Is “Green” about the Environment or Money?

USA Today recently ran a series of articles, under the lead “GREEN INC. Environmentalism for Profit,” regarding the US Green Building Council and their LEED certification process.  LEED stands for Leadership in Energy and Environmental Design, and is a self-proclaimed “voluntary, consensus-based, market-driven program that provides third-party verification of green buildings.”  LEED standards come in four basic flavors: LEED Certified, LEED Silver, LEED Gold, and LEED Platinum.

The stories make several points of interest, among them that the LEED standard, while “voluntary” and entirely private, is required by more than 200 federal, state and local government agencies.  And many of them provide meaningful incentives for developers who achieve LEED ratings.  USA Today reports that the Palazzo Hotel and Casino in Las Vegas received a $27 million tax credit over 10 years due to Nevada’s delegation of the responsibility for determining who should get tax subsidies to the US Green Building Council.

It should be remembered that the US Green Building Council does not have a complete monopoly over environmentally friendly construction standards.  Many states, including California, have adopted “green building codes, and there is at least one other private organization, Build It Green, has a program of rating developments.  Build It Green’s GreenPoint rating system also provides certification of residential developments, and is also used for marketing purposes.

California also has a statewide standard in the CALGreen Code, adopted in 2010, which sets minimum construction standards with a goal of reducing the overall carbon output to the environment.  This is one part of the state’s efforts to reduce greenhouse gas emissions from all sources, mandated by AB 32, a state law which mandates rolling back greenhouse gas emissions to 1990 levels by the year 2020.  The CALGreen Code has both mandatory and optional provisions, which are implemented at the local level by city and county building codes.  In the case of Los Angeles, for example, the local building code incorporated essentially all of the CALGreen Code standards and essentially replaced the LEED-based standards with the new state code, while applying them more broadly than CALGreen required.  Several other cities also have adopted local codes stronger than the CALGreen minimum requirements, including San Francisco and San Jose.

The tone of the USA Today articles was somewhat disparaging toward the US Green Building Council standards.  The articles questioned how the LEED standards were created, are administered and the methods used by developers to receive certification.  Regardless of those factors, the question now is whether the LEED certification matters any more?  Or has it reverted to its origins–a marketing tool?

Building Livable Communities – the Annual Housing, Transportation & Jobs Summit

On October 4, the Los Angeles Business Council hosted the 2012 Mayoral Housing, Transportation and Jobs Summit at UCLA. For over a decade now, the LABC has been organizing these discussions of issues with elected officials, business leaders and members of the community.

The report released at this year’s Summit, Building Livable Communities: Enhancing Economic Competitiveness in Los Angeles, describes how rising rents, a shortage of new residential development and still inflated home prices that remain well beyond the reach of middle-income families in Los Angeles County are causing a widening affordability gap for Southern California residents.

Failing to adequately address the problem will cause Los Angeles to become far less attractive to current and future employers, and less competitive against other metropolitan areas where quality and affordable workforce housing is in far greater supply.  Of the large metropolitan areas discussed, only New York and San Francisco had less affordable housing.

“The vast majority of housing units in the County are unaffordable to the typical worker. With housing production 40 percent below target levels, the problem will only grow when you factor in the laws of supply and demand,” said Paul Habibi, the lead author of the report and a professor of real estate at the UCLA Anderson School of Management. Read more

Should Housing Destruction Be Part of the Recovery Plan?

Everyone is familiar with the collapse of the Housing Bubble, even if we don’t all agree on what caused it. There seems to be a consensus that, like an alcoholic, the Housing Market will not begin to recover until it hits bottom and takes responsibility for its own future, instead of manipulating and cajoling others to support it.  And most people realize that the Housing Market has not yet hit bottom–even though no one seems to know how far down the bottom really is.  In California, the Housing Market has only fallen back to 2003 price levels, which were considered too high then.

When the Housing Market was higher than a kite, everyone was saying that the laws of economics were out of kilter, that housing was too expensive and regular working folk couldn’t afford to buy or even rent a place to live that was within their ability to pay.

Here in California the Housing Market was considered so far out of balance that, in 2002 and 2006, the voters approved Housing Bonds totaling $4 billion to pay for homeless shelters, affordable apartments, and to subsidize first-time homebuyers.

Today, many people are saying that housing is too cheap, despite all evidence to the contrary (more on that another time).  Public agencies at all levels, financial institutions and the real estate industry are doing everything they can to enable the Housing Market to get high again.  And they have come up with a remarkable tool to do that.  Read more