Real Estate Development Law Blog

A Different Kind of Distressed Real Estate

Marta Lowe — Mon, 12 Apr 2010 08:54:39 -0800

Bad news for residents and businesses in the McGuire Building in Belltown. An article in this morning's Seattle Times details the plan to demolish this nine-year-old building and explores how the owners are (or are not) helping their lessees make the transition out of the building. Looks like they're softening the blow for the residential tenants, but if the retail tenant's quote is accurate, there's a demolition clause in his lease that allows the landlord to push him out in 60 days. That's a provision I'd like to see. The tenant has not yet met with the owners and is hopeful he'll be offered something. Apparently suits and countersuits abound as well. I am interested in how this plays out and will continue to monitor the story.

More Recovery Predictions, East Coast Style

Marta Lowe — Mon, 05 Apr 2010 09:19:25 -0800

From the Boston Globe, an article by Casey Ross looks at the office vacancy issue in that city. Rents in Boston have dropped for five consecutive quarters, and are down one third to $42.46 per square foot, according to CB Richard Ellis. Just a little higher than the Seattle market . . . He's also got a recovery prediction from Deloitte:

A survey released by the financial advisory firm Deloitte this week found that nearly 75 percent of real estate executives believe rents and property values will continue to fall in 2010. Most predicated [sic] a full recovery in two to three years.

This is in line with what I'm reading about Seattle/Portland.

The State of Portland Real Estate - and Future Financing

Marta Lowe — Fri, 02 Apr 2010 14:30:40 -0800

It's not Seattle, but from Todd Murphy's article in yesterday's Oregon Business it sounds like Portland is suffering just as much as its urban neighbor to the north. I found two pieces of useful information in this article. First, it attempts to predict what lending will look like once we finally hit bottom and begin to recover (in 2011 or later, says the article). The changes are not difficult to predict, but Murphy does a nice job of sketching out how a deal might get done:

The community banks that survive for the next commercial real estate world . . . [will] be giving loans of maybe only 60% or 70% of the now-lowered value of the property. For some traditional titans in commercial real estate and some new cash-rich entrants into the industry, that will work out OK. Large players in the industry and others, including private equity funds, have been amassing cash during the tumult of the last year or more.

“And they’re looking for opportunities,” says Mike Paul, former CEO of The Commerce Bank of Oregon, who now is a partner in a firm helping financial institutions dispose of their non-performing assets: foreclosed properties.

Paul suggests that the new commercial real estate world, with the traditional banks being reluctant to lend very much on any property, will leave an opening for those new entities to be part of deals. The private equity firms and others, looking to place cash in a distressed market, will provide some less-traditional financing that will make up a part of the deals. The firms will do it as more expensive lenders, or in return for equity in the properties. The private entities might provide another 10% to 20% of the value of the property, with the owner providing the final 10% to 20%.

But for right now, Murphy and those he consults see the spiral continuing down:

. . . as the job market remains dormant, the vacancies remain. As vacancy rates stay high, building values plummet. As building values plummet, many owners owe more on their loans than the properties are worth. And community banks with the loans on their books have lost billions of dollars in asset value. Many in the industry say some building owners without deep pockets are finding it difficult to make their loan payments or sell their buildings. (No one would name names.)

As we saw in the Seattle Times last week, that name in Seattle is Beacon Capital Partners.

The bright side in all of this is that commercial tenants are doing very well, from lower rents, to months of free rent, to great TI contributions. I'm even finding I'm able to negotiate self-help rights in a growing percentage of the leases I work on, which was unheard of except for the biggest tenants previously. The ability to lease space on great terms is a big help to new and expanding businesses, and ultimately to us all, as much as it may pain the landlords in the short-term.

How Would the Answers be Different Today?

Marta Lowe — Wed, 11 Nov 2009 15:06:15 -0800

I was reading the November 16th issue of BusinessWeek and stumbled upon an article about how a "recent" Turner Construction survey of commercial real estate executives determined that 75% of such executives - including developers, rental building owners, brokers, architects, engineers, etc. would not be deterred from building "green" by the credit crunch, and that 83% of them would be "extremely" or "very" likely to seek LEED certification for buildings they plan to build in the next three years. The further I read it became obvious that the "article" was a shameless promotion of a Brazilian energy producer (when I looked closely at the page, I realized it was a "Special Advertising Feature"), but the Turner survey results hung with me. Was this really the case despite the cratering of commercial real estate development? Who had they surveyed? How recently? And was anyone really planning to build something in the next three years? I had to check it out.

It turns out the survey was completed in September of 2008 - a world away from the reality of September 2009. That said, I would love to know what the same executives are saying today. The population they surveyed looks diverse in terms of what role they play in commercial real estate, but did they talk to small developers and owners as well as the big players? Turner completed similar surveys in 2004 and 2005. Turner Construction, please release another survey soon and give us a better sense of who's providing answers, as I think that provides a necessary context for understanding the results. In other words, if the little guys as well as the bigger players see the long-term benefits/efficiencies of building green compelling enough to spend the money on LEED certification at a time when little money is available, I'd find that compelling - and heartening.

FDIC Action: Delaying the Recovery?

Marta Lowe — Fri, 06 Nov 2009 12:38:57 -0800

On Halloween, Douglas McIntyre reported in Daily Finance on a recent action by the FDIC that takes a more “liberal view” of what constitutes a nonperforming commercial real estate asset. As reported in wsj.com, the change allows “banks to keep loans on their books as "performing" even if the value of the underlying properties have fallen below the loan amount.” As McIntyre puts it, "[the] change in how the current regulations should be interpreted appears to be a fudging of the way in which federal agencies look at bank financial statements. Loans that are "nonperforming" may be restructured, but many are likely to lose a great deal of their value in the process. The FDIC appears simply to be dealing with losses that would be incurred in the normal course of business by pushing the true accounting for them into the future."

While this may help banks in the short term (and the FDIC, who might otherwise have to insure deposits at these banks should they fail), it seems dealing with these assets for what they truly are might get us to a market correction more quickly, get the assets into the hands of those that can re-develop them, and get that deal flow I mentioned in a previous post underway. Do you agree? For a lively discussion, visit the comments section of the wsj.com article. I don't mean to infer that this would be a painless process for anyone involved, but the faster we can get a recovery in commercial real estate underway, the better for everyone.

The Funds are Circling - Can We Get Deals Done?

Marta Lowe — Fri, 06 Nov 2009 12:18:20 -0800

The October 30 Puget Sound Business Journal touts, on its front page, the Schuster Group as another fund ready to “pounce on opportunities presented by the Puget Sound area’s growing list of troubled companies.” The first such fund to get the front page treatment was Talon Private Capital, headed up by heavyweights Bill Pollard (formerly of PREP) and James Neal (formerly of Metzler). Also as reported in the PSBJ, Urban Renaissance Group has added a new Chief Investment Officer (John Bliss, another former Metzler exec) to work with institutional investors looking to buy troubled properties in town. They are not alone. Groups like Caerus Realty Capital and the major brokerage firms are circling as well. When will they investing frenzy begin? It may take awhile.

In September of this year, Northwestern Mutual paid $115 million for the Washington Mutual Tower, which cost $350 million when it was completed in 2006. At $132 a square foot, this is a significant discount on the estimated $450 a square foot paid by Beacon Capital for Equity Office Properties’ portfolio in early 2008. At this point there are not a lot of other well-publicized sales, due to a number of factors: credit markets have yet to thaw, investors want to make sure we’ve hit bottom, owners have to determine if they can hang on to the asset given their debt load/vacancy rates. The lack of sales makes setting a price for distressed properties more difficult. If those with the cash and those with the distressed property can agree to terms on a few other buildings, I hope we’ll see begin to see a more steady flow of “done deals.” I have no doubt everyone mentioned above is hustling to make that happen.

More LEED Changes by the USGBC

Richard E. Mitchell — Mon, 28 Sep 2009 13:59:14 -0800

The USGBC announced on September 2, 2009 a change in its occupancy requirement for LEED for Existing Buildings: Operation and Maintenance. The occupancy rate required for certification has been lowered from 75% to 50%. The USGBC indicates that this change is in response to current market realities that have disqualified an unprecedented number of properties from pursuing LEED certification.

Bottom line: The requirements for green building certification are constantly changing and building owners and tenants must be aware of how they might be affected by the changes. In this case, it is possible that the lower occupancy requirement will change the building’s performance data. This, in turn, could have an impact on performance specifications in contract and lease documents.

Recent LEED Changes - What do They Mean?

Richard E. Mitchell — Mon, 28 Sep 2009 13:48:28 -0800

As discussed in Mireya Navarro's recent New York Times article, the difference between building design and construction and building performance may be substantial. Owner and tenants alike should be aware of how these differences may affect LEED certification.

On August 25, 2009, the USGBC announced its Building Performance Initiative. Under the initiative, the USGBC would begin collecting data from all buildings that have achieved LEED certification for future analysis. This program is voluntary and the USGBC maintains privacy policies, however, as noted in my blog entry on September 2 (Seattle Contemplates Building Performance Reporting!), the reality of the mandatory disclosure of a building’s performance may not be for behind.

This change is in conjunction with a USGBC announcement earlier this year that will require that all LEED certified projects--from new construction to existing buildings provide energy and water usage data for at least five years. Furthermore, the requirement would remain in effect regardless of whether the building changes ownership or lessee. Non-compliance could lead to de-certification of any project that fails to comply with this requirement.

Bottom line: What do these changes mean to owners, designer, contractors, landlords and tenants? Not only should an owner be cognizant of the possibility that a LEED certified building will under-perform, but owners must include the appropriate lease language to allow for the collection of all relevant environmental performance data.

Eric Pryne Hears Real Estate Maestro's Discordant Note!

Richard E. Mitchell — Sun, 27 Sep 2009 19:02:49 -0800

On Sunday, Eric Pryne, The Seattle Times business reporter, broke the story many of us knew was coming. Seattle's commercial real estate market is long due for recalibration, and many commercial real estate fortunes will be lost. Seattle real estate mogul, Micheal R. Mastro, and his many investors now being among them.

In his Sunday, September 27, 2009, front page story "Hundreds Lose Big as Real-Estate King Falls", Pryne methodically outlines how Mastro took in funds to finance his real estate deals from so-called "Friends & Family Investors", giving them promissory notes pledging interest returns in the 8, 9 and even 12% level, while conveying "I couldn't care less if you invested attitude" as the investors asked questions of him. After several decades of success, word of mouth notoriety, and a well-cultivated disinterest in selling his investors, many flocked to Mastro whose reputation of paying his investors was legendary. But now his pending bankruptcy puts at risk well over over $100 million owed to over 200 investors, many of who are from Seattle's Italian community.

With $587 million in debt and $249 million in assets, Mastro's debt/equity ratio is not unlike over commercial real estate moguls. But with market crash, the probably need to recapitalize his investments in order to refinance his properties, and the shortage of equity investors, bankruptcy was all but inevitable for Mastro and many others to come. Of that, I'm sure.

Datacenters: Developer's Recession Proof Economic Engine?

Richard E. Mitchell — Thu, 17 Sep 2009 10:28:10 -0800

For several years states have competed to attract the development of datacenters with tax incentives, developers have reshaped their building portfolio mix to include building them, and local communities have challenged their elected leaders to prove just how many jobs the datacenters will provide the local economy in exchange for reduced taxes.

While the debate continues, commercial interests with significant electronic information storage needs can't help but embrace the move toward data storage centers. Numerous companies have for years flocked to central Washington to build datacenters, including Microsoft, Yahoo, Ask.com, Intuit and Sabey Corporation. Traditional commercial developers like Sabey Corporation have been in the datacenter market for a while now, recently announcing a $100+ million datacenter project.

With Washington's Governor Gregoire predicting that over 50% of government agency's IT data needs will be outsourced in the near future (i.e. government agencies will get out of the often costly and redundant server/information storage business), can one reasonably say that datacenters are a recession proof building typology for developers? The answer is probably no, at least until the development and operational costs of datacenters cease to be inextricably tied to state tax incentives. That's the experience in Washington. Many of the datacenter projects mentioned above are now on hold, because state lawmakers could not agree on tax incentive legislation.

As those projects have been developed, the competition to keep them has also been fierce. Take for example, Washington's own Microsoft, which well be the proverbial Canary in the mine, given it's reported consideration of moving a 470,000 square foot datacenter in Quincy, Washington to Texas for cheaper electricity and better tax incentives.

Passive observers of the technological age can't help but wonder with Google digitizing libraries whether the community library is soon to be a thing of the past, with datacenters the reality of the future. Bottom line: keep you eyes on datacenters as recession proof economic engines! Buildings to store information in the age of cloud computing may lease up quicker than your traditional speculative Class A office building. If the development agreements are structured to fairly allocate risk, when and if the lessee defaults, the developer may well find themselves managing and operating a datacenter at a fraction of the original cost.

Community Development Agreements - The Need for Vision!

Richard E. Mitchell — Thu, 10 Sep 2009 14:38:12 -0800

Community Development Agreements allow developers to negotiate with permitting agencies to build more than the current zoning restrictions allow for their developments. Apparently, these agreements are conspicuously prevelant and may be a issue in the City of Seattle's Mayoral race - as evidenced by today's Chamber of Commerce sponsored debate between mayoral candidates Mike McGinn and Joe Mallahan - where the issue was among many discussed.

Certainly, at a minimum, the agreements are a possible symptom of the potential need for a grander vision for the City of Seattle that is consistent with its zoning code. And without question, the City should not use them to extract concessions from developers seeking to develop, if those concessions could reasonably lead to the development not penciling out! If you're curious about what one looks like, here's an example of one currently under consideration by Seattle's City Council.

Since the agreements are contracts, the question is what "must" a City like Seattle require developers to include in the agreements as a predicate to building outside the current zoning requirements. Must labor issues be addressed? Should developers be required to provide more below market housing in exchange? What other improvements should be required, if any? Should there be basic legislative guidlines on what can and cannot be in them? Traditional contract law would say - - leave it to the parties! But is that the right choice here, given the impact to City residents on the whole?

Ultimately, given the myriad of issues these agreements could address, issues that have a direct impact on the City's residents, the central question is "How does the City advance progressive and visionary development that improves the lives of City residents and our economy, if such agreements are not the direct function of a larger and comprehensive vision for the City?" Students of city development history would say, it cannot.

Bel-Red Smart Growth Around Light Rail

Richard E. Mitchell — Tue, 08 Sep 2009 10:20:28 -0800

The City of Bellevue is on the verge of fulfilling the promise of Washington's Growth Management Act ...ensuring smart growth and higher densities in our commercial corridors. The Seattle Times reported yesterday that the City has in place all the necessary agreements to allow farmers in specified rural areas of King County to transfer development rights to developers who want to build more densely in the Bel-Red area. The farmers who offer to sell their land's development credits, which would result in preserving the land for farming, could receive as much as $20,000 per credit. The actual value of the development credits will be dependent on the negotiations between the farmer and developer. Every credit purchased allows a developer to build an additional 1,333 square feet. The City's transfer of development rights program will be limited to the first of 75 credits purchased, or 100,000 square feet of development area. The City's plan (pdf) is ambitious, but a definite model for capitalizing on the light rail system and advancing transit-oriented growth essential to the economic vitality of the region.

High Performance Buildings to Climate Benefit Districts

Richard E. Mitchell — Fri, 04 Sep 2009 12:13:59 -0800

How do we move away from community development as we know it today, which often occurs one building at a time, over several decades (if not longer) and with enormous competing interests, to incentivizing the development of high performance commercial and residential communities? It's an interesting question that Mithun Architects in Seattle, Washington, has been considering. Mithun's answer is for state lawmakers to create a Climate Benefit District (CBD). The CBD would provide communities with a strategy for participating in the impending carbon regulated future and in making their communities sustainable.

Here's how it would work. State law would allow a community to petition to become a CBD, or a local government could instigate the creation of a CBD in a certain area. The Washington Department of Commerce would provide the CBD with technical assistance and ensure that its work was compatible with statewide greehouse gas reductions goals. The CBD would have a governing community body that would indentify, implement and review climate-friendly actions within the CBD. The CBD area would implement a sustainability plan, work toward and ultimately achieve the desired sustainability level. The CBD governing body would - and here's the punchline - be capable of receiving and distributing carbon market revenues.

It seems to me that Mithun's proposal could go one step further and provide for the CBD to levy a "local benefit charge", which would be offset by a proportionate reduction in city of county taxes in the CBD, for the continuous improvement of the CBD's high performance community amenities. It's an idea worth debating in Olympia.

Seattle Contemplates Building Performance Reporting!

Richard E. Mitchell — Wed, 02 Sep 2009 10:30:25 -0800

The City of Seattle is currently developing an ordinance that would mandate disclosure of building performance. This proposed ordinance is an outgrowth of Mayor Nickel's Green Building Capital Initiative. But it wasn't rolled out before, or even discussed in the run up to, the August Primary election. With Mayor Nickles' defeat in the Primary, whether the proposed ordinance will be discussed before the General Election in November, or get to the City Council any time soon is an open question.

If it does, and is passed into law, some real changes in the Seattle real estate market are in the making. The proposed ordinance is built on Section 6 of Senate Bill 5854 (pdf). However, there are some differences. It would also apply to multi-family properties of greater than 4 dwelling units. It would include requirements for mandatory disclosure to current and prospective buyers, tenants and lenders. In addition, energy and performance ratings would be reported to the City of Seattle annually for all buildings over 10,000 square feet (or every 3 years for multi-family properties of more than 4 dwelling units).

Once the City of Seattle collects all this data, its not clear how they would exempt it from Washington's Public Records Act. In other words, in the near future Seattle tenants, brokers, buyers, investors, financiers and developers may be able to obtain the information through a public records request and better assess the energy performance of a particular piece of real estate - before they lease, buy or develop it. The potential impact to the Seattle real estate market would be significant; the era of High Performance Buildings is just around the corner.

Green or High Performance Building?

Richard E. Mitchell — Tue, 01 Sep 2009 09:38:13 -0800

The regulatory and certification structure that governs the evaluation of buildings is changing, and so too will the relationships between those who design, build, own, lease and sell buildings. Soon, a building's level of sustainability will no longer be evaluated at the moment it's engineered, permitted, occupied or certified. Rather, it will be evaluated after it's fully operational, on an annual basis, or even each time it's sold. Some suggest that building owners, commercial and residential alike, will be eventually required to "collect and report" to local authorities their buildings' energy consumption performance. Once this happens, all that information will be available to prospective tenants, investors, financiers and buyers. This paradigmal shift is best noticed in the slow but obvious language change from "green buildings" to "high performance buildings" that is evident in the green building industry.

It can also be noticed in recent legislation. Take a quick look at Senate Bill 5854 (pdf), which passed in the Washington State Legislature during the 2009 Session. The bill, entitled "Reducing Climate Pollution in the Built Environment" is the first of many that legislatures across the nation will pass to address the next biggest environmental pollutor behind vehicles and heavy industry, that's right, buildings!

To the extent a building's energy consumption is being tracked under this bill, let me first say that SB 5854 is focused on public buildings. See Section 6. But the Legislature's grander vision is clear....

In Section 1, the Legislature states that it's intent is to spur the state's economy by "promoting super efficient, low-enery use building codes; requiring disclosure of building's energy use to prospective buyers." There are no exceptions in the language. Public, commercial, industrial and residential buildings are all within the intended objective - even though the active portions of the bill are not as broad.

In Section 3, Washington's Department of Commerce is required to develop and implement a strategic plan by December 2010 (to the extent funding is available) that reduces "greenhouse emissions from homes, buildings, districts, and neighborhoods." Again, the grander vision is clear; perhaps this means we'll be talking about "high performance communities" with their own taxing authority in the near future. That same section requires the agency to propose a transition from "prescriptive [building] codes" to "performance based codes." And there is the coup de grâce to the old system of evaluating the health and life safety of buildings.

To evaluate how the built environment is functioning, we have to move away from evaluating buildings at the moment they are engineered, permitted, occupied or certified, to evaluating their actual performance over time.

Managing high performance building risks just took on a whole new meaning.

Where are the Green Leases and the Green Design and Construction Contracts?

Marta Lowe — Mon, 20 Jul 2009 15:04:44 -0800

Green building is booming, especially in the Pacific Northwest. Look no further than your local Starbucks. Starbuck’s goal is LEED certification for all for all new and renovated company-owned stores worldwide beginning in 2010.

Despite the growing green building trend, few commercial leases have been updated to reflect the legal issues surrounding green leasing. Although there are some green leases out there, a brief survey of owners of commercial developments in the Seattle area indicates that few landlords, even those focused on sustainable building, have “greened” their lease language.

In the construction industry too, neither the architects nor the law firms representing the developers that we contacted had updated their design and construction contracts to reflect green building issues. They seem instead to be addressing those issues on a case-by-case basis. Likewise, the standard form AIA documents are silent on sustainable building issues, and do not address those issues that must be addressed regarding the owner’s green building goals and the corresponding allocation of risks.

Sustainability building and leasing risks are real, particularly in light of rapidly increasing regulatory activity at the state and local levels. Third-party sustainable building certification, and the maintenance of that certification, in combination with new building systems and technologies may provide a recipe for potential legal exposure. It is critically important to have clear contract language for each stakeholder on green construction projects and green leases. The alternative could be exposure to unanticipated liability for every participant.

Bottom line: because of the popularity of eco-friendly building projects, increasing state and local incentives, as well as possible funding opportunities from the American Recovery and Reinvestment Act, sustainability building is extremely attractive and viable in commercial real-estate when the risks are adequately addressed. As green building and green leasing continue to become the standard, the corresponding legal issues should be addressed in a coherent and comprehensive fashion.

Othello Partners: Right Place, Right Time

Marta Lowe — Mon, 20 Jul 2009 15:00:24 -0800

Local developers Othello Partners have a great piece of real estate on top of the Othello link light rail stop, and they know it. Their design for the parcel, known as The Station at Othello Park, has received a lot of buzz of late (though not everyone is a fan.

With good density, some retail, a large park space and planned LEED Silver certification, there is a lot to like about what they’re doing. And at a time when few new developments are breaking ground (and many large holes in the city are likely to remain so for a while), Othello Partners broke ground earlier this month and plan to be pre-leasing by 2011. They - and USAA Real Estate Company, who’s financing the project – clearly believe the timing is right of this sort of development, and I have to agree. While a terrific project like Thornton Creek is struggling to sell condos despite its transit-friendly and LEED certified status, the apartments there are renting on-target. Othello Station is all apartments, and I think the two year time difference in hitting the market can only be to its benefit. Looking forward to seeing this project go vertical.

Going Retro

Marta Lowe — Mon, 20 Jul 2009 14:56:10 -0800

Add the Empire State Building to the list of buildings retrofitting to go green.

According to this AP article, in a challenging tenant market, higher-profile tenants want efficient spaces, and owners of older buildings (the iconic Empire State Building is 78 years old) must update systems to attract them. The article cites a CoStar Group study of green buildings that “found that buildings with the council's certification enjoyed higher occupancy rates (90.3 percent) than their peers (84.7 percent) in the first three months of 2009,” and that such buildings “rented at an average of $38.86 per square foot in the first quarter of 2009 compared with $29.80 per square foot for their peers.”

In fact, construction giant Skanska has chosen to locate their Manhattan offices in the Empire State Building and is working on a build-out they plan to have certified LEED Platinum. My favorite quote in the article echoes what a number of people in the real estate development industry have been saying for a while: "This isn't just a 'We are doing the right thing' movement," said Marc Heisterkamp, U.S. Green Building Council's director of commercial real estate. "In the end, the numbers pencil out."

Is there a downside to retrofitting your aging building to achieve LEED certification? Every case is different, but I’d say the toughest part of that question in these times is not whether to do it, but rather where to get the financing.

G2B Ventures' New Fund - And Its Commercial Real Estate Counterparts

Marta Lowe — Wed, 01 Apr 2009 12:52:37 -0800

Yesterday G2B Ventures, a Seattle-based hedge fund, launched a $50 million fund that will be used to purchase distressed residential properties and convert them into more energy efficient homes for resale.

This approach has been used with success in the commercial market too - examples below. I’m hoping that the reported drop in office rents in Seattle (and the Eastside) means we'll see more of this sort of sustainability-focused, value-add investment, as its time has come. A report released last August by Deloitte and environmental consultant Charles Lockwood argues that within three years "companies that do not have green workplaces will be at a competitive disadvantage from higher operating costs, lower productivity, declining attraction and retention of skilled workers, and an increasingly negative brand image."

Earlier this year, an article by Matt Hudgens in the National Real Estate Investor reported on the partnering of L.A.-based builder Shangri-La Industries and Thompson National Properties, who announced a $100 million fund - dubbed the TNP/SLI Green Building Fund - targeted retrofitting and redeveloping commercial and industrial buildings to add significant value. Hudgins lists examples of similar funds: the Hines CalPERS Green Development Fund (created in 2006), with a current equity commitment of $277 million; and the $100 million Rose Smart Growth Investment Equity Fund. He points specifically to the Rose fund's $23 million acquisition of Seattle’s Joseph Vance Building (right) and an adjacent property in 2006, followed by a $3.5 million green retrofit guided by Energy Star and LEED standards.

As someone fully behind green retrofits - both from a financial and environmental perspective, I'm hopeful funds like G2B's in the residential market and TNP/SLI Green Building Fund and Rose Smart Growth Investment Equity Fund in the commercial market proliferate and prosper.

Dust Off Your Contracts & Leases - Make Them Green

Richard E. Mitchell — Fri, 20 Mar 2009 18:14:28 -0800

The Cap & Trade system being proposed in Washington D.C. will almost certainly regulate both vehicle and industrial emissions as it will emissions from buildings. Let’s not forget what’s happening right here in Washington State. The Legislature is considering its own Cap & Trade system (HB1819 and SB5735), changes to the Growth Management Act to make it more green (SSB5687 and SHB1490), and greening the building code (SHB1747).

With construction costs falling a project 5.8% in the first quarter of this year, many have realized that the initial premium (6.5%) on building and maintaining the highest level green certified building (Platinum) can be recoup immediately. We all know that law is slow to respond. But the time is now to dust off your design, construction and management contracts, as well as in your financing documents and leases.