An open letter to the Mayor of Houston about residential green building
Dear Mayor Parker,
Sustainability and energy conservation by "green building" are necessary for a healthy and prosperous future of our city, and the tremendous progress in Houston on the commercial real estate side are testament to your vision, and that of your predecessors, in making this a reality. On the residential side, as you know, things have not developed as rapidly. My family and I moved to Houston in 2005, coming out of an already declining Detroit housing market, and settled in a 50's bungalow off Stella Link, just south of Bellaire Boulevard, to be close to good schools and the medical center where we work. Two years ago we embarked on the journey to scrape and build a moderately sized (by local standards) house with LEED certification - this blog describes much of the detail, so I won't repeat it here.The blog also details our struggles to get the project financed. It has taken about a year, but we just got the green light from our bank - I will post more on this when we close the loan, early next month. Now that this part of the journey is almost over (and the real fun of building about to begin!) I wanted to ask you to consider how it might be made easier to get financing for projects such as ours. The key stumbling block for us was the valuation of our projected LEED Silver plans of a house of about 3,200 square feet at $165/sq ft. Essentially, all the banks understand is sales of comparable-sized houses. In our neighborhood the majority of new houses are upwards of 4,500 square feet reducing the valuation of our house by comparison. LEED certification is also based around square footage, but here the larger the house the harder it is to get certified, for the obvious reason that larger houses are more resource intensive to build and maintain. This means that, almost by definition, LEED houses will be penalized by the finance system, certainly in the mid-range of the custom housing market where we are. I firmly believe that over the next few years the market will properly value green, as people realize the advantage of a well built, energy efficient and reasonable-sized house. We did find an appraiser who understands green. This appraiser added a premium in the valuation, which no bank would agree to entirely - we talked to over half a dozen, and made formal loan applications to three. The banks therefore effectively reduced the amount we could borrow, delaying our plans. The comment from the banks was that there was too much risk that the house would fair poorly in the market, should they have to foreclose.
I would like to suggest that you consider ways of giving people trying to build green residential a boost. With a little help we could have been creating jobs this past year, building a house that will use less energy than our current one does and provides more rain water drainage to boot. Not versed in these matters, I imagine that some kind of a loan guarantee might reduce risk in the eyes of the banks. Of course, their long-term concern about how LEED houses will fare in the market could be addressed by a reward for such houses. While I realize that your administration is currently dealing with a revenue shortfall, I would still like to suggest that a property tax break for LEED be considered. This would help elevate these houses to the top of their market segments. Since LEED has several levels, one could develop a tiered system that would rapidly gain traction in the market. The ability to search for LEED on HAR listings is already a huge boost.
These are of course suggestions. On the other hand I am almost invariably asked what kind of breaks we are getting from the government to build green, when I talk about our plans. I am not aware of any, aside from a one time $1,500 tax reduction on windows (which makes little impact on a building budget of over $500,000) and so I tell them that we are getting essentially no breaks. I can see them thinking that building green is not a great deal at present, and despite my determination to do it, the experience of the past year teaches me that they are not all wrong. Yours sincerely and with best wishes for the Holidays, Oliver B.
Posted
by Oliver Bogler
