Green buildings cost less to maintain than traditional structures and are good for the environment. The savings associated with green buildings are normally considered to be the result of energy efficiency, but now there will be direct financial benefits as well – namely reduced interest rates for property refinance acquisitions and supplemental mortgage loans. It seems that reasons to make buildings more sustainable just keep adding up.
What makes a building green?
Kristen Parrish, assistant professor in the School of Sustainable Engineering and the Built Environment at Arizona State University, explained that one of the best ways to make a building green is by working on improving energy efficiency, reported ASU News. A fellow professor at ASU's Design School, T. Agami Reddy, agreed that energy-efficient buildings and green buildings are the same thing.
"When people say sustainable buildings, they are really thinking of green buildings," said Reddy, according to ASU News. "[Green buildings are those that are] very energy efficient, operationally low-energy, and which have a low impact on their environment."
The United States Environmental Protection Agency defined sustainable buildings as structures that are environmentally responsible and utilize resources efficiently. Sustainable buildings usually reflect these requirements from the initial siting and design phases, through the construction phase, all the way to maintenance and renovation.
Green buildings have received lots of media attention over past months due to increasing concern with climate control issues, and sustainability is seen is an effective way to limit carbon dioxide emissions. Environmental publications advocate the cost benefits of going green – mostly due to energy efficiency savings – but now it seems there are other financial incentives as well.
Lower interest rates for green buildings
While it is widely believed that energy efficiency is the predominant way that green buildings save money, interestingly, that is not true. Environmental Leader reported that the U.S. Federal National Mortgage Association, Fannie Mae, will now grant lower interest rate loans to green multi-residential buildings. For owners and investors in large multi-residential properties, the reported 10 basis point reduction in interest rates could result in considerable savings.
According to the news source, Fannie Mae will grant this reduction for green property refinance acquisitions, or for supplemental mortgage loans for certified green buildings. For a loan worth $10 million, amortizing over a 30-year period, the interest rate reduction would save the owner approximately $95,000 in interest payments in just 10 years.
Incentives for going green are strong
According to Environmental Leader, Rick Fedrizzi, chief executive and founding chair of the U.S. Green Building Council, explained that Fannie Mae's recent offering provides incentive for owners and investors to either achieve certification in their existing buildings, or build new green ones. The U.S. General Services Administration noted a study which said green buildings cost 19 percent less to maintain than non-certified ones.
Ed Kavazanjian, a geotechnical engineer, provided comments that may comfort building owners who are not yet ready to seek LEED or net-zero certifications. Kavazanjian explained that sustainability as a term is relative, and that a completely sustainable entity simply does not exist, reported ASU News.
"What we strive to do is come up with approaches, processes, techniques, that are more sustainable than what's being used right now," said Kavazanjian, according to the news source. "What is truly sustainable? I don't know. If and when we'll get there? I don't know. But we need to do the best we can. I think that's what it's all about, just trying to make things better."
While it is important to know that the financial incentives for going green keep getting stronger, for those who are not ready to seek official certifications, it is important to point out that maintaining a green buildings needs to start somewhere. As experts noted, sustainability is a process, not an end result.