The Hotel Developers Conference

Green Building: Looking at the Triple Top Line
March 12, 2008

Financial

Commercial

Public

Retail

Higher Ed

Mission

Tom Paladino, President, Paladino and Company, Inc. Creating client value through a sustainable approach to asset management

our situation today

peak oil

desertification

over population

climate change

Required LEED Adoption Rates by the Commercial Building Sector to Meet the 1992 Kyoto Protocol Targets for Carbon Emissions
140 120 100 Carbon , Million Metric Tons 80 60 40 20 10% 20% 30% 40% 50% 60% 70% Kyoto Target Zone
Platinum

Gold Silver Certified

80%

Adoption Rate, % of US Commercial Building Sector

minimize disturbance minimize control emissions control reduce water use reduce minimize waste minimize save energy save

scarcity vs. abundance

The Poseidon Mystery Island, is competing for the title of the world’s first luxury underwater resort. The complex will be designed by Bruce Jones,

a new paradigm

The Habitat Hotel is a working scale model of a hotel by architect Enric Ruiz of Cloud 9 Architecture.

The Hotel Rex

prosperit y

financial

Financial Asset Management

total assets, shareholder equity, revenue

financial

abundance

p plane t

Olympic Mountains, Washingto

planet

financial

p p people

people

planet

financial Creating owner value through a sustainable approach to asset management

prosperit py lane t people

Triple Top Line Asset Management

financial

total assets, shareholder equity, revenue

planet

carbon, energy, emissions, habitat hydrology

people

productivity, job satisfaction, health

Current Asset Base

people

planet

financial

Future Asset Base

people

planet

financial

Case 1

Pittsburgh mixed use hotel, condo, office and reta sun dryness wind visitors

3 pnc

Strategy
Use Triple Top Line as measure of success, because:
•LEED does not currently recognize enhancements to urban context—using just LEED may downplay the major successes of the project. • LEED is still not well known to public— focusing on people & economics will create wider interest and reception. • Triple Top Line will encourage the development team to think beyond the LEED requirements.

historic structures steel bridges public transit pedestrian traffic

3 pnc

Enhance Urban Ecology
 Add pedestrian street miles per day across the site.  Connect with at least 3 modes of mass transit: bus, train, & carpool.  Reduce automobile trips by 50% over conventional.

Design for the Place

 Respond to climate.  Utilize local materials (500 mile radius) for 75% of the major, visible systems.  Reference building precedents that reflect local climate, materials & technologies.
Source: Big & Green

TBL Scorecard

Community
Total Points 18
EP BMP MO EP BMP MO

Economics
Total Points 18
EP BMP MO

Environment
Total Points 18

Enhance Urban Ecology
Pedestrian Street Miles Mass Transit Connectivity Automobile Traffic Impact

6
2 2 2

Maximize Top Line
Capture Incentives Mixed Use Balance Equity Focus

6
2 2 2

Design for Place
Climate Responsive Design Local Material Use Connection with Urban Fabric

6
2 2 2

Make Places for People
Urban Connectivity Public Street Experience Public Open Space Access

6
2 2 2

Create Value
Leasability First Costs Total Cost of Occupancy

6
2 2 2

Create a Living Building
Adaptable Space Shared Infrastructure Resource Dependence

6
####

2 2 2

Inspire Community Pride
24 hr Use Public Ownership of Space Interaction with Community Assets

6
2 2 2

Bottom Line
Utility/Maintenance Costs Tenant Marketability Branding Placement

6
2 2 2

Demonstrate Leadership
LEED Rating Potential Net Producer Green Building Education

6
2 2 2

Recommendations
•Define Triple Top Line goals to create a framework for decision-making. Goals should include measurable targets. • Use a Triple Top Line pro forma to evaluate design decisions. Weigh input streams (rent, condo prices, utilities) against feature sets. •Develop a LEED strategy for the project to include multiple tenants. Tenants should commit to green building goals.

community goals
• Schemes D and A – How does it touch the ground? – Public space and adjacent uses
Scheme D
EP BMP MO

Community
Total Points 18

Enhance Urban Ecology
Pedestrian Street Miles Mass Transit Connectivity Automobile Traffic Impact

6
2 2 2

Make Places for People
Urban Connectivity Public Street Experience Public Open Space Access

6
2 2 2

Scheme A

Inspire Community Pride
24 hr Use Public Ownership of Space Interaction with Community Assets

6
2 2 2

urban place making knowledge workforce business catalyst

Fairmont Hotel – LEED-CI

people

planet

financial financial

Fairmont Hotel – Triple Top Line
Goal: Align hotel tenant corporate sustainability policy and CI build out with 3PNC base building’s triple top line scorecard
Community • Local sourcing
– Building materials & furniture

Environment • Energy
– – –

• IAQ
– – – Low-emitting adhesives, paints, carpets, etc. GREENGUARD certified furniture Non-smoking hotel

people

planet

Energy management system Energy star equipment & appliances Smart room cards

• Water efficiency
– Low flow WCs & aerators

• Green housekeeping
– Environmentally preferable cleaning products and practices

financial

• Green education
– Educating local furniture manufactures, hotel staff, guests, etc.

Economics • Branding value increases VAR • Utility/maintenance costs reduced through energy & water efficiency savings

Fairmont Hotel – Draft Scorecard

Case 2

Candela Hotels – High Performing, Luxury Hotel

planet

planet

financial financial

Candela Hotels, Seattle, WA – LEED-CI Gold
Goal: Create a traveler centric, high performing, luxury hotel built to LEED Gold standards

Green drove the people development process:
– Identify green developer/partner – Optimize concept to financial align with sustainability goals – Map to triple top line scorecard

planet

Candela Hotels – Triple Top Line
Goal: Create a traveler centric, high performing luxury hotel built to LEED Gold standards
Traveler Centric • Superior air quality • Daylighting • Thermal comfort • Green housekeeping • Green education Environment • LEED Gold – Site (in LEED core building) – Energy
• Lighting controls • Equipment/appliances

people

planet

– Water efficiency

financial

– Materials & Resources
• Construction waste management • Local / sustainably harvested resources

Economics • Branding value increases ADR, • Operations centric – reducing operational waste and utility costs

Front of House Feature Mapping
LEED Building Features

Full spectrum lighting Hypo allergenic bedding

Operable windows

Green Guard furniture Sustainably harvested wood

Daylight space

Non-toxic carpet

Under floor air delivery

Back of House WATER Analysis
21% 33%

Residential Water Use
243 gals/day

22%

192 gals/day – GREYWATER
24% Faucets Toilets 8% 13%

Clothes Washer Showers

19%

Hotel Water Use
209 gals/day

4% 6% 7%

90 gals/day – GREYWATER
43%

Source: AHLA

Cleaning Domestic (Grey) Kitchen Toilet

Irrigation Cooling Other

Water-Efficient Appliances

Toilets Target Flow & Flush Rates
0.8 - 1.1 gpf 0.8 / 1.6 gpf (Dual Flush)

Showerheads
< 1.8 gpm Aerated

Faucets
< 1.8 gpm Aerated head Sensor control

Base Building Ideas

Case 3

Major Hotel Chain – Green Brand Re-Invention

people

planet

financial financial financial

Major Hotel Chain – Green Brand Re-Invention
Goal: Align green prototype design with traveler values in a way that demonstrates the green business case to the franchisee

Major Hotel Chain – Green Brand Re-Invention
Major Hotel Chain Green Brand Reinvention
P R

Currently Possible but not embedded in documents Required as assessment of the current prototype LEED status

This scorecard compares the LEED status of the current prototype documents with the Incremental and Stretch green versions of the prototype. The project goal identified for the Incremental green version is Certified and Stretch version is Silver. Volume Build will be attempted as part of the Stretch version.

Total Project Score
Certified: 26 to 32 points S er: 33 to 38 points ilv Increm . (vol bld?) P
14 12 19 Y Y Y 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Y R 1 1 1 1 1 5 Y Y Y Y 2 1 1 P 1 1 2 2 2 2 1 1 1 1 1 1 0.5 2 Y Y 1 1 1 1 1 1 1 1 1 1 1 1 1 4 Y Y Y 1 N 1 N 1 1 1 1 1 1 1 1 1 1 0.5 3 Y 1 1 1 1 1 R 2 1 1 1 1 1 1 1 1 1 1 1 1 1 3 eas m y od diff 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 eas m diff y od 1 1 1 1 1 P 1 1 6.5 R 2 2 10 1 1 1 1 3 8 1 1 1 1 1 1 4 3 1 12 1 2 P Y Y 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 S IDc1.1 IDc1.2 IDc1.3 IDc1.4 IDc2 1 1 1 1 1 1 1 1 14 1 S EQp1 EQp2 EQc1 EQc2 EQc3.1 EQc3.2 EQc4.1 EQc4.2 EQc4.3 EQc4.4 EQc5 EQc6.1 EQc6.2 EQc7.1 EQc7.2 EQc8.1 EQc8.2 1 R 3 4 4 3 Y 1 1 1 1 1 1 1 1 1 1 1 9 3 Y 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 6 5 Y 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 5 P Y 1 5 1.5 R 3 2 2 2 1 1 1 1 1 1 15 P 3 Y Y Y 2 2 2 2 2 1 1 1 1 1 1 1 3 S MRp1 MRc1.1 MRc1.2 MRc1.3 MRc2.1 MRc2.2 MRc3.1 MRc3.2 MRc4.1 MRc4.2 MRc5.1 MRc5.2 MRc6 MRc7 1 1 4 10 1 1 1 1 4 1 1 2 1 1 1 1 1 7 Y Y Y 2 2 2 1 1 2 1 1 1 5 5 P Y Y Y 2 2 1 1 2 2 2 1 1 1 1 1 R R 9 5 1 22 6 P 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 1 1 1 1 1 9 8 S EAp1 EAp2 EAp3 EAc1.1 EAc1.2 EAc1.3 EAc1.3 EAc1.3 EAc2.1 EAc2.2 EAc2.3 EAc3 EAc4 EAc5 EAc6 1 P 1 1 1 3 1 1 1 1 38 7 23 4 Y 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 S WEc1.1 WEc1.2 WEc2 WEc3.1 WEc3.2

Gold: 39 to 51 points

P latinum: 52 or more points

MI - Mngd

B e Green as P ot rot ype

Sret t ch

S ch tret Vol. B uild P S
22 8 S Y SSp1 1 1 1 1 1 1 1 1 1 SSc1 SSc2 SSc3 SSc4,1 SSc4,2 SSc4,3 SSc4.4 SSc5.1 SSc5.2 SSc6.1 SSc6.2 SSc7.1 SSc7.2 SSc8

P
22 8 22 2 40 9 Y 1 1 1 1 14 13 5 P

LEED Credits

40 6

?
11

N

Sustainable Sites
Construction Activity Pollution Prevention Site Selection Development Density and Community Connectivity Brownfield Redevelopment Alternative Transportation, Public Transportation Access Alternative Transportation, Bicycle Storage & Changing Rooms Alternative Transportation, Low Emitting and Fuel Efficient Vehicles Alternative Transportation, Parking Capacity Site Development, Protect or Restore Habitat Site Development, Maximize Open Space Stormwater Management, Quantity Control Stormwater Management, Quality Control Heat Island Effect, Non-Roof Surfaces Heat Islands Effect, Roof Surfaces Light Pollution Reduction

P s P os ible oints

14
1 1 1 1 1 1 1 1 1 1 1 1 1 1

•Establish new financial model •Create scalable green feature ‘packages’ to give franchisees more choice •Validate green features through rigorous cost/payback analysis •Use LEED volume build to streamline submittal process •Embed cost and payback for green into pro forma

?

N

easy mod diff

easy mod diff

easy mod diff

Water Efficiency
Water Efficient Landscaping, Reduce by 50% Water Efficient Landscaping, No Potable Use or No Irrigation Innovative Wastewater Technologies Water Use Reduction, 20% Reduction Water Use Reduction, 30% Reduction

P s P os ible oints

5
1 1 1 1 1

?

N

eas m y od diff

eas m y od diff

eas m diff y od

Energy & Atmosphere
Minimum Energy Performance Fundamental Refrigerant Management Optimize Energy Performance, 20% New / 10% Existing Optimize Energy Performance, 30% New / 20% Existing Optimize Energy Performance, 40% New / 30% Existing Optimize Energy Performance, 50% New / 40% Existing Optimize Energy Performance, 60% New / 50% Existing On-Site Renewable Energy, 2.5-7.5% On-Site Renewable Energy, 10% On-Site Renewable Energy, 20% Enhanced Commissioning Enhanced Refrigerant Management Measurement & Verification Green Power

P s P os ible oints

17

?

N

eas m y od diff

eas m y od diff

eas m diff y od

Fundamental Commissioning of the Building Energy Systems*

2 2 2 2 2 1 1 1 1 1 1 1

Materials & Resources
Storage & Collection of Recyclables Building Reuse, Maintain 75% of Existing Shell Building Reuse, Maintain 100% of Existing Shell Building Reuse, Maintain 100% Shell & 50% Non-Shell Construction Waste Management, Divert 50% Construction Waste Management, Divert 75% Materials Reuse, Specify 5% Materials Reuse, Specify 10% Recycled Content, Specify 10% Recycled Content, Specify 20% Regional Materials, 10% Extracted, Processed and Mnfctrd Locally Regional Materials, 20% Extracted, Processed and Mnfctrd Locally Rapidly Renewable Materials Certified Wood

P s P os ible oints

13
1 1 1 1 1 1 1 1 1 1 1 1 1

?

N

eas m y od diff

eas m y od diff

eas m diff y od

Indoor Environmental Quality
Minimum IAQ Performance Environmental Tobacco Smoke (ETS) Control Outdoor Air Delivery Monitoring Increased Ventilation Construction IAQ Management Plan, During Construction Construction IAQ Management Plan, Before Occupancy Low-Emitting Materials, Adhesives & Sealants Low-Emitting Materials, Paints & Coatings Low-Emitting Materials, Carpet Systems Low-Emitting Materials, Composite Wood & Agrifiber Products Indoor Chemical and Pollutant Source Control* Controllability of Systems, Lighting Controllability of Systems, Thermal Comfort Thermal Comfort, Design Thermal Comfort, Verification Daylight & Views, Daylight 75% of Spaces Daylight & Views, Views for 90% of Spaces

P s P os ible oints

15

?

N

eas m y od diff P P 1 1

eas m y od diff Y Y 1

eas m diff y od Y Y

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Innovation & Design Process
Innovation in Design: Use of Energy-Star Appliances Innovation in Design: Green Education Innovation in Design: ECHO Program Innovation in Design: Green FF& E LEED™Accredited Professional

P s P os ible oints

5
1 1 1 1 1

?

N

eas m y od diff 1 1 1 1 1

1

1 1 1 1 1 1

1 1

1 1 1 1

Innovation in Design: Low Mercury Light Bulbs Innovation in Design: Exemplary Performance Innovation in Design: Green Housekeeping Innovation in Design: ? Innovation in Design:

Back of House ENERGY Analysis

Analysis of End Use
Hotel
16%

Multi-Family Residential
7% 5% 32%

6%

42%

16%

33%

20%

23%

Water Heating Space Heating Other

Lighting Cooling

Water Heating Space Heating Other

Lighting Cooling

Sources: Commercial Buildings Energy Consumption Survey (CBECS). Energy Information Administration, 1998. Residential Energy Consumption Survey (RECS). Energy Information Administration, 1999.

Boiler Efficiency
• Condensing boilers can be used to capture waste heat that is typically sent up the flue. Flexible and Robust: if operating at high temperatures, condensing boilers still operate at high efficiency >80%

Solar Heating & Heat Recovery
• Year-round supplemental water heating can be provided by a solar thermal system.

80-90% of the energy used to heat water is sent down the drain. Recapturing heat from drain pipes can provide energy savings in hot water makeup.

green cost analogy

• Chevy Malibu

green building cost options

green building cost options

constant program process

Pro forma MODEL
Office Scheduled Gross Income Office Space Green RentIncome Signage Premium Plus: Parking Income Total Scheduled Gross Income
(Less): Vacancy Improved lease up for green product offering Plus: Recoveries 10.00% of SGI ($0.01)

850,550
2%

850,550 Sq. Ft. 2,002 spaces

$35.00 PSF/Yr. $0.70 PSF/Yr. $0 per mo.

$29,769,250 $595,385 $500,000 $0 ____________ $30,269,250
($3,086,464) $308,646 $0 ____________

$0.6 $0.0 _____ $35.6

Effective Gross Income Operating Expenses Operating Expenses Management Fees $28,086,817 Janitorial Services 850,550 Window Washing 850,550 Repairs & Maintenance 850,550 Insurance $155,100,294 Professional fees 850,550 Utilities (LEED Silver) 20% 850,550 General & Administrative 850,550 Security 850,550 Landscaping 850,550 Parking Expense not paid by Tenant Gr. Lease Payment RE Taxes $247,113,601 Total Operating Expenses Net Operating Income

$28,086,817

Sq. Ft. Sq. Ft. Sq. Ft. Sq. Ft. Sq. Ft. Sq. Ft. Sq. Ft. Sq. Ft.

3.0% $1.25 $0.25 $0.50 0.500% $0.20 $1.20 $0.50 $0.75 $0.25

of EGI PSF PSF PSF Costs PSF PSF PSF PSF PSF

1.0246% Value

$842,605 $1,063,188 $212,638 $425,275 $775,501 $170,110 $1,020,660 $425,275 $637,913 $212,638 $2,149,980 $216,442 $2,531,926 ____________ $10,684,151 $17,402,666

TOTAL NET GREEN OPERATING INCOME TOTAL NET OPERATING INCOME Improvement to NOI NET NOI IMPROVEMENT SIMPLE PAYBACK

Green Overlay

17,402,666 16,450,316 5.8% $952,350 9.2 years

Thank You!

people

planet

financial