What the changes to Denver Green Roof Initiative means for developers

By Alyse Opatowski and Harlan Blynn

Featured In CREJ’s June 20-July 4, 2018, issue

In November, Denver voters passed the Green Roof Initiative that requires buildings with more than 25,000 square feet to have a green roof or solar panels. Since January, varied stakeholders comprising the Green Roof Task Force Committee have been meeting to propose changes. They will then make a recommendation to City Council, who can make changes with a two-thirds vote (nine council members), starting at the end of this month.

While many developers opposed a green roof mandate, there are benefits to green roofs, and the new proposed initiative offers a lot more options. We break down how the new proposal can help and hurt developers versus the original ordinance.

How the New Proposal Helps Developers

More options. New construction would have eight options to choose from under the ordinance, instead of the initial two proposed. With these options, buildings can have LEED or Enterprise Green Communities certification, energy-efficiency programs or off-site solar. This allows more flexibility for developers. Many of the options don’t take up additional space, and we all know how valuable each square foot is in Denver’s economy. According to the committee’s cost analysis, the cost increase resulting from these options is lower than the initial proposal. However, their calculations only look at energy savings and do not take into account myriad benefits green roofs can offer.

Aids affordable housing projects. At one point, they were going to exclude affordable housing projects. As of now, they are not exempt. While this may be more costly up front, it can help these communities that need green spaces the most. The proposal dictates the cash in lieu fee money goes to affordable housing projects. Lower-income communities are more affected by climate change, and the locations of low-income neighborhoods usually experience more air and water pollution. Green spaces and solar energy are more attractive to potential occupants and can lower energy bills.

Increased compliance. Instead of only certain buildings complying, there are many options so everyone can comply. For existing buildings, there were a lot of exemptions originally. Although the form of compliance may not be an up-front cost increase (such as buying into Xcel Renewable Connect), it does level the playing field for developers and building owners.

How the New Proposal Hurts Developers

More complexity. More options mean more complexity. The permitting process will take longer, and the city will have to navigate eight options forms, criteria and regulations. It is harder as a developer to understand all the options and benefits to your bottom line when there is such an extensive menu to choose from. For new construction, green roofs could provide a payback of six years, according to “The Benefits and Challenges of Green Roofs on Public and Commercial Buildings,” a May 2011 report from the U.S. General Services Administration. They also can increase your valuation by 11 percent and provide an extra amenity space, according to “The Monetary Value of the Soft Benefits of Green Roofs,” a report prepared for the Canada Mortgage and Housing Corp. The task force cost analysis is only accounting for energy savings and doesn’t provide more data and information to help developers make the best informed decision.

Could reduce long-term cost savings. It seems that these new options are more affordable for developers, but the lower up-front costs of energy-efficiency programs will cause many developers to opt out of green roofs or solar. This means missing out on all of the benefits these options have to offer. By providing alternatives that seem less costly up front, developers and building owners may pay more overtime. A green roof can last two to three times longer than a traditional roof, which could mean saving the cost of several roof replacements, according to the GSA report. Also, green spaces retain tenants longer and reduce turnover, according to the Government of the District of Columbia Department of Energy & Environment.

Lack of incentives. The city of Denver also has the opportunity to provide incentives. Other cities like Washington, D.C., Chicago and New York City have been successful in incentivizing green roofs. The city should understand that green roofs and solar will save millions in storm-water management – a Green Roofs for Healthy Cities report estimates a saving of $23 million in reduced storm-water fees for Denver – and a reduction of health care costs due to heat related illness, biophilia design research finds. Denver has an opportunity to incentivize developers who are building green roofs to do fast-track permitting or direct or indirect economic incentives. The proposal may include a solar rebate program.

While there are more options for developers in the new proposal, by watering the original proposal down we are missing on many potential improvements to our community. If you have suggestions on how to improve the Green Roof Initiative email katrina.managan@denvergov.org, or attend the June 25 City Council meeting at 1:30 pm in Room 391 of the City and County Building.

After this article is published, the task force could still make additional updates to the initiative.

You can find the original article in Colorado Real Estate Journal here.