Author: abrahamwien18

Costa Rica powers nation sans fossil fuels, serving as example for the region

Posted on April 27, 2015 by abrahamwien18

By Nancy San Martin, [email protected]
View the original article here

NEW POWER SOURCE: Arenal, a dormant volcano, is seen in the town of La Fortuna in the province of Guanacaste, Costa Rica. The power company managed to produce all of the electricity for the nation from renewable energy sources for 100 consecutive days ending in mid-March. The milestone was reached with the use alternative power sources, including hydroelectric power plants. Joe Raedle Getty Images

GUANACASTE, COSTA RICA

In the heart of this western province where scalding water emerges from the earth and peaks of volcanoes kiss the hovering clouds, sunshine, wind and rain have been culled to create a source of power that has earned this nation a gold star in renewable energy.

For 100 consecutive days ending in mid-March, Costa Rica did not use any fossil fuels to generate electricity. Instead, it relied on primarily hydropower plants to light up households across the country, with added power generated from wind, geothermal and solar projects.

Experts say Costa Rica’s fossil fuel-free streak is impressive though not a surprise: The nation of nearly 5 million people has pledged to become carbon neutral by 2021 and the country’s electricity matrix, on average, is already nearly 90 percent renewable, making Costa Rica the second most “renewable country” in Latin America following Paraguay in terms of electricity generation, said Juan Roberto Paredes, senior renewable energy specialist at the Inter-American Development Bank (IDB).

Paredes points to the country’s diversified sources for renewable energy as its hallmark. By relying on various sources, Costa Rica has been able to both provide electricity and keep costs down by not having to import a large amount of costly fossil fuels.

“The lesson to be learned is in diversification,” Paredes said. “You can have stability in the longer term, as it relates to electricity prices, if you rely on various renewable sources as the fuel price will always be zero.”

Felix Mormann, a University of Miami law professor who teaches and writes about environmental law and policy, said Costa Rica’s achievement is noteworthy.

“Sourcing 100 percent of energy needs from renewables is amazing,” he said. “The fact that they did not have to burn any fossil fuels is outstanding.”

Like other countries relying on renewable energy, Costa Rica gets most of its carbon-free electricity juice — about 80 percent — from hydropower plants operated by the state-run utility provider, Costa Rican Electricity Institute (ICE). But this year, geothermal, solar and wind energy sources have given the nation an additional boost to limit the use of coal or petroleum to keep light bulbs glowing and appliances humming.

Hydropower

At the ICE hydroelectric plant and reservoir in the shadow of the Arenal volcano near the town of Tilarán, the production of electrical power is generated through the use of the gravitational force of water stored in the reservoir that flows through turbines connected to large generators. This plant provides some 21 percent of energy for the country, said supervisor Alberto Sanchez Fernandez.

“Since we were children, we have been taught to respect nature,” Sánchez Fernández said. “In that sense, this country has gotten better because those lessons go back a generation and it’s ingrained in our children. The fact that my country is producing energy from 100 percent clean sources, makes me very proud and satisfied that we are helping protect this planet, the only place we have to live.”

Sánchez Fernández said when children visit the plant on field trips, “I always tell them that mankind, before dying, should have at least conceived a child and planted a tree.”

Along the hilltops, giant wind turbines like those of an airplane propeller, can be seen circulating at various speeds, depending on the strength of winds that flow through the area. The windmill project began in the 1980s and about 30 wind turbines can now provide electricity to about 26,000 homes.

“This accomplishment is the result of making use of our natural resources and experimentation,” said Carlos Manuel Quiros, a company spokesman.

Tilarán, the town’s name, comes from the indigenous word “Tilawa.” It means place of wind and rain.

Geothermal

Billboards in Bagaces and nearby towns dub the area as the cuna (cradle) of geothermal. Power lines emit a high-pitched sound that can be heard for miles, like crickets on steroids. And the smell of sulfur is reminiscent of the odor that comes from cracking warm hard-boiled eggs.

The geothermal plants Miravalles I y II use subterranean heat to produce electricity. Wells are drilled deep into the earth and the water that comes out of the wells are 85 percent liquid and 15 percent steam. The steam is used to turn large turbines, which run electrical generators. Some 35 wells in the area are used for production, said Darlyn Gutierrez Rodriguez, an assistant engineer.

“The advantages of geothermal is that it’s not dependent on seasonal variations,” she said. “It isn’t dependent on whether it rains or is windy or sunny. It’s constant production.”

Geothermal now contributes about 14 percent of Costa Rica’s energy and will likely grow as the government makes further investments. In a country with six active volcanoes and dozens more inactive, geothermal provides an exceptionally reliable source of power, experts said.

Solar

Just a short drive away, is a solar panel farm built with equipment donated by Japan. The project, comprised of 4,300 panels, began in 2012 and now provides electricity to about 550 homes, said supervisor Mauro Arias.

“For us, it’s been very novel, very important, because it’s an experimental plant,” he said. “Without a doubt, we have a good location for this solar plant…We are able to document, minute by minute, the output of solar energy…We are the pioneers in Central America.”

While the power produced by this method remains small, Arias said similar farms have been built in neighboring Nicaragua and Panama. “It’s cheaper, cleaner for the environment,” he said.

Other countries in the region could follow Costa Rica’s steps about diversification as they also have untapped renewable potential. This is the case of geothermal resources in the Andean countries where volcanic activity is comparable to Central America but no electricity so far is produced with the heat of the earth, said Paredes of the IDB.

But even as the use of renewable energy is applauded, there are potential setbacks. Droughts come from limited rainfall, which can affect electricity production. Wind and solar availability can vary from year to year. And, of course, there’s the issue of climate change.

“The but is maybe the variability of these renewable sources,” Paredes said. “We can’t be 100 percent sure of what will happen next year.”

Storing energy in an efficient manner also is a work in progress that will get better with technology. In Central America, the IDB is supporting the electricity market with Costa Rica and five other nations: Guatemala, El Salvador, Honduras, Panama and Nicaragua.

“In order to cope with this variability, you can diversify and use complementary renewable sources such as wind and hydro, use smarter grids to manage variations better and have more interconnections to other countries in case you have excess electricity,” Paredes said.

For Costa Rica, the more measurable results of its renewable energy success will be known by early 2016 when a full year worth of data will be available to compare with the previous year. By then, the largest hydropower plant in Central America should be in operation. The Reventazón Hydroelectric Project, located in the eastern province of Limón, is expected to be ready for operation by January.

Whether Costa Rica’s renewable energy model can be implemented in other countries will depend on the topography and climate, said Mormann of UM.

“Costa Rica is a small country and has a very special resource mix,” he said. “Costa Rica did not do this to do the rest of the world a favor. In their particular situation, it made the most sense. This is more about setting an example that it can be done.”
Read more here: http://www.miamiherald.com/opinion/issues-ideas/article19542720.html#storylink=cpy

How you can help make Florida the Sunshine State again

Posted on April 21, 2015April 21, 2015 by abrahamwien18

By Julie Lundin, LEED-AP ID+C,
Principal, Emerald Skyline Corporation

Florida is undeniably sunny. “The Sunshine State” was adopted as the State Nickname in 1970. It is used on FL_Sunshine motor vehicle licenses, welcome signs and marketing campaigns. While Florida promotes itself as the Sunshine State we are not utilizing our most abundant and natural resource, solar power.

What is solar power? It is energy from the sun that is converted into thermal or electrical energy. Solar energy is the cleanest and most abundant renewable energy source available. The U.S., including Florida, provides some of the richest solar resources in the world. Only two other states, California and Texas, have more rooftop solar power potential than Florida, according to the U.S. Department of Energy. Based on Florida’s size, rebounding economy and growing population our state should be a leader in the generation and promotion of solar energy.

So why isn’t Florida a solar energy leader?

The reason is simple: Florida’s large utility monopolies and lawmakers have worked successfully to block and control who can generate solar energy and what it can be used for; thereby restricting its use by homeowners and businesses. Florida utility monopolies exist today due to a law that was created over 100 years ago which was trying to avoid a tangle of power lines strung up by competing companies. This same law restricts solar companies from installing solar panels on roofs and selling back electricity. It is considered a third party sale and is illegal in Florida.

Florida is now only one of four states in the nation that prohibit citizens from buying electricity from companies that will put solar panels on a building.

Due to the influence and power of Florida’s utility monopolies, there is a large effort to discourage renewable energy in the state. The large utilities are afraid of losing their monopoly and the lucrative profits that the government guarantees them. Recently lawmakers, at the direction of the utility companies, gutted the State’s energy savings goals and entirely eliminated Florida’s solar-rebate program.

Floridians should have access to solar power and free market choices. We should be allowed to contract directly with solar providers to power our homes and businesses with solar energy. We are currently being denied the right to choose solar as a power source. The free market and competition benefits all of us. Solar energy makes financial sense. That is why business leaders in America’s brightest, most competitive companies are increasingly choosing to install solar energy systems at their facilities. The price of solar energy has fallen dramatically over the past few years while the price of fossil fuel generation continues to experience volatility. America’s businesses are turning to solar power because it’s good for their bottom line.

According to a report by the Solar Energy Industries Association, Walmart is the top corporate user in the United States with 105 MW installed at 254 locations.

The average price of an installed commercial PV (photovoltaic) project in 2Q2014 was 14% less than the cost in 2013 and was over 45% less than it cost to complete in 2012.

Electricity costs represent a significant operating expense, and solar provides the means to reduce costs and hedge against electricity price increases.

The Solar Means Business report noted that the top 25 companies for solar capacity had more than 569 MW of solar PV at 1,110 different facilities in a survey conducted last August. These results represent a 28% increase over the prior year and a 103% increase over 2012.

Clearly, solar power is a great untapped resource for the Sunshine State – one that can benefit residents as well as businesses. It is time to enable Floridians to have unfettered access to this inexpensive energy source – and you can help in the process:

The Florida resident-led solar group, Floridians for Solar Choice, is seeking to make solar more accessible in the state. They are seeking your signature on a ballot petition.

The petition seeks to expand solar choice by allowing customers the option to power their homes or businesses with solar power and chose who provides it to them.

Floridians for Solar Choice have reached 72,000 signatures on their petition which clears the way for it to be reviewed by Florida’s Supreme Court.

The Supreme Court will decide whether or not the petitions language legally qualifies it to be a ballot initiative for Floridians in 2016.

Getting its petition on the 2016 ballot is the main goal for Floridians for Solar Choice. They need over 600,000 more signatures to have this critical citizen initiative to be put on the ballot for next year.

Please visit their website to learn about the solar initiative to remove this legal barrier to making Florida the Sunshine State again, and, more importantly, to sign the petition, go to: www.FLsolarchoice.org.

LEED Project Update

Posted on April 21, 2015May 27, 2015 by abrahamwien18

4/19/15

By Julie Lundin, Founder,
Director of LEED Process Management for Emerald Skyline Corporation

Emerald Skyline Corporation in conjunction with Golden Spiral Design, is designing, renovating and repurposing an unoccupied industrial building located in Boca Raton, FL. This distinctive commercial building will include many sustainable features with the intent to obtain LEED certification from the USGBC.

Existing

Proposed

Proposed LEED Certified Building

For general information on this project please Click Here to see our last post.

We have been busy working on the design and drawings in preparation for submission to the City of Boca Raton Development Services Department. The design of the building has taken many twists and turns over the last few months. Since we are doing a major renovation and constructing a second floor, the design and location of the stairs and an elevator have been instrumental in our building’s design. As with any project, the site plan and its setbacks limit the building footprint that will be utilized.

Based on our site plan, we do have the space to bump the front of the building out to accommodate our new staircase. This allows us to construct the stairs without having to penetrate the existing building ceiling membrane. In addition, it creates an interesting design element that does not deduct precious square footage for the stairs construction.

We have also decided to locate the elevator on the outside of the building. Again, an exterior location will not deduct square footage from the base building plan. Since the elevator shaft will be located on the exterior, building fire codes will be different than if the elevator was located internally. We are anticipating that the elevator will be a prominent design feature and contribute to the aesthetics of our project.

As stated in our previous post, this project is a proposed LEED certified building. A key component of a LEED project is its reduced energy use. Our initial design utilized solar rooftop panels to generate power for the building even with the hopes of generating enough power to sell back to the grid. Florida’s large utility monopolies and lawmakers have worked successfully to block and control who can generate solar energy and what it can be used for; thereby restricting its use by homeowners and businesses. The Florida legislature, at the direction of the utility companies, have gutted the state’s energy savings goals and entirely eliminated Florida’s solar-rebate program. Due to this situation, we are now exploring alternative methods of energy including fuel cell technology powered by natural gas.

There is a pro-solar group in Florida, Floridians for Solar Choice, that is seeking to make solar more accessible in the state. Their ballot petition seeks to expand solar choice by allowing customers the option to power their homes or businesses with solar power and chose who provides it to them. Please visit their website to learn about this initiative and sign the petition. www.FLsolarchoice.org.

If the benefits of a sustainable retrofit are so robust, why isn’t everyone doing one?

Posted on April 15, 2015April 21, 2015 by abrahamwien18

Paul L. Jones, CPA, LEED Green Associate, Principle, Emerald Skyline Corporation

A sustainable retrofit includes replacements and upgrades that result in lower energy, operating and maintenance costs as well as improved occupant satisfaction. A sustainable facility will have a small carbon footprint, limited environmental impact and conserves natural resources. They can range from replacing conventional lights to LED bulbs, adding motion-control switches and installing low-flow water fixtures to installing a green roof, replacing the building skin and adding solar panels to all of the above.

When you fully understand the economic benefits of doing a sustainable retrofit which include lower expenses and rent and occupancy premiums resulting in higher NOI as well as reduced cap rates resulting in higher long-term values, you realize how few property owners, managers and tenants have actually made the decision to pursue an upgrade of their building(s), it initially does not compute a United Nations Environmental Program Finance Initiative Investor Briefing entitled “Unlocking the energy efficiency retrofit investment opportunity” reports:

Buildings with the Energy Star label had significantly stronger performance than similar unlabeled buildings: 13.5% higher market values, 10% lower utility costs, 5.9% higher Net Operating Income (NOI) per square foot, 4.8% higher rents and 1% higher occupancy rates.
A study using Co-star data concluded that LEED-certified buildings and Energy Star rated buildings versus non-rated buildings had 8% higher effective rents (a function of both the rental amount and the occupancy rate) and a 13% sales price premium.

See also my article, “Welcome to Sustainable Benefits – Let’s begin with the benefits of doing a commercial building sustainable retrofit” for additional survey results and case studies that demonstrate the results building owners and managers have realized.

In a 2012 study by The Rockefeller Group and Deutsche Bank Climate Change Advisors, however, reported that approximately $72 billion in capital is needed to be invested in sustainable retrofits to effect profitable energy efficiency in the existing building stock. However, the total spent in 2012 was just $1.5 billion.

Once you understand the relative perspective of the stakeholders in both the investment and the benefits, the resistance to effecting a sustainable retrofit can be understood. Let’s dissect the framework in which the decision to make sustainable improvements are made and the issues and motivations that cause a property owner not to update and improve their property which are:

Short-term investment horizon
Incongruous lease structure
Capital and operating budget limitations
Financing availability, complexity and/or cost
Limited knowledge, time and/or motivation to effect energy upgrades

Understanding these investment, operational and financial constraints is the first step in developing solutions that will result in making the sustainability and resiliency of the existing stock of commercial buildings feasible and practical.

Short term investment horizon:

In the era of REITs, CMBS, hedge funds, crowdfunding and private equity, investment hold periods are frequently in the 3 – 7 year range when investors can typically optimize the IRR and other profitability measures or bail on a bad investment and reallocate their capital. As a result, many investors will only consider sustainability measures that have a two-to-three year payback period. Deep energy retrofits with savings of 30% to 50% that result from retrofitting multiple building systems requiring more time and capital to effect are tabled and not done.

Solution: The current and prospective investment environment will continue to reflect hold periods that are relatively short; however, the solution is for investors, owners and managers to realize that a sustainable retrofit enhances the long-term value of the property and will cause investment returns to increase. Including the costs and benefits of upgrading a building is a common way for sponsors to demonstrate the inherent value of a property – especially one that is not fully leased or suffers from functional obsolescence or poor aesthetics and other physical limitations on its marketability to prospective tenants. Many business plans include upgrading a building from one class to a higher class which results in increased rents and lower cap rates. As evidenced by many studies, including sustainability and resilience in the business plan is an increasingly important component in any market-oriented building upgrade. The solution is for sponsors, investors and owners to realize this and to put it into practice.

Future articles will present sustainable ideas many of which can be implemented with no capital investment required.

Incongruous Lease structure

Commercial buildings, a/k/a income properties, are leased to tenants pursuant to a variety of lease structures with the four most common being as follows:

Gross Lease, or full service gross, is a lease where the landlord/owner collects a stipulated rent amount and is pays all expenses including real estate taxes, insurance and operating expenses that are comprised of utilities, repairs and maintenance and management. The room rate paid for a night in a hotel and a lease for a self-storage unit are examples of gross leases.
- Apartment leases are typically considered to be a gross lease as the landlord is usually responsible for all operating expenses including real estate taxes, building insurance, common area maintenance and utilities, and property management while the tenant is responsible for the unit’s electricity (and sometimes water) and interior maintenance.
Modified Gross Lease is a gross lease where the landlord/owner collects a stipulated rent amount plus a reimbursement of real estate taxes, insurance and operating expenses which exceed an agreed upon amount which is typically an estimate of the building expenses for the initial lease or calendar year. Typically, at the end of the year, the actual expenses are reconciled to the estimate and any increase is passed to the tenant based on its pro-rata share. Most multi-tenanted office buildings are leased pursuant to modified gross leases.
Net Lease is a lease where the landlord/owner collects a stipulated rent amount plus building expenses which include real estate taxes (net), taxes and insurance (double net); or taxes, insurance and operating expense (triple net) depending on the terms of the lease. If the building is multi-tenanted, the tenant pays its pro rata share. Most net leases are currently triple net. Retail properties are typically leased using a triple net lease.

In a standard Full Service lease, there is no split incentive in the lease structure as any and all savings realized from a sustainable retrofit inure to the benefit of the owner; however, the property manager may not be incentivized to promote a retrofit as it would be responsible for supervising and effecting the improvements without any additional management fees. With regard to an apartment complex, the landlord’s incentive to invest in energy efficiency measures is limited to the common areas – or to improve the competitive position and marketability of the units to prospective tenants.

In a standard Modified Gross lease as well as a Net lease, the landlord/building owner is not incentivized to invest the time, money and personnel resources to effect a sustainable retrofit as the landlord receives no direct financial benefit as the tenant pays the operating expenses and receives all of the benefit of lower operating costs.

Solution: Creating a lease structure that equitably aligns the costs and benefits of efficiency, sustainability and/or resiliency between building owners and managers, known as a green lease, aligned lease, high performance lease or energy efficient lease, will create sustainable and substantial benefits, both quantitative and qualitative, for both tenants and owners/landlords.

According to Jones Lang LaSalle, “A green lease need not be complicated. Often it merely requires structuring terms and agreements already in place, such as temperature settings and building operating hours, in a fashion that provides sustainable cost savings with negatively impacting building performance.”

To effect a green leasing program that includes both current and prospective tenants, engaging a consultant that understands both commercial lease structures and efficiency and sustainability retrofits to maximize the sustainable benefits to be derived therefrom.

Green leases will be addressed in detail in a future article.

Capital and operating budget limitations

Many properties suffer from a breakdown in communication and financial planning between building managers and building owners. Building managers typically operate a facility pursuant to a one-year budget which causes them to budget and implement projects with a short term (1- 2 years) payback period. Consequently, capital improvements that have a longer payback period are not often recommended by management, or if recommended, not implemented by ownership due to a combination of knowledge, time or motivation to consider an energy upgrade or a perceived lack of available capital. This short-term horizon again limits the nature and extent of any efficiency or sustainable upgrades and prevents ownership from reaping all of the economic benefits that inure from a building retrofit.

Further, many times neither building ownership nor building management understand the nature and availability of financing options, tax credits, utility and local government rebate programs. Some of the programs, or a combination of programs, can result in building owners not having to come out of pocket to fund the improvements; however, the unique nature of them requires time which is typically focused on achieving the primary business goals of the organization.

Solution: Engage a sustainability consultant with knowledge of property operations and management as well as the nature of the available financing, credits and rebates – and how to source and evaluate alternatives in order to minimize actual investment dollars and the cost of any financing incurred. Conducting a life-cycle analysis in addition to other financial analyses will provide ownership with the information needed to make the business decision.

Future posts will present investment analysis tools and methodologies with examples of the real economics of sustainable retrofits.

Financing availability, complexity and/or cost

Contrary to popular belief, energy efficiency and sustainability retrofits benefit from a variety of financing alternatives. However, for real property professionals who work with mortgage loans, mezzanine loans, preferred equity and similar forms of financing, retrofit financing options ranging from equipment leases to ESCO (Energy Service Company) contracts and PACE (Property Assessed Clean Energy) liens is a whole new world. When you add in the variety of tax credits, utility rebates and vendor financing, the options become complex.

Further, the sources for financing a retrofit are not usually the same ones that provide mortgage financing so it is a new arena which makes accessing sources and evaluating options time consuming and prohibitive.

Solution: Engaging a professional who is familiar with the types and sources of retrofit financing as well as the typical structures and issues of which owners should be aware is the easiest and most efficient way to determine and evaluate the options based on the financial and non-financial objectives of the owner.

The various retrofit financing options, examples of tax credits and utility and municipal rebates will be described and explained in future posts.

Limited knowledge, time and/or motivation to effect energy upgrades

In today’s competitive commercial real estate environment that is still recovering from the devastatingly harsh Great Recession of 2007, keeping your focus on the primary business of keeping space leased (as hoteliers say – heads in the beds) and watching every penny to the bottom-line is the first priority of owners and managers.

Even though the results of an efficiency, sustainability and/or resiliency retrofit provide a substantial boost to the net operating income (and cash flow) of a property, it does not become a high priority item due to lack of understanding of the process, the capital, management and labor requirements, the extent of the potential disruption to operations and tenants as well as knowledge of the additional value (rent premiums, occupancy premiums, higher quality tenancy, lower cap rate, increased investment value) and business benefits (reputation, image, goodwill) to be derived therefrom.

Also, many times building management staff, who may have the understanding of the sustainability technology will not have the financial literacy to present a compelling case to ownership.

Further, many energy service providers (who are typically considered to be the expert in facilitating a retrofit) do not know or understand the financing options that are available to building owners. Accordingly, these professionals are not able to property advise an owner on energy project financing. Accordingly, many owners are not aware of, nor understand, the variety of financing mechanisms available to them.

Solution: Learn enough to realize that it is worth the time to learn about the options that are available, hire a sustainability consultant, architect or engineer to analyze the property, benchmark its energy and water usage and understand other maintenance practices, have the systems retro-commissioned to determine how well they are performing and develop an efficiency, sustainability and/or resiliency retrofit plan. Implement the plan and start realizing the benefits.

Our Sustainable Benefits blog will be your resource to learn and understand the new world we are transitioning into – one in which we leave the world better off for having lived (Emerson).

Welcome to Sustainable Benefits – Let’s begin with the benefits of doing a commercial building sustainable retrofit….

Posted on February 19, 2015February 19, 2015 by abrahamwien18

2/12/15

By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

“Who is more foolish: The child afraid of the dark or the man afraid of the light?” (Maurice Freehill, British WW I flying ace).

Figure 1 Empire State Building – LEED Gold

Throughout my 36-year career in commercial real estate, commercial buildings have generally been classified from A to C based on location, construction quality and tenancy. Class A buildings represent the cream of the crop. They secure credit-quality tenants, command the highest rents, enjoy premium occupancies, are professionally managed and have a risk profile that supports lower cap rates and higher values. Class B buildings are similar to Class A but are dated yet not functionally obsolete. Class C buildings are generally over 20 years old, are architecturally unattractive, in secondary or tertiary locations and have some functional obsolescence with out-dated building systems and technology. NOTE: No formal international standard exists for classifying a building, but one of the most important things to consider about building classifications is that buildings should be viewed in context and relative to other buildings within the sub-market; a Class A building in one market may not be a Class A building in another.

Based on years analyzing investments in income properties, it appears to me that in the recovery from the Great Recession the commercial real estate market has evolved to include energy efficiency and environmental design as a requirement for improving the marketability of a building – not to mention optimizing its operating income and value.

COMMERCIAL OFFICE BUILDINGS

On December 1, 2014, Buildings.com, in an article entitled “GSA Verifies Impact of Green Facilities,” reported that a study conducted by GSA and the Pacific Northwest Laboratory conducted a post-occupancy study of Federal office buildings, which varied in age and size and had been retrofit to reduce energy and water consumption. The following results were based on a review of one year of operating data and surveys of the occupants which was compared to the national average of commercial buildings: High performance, green buildings:

cost 19% less to maintain
Use 25% less energy and water
Emit 36% fewer carbon dioxide emissions
Have a 27% higher rate of occupant satisfaction.

One of the most famous sustainable retrofit projects undertaken was the updating of the 2.85 msf Empire State Building whose ownership directed that sustainability be at the core of the building operations and upgrades implemented as part of the $550 million Empire State ReBuilding program. According to Craig Bloomfield, of Jones Lang LaSalle (JLL), “After the energy efficiency retrofit was underway, JLL led a separate study of the feasibility study of LEED certification” which “showed that LEED Gold certification was within reach at an incremental cost of about $0.25 psf.

Graphics on financial benefits of high-performance buildings

Source: Institute for Market Transformation: Studies consistently show that ENERGY STAR and LEED-certified commercial buildings achieve higher rental rates, sales prices and occupancy rates.

According to the report “Green Building and Property Value” published by the Institute for Market Transformation and the Appraisal Institute, a trend is emerging where green buildings are both capturing higher quality tenants and commanding rent premiums. As indicated by the above graph summarizing four national studies for commercial office buildings back up this trend on rents and occupancy, as “certified green buildings outperform their conventional peers by a wide margin.”

According to the EnergyStar.gov website, “Transwestern Commercial Services, a national full-service real estate firm, has generated impressive returns through sound energy management. In 2006, Transwestern invested over $12 million in efficiency upgrades, for an average 25% energy savings. The Company estimates that dedication to energy management has increased the portfolio’s value by at least $344 million.”
According to John Bonnell and Jackie Hines of JLL – Phoenix, “In Phoenix, owners of LEED-certified buildings can capture a premium of 29 percent over buildings without this distinction.” The premium for Green buildings had disappeared during the Great Recession and reemergence in the first quarter of 2014 as a result of improving Phoenix market dynamics which is being realized in other major markets as well.

RETAIL

For retail buildings, the tenants are driving the shift to sustainability with green building as consumers become increasingly aware of the environment and the need to reduce, reuse and recycle. According to the “LEED in Motion: Retail” report published by the USGBC in October 2014, “LEED-certified retail locations prioritize human health: among their many health benefits, they have better indoor environmental quality, meaning customers and staff breathe easier and are more comfortable. In a business where customer experience is everything, this is particularly valuable.’ Green retail buildings also out-perform conventional buildings and generate financial savings:

On average, Starbucks, which just opened their 500th LEED-certified store, has realized an average savings of 30% in energy usage and 60% less water consumption.
McGraw-Hill Construction, which surveyed retail owners, found that green retail buildings realized an average 8% annual savings in operating expenses and a 7% increase in asset value.

It is noteworthy that, according to the third annual Solar Means Business report published by the Solar Energy Industries Association, the top corporate solar user in the United States is Walmart. In fact, almost half of the top-25 solar users are retailers (the others are Kohl’s, Costco, IKEA (9 out of 10 stores are solar powered), Macy’s, Target, Staples, Bed Bath & Beyond, Walgreens, Safeway, Toys ‘R’ Us, and White Rose Foods). Other Top-25 solar users with a significant retail footprint include Apple, L’Oreal, Verizon and AT&T.

In the competitive retail market, the study also noted that being distinguished for pro-active and responsible corporate social responsibility attracts customers and investors.

MULTI-FAMILY BUILDINGS

In a study of 236 apartment complexes conducted by Bright Power and The Stewards of Affordable Housing released last July, 236 properties in two programs, HUD’s nationwide Green Retrofit Program and the Energy Savers program available from Illinois’ Elevate Energy and the Community Investment Corp. One year of pre- and post-retrofit utility bills were analyzed. The researchers found the following:

Properties in the Green Retrofit Program had realized a 26% reduction in water consumption – or $95/unit annually.
The energy consumption in the Green Retrofit Program was reduced by 18% representing an annual savings of $213/unit.
Surveyed buildings in the Energy Savers program had reduced gas consumption by 26% and had reduced excess waste by an average of 47%.
The water saving measures in the Green Retrofit program reflected a simple payback period of one year while the energy savings measures had a simple payback period of 15 years.

In an article be Chrissa Pagitsas, Director – Multi-family Green Initiative for Fannie Mae, reports that 17 multifamily properties have achieved Energy Star^® certification with two of them, Jeffrey Parkway Apartments in Chicago and ECO Modern Flats in Fayetteville, Arkansas, receiving financing from Fannie Mae.

The Eco Modern Flats complex is over 40 years old. With the goal of reducing operating expenses, the project was retrofit in 2010 with energy and water efficiency improvements including low-flow showerheads and faucets, dual flush toilets, ENERGY STAR^®certified appliances, efficient lighting, closed-cell insulation, white roofing, solar hot water and low-e windows. As a result of the retrofit, the property achieved a 45% reduction in water consumption, a 23% drop in annual electricity use including a 50% savings in summer electricity consumption while increasing the in-unit amenities, obtaining LEED Platinum certification and increasing occupancy by 30% resulting in a significant increase to Net Operating Income.

Multi-family properties made sustainable gain a competitive advantage in marketing to young professionals and other target audiences who prefer to live in an environment that is healthy and energy-efficient which saves money on utilities.

HOTELS

In a 2014 study conducted by Cornel University, researchers compared the earnings of 93 LEED-certified hotels in the US to 514 non-certified competitors. The study included a mix of franchised, chain and independent facilities in urban and suburban markets with three-quarters of the properties having between 75 and 299 rooms.

The results show that green or sustainable hotels had increased both their Average Daily Rate (ADR) and revenue per available room (RevPAR) with LEED properties reporting an ADR that was $20.00 higher than the non-certified properties (prior to certification, they reported an ADR premium of $169 vs. $160).

The researchers noted that these premiums were realized in price-competitive markets and that the amount of the premium was unexpected. From the results, they concluded that Eco-minded travelers were willing to pay a modest premium to stay at a verified green facility.

Further, the savings realized in electricity and water usage as well as reductions in waste disposal fees and costs as well as reduced maintenance costs go straight to the bottom line resulting in increased Net Operating Income. Here are some examples:

The Hampton Inn & Suites, a 94-room facility in Bakersfield, had REC Solar install carport-mounted solar panels which is offsetting 44% of the electricity costs, or up to $8,800/month – adding over $100,000 to the property’s bottom-line.
The 80-room Chatwall Hotel in New York completed an LED lighting retrofit project mid-year 2014 which will result in a first year savings of almost $125,000. The cost: just about $1.00 per LED light after rebates.

According to Flex Your Power and ENERGY STAR^® statistics, the hospitality industry spends approximately $4 billion on energy annually with electricity, including the HVAC system, accounting for 60% to 70% of utility costs. In fact, excluding labor, energy is typically the largest expense that hoteliers encounter and the fastest growing operating expense in the industry (www.cpr-energy.com). The EPA has concluded that even a 10% improvement in energy efficiency is comparable to realizing a $0.62 and $1.35 increase in ADR for limited service and full service hotels, respectively.

Many studies show that hotels do not realize the full benefit of many energy efficiency measures as guests feel no obligation to employ sustainable practices and wastes the opportunity for savings afforded by the hotel’s energy efficiency measures; however, almost half realize savings in excess of 20% reflecting that many operators have found ways to enlist guest cooperation in saving electricity and water.

According to the US Energy Information Administration (EIA) 2012 Commercial Buildings Survey, the United States had approx. 87.4 billion square feet of floorspace in 5.6 million buildings that were larger than 1,000 sf which also excluded heavy industrial manufacturing facilities. Ninety percent of the buildings that will exist in2035 have already been built – and buildings consume 80% of energy used in cities worldwide and represents almost 20% of all energy consumption in the United States.

Source: US Department of Energy 2013 Renewable Energy Data Book, 1/22/2015

The evidence is clear – building and operating sustainably pays dividends – in improved NOI from cost savings and increased revenues. Attracting higher quality tenants, improving market perception and reducing risk indicates that going Green is becoming a key for maintaining the Class of a building – keys to improving long-term values through lower cap rates.

So, why aren’t more building owners and managers going green? We will seek to discern this matter in our next Sustainable Benefits.

Has the Increase of Human Knowledge given us Wisdom? Let’s start the dialogue

Posted on February 19, 2015 by abrahamwien18

11/25/14

By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

Muhammad Ali is quoted as saying: “The man who views the world at 50 the same as he did at 20 has wasted 30 years of his life.”

It makes sense that as we experience life, we learn from our experiences which changes our view of the world – we call it many things – like growing up or becoming mature. Throughout each of the stages of our lives, we experience life differently which causes us to act differently. Those changes can be infused from our personal lives through the loss of a loved one, the survival of a major illness, the overcoming of addictions or the recovery from a bad marriage or relationship. Or they may be through our education and career, through the rise and fall of a business, the lessons of a new course of study, the influence of colleagues and clients. And they may be spiritual – developing a deeper relationship with our God – however we conceive Him/Her to be, and what becomes important in the service of God and humanity. Ideally, we mature through all of these experiences and we move into Wisdom.

Wisdom is defined as “the quality of having experience, knowledge and good judgment; the quality of being wise; the soundness of an action or decision with regard to the application of experience, knowledge and good judgment; or the body of knowledge and principles that develops within a specified society or period.”

The process of maturation in an individual can be viewed as the evolution of a person. And just as a person evolves, so does society: humanity as a species is dramatically different now than it was just 30 years ago – pre-internet, pre-smart phone, pre-nanotechnology, pre so many things that have changed how we experience and view the world.

In fact, the pace of human advancement has been accelerating throughout time. you can select many gauges by which to measure progress and change, patents for instance; but, there is one yard stick that I think gives us the greatest insight into the pace of change which is R. Buckminster Fuller’s Knowledge Doubling Curve which he introduced in his 1982 book, Critical Path.

A futurist and inventor, Fuller estimated that if we took all the knowledge that mankind had accumulated at the time of AD One, or One CE (Common Era), as equal to one unit of information, which took hum curve ans nearly 198,000 years to accumulate, and used that as the benchmark; the amount of human knowledge would take another 1,500 years to double. With the introduction of the printing press, the pace of growth in human knowledge started to accelerate with another doubling occurring in about 250 years. By 1900 (around 150 years), human knowledge had doubled again. By the end of World War II, knowledge was doubling every 25 years. At the time Critical Path was published, Fuller estimated that human knowledge was doubling every 18 months. Now, Human knowledge is estimated to double every 13 months. With the internet and other advances in human communication and data storage, IBM predicts that human knowledge is soon to double every 12 hours.

This growth in human knowledge has lead to great advancements in the quality of life for much of humanity with scientific and technological advancements leading to improved hygiene, literacy, agricultural production, mass production, and medicine.

Further, these advancements lead to the first real increase in global per capita GDP which has been estimated to average $158 per annum (adjusted to 2013 dollars) from pre-history until the Industrial Revolution. (According to a 1998 academic paper entitled “Estimates of World GDP, One Million BC to Present” by J. Bradford De Long of the UC Berkeley Department of Economics, GDP per capital started escalating around AD 1600 with consistent growth occurring after 1800).

The growth of knowledge and information accelerated in the 18^th and 19^thCenturies with a doubling of human knowledge translated into improved opportunities for a better life: People were empowered with knowledge which lead to the end of the feudal system and the introduction of democracy in politics, social structures and economics.

With the pace of human knowledge and the changes that it brings to our daily lives increasing exponentially, the natural reaction is to hold onto the bar and try to slow down the ride – like we do in a roller coaster or a vehicle traveling faster than is comfortable….

All this information and knowledge and experience should also lead to wisdom, right?

Unfortunately, however, billions of people – including many of our political, religious and social leaders – still live as if they were in the Middle Ages.

The changes have made our lives better in many ways – but they have come with a price. The following diagram from Wiki-books on “Economic History” is a diagram of societal development: hunter/gatherer, pastoralist/horticulturalist, agrarian, industrial, and post-industrial. It also ties each stage of development to the important consequences of societal development, namely: surplus, denser populations, specialization, technology and inequality (As a dramatic example of this inequality, the Toilet Board Coalition just reported that over one billion people live with no alternative to open defecation while 2.5 billion people in the world do not have access to proper sanitation which is in stark contrast to the standard of living experienced in the First World.) See: http://www.theguardian.com/sustainable-business/2014/nov/19/world-toilet-day-business-coalition-open-defecation?CMP=new_1194

(http://en.wikibooks.org/wiki/Economic_History)

As noted in an October 2012 article by Samuel Arbesman in BBC Future, “our lives are governed by centuries of advances that haven’t been random….there’s a pattern that reveals how our knowledge has changed over time….”

Understanding this pattern, Mr. Arbesman states, “helps us to understand something fundamental to our success as a species.”

In technology, Gordon Moore, a retired chemist and physicist who was a co-creator of the Intel Corporation, wrote a paper in 1965 entitled, Cramming More Components onto Integrated Circuits. In this short paper, Moore predicted that the number of possible components that can be placed on a single circuit for a fixed cost would double every year. This thesis, based on just four data points, has been proven true and is known as “Moore’s Law.”

If you generalize Moore’s Law from integrated circuits and chips to information technology, it explains extremely regular changes in technology over the past few centuries.

A primary reason that everything from the growth in knowledge to the advances in science and technology follows this pattern is related to the concept of cumulative knowledge. All advances are built on the information available already. Like this article is based on the information and research that has been done by many people and is available now on the internet.

Mr. Arbresman continues:

” So, while exponential growth is not a self-fulfilling proposition, there is feedback, which leads to a sort of technological imperative: as there is more technological or scientific knowledge on which to grow, new technologies increase the speed at which they grow. But why does this continue to happen? Technological or scientific change doesn’t happen automatically; people are needed to create new ideas and concepts. The answer is that in addition to knowledge accumulation, we need to understand another factor that’s important to knowledge progression: population growth.”

In an August 1993 academic article published in The Quarterly Journal of Economics, Michael Kremer presents the case that the growth in knowledge and technology is directly linked to population growth and that technological growth is proportional to population growth.

There are now over seven billion humans on this earth – which both fuels innovation, the growth of knowledge, scientific discovery and technology while also causing an extreme demand on natural capital – the stock of finite resources which includes geology, soil, air, water and all living things from which humans use to sustain life.

Now, the question is – with 200,000 years of history and all this data, information and knowledge, have we grown wise?

What would Ali think? What do you think?

To be continued…..

Perhaps the Scientists are sounding too much like Chicken Little

Posted on February 19, 2015February 19, 2015 by abrahamwien18

11/5/14

By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

This week, the United Nations’ Intergovernmental Panel on Climate Change issued its latest report on the effects of climate change on the world if corrective action is not taken. The headline in the Miami Herald read “Scientists’ warning is most alarming yet.”

A review of articles on climate change reflects similar headlines and worse – like “Goodbye Miami” or “Florida developers facing environmental woes.”

The alarm bell is ringing – and the headlines are starting to sound like Chicken Little crying “The sky is falling, the sky is falling!” in the children’s books. I know it does to me – and I know that the scientists have done their homework which is the opposite of Chicken Little and all his furry friends – Hen Pen, Duck Luck, Goose Loose and Turkey Lurkey.

In fact, a group of industry experts and sustainability professionals met in London last summer to dialogue about a report being issued by DNV GL, a leading ship and offshore classification, a leading technical advisor to the global oil and gas energy and a leading expert for the energy value chain including renewables and energy efficiency. The report, entitled, A Safe and Sustainable Future: Enabling the Transition, provides an analysis of challenges to sustainability in the global economy, societal well-being and governmental and corporate governance.

In an article published in Maritime Executive (http://www.maritime-executive.com/article/Too-Much-Climate-Change-Doom-and-Gloom-2014-07-12), entitled “To Much Climate Change Doom and Gloom,” participants expressed concern that the messaging around climate change is too much “doom and gloom” and not enough on the opportunities that are arising from addressing the effects of a warming world. Bjorn Haugland, executive vice president and chief sustainability officer at DNV GL was quoted:

“We believe there is a need to put the focus on the opportunities. For corporate leaders and politicians to speak a positive narrative is so important as it directs so much activity in society.

“We believe it is possible to create a thriving economy, it is possible to stay within the limits of the planet and it is possible to create a society for nine billion people to live well if we want to. It is human activity that has taken us into this situation and it is human activity that will take us out of it.”

Much of our perspective on the world, including our economic systems, is based on the belief that the world has an infinite supply of natural capital and a warming planet; however, the headlines about water shortages, famines, super storms, flooding, the hottest year on record, rising sea levels, ice caps melting and other calamities highlight that the scientists are not Chicken Little – the evidence is all around us.

Whether or not the global warming is man-made or from natural causes does not really matter, it is affecting the future for man-kind. Further, resource limitations can be extended – like the Green Revolution in agriculture where research, development and new technology between the 1940s and the 1980s increased agricultural production around the world – saving hundreds of millions of people from starvation.

Challenges abound everywhere, but where there are challenges, opportunity also exists.

DNV GL’s research report highlights 36 “barriers to sustainability” which range from economic and market hurdles to policy, societal and behavioral attitudes and habits – including reactive and short-term thinking, “denialism” and a lack of urgency. (available here: http://dnvgl.com/Images/DNV%20GL%20SSF_20_aug2014_tcm212-595432.pdf)

The Report concludes with Pathways to a Sustainable Future, which is summarized as follows:

“Our vision for a safe and sustainable future is within reach. Humanity has faced, and overcome, grand challenges in the past. Undoubtedly, we can surmount our present challenges too – if we choose to. Changing course will depend on our ability to work together, to act quickly and to harvest opportunities both today and tomorrow.

“We can develop an economy that is sustainable and regenerative, we can rejuvenate our ecosystems, and we can build the stable, equitable and thriving societies that we desire for the future. We are at a moment in time where there is a unique opportunity to shape the future we want.”

The scientists are not Chicken Little. It is time to stop ignoring the headlines which are designed to instill a sense of urgency and realize that the time is now for each of us to act.

It is real estate owners and investors who have the most to lose as the effects of climate change will most definitely be seen in utility bills, property taxes and insurance premiums. With the new building management technologies, energy efficiency, water conservation capabilities and waste management programs, building owners and managers have the ability to reduce operating costs while making the building sustainable. We know. We see it being done – in both new and existing buildings.

As Glenn Pickett reports in his article on “the Drumbeat for Climate Action Grows,” published in Environmental Leader on 11/3/2014,

“The appetite is all but gone for hearing more about our frightening global forecast and who’s at fault for it. The more time the environmental and sustainability movement spends sharing solutions, the more mainstream these choices will have the chance of becoming….. It’s time for action, and leaders will be rewarded.”

May we all become good stewards of this earth.

Now, let me tell you about this…

Posted on February 19, 2015 by abrahamwien18

10/22/14

By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

I freeze…become paralyzed in the face of danger or uncertainty. It is something that I am getting better at as I age but I still tend to become a deer in the headlights from time to time. In heated discussions, I never come up with the one line “Buzzinga” response until later – sometimes days later – when it is too late to be effective.

Does this happen to you? Or, are you one of the blessed people who know just the right response to any situation without giving it a second thought? Do you see a situation and instantly know and take the correct action to save the person from going into the undertow or stop the bleeding from a kitchen knife cut or have just the right response to win the debate?

We all respond to new circumstances differently. Some freeze, some panic and run, others deny what is happening like a child who pretends people cannot see him when he pulls his “magical” covers over his head. And, then, there are some charge forward full speed ahead.

Again, if you are like me, once you get over the shock of “is this really happening?” you assess the situation, spring into action and work feverishly to correct, or save, the situation….

Based on the muted reaction, or the “I am not a scientist so it does not exist” position of a significant number of our civic, community and business leaders, either they are in shock that the world’s climate can change so rapidly or they are in complete denial which is worse. The fact that many large American cities ranging from Galveston and New Orleans to Tampa, Miami and even as far north as New York City will be faced with significant issues from the rising sea level is still being debated among politicians reflects a similar approach to reality as the child with the magic blanket.

The news of global warming, now more appropriately referred to as Climate Change, is not new. Scientists have been ringing the warning bell for at least two decades. And yet we still do not want to believe.

Well, we are now starting to see the effects. Storms like Hurricanes Katrina and Sandy, increased flooding in cities like Miami Beach, increased tornado activity, the hottest year on record, and shrinking shorelines caused by sea level rise are now featured in the news on a regular basis.

Many government officials responsible for protecting the public from such events are joining in the chorus to raise awareness in order to make their job of obtaining public approval for a budget to install and maintain systems and equipment to reduce the damage from the effects of climate change feasible.

Yet, it is the real estate community that seems to most want to stick their head in the sand….For instance, last July, the Miami-Dade Sea Level Rise Task Force issued its report and recommendations. Shortly afterwards, the Miami Chapter of the American Institute of Architects held a meeting with Harvey Ruvin, Miami-Dade Clerk of Courts and Chairman of the Task Force, presenting the report. The meeting, which was broadly announced, had fewer than 100 attendees and almost no one from the real estate community was in attendance.

As reported in the June 2014 report “Risky Business: A Climate Risk Assessment for the United States”, it is apparent that climate change and sea level rise are going to have significant effects on the American global business community – and real estate, which has a particular distinction of being immovable, is going to be more impacted than most industries.

And yet. And yet the real estate community is acting as if it is business as usual. The level of interest in doing a sustainable retrofit has yet to make a significant impact on the market – especially for properties that are not seeking credit-quality tenants whose corporate sustainability policies encourage occupancy in LEED-certified buildings. (According to an article entitled “What’s Sustainability Wroth to Tenants?” by Paul Bubny of Cushman & Wakefield in the 10/28/2014 GlobeSt.com national eMagazine, ” Among the 37 real estate and sustainability directors at 23 US-based corporations surveyed by C&W, 74% see value in going to a sustainable building compared to a non-sustainable one.”¹

With the obvious costs to upgrade and improve the infrastructure – especially electrical and water and sewer utilities, as well as expected increase in insurance costs, a prudent reaction to the reality of climate change and sea level rise would be to put improvements in place now that reduce the consumption of water and power as well as to make a building less susceptible to damage from major hurricanes, storms and other weather events (like flooding).

We can only hope that real estate owners, investors, managers and tenants will soon realize that the future is now, overcome their “shock” of the impending calamity and start to take action. It is time to take action. The economic, environmental and operational benefits will be immediate and, if done right, sustainable.

And, as in any crisis situation, if you wait too long to take action, the results can be devastating. Let me know if I can be of service.

¹See (http://www.globest.com/news/12_975/national/office/Whats-Sustainability-Worth-to-Tenants-351877.html?ET=globest:e44644:11970a:&st=email&s=&cmp=gst:National_AM_20141027:editorial).

Miami weather forecast …rising tides, flooding and heat

Posted on February 19, 2015February 19, 2015 by abrahamwien18

8/13/14

By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

I live in Miami – it is my home. The other night I was watching the weather forecast. The August full moon, a “super” moon, was on Sunday. The forecaster gave us the news that the weather was going to continue to being in the mid-90s with afternoon thunder storms – summer in Miami, no news there (NOTE: All of the record high monthly record temperatures in Miami have been recorded since 1971). However, the forecaster continued to advise viewers who live on Miami Beach and other low-level areas that they may need their rubber boots in order to get to their cars in parking lots and to watch for flooding along the roadways….This is a fairly recent phenomenon – but one that is going to be a part of the forecast for years to come.

It has been a year since Rolling Stone published its article entitled “Goodbye, Miami” written by James Goodell (7/4/2013 Read more: http://www.rollingstone.com/politics/news/why-the-city-of-miami-is-doomed-to-drown-20130620?page=3#ixzz3A6oXVFId).

When the article was first published, most of Miami’s leaders scoffed at the article and the idea that Miami may not exist in 100 years. Perhaps it was the publication in which it was published or wishful thinking, but most of Miami’s (and Florida’s) business and political leaders decided to stick their head in the sand and ignore the increasing number of days in which our streets are flooded.

As reflected in numerous studies and many reports and articles, the world is warming. It does not really matter if it is natural or man-made – the facts are the facts – and this one will not be ignored for long. Along with the warming of the earth’s surface is a rising of the sea level resulting from both the melting of the ice caps and the expansion of the water as it warms….It has already risen almost one foot in the past century – and the pace at which it is rising is hastening.

Predictions are that the sea level will rise by two feet within 35 years and by up to one foot per decade thereafter – until the earth’s temperature stabilizes. At these levels – and with no actions put into place – Mr. Goodell’s prediction will surely come true.

The implications are immense: According to the report, Risky Business: The Economic Risks of Climate change in the United States, produced by the Risky Business Project led by former New York Mayor Michael Bloomberg and published in June:

“In Florida, because of porous limestone on which the major southern cities were build, even modest sea level rise comes at significant economic cost. Under current projections, between $15 billion and $23 billion (in today’s dollars) of existing property will likely be underwater by 2050, a number that grows to between $53 billion and $208 billion by the end of the century…An additional $240 billion in property will likely be at risk during high tide that is not at risk today.”

The impact of rising sea levels goes beyond flooded streets and imminent threat to property – and the impacts will grow exponentially as the sea rises and our leaders and citizenry remain immobilized – whether out of denial, ignorance or apathy.

Miami especially is vulnerable because of our low ground level (one quarter of Miami-Dade County is at less than 3′ above sea level) and our porous limestone plateau which Glenn Landers, senior engineer at the US Army Corps of Engineers likens to a block of Swiss cheese in Mr. Goodels’ article. A good analogy for the ground on which Miami (and all of South Florida) is built; but troublesome in the development of global solutions.

To its credit, Miami Beach has started to build pumping stations to reduce flooding – but this is only a stop-gap measure AND is being contested by home owners who feel it reduces the value of their property. This Stormwater Master Plan began with $206 million budget which is estimated to be half of the actual monies needed. The City is starting to raise fees and rates in order to pay for this program.

According to information in the website Sea Level Rise America, (www.slramerica.org), “Property owners of all types including developers, need to understand sea level rise issues and adaptation strategies. Those seeking to sell their properties will have to disclose to potential purchasers that their real property will be impacted by sea level rise and possibly higher taxes imposed by governments seeking to update public infrastructure projects such as storm sewers. Such adaptation projects will be necessary, but some will be controversial.”

SLR America identifies 26 legal and financial implications of rising sea levels on coastal communities – and many of these implications need to be addressed NOW: For instance, let’s take the disclosures in real property sales. “Simply stated, residential (and commercial) property purchasers in sea level rise threatened zones need informed notice and protection.” Just like sellers and real estate agents must disclose hazards due to asbestos and radon and lead-based paint, in order for sellers to be protected from future claims, property sales in 2013, when sea level rise is a known scientific fact, need to be accompanied by the disclosure of the potential impacts of sea level rise on the property.

We are not under water – yet! Last year, the Miami-Dade County Commissioners created a Sea Level Rise Task Force which issued its report on July 1st (Available here: http://www.miamidade.gov/planning/boards-sea-level-rise.asp) and provided six recommendations to the Commissioners. It is important that the real estate and business leaders support these recommendations and encourage the County government to dedicate the resources necessary to create and implement a plan that results in the survival of our fair City.

Meanwhile, building owners and managers can start now to make their properties more sustainable – which includes the ability to withstand increasingly harsh and violent storms with greater flooding from storm surge.

I have lived in tornado zones and earthquake zones and hurricane zones. The true benefit of living in a hurricane zone is that you have 3 – 7 days of advance notice. In those days, we prepare – we buy supplies and protect our properties against the coming storm. With climate change and the sea level rise, we are given just 40 years to prepare – it is time to start make our preparations – the weather forecast is not changing any time soon.

Why the Invisible Hand Works

Posted on February 19, 2015February 19, 2015 by abrahamwien18

7/23/14

By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

This post has been over two weeks in the writing. Yes, two weeks. For me, the anniversary of the adoption of the Declaration of Independence has always been a source for inspiration as the principles on which the United States of America is based continue to be a source of pride and reflection as well as a call to action.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

By these words, the Continental Congress established a moral standard that became the cornerstone of the US Constitution – our contract with each other that establishes the basis for our governance.

Of course, we have not realized these goals and they continue to be a guideline for our actions – as individuals and as a country. It is the mutual respect of our individual Rights that enables this pact among men and women to provide the freedom Americans enjoy.

In the same year the British-American Colonies declared their independence from England by establishing a new standard for the governance of a nation-state, Adam Smith published his A Wealth of Nations which provided the basis for modern free market economics. This was serendipity for sure.

As discussed in an earlier post, Smith introduced the concept of the Invisible Hand wherein he states that the market had an “automatic mechanism that allocated resources with great efficiency.”

It is difficult to realize how radical this concept was in 1776. Prior to the formation of the United States with an economy based on a free market, the allocation of labor was established either by tradition wherein the son was expected to follow in the trade of the father, or by command whereby an autocratic ruler (e.g., a king, pharaoh, emperor, etc.) dictates the economic activity to be pursued and the allocation of labor. In this way, humanity made sure there were enough farmers, carpenters, bakers, fishermen.

In describing the Invisible Hand, Smith says: “it is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

Accordingly, the Invisible hand facilitates the interdependence of human workers while maintaining their independence. The precarious nature of human survival – and the ability of individuals to enjoy the unalienable Rights the Founding Fathers so bravely declared – would be exposed if the invisible hand had not worked.

It works because we are both independent and interdependent.

I, like most Americans, was raised to believe that America was built by rugged individuals who were as driven and as hardened as John Galt, Francisco d”Anconia, Hank Reardon and Dagny Taggart in Atlas Shrugged, the 1957 novel written by Ayn Rand.

The American history that I was taught told me that it was the titans of industry that built this country alone and the rest of us were along for the ride. Just like the characters in Ayn Rand’s famous novel, this is a myth and a fiction. To quote John Donne from Meditation #17 written in 1623:

“No man is an Island; every man is a piece of the continent, a part of the main.”

It seems that in the propagation of the myth of the rugged individualist, we have forgotten that we are all in this together….America became an economic force because it had rich and abundant natural resources, a governmental model that promoted trade, an ever-expanding labor force by immigrants drawn from every nation on earth, scientific advances that led to the industrial revolution among other contributing factors.

Especially in this post-industrialized era of specialization when each of us have one primary trade or profession from which we earn a living. I would not have my breakfast if not for the farmer, the trucker, the grocer, the clerk and all the people who facilitate the production, processing, shipping and distribution of the food I ate. The market works because there is both a seller and a buyer. Without a buyer (market), no enterprise can survive.

America is built on our interdependence as well as our independence. I have thought about this seeming paradox. Here is what I have concluded: We are independent in what we offer the world as God has endowed each of us with a unique set of talents and capabilities which we then refine through education and experience to become skills and proficiencies that sustain us. But, we are interdependent in what we need or take from the world.

We each are an individual with a unique life, values, talents, capabilities, perspectives, relationships, but like a drop of water in the ocean or a snowflake in a snow drift, we quickly join with other droplets or flakes and become greater, and better, than we could alone. Individual contribution and group synergy form the basis for the modern business enterprise, the sports team, the nation-state and most human endeavors.

Therefore, the basis for all civilized human interaction has to be respect for our human dignity and our personal right to our identity, our ideas, and the fruits of our labor.

As stated above: the Invisible Hand works because we are both independent and interdependent. So, as we celebrate our independence, it is right and good that we also celebrate our interdependence – an American tradition since 1945.

Original Declaration of INTERdependence

By Will Durant, 1945

Human progress having reached a high level through respect for liberty and dignity of men, it has become desirable to re-affirm these evident truths:

The differences of race, color and creed are natural, and that diverse groups, institutions and ideas are stimulating factors in the development of man;
That to promote harmony in diversity is a responsible task of religion and statesmanship;
That since no individual can express the whole truth, it is essential to treat with understanding and good will those whose views differ from our own;
That, by the testimony of history, intolerance is the door to violence, brutality, and dictatorship; and
That the realization of human interdependence and solidarity is the best guard of civilization.

Therefore, we solemnly resolve, and invite everyone to join in united action,

To uphold and promote human fellowship through mutual consideration and respect;
To champion human dignity and decency, and to safeguard those without distinction of race or color or creed;
To strive in concert with others to discourage all animosities arising from these differences, and to unite all groups in the fair play of civilized life.

Rooted in freedom, children of the same Divine Father, sharing everywhere a common human blood, we declare again that all men are brothers, and that mutual tolerance is the price of liberty.