“There’s great opportunity for owners and managers of multifamily properties,” says Maria Vargas, director of the Better Buildings Challenge at the recent Energy Summit in D.C. “Part of the reason we wanted to meet is to discuss what we’re trying to do at the Department of Energy and the Better Buildings Challenge, and how, together, we can drive energy efficiency in multifamily properties.”
Yet, she admits that persistent barriers exist and cites a number of reasons why. Vargas says that energy efficiency is not always included within the framework of corporate decision making, and certainly not in business planning. There’s a lack of senior management buy-in due to a lack of information, even misinformation.
Vargas contends that the lack of available financing constricts the industry’s ability to make needed retrofits, and that resident behavior usually runs contrary to conservation. The split-incentive of the rental model (i.e. where owners bear the cost of upgrades and residents reap the benefit) make it challenging to monetarily incentivize retrofits and finally Vargas believes, there is not enough qualified workforce to execute such retrofits.
Vargas is leading the charge on a Department of Energy initiative called Better Buildings Challenge with the goal of making commercial, including multifamily, buildings 20 percent more efficient over the next 10 years. If accomplished, the program is estimated to save American businesses more than $80 billion annually and boost domestic job creation.
The program works through 6 key catalysts: leadership, results, transparency, best practice models, recognition and action.
At present, financing and ROI models mean that most multifamily companies participating in the program are affordable and student housing sector types. Forest City of Cleveland, Ohio, EAH Housing of Marin, Calif. and Bridge Housing Corporation of San Francisco, Calif., mostly non-profits, to name a few. But Vargas says that there are plans to break through to conventional properties by balancing incentives and regulations, metering strategies, green leasing and ear marking funds to stimulate retrofits. Forest City is currently ranked 21st largest owner in the country with 48,201 units under ownership; it is ranked 36 in number of units managed on the National Multi Housing Council 2014 list.
Forest City joined the challenge in order to improve the energy efficiency of the buildings in its portfolio by first committing to the organizational structural needed to set goals and prioritize energy efficiency.
Forest City believes that optimizing energy management requires a well-structured organization with a clear definition of roles, responsibilities and accountabilities. Creating a sustainability department helped drive the initiative and align field decisions with corporate objectives.
Benchmarking results, program transparency and recognition are also key to the Better Building Challenge success, says Vargas.
When agreeing to take the challenge, a multifamily owner and operator agrees to 3 actions: commit to improve a building or buildings’ energy consumption by 20 percent over the next decade; showcase a project within 6 months along with its implementation model; and reporting and publishing portfolio-wide energy performance data results including tracking progress on an annual basis. For its part, the DOE will provide technical assistance on energy efficiency models, collaborate with partners taking the challenge, establish a marketplace of energy efficiency stakeholders and recognize the success of Better Building participants. Where applicable, HUD and DOE will give preference to participants in competitive funding environments.
The Better Buildings Challenge is seen as an extension of President Obama’s Climate Action Plan, especially with its improvement goals. Energy efficiency has garnered the administration the broadest support as initiatives about to implement benchmarking and energy efficient programs. Although it’s just making its way into the multifamily space, other commercial sectors, such as hotels, are already seeing returns.
Bob Holesko, VP of facilities for HEI Hotel & Resorts which owns 41 Marriotts across 6 states, says that organization saves $5 million a year on utility bills through its retrofits and is proud to participate in the Better Building Challenge. He says just one example that delivered ROI (return on investment) almost immediately was programmable thermostats which pay for themselves inside of three years.
When hotel guests leave their room during the day, a door sensor tells the thermostat to reduce heating or cooling and resumes its temperature upon their return to the room. The hotel also uses motion sensors in stairwells and vending areas to dim lights when not in use.
“We’re enthusiastic about the next step,” says Vargas. “We’re interested in working with NWP customers because as leaders in the multifamily sector, there’s a lot of opportunity to reduce our energy waste. We need to figure out who’s leading in the space and profile the innovative work they are doing. This will not only benefit their peers, but it will benefit the industry broadly.”