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Builders talk pros/cons of city’s push for environmentally friendly construction

Friday, November 18, 2022 by Chad Swiatecki

As Austin moves closer toward its net-zero energy goals, the city’s building and development community will play a major role in making new buildings environmentally sound and gradually retrofitting existing buildings to be more energy efficient. How to manage those costs and responsibilities was the topic for a recent Urban Land Institute panel held in anticipation of a forthcoming report from the group about the city’s Climate Equity Plan that was adopted last year.

The report’s broad recommendations include finding ways to spell out the specific goals and requirements for builders, standardizing the plan and its requirements across city departments, initiating pilot programs that can be studied and scaled based on their effectiveness, and finding ways to improve the permitting and approval process while increasing awareness and outreach for existing climate-related programs.

Bungane Mehlomakulu, head of building science and performance for the building company ICON, said one of the primary concerns of builders who otherwise support net-zero goals is that a lack of coordination across city departments will add to the construction timeline of projects that are trying to secure incentives designed to encourage green building.

“It actually might slow down the delivery of their project and through the result of additional approvals that are required, or just the time it takes to go through all the different steps,” he said. “One of the recommendations was to really look at what the existing assets are within the city, the programs that they’re using, and figure out how to provide additional education and awareness, and also look at where the pain points are for those people that they’re trying to incentivize or to work with and partner with on those projects, and align incentives that work for development.”

Moderator Ashley Besic, senior associate for the Building Decarbonization Coalition, said the relationship between the city and Austin Energy and the utility’s advanced progress in meeting climate goals are seen as a strong positive for the local development community compared to the friction that exists in other markets.

“A big thing that we find and get feedback on is people saying their utility is not investing in renewables, and so it puts that burden back on the owner or the developer to have to invest in their own on-site renewables. In Austin Energy’s case, they’re actually doing that work for the developers,” she said. “It’s a unique situation where you have the electrical utility that’s already willing to make the investment and so it takes that burden off of the developer … to focus on those building efficiencies that will make it more impactful and be cost-effective for you all.”

Panelist Tyler Buckler, director of development and investments for Cielo Property Group, said the investment community’s growing interest in environment, social and governance (ESG) investing is making it far easier moving forward for builders to get the capital they need to make their projects environmentally sound.

“As far as how equity and debt are both looking at ESG-related projects, over the past five years we’ve seen a tremendous uptick in especially institutional capital’s interest in investing in ESG. Even over the past two years it’s kind of exploded. We have a number of larger projects downtown that we are actively working on and talking to capital and I would say it is on the front of everybody’s mind right now,” he said. “The second thing is your customer, and is your customer interested? Because ultimately to achieve the returns that a lot of this capital wants to achieve, you’re going to have to get at the rate to match it. Right. Which means people are paying more for that.”

Photo by Larry D. Moore, CC BY-SA 4.0, via Wikimedia Commons.

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