seek fundings from city or state incentives to reduce construction costs. According to Delaware Valley Regional Planning Commission, some local governments offer expedited permitting processes or fast-track review, which translates into considerable economic benefits because project costs are more predictable, building loan interest is diminished, and construction can be finished, sold or leased sooner. For instance, the City of Chicago's Green Permit Program offers both expedited permitting and financial incentives. Permits for large projects can be issued as soon as six weeks from the time of submission. Builders can also waive up to $25,000 in consultant fees if their projects qualify for the Green Permit Program (Delaware Valley Regional Planning Commission). A national green program like Fannie Mae’s Green Rewards program provides lower loan pricing and higher yields to multifamily property owners looking to make sustainable upgrades to their buildings*. An additional tip to cut costs is to actively communicate with end users. As the buyers and residents of the final space, end users understand what they want and how they want the buildings to be built. Set up a focus group with the future residents, which allows the building construction teams to understand what they are looking for and how to modify their plans. Failure to communicate with end users may cause design down the line, levying additional expenses during construction. * I've discussed Fannie Mae's program before: https://www.rateitgreen.com/green-building-community/discussions/sustainable-building-communities/green-finance-how-to-take-advantage-of-fannie-mae-and-freddie-mac-green-lending-program/2846 You can read more about Fannie Mae's green finance program here Drew H. McCreery http://rew-online.com/2018/06/07/green-guidelines-point-changes-multifamily-agency-financing/ To read more, please visit: Travis Gonzalez https://bit.ly/2LbDyUm Surprise! Steel Can Be a Great Green Building Material https://www.rateitgreen.com/green-building-community/discussions/sustainable-building-communities/surprise-steel-can-be-a-great-green-building-material/3023 NPR https://www.npr.org/2018/03/08/591744195/trump-expected-to-formally-order-tariffs-on-steel-aluminum-imports BLS Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Construction Laborers and Helpers, on the Internet at https://www.bls.gov/oes/current/oes472061.htm#nat (visited June 20, 2018). https://data.bls.gov/timeseries/CES2000000003?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true Skender https://www.skender.com/buildsmarter/ Travis Gonzalez https://bit.ly/2JgDsFN Delaware Valley Regional Planning Commission https://www.dvrpc.org/reports/MIT017.pdf Additional Resources: Facilitiesnet https://www.facilitiesnet.com/green/article/Measuring-The-Cost-To-Become-LEED-Certified-Facilities-Management-Green-Feature--10057 Erica Evans https://www.deseretnews.com/article/900021482/this-utah-group-just-proved-that-net-zero-energy-buildings-dont-have-to-be-more-expensive.html