The current system is stacked against greentech in big buildings

Illinois tech company bucks the system to build green headquarters.
Written by Harry Fuller, Contributor

The current financial systems in the United States makes it very difficult to build a large building using green technology. Most large buildings are built with loans. Those loans are based on standard commercial building costs. So much for warehouse space, so much for office space, etc. There is no margin for the added costs of putting in greener tech or better insulation or windows.

OUTSIDE THE SYSTEM I recently had the pleasure of speaking with one American CEO who actually went outside the banking system to get his new company headquarters built with the best of current green tech. The loan from the bank paid for a minority of the project, the rest was self-funded by Other World Computing (OWC) in Woodstock, Illinois. CEO Larry O'Connor says his company has always been conservatively run. The don't like debt and don't franchise, don't over-expand.

It can be clearly shown how green tech makes the building more efficient and cheaper to operate. Yet the entire commercial lending and building system is based on least cost, highest profit. There's no flexible formula to take into account energy or other operating costs or savings. The loan is so much per square foot, take it or leave it.

As O'Connor described it to me, "The bank doesn’t change the appraisal value of building, they do it on square footage. That’s a potential hinderance on long-term green investments.”

The assumption is recent years has been: buy land, build cheaply, flip the commercial space and move on. Let the next sucker worry about energy costs. Of course, at the construction stage it's more costly to put up a wind turbine or install a geothermal heating system. But those are systems that deliver real savings to the building operator every year. O'Connor told me the geothermal heating system was 10% of the total project cost, way more than a standard gas furnace. But OWC will never pay a cent for natural gas heating, and has a greatly reduced carbon footprint as well.

OWC has built a headquarters he hopes will be in use for decades. No flipping here. So as they looked at green tech for power and water and paper, etc., they realized there's a great ROI despite the higher original cost. Sure it's cheaper to build an office building with single pane windows, standard electric or gas heating, powered by the local grid. But those operating costs, month after month, add up. And the company becomes hostage to vicissitudes of the marketplace for energy, water, paper.

As I blogged about OWC earlier, their offices are wind-powered, they have extensive LEED certified green tech for water and heating, a permeable parking area that collects and then cleans run-off, and numerous other clean tech features. O'Conner said the technology is not new, but there's little incentive or even loan mechanism to get the tech in use for large buildings.

Naively, I asked about the great tax breaks and rebates for putting in greentech. That's for your home or mine. Office buildings: zilch. O'Connor said they made these green choices because the ROI is so clear and it frees his company from the almost certain grief of the next energy price run-up.

O'Connor said all the tech in their building was installed by local contractors using standard equipment. He said it's important to work with a design firm that really knows LEED buildings and green tech. That's where the whole system gets put together before any site work is done. For OWC's new green HQ it was Harris Architects in Palantine, Illinois. [poll id="194"]

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