All right.
How many of you in this room are single

family home owners raise your
hands pretty good runners.

Come out of see those hands.

OK good.

There's going to be a quiz here
because it's an academic setting so

the first thing I'm
a start up with is a quiz.

Now and the last decade of
the one nine hundred ninety S.

the decade of the twentieth
century seem to me was the largest

burst of legal immigration
in our country's history.

So after nine eleven years
the quiz answer later.

How many of you feel that we started
closing our doors to immigration and

that legal immigration actually
declining this decade.

Raise your hands if you know how
many thinks about the same thing.

How many think it's grown.

OK.

I'm going to answer that but not now.

Debbie asked me to talk

about the marriage of apartments and
this estate ability movement and so

this is the five wrote this
presentation for this class.

It won't be the last time I use it.

I guarantee you.

But.

It's written for you.

So they'll be times when I have to
go over to my notes a little bit and

times when I don't.

So let's start off.

If this will work.

I'm not

getting any but I do so they were here or

is it this way we sort of use that way
just right click instead of left like.

Just by background there are seventeen
million Americans who are red apartments

you some of you are in that group that's
about fourteen percent who call a part of

their home when you add in people who
are renting single family homes and

other smaller units.

About a third of Americans rent their
housing in some form or another.

More importantly we're
experiencing a boom in.

Little housing and little households for
lots of reasons their demographic reasons

they're economic reasons I'll
talk about a little bit later.

But to put this whole thing in
perspective in two thousand and

six Harvard's Joint Center for ECT.

For Housing Studies
projected that we'd have

one point eight million new renters
by by two thousand and fifteen.

You can see from the graph.

We blew through that we have two point
seven million rather households added

between two thousand and
five and two thousand and nine.

So we are we are in the midst
of a boom in rental housing.

It's good news because really apartments
are important to their future of

the sustainability in our lives.

You know you're going to
I'm going to advocate.

I'm not going to college.

As for we need rental housing and

we want rental housing and
it's a tremendous opportunity for us.

To undo the mistakes that we've made
not in the talk about those in terms of

housing policy as we go forward.

Apartments are intrinsically green
they are fiscally sustainable.

They're better suited to the changing
housing preferences in our lives.

And if we can let go of this assumption
that you have to go out and buy a house.

I'm sorry for
those of you do all in Iowa want to.

So that's the way to make
your wealth in your life.

That's the way to build your net worth.

In that we all want single
family houses in the suburbs.

We can let go of that I think we can we
have a historic opportunity to really undo

some of the mistakes of our sprawling.

Past and you see that here.

When I first came to Atlanta in the early
eighty's Buckhead was a distant so

over leafy tree filled community.

It took a while to get
there from downtown.

It's now part of Atlanta.

So you know we all were
right where we come from in

the States particularly we've seen
what's happened in our communities as we

pushed out the growth to
the start suburbs in the ex-urbs.

So we talk about how
partners can help with.

Ant's sustainable future I'd like to talk
a bit about the dynamics of supply and

demand is very important.

Everybody understand what
we're dealing with here.

I'll talk a bit about my generation and
yours.

So are the Baby Boomers
close right I'm there.

That's seventy eight million
strong a small percentage of that

population migrates to rental housing and
we're already seeing some studies that is

showing signs that people are increasingly
opting to leave their suburban homes or

suburban houses and
to trade in those houses for

downtown living work live play kind
of environments walkable communities.

According to census data seventy five
percent of all seniors make a decision and

do move between sixty five and
eighty years of age.

Well before they make that move
twenty percent of them are renters

after they make that move nearly sixty
percent of them rent think again you

can see even with the boomers.

They're migrating now to rental housing.

So a sufficient supply of rental housing
isn't just going to be important for

the next two groups I talk about but
also for the baby boomers.

And even more powerful force for

demand is the echo boomer
generation the church my children.

And both of whom are unemployed and
one move back in.

I mean I regret to say but.

We're getting ready to enter
the housing market in a big way.

In fact by twenty fifteen
as you can see here.

There are going to be sixty
seven million people between

the ages of twenty and thirty four.

It's a huge huge Bolger population
coming through looking for

housing and looking for work.

And.

This We've got a reason to believe that
this generation of young people is

going to be looking for

more varieties in the housing that they
seek they're going to rent for a longer

time because they've seen firsthand that
housing is no longer a can't miss op.

Today to build your wealth.

You seem to many people there are millions
of people who've lost their homes out

there and they've also learned
that they need to be flexible.

You need to follow jobs if
you're burdened with a house.

It's underwater and I know several
people who do are in that situation.

They can't move without
taking a bath on that house.

So being able to rent and then move
quickly after that determining that lease.

That's very very important
to their economic future.

Thank you.

Now back to the.

Immigration better.

We were on a pace this decade the data
took us all the way through two

thousand and eight TO BREAK THE RECORD WE
set in the one nine hundred ninety S. And

that was the record that had stood since
the first decade of the twentieth century.

So we did not close our doors immigration.

It still goes very strong it's very
important to us and I'll tell you why.

Again as we go back into where we had it.

So how important is immigration
to to housing demand.

Based on what happened in the one
nine hundred ninety S. and

up to date through to two thousand and
eight one in five households in the U.S.

now is either foreign born or the child.

Native born child of
an immigrant one in five.

Unlike the echo boomers
tomorrow's immigrants are likely

to rent longer than their predecessors and
why because the housing crisis has made

underwriting a lot tougher and
down payments are mandatory now.

No more free rides no more of that.

So this is there are much more
likely to rent for a longer time.

And as a matter of fact I
didn't mention this but.

You can see that even after it
gets a bit here for ten years.

But over over.

Two thirds of them are still running.

Now perhaps the biggest force at work

is a dramatic change in what constitutes
the typical American household.

You know for.

Integrations our housing policy has
been driven on the assumption that we're

building housing for
married couples with children.

Today as you can see

twenty two percent of households
are married couples with children.

That drops to twenty percent of
households by two thousand and twenty.

And so if you look at this and you say
you know by two thousand and thirty.

That's majority of our households are
going to be those without children that

includes by the way the top figure
households with children is

single heads of households with children
and married couples with children and

by twenty twenty thirty we're talking
about twenty seven percent of households.

So you've got the baby boomers you've got
the echo boomers you've got immigration

and you have dramatically changing
household formation household preferences.

This just gives you a snapshot.

In fact you know between two thousand and
twenty forty fully eighty six percent

of household growth is going to
be households without children.

Now mind you you know since we're going
to growing as a population I get that

the second the married couples with
children numbers are still going to grow.

They're just going to be dwarfed by
the households without children and

that's a profound change
as it is very serious and

long range implications for not only
our housing but our housing policy.

Our future society is going to
be dominated by single people

unrelated living together couples without
children empty nesters and so on.

We're going to choose the flexibility
in the convenience and

superior locations that rental
housing can provide them.

Now that's a demographic picture.

There's another important factor and

that's are changing attitudes
about homeownership.

In many ways the housing crisis freed
people to question the conventional wisdom

as I mentioned earlier that
you have to buy a house.

When I when I hit the housing market.

Boy I had to buy a house that was
the only thing to do according to the.

Two thousand and nine survey by the
National Foundation for Credit Counseling.

Almost half of American adults no longer
believe that owning a house is a realistic

way to build wealth.

And people are starting to realize that
when you add up the potential liabilities

of home ownership let's just say
obligations where the liabilities property

taxes insurance upkeep maintenance repairs
not to mention that housing prices

have now demonstrated for the first time
in the post-war period they can decline.

Again the first time
in the post-war period

that that may be problematic for him and
that running may be a smarter choice.

Those people come to understand that
housing is shelter and not an investment.

And by the way you know it
is not a Republican thing or

a Democratic thing we had sixteen.

We had eight years of Clinton and
eight years of George W.

Bush cheerleading for homeownership.

So we've had discounts that that is
the way to build wealth is an investment.

It is shelter and I think.

That will again point toward the.

Preference for reading.

So with these new attitudes will
come lower homeownership rates.

If you look here.

You know coming into the ninety's
the rate was down around sixty four.

You saw this story about that they
were going the wrong way here.

We're now coming down to more
of a longer term trend here.

There are some forecasts that will
come down to sixty two percent

as a long term trend.

This just shows that based on the
population growth that we have been based

on the demographics in the household
composition going forward that you know

you can see two thirds of the households
must be right or households going forward.

You know.
I don't think right now it's

not that I don't think right
now I know right now that

our policy makers our lawmakers
do not understand this dynamic.

And it just it's one of my battles.

I go up to Capitol Hill and we educate the
staff and the legislators themselves but

they just don't understand this yet.

And this is something
that I work very hard on.

Well these macro trends mean that we can't
keep building housing as we have for

the past fifty years because tomorrow's
households want something different.

They want more choice.

They want more interested
more in urban living.

Maybe less space but more amenities.

I think one of you studying.

Generation Y. in this class.

And we're trying to find out as
much as we can right now but

we're going to be building for
very very different.

Household preferences going forward and
to meet this future demand requires

a fundamental rethinking of how we
approach housing in this country.

And how big is the change.

Professor Arthur Nelson who used to teach
or Georgia Tech now is at the University

of Utah in their metropolitan
Research Program

says that to meet the emerging housing
demands half of all new homes built.

Between now and
twenty thirty must be rental units.

And furthermore he predicts that we're
going to have a surplus and this number

is staggering of twenty two million
large lots that's a six of an acre or

larger a surplus of twenty
two million large lot homes.

And he's predicting that that
as we become more diverse.

That we will have some of these mega
mansions turned into multigenerational

family houses with several
generations living within these and

it's fascinating thought going forward but

we have built a lot on spec that
these huge homes and now we've

got to figure out what to do them because
the demand is not going in that direction.

OK you can get that one.

Well here we go.

So we cover the demand side the obvious
question is are we building what we need

for the future and
the answer is no correct new

apartment construction set an all
time low post World War two

low of ninety seven thousand
units in two thousand and nine.

The projection is that we're going
to build somewhere between sixty and

seventy five thousand units
in two thousand and ten.

Now this is not going to do it for

us we there are several estimates
that we're going to need and

average annual deliveries of around
three hundred thousand units.

Of rental housing to
meet the expected demand.

And we are the completions have
been coming down down down and

we are at this current rate of both starts
and completions we're not even replacing

the housing stock that we lose
each year to obsolescence.

So we're falling behind even replacing
the stock that's going out of the system.

Now some of you in the room may think
this and I know certainly others do.

Well wait a minute we got all this
housing doctor got foreclosed on.

But we do we have a surplus of housing but
guess what it single family detached

housing and that doesn't really sink us
up with what we're looking for to do.

So we think.

And then we see in some of the researchers
we're working with we think we are faced

will face a absolute housing shortage
apartments by two thousand and twelve.

So that's coming faster than we think.

The short of the shortage of fordable
rental housing is particularly acute

the Harvard Joint Center again is a great
resource for us estimates that we have

a three million unit shortage right now
and that you know that number is growing.

So that's not a should head up there.

Sorry about that.

So the next question is why is there
such a supply and demand imbalance

one important reason is as I mentioned
before for fifty years we've had a housing

policy that has been dominated by
a preoccupation with homeownership.

And everything from rhetoric.

To tax policy to the conventional wisdom
that this is the way to build wealth.

This is an investment.

All of that has pushed more and

more people into homeownership
that shouldn't have gone there.

You know I used to have
a boss at Fannie Mae.

Who said I'm for homeownership.

Absolutely.

And for homeownership is for
as broadly as we can we can make it.

But I'm for
successful successful homeownership

in a someone doesn't even have
a down payment for a mortgage.

How in the world are they going to
pay property taxes and insurance and

routine maintenance and
upkeep and repairs.

And that's the key point here.

You know we're all we like to
have successful homeownership.

We put too many poor people and people
without resources into homes that couldn't

sustain them and it's now a tragedy
out there for lots of people

whose credit history have been marred
who had their homes foreclosed on.

It was the wrong wrong
headed policy to follow.

Now you know how strong is
this homeownership bias.

According to research we did the federal
government spent approximately two hundred

thirty billion dollars on housing
programs and tax expenditures.

Last year.

You can see seventy nine percent
of it went to homeownership.

And the we spend more on
the mortgage interest deduction and

the property tax deduction
look at this than we do on

education roads public transportation and
national parks.

And these by the way are deductions
that largely go to wealthy homeowners.

Because most people don't itemize their
taxes and therefore they don't take

the deductions for mortgage interest and
for property taxes.

So you can see the bias as led
us where we are it isn't just

a cheerleading it's tax
policy that's got us there.

Now this this homeownership
suburban obsession.

Not only fails to keep up
with today's reality it also

produces some serious negative
externalities that have real costs.

It's created too many large
lot homes disconnected

from anything anywhere that
requires too many car trips for

residents to reach their jobs and
to reach recreation.

It's too expensive and I'll talk a bit
more about that as we go forward

to take services out to all
this far flung housing.

And.

It's environmentally insensitive.

So what should a sustainable
housing policy be.

And these are these in my mind
are the basic ingredients

that you have a balance and
we're not talking for

to about tilting it just a balance
between rental and home ownership.

Using infrastructure efficiently and
I'll get into this a little bit later but

this is a key point.

It's a money winner in a money loser
depending on the decision you make

as a policymaker we want to protect
green spaces and waterways.

You know we're lucky in this country
to have enormous natural resources and

we use about eleven or
twelve percent of the land here.

Lots of parks and so on but we're still
in some areas are pretty dense and

in other areas we've just pushed out and
taken all those parks and

lakes and everything out of the system as
we push the sprawling development out.

We want to encourage walkable communities.

Washington D.C. was picked as one
of the most livable cities and

where I am today is because it's so
walkable.

It's vibrant twenty four seven.

We're talking about Atlanta and
I mentioned Buckhead earlier but

there are several now almost cities
ringing Atlanta that were Hamlets before.

And all the emphasis went out of
Atlanta as it did in Dallas and

other cities and now we're understand
we've got to bring that emphasis back in.

We want to promote the most efficient
delivery of affordable housing and

we want to pop comedy population growth
in a more environmentally friendly way.

So how do we get to this more
sustainable Procida housing.

First of all by realizing that
sprawling low density development

patterns we followed is unsustainable.

It's both financially and environmentally.

Then here is where the convergence
comes in and what I was asked to

talk about today the convergence of
apartments and sustainability movement.

A more sustainable future
requires new land use patterns.

And it requires us to
accept compact development

as a desirable alternative to sprawl.

Now this is a great study.

I can send a link to you.

Debbie on this this Brookings Institution.

One of the really prominent think tanks in
this country did a study of low density

sprawling development versus
more compact development.

And looked at the economic
impact on the region.

When the key findings really
give us the the principles for

sustainable housing policy going forward.

The first is that.

Public infrastructure cost can be
reduced through thoughtful design and

planning sounds so obvious.

But it isn't to policymakers yet.

Second that vital urban centers enhanced
regional economic performance and

benefit the suburbs.

Let me repeat that they
benefit the suburbs.

The more you revitalize your downtown
areas in your urban core the more

the economic benefits spill
out throughout the region and

the more the benefit
the suburbs themselves.

But the third the lower
density sprawling development

is a net cost to regional
economies now how do we pay for.

The detached.

Single Family Development way out that we
just we just convert all this farmland

put this commute out there.

How do we pay for
that we've got to put fire

police highway sewer roads
electricity everything out there.

We pay for that through property taxes.

It never pays for itself.

Never zero.

On the other hand when you get
to take existing infrastructure.

So you've already got the sewers
you've already got the road.

You've already got the power
you can just tap into it.

When you develop in that
context it is always and

I said always a money winner for
the region.

Principally compact

development is a low cost
weapon against climate change.

According to the Urban Land Institute and

this is another fabulous organisation if
you're looking for sources of information.

Harvard's Joint Center for

Housing Studies Brookings
Institution Urban Land Institute.

All three are very very powerful
sources of information and

data they're not like me I'm
an advocate they are nonpartizan.

And do great work if we can shift sixty
percent of our new growth to compact

walkable neighborhoods.

We would save seventy nine million metric
tons of carbon dioxide by twenty thirty.

Let me put that in in
layman's terms that that's

equating to a twenty eight percent
increase in vehicle efficiency in other

words that would be the same thing as if
all of our cars magically got thirty two

miles per gallon that's
how big that change would

be the report they report that if sprawl
development continues at its current pace.

People are going to drive more and

that's going to nullify any gains we
get from more fuel efficient cars.

On the other hand people living in compact
green walkable neighborhoods contributed.

Much to fighting global warming and
climate change as.

People like me who drive a hybrid but
live in suburbs.

So that I do.

Well count that develop it also
helps us deal with the fiscal crises

because sprawls expensive I already
mentioned it to you because I

said it cost a lot of money to extend
water sewer power electric highway and so

on and community leaders finally
are waking up to the fact that

they are less willing now
to use public dollars.

To to emphasize sprawl.

There are two counties I
want to show you here.

One of them.

Is is a compact community in Kentucky.

It cost them on average ninety
dollars per family of four to provide

all the infrastructure that they need.

And then look at the cost for
Pendleton County in Kentucky.

Which is a sprawling
low density environment

that cost almost twelve hundred dollars.

Just because more spread out.

Nationally.

The United States can save over
one hundred billion dollars

in infrastructure costs over the next
twenty five years if we follow

more compact development patterns.

So fortunately we have an unprecedented
opportunity ahead of us to undo

the mistakes of the past.

Unlike most industrialized nations
our population is growing.

We're in the top ten and growth in
population in the world we're there.

With Bangladesh Anybody here
from France Spain Russia Japan.

All those who are either
losing population right now or

on the cusp of a losing population.

We are the only major
industrialized country in the world

still growing very very strongly.

So you know if there's no other
reason sort of move the slide sorry.

For no other reason we've got

to figure out how to house this
population that's growing.

And.

We're going to have ninety four
more million million people here

then we're here in in two thousand.

And we're going to need sixty
million new housing units.

And analysts say this is going to fuel for
those of you.

I know some of you in this in this room or
it's in construction.

This is going to fuel
fuel a construction boom

like we've never seen in this country.

And frankly.

Half the buildings that will be in
existence twenty five years from now

will be built between now and then.

So we have a really an on
President opportunity

to make a difference because we're going
to be building so many so many structures.

Thank you for the water main.

And apartments as a metaphor are a key
part of the strategy they're

inherently green they
have a smaller footprint.

They help preserve green spaces.

They're typically located as you know
closer to jobs into transportation nodes

and that means that residents of
apartments have fewer cars and

they make fewer car trips.

And they generally use
existing infrastructure and

it's shown that that apartment
residents use less energy

then you energy wastrels who
are homeowners in this room here.

The data from the U.S. Energy Information
Administration consistently shows

this chart the people living in
in apartments use less energy.

Whether it's the household itself or
the individual members.

Roy compact design small unit size
fewer exterior openings and exposures.

OK so how do we get from here to there.

What are the opportunities and challenges
in building a sustainable future.

I've noted that apartments
are inherently green but

that's in comparison to sprawling
single family homes houses.

That doesn't mean that we can't
green apartments better and

in fact that's the rest of my message
today is what can we do to green.

Our apartments and our multifamily
housing structures in this country.

The challenge that we face is that.

The industry faces a bit
of a dilemma here.

The landlord if you will if you call and
we call him.

The owner controls between twenty five and

thirty percent of the energy usage
in a typical apartment community.

You the residents control
most of the rest.

So that means that the owner can only
achieve modest returns on investment

in expenditures to improve
energy efficiency.

They have to shoulder the costs and

then hope that they can pass
some of that on to residents.

But as the studies that I've seen and

if anyone can enlighten me differently
on this please do that while

each of you in this room may feel that
you're greener than your parents.

You still don't necessarily want to pay
for that in added costs for your housing.

You know twenty eight dollars.

Well that's consistent with
what we're finding too is that

he was I'm green I'm green
I'm green if you want to pay.

Well I don't want to pay more for that.

So that's the dilemma that the owner
faces is I've got being asked to and

I'll get into some of this little bit
later to invest in energy efficiency and

economies but
I can't pick up the cost on that.

So the dichotomy of one party
paying the cost of the upgrade and

another receiving the benefits is one
that separates by the way the Lord

single family housing involved in family
housing and multifamily from commercial

structures where again you can recoup if I
make investments in a commercial building.

I can recoup those through the through.

The rates that I charge my my tenants and

they're in single family
housing I own the house.

I'm not put the investment and
I'm paying myself back.

My bill.

Don't raise your hand.

Apartment firms also

faced significant legal and regulatory
hurdles in their efforts to go green.

And let me give you some subset of
examples here in Connecticut a developer

was trying to build the nation's first
LEED Platinum apartment building.

And has been stymied by the state and
here's what they want to do this is

an infill multi sort of mixed use
development designed to include

onsite clean power generation using two
million dollars in fuel cell technology.

But the developer can't
get past the state.

In this thing and it's taken two years
to secure rudimentary approvals and

they're still in litigation on this.

They can't even use this because this
is the situation just too typical where

attempts to include fuel cells combined
heat and power systems and on site power

generation in multifamily buildings
are blocked by regulatory hurdles.

In Philadelphia the city

has proposed to integrate green practices
into its storm water management plan and

now those of you who consider
yourselves environmental or

or study the field know that storm
water runoff is one of the major

causes of pollution and
are streams of lakes or

waterways and so
Philadelphia was trying to come up with

integrating green practices into a storm
water management plan very important and

it needed approval of the environmental
protection protection agency and

the E.P.A.
because it's stuck in an mentality.

Of traditional designs and
approvals can't get its head around this.

And so even something as progressive as a
city coming forward saying we're going to

put green practices into storm water
management can't do it because the E.P.A.

can't figure out how to adjust
its approval process to something

different like that.

A nationwide building owners that
face outdated building code and

safety regulations that
negate green goals.

For example many jurisdictions waste
energy through twenty four hour lighting

requirements for garages and stairwells
and other open areas and Francis.

Despite the fact that today you all know
motion tech sensors and can technology

can do that much more efficiently and
still light when you need it.

So even with these impediments

several forward thinking developers
are moving ahead and going green.

Anyway.
And

there are lots of good
reasons it does save money.

Lots of my members are saving money today
by making by having made investments and

continue to make investments.

Also there are some documented
cases that it does attract

residents those who like
the idea of investment in green.

There are actually some buildings where
some high end buildings in New York City

where there are there are there
are lead platinum and the residents

with that would you probably another do
go there will pay a premium to do that.

But they're not college students
trying to make a living and

therefore twenty dollars is the limit.

I guess on that.

So is that right.

Not many.

But also probably won't increase
property values over time.

I think we're already hearing that some
institutional investors are making

the statements that they will be looking
for these kind of properties and

they will shun those who have not
made any investment in that in green

building standard.

We also are facing in the apartment
business federal state and

local mandates to build
energy efficient properties.

And firms investing in this technology so

much before are really going to be
ahead of the curve in the years ahead.

And finally the cost premium for
Building Green has come down significantly

it used to be you know ten to
fifteen percent premium in

commercial structures today the premiums
anywhere from zero to four percent.

We also heard that for residential
construction a recent study showed that it

costs about two percent more to
build an affordable green apartment.

Now there is probably going to be
a slightly higher premium for market rate.

But it's certainly nowhere near
the ten to fifteen percent.

We saw just a few years ago.

Now.

One of the opportunities.

There are two opportunities.

Obviously building green there's not a
whole lot of building going on right now.

The other one is is rehabbing and

retrofitting and
greening existing properties.

Let's start with new construction.

You know building design is the key
to determining a property is energy

performance and

developers can do a lot to reduce energy
by selecting energy efficient windows and

making sure the H. vac systems are
properly sized but not every property's

going to get the same boost from triple
glazed windows or from higher R.

value insulation the savings vary from
climate to climate from region to region.

Now let me see it spent two years running.

Hundreds literally hundreds of simulations
determine which design and construction

techniques do deliver energy efficiency
savings and that well those that don't.

Then one interesting interesting
thing that we found is that just

being conscious of the shape and siting
of a building can make a huge difference.

If you change an apartment configuration
from square to rectangle and

you cited east west as opposing yourself

you can save anywhere from four to
sixteen percent just by doing that.

As critical as designing construction
decisions are they aren't the only factor

in energy efficiency
the building envelope the walls.

The windows in the roof
only represent a third

of the buildings total energy load say
it again if the skin of the building

walls exterior the roof and so on are only
represent a third of the buildings total

energy loads of words the rest come from
the most is what's called a plug load.

And that's usage of lighting computers
elevators and more for the most

part the buildings residents determine
the usage of these consumption patterns.

It is you with your games and
you're downloads and

all the stuff that you're doing.

You are drawing the.

The bigger Already the power.

For that unit.

Just.

Sure got the right one here.

OK now even more the new construction and

frankly this is the opportunity today that
really is the sweet spot of opportunity

for our country and that is to green
our existing apartment properties.

Nearly seventy five percent of

the apartments in use today were
built at least twenty years ago.

OK but why if I don't you don't exist.

And so
many can vent that from replacements and

upgrades of older equipment and
building systems.

And upgrading existing properties for
our country and for our economy.

Represents an enormous enormous
opportunity for savings.

And I'm frankly a little
chagrined that we just.

Haven't had the leadership
at the federal level.

Pushing us in that direction to conserve
more and this is one way to do it

is it is to take these older
properties and really upgrade them.

A prominent study by enterprise community
partners shows that it cost approximately

forty five hundred to
build a green unit new

which will generate lifetime utility
savings as you can see of less than that.

So there in lies a bit of a dilemma
with new construction but

it only costs about twenty five
hundred to green a moderate rehab and

that rehab will yield lifetime savings
of close to six thousand dollars.

Here are some examples I mentioned earlier
that we can achieve the redevelopment.

Upgrading an apartment with
Energy Star products and

appliances can reduce energy consumption
by between fifteen and twenty percent.

A simple lighting upgrade will
yield five to thirty dollars

a year per savings per fixture.

And an apartment property that upgrades
fifty washing machines to energy star

levels would save twenty six thousand
dollars over the life of the units and

prevent more than one
hundred thirty thousand

pounds of greenhouse gas emissions.

So these are all that can be
done today in redevelopment and

there are what we call low hanging
fruit but very very important.

With little understanding of the
opportunities and challenges that face us

let's turn now to the last area challenge
which is the building codes themselves.

Thirty five states almost
every single one and

over two hundred other jurisdictions
which are cities towns and counties.

Haven't acted green building initiatives
and legislation in some form or another.

Until recently.

Most of the.

Were voluntary they were incentive
based and they were only mandated.

In the case of federally financed or

government finance or
public financed construction.

However a growing number of cities in
Dallas Baltimore Boston are now requiring

commercial and multifamily to meet green
building requirements and several states.

Notably Connecticut and California have
incorporated green standards into their

buildings some localities embrace these

building codes in green standards as a way
to require more sustainable built but

it's important that they be relevant
to our industry and multi-family.

I think you have a presentation
in this class on lead.

You know that was designed initially for
commercial buildings.

And so in our business.

We're at most ten percent of
the construction is high rise.

Most of it is mid to low rise
structures are people have

a difficult time grappling I would lead
frankly and there have been others.

Standards out there that were designed
more for single family houses and not for

Apartment Communities.

So we were sort of stuck in Never Never
Land we didn't have anything really

specific to us and so if someone want
to develop they had to cobble together.

Different standards and
try to figure out how to do it and

by the way spending time and
resources and money to get there.

And so in the past eighteen
months however we now have three.

New standards we created
one of them in a coalition

ourselves called the National Green
Building standard and bill you be happy

to know that one of our members
Alliance residential built a community.

According to the N.G.'s.

And we also have the international
green construction code and

ashtray one eighty nine and by the way
all of them are written in code language.

If you studied lead you know it's of.

It's sort of a it's not written in code.

You can trade off the bicycle racks for
triple glazing windows and so on this

green building standard is all metric
based and written in code language so

that municipalities can adopt it into
their local codes are very important.

And it's going to be easier for
people to develop rightly under that.

Now here's the downside of
the green building codes however.

Well we certainly embrace standards and
guidance.

To build more sustainably.

Unfortunately some municipalities and some
policymakers have decided that mandates

can be used across the board and
some of these have been missed missed.

Misunderstood and
misused by by policymakers at all levels.

There is for example a prevailing fallacy
that if we improve the efficiency of our

building codes by thirty percent.

We're going to reduce energy
usage by thirty percent.

But the assumption fails to note that only
forty percent of apartment energy use.

Is regulated by the codes so
the codes don't cover things like

lighting appliances and
most importantly they can't mandate.

What you use in your apartment
communities yourselves as residents

the codes don't cover that.

So you've got you've got sixty percent
of usage outside of the code system.

You know for instance the deal we
estimate is that phantom loads

that means the energy used by electronics
and appliances once they're powered down

constitute ten to fifteen percent of the
total energy bill for the average home.

Here's a good graphic that just shows
what isn't covered by the codes and

why a thirty percent mandate.

Doesn't translate to thirty
percent reduction in energy costs.

And you might think well
why is this a problem.

Why do we have ideals why don't we just
set the bar high and go out and do it.

The problem is lawmakers can cause a lot
more problems when they don't understand

what they're doing and
that has happened before.

You can.
It took us many years to adapt to

Sarbanes Oxley which was well intentioned
but enormously complicated to deal with

last year for example the U.S.
housing U.S.

House of Representatives passed an energy
bill which did not make it to the Senate.

But in that there were mandates for

federalized building codes that would
require thirty percent and then

ultimately fifty percent more efficiency
in any construction going forward.

But these targets are not
based in science.

They're not grounded in science
a comprehensive study from my own

organization and
I meet see shows that exceeding

current code by thirty to fifty
percent is prohibitively expensive.

And for most buildings a fifty percent
increase in energy efficiency is

technology technically impossible.

Let's look at some of
the paybacks here in Atlanta.

We've got a mild climate here relatively

report found that thirty percent
improvement in energy codes.

Could cost up to eight thousand dollars

per housing unit with a payback
of between sixteen and

twenty five years now will builders
going to accept a pay back that loan.

It's not doesn't work then pencil out.

And a fifty percent improvement here
in Atlanta is not technically feasible.

Now imagine you apply that one
size fits all mentality and

thinking to Boston and
that colder climate there.

So a code space approach to
energy conservation puts extreme

pressure on apartments to try to invest in
very expensive upgrades that would have to

be passed on to the residents and
they can't be passed on to residents.

And as we've seen the vast
majority of usage is unaffected

by these codes to start with.

Now if real estate were
one of the real offenders.

You could say OK I heard you.

I don't care.

You guys are polluters You're too
many greenhouse gas emissions.

We want to crack down on you but

the fact is that residential real
estate actually has the lowest direct

emissions of any of the economic
sectors just under five percent.

Direct emissions are those that
are that are produced onsite

that we have direct control over
like the furnace the boiler so on.

Even when indirect emissions
are considered meaning those

emissions stemming from the energy we
purchase to operate appliances and

lighting and so
on are sector is still responsible for

just twelve percent of electric
electricity related emissions

the transportation sector by itself
accounts for thirty percent of that load.

So that brings me back full circle to

reinforcing how important
our land use decisions are.

In sustainability and global warming and

climate change we need to reduce
the number of vehicle miles traveled.

And the best way to do that
is to grow more compactly.

The good news is the smart growth compact
development movement is growing more and

more policymakers are understanding it and

I can tell you the media
get it they truly get it.

And while demand for smart growth is
increasing developers are eager to meet

that demand are often
blocked by zoning and

land use regulations and
those regulations favor.

What sprawling car dependent.

Development.

So.

It's.

It's amazing to me that there are still
land use and zoning policies and

use across this country that date back to
the early part of the twentieth century.

I kid you not.

And you know we're born more
misspelled our updating of my.

Modernizing there is zoning in
their land use policies but still

there are some that are stuck back in
the early part of the twentieth century.

The more than any building
code sustainability program

which I've already talked about the flaws
in that we need federal state and

local policies that encourage the
development of compact sustainable housing

located near transportation and
employment centers.

Now where current by the fact
that the Housing and

Urban Development Department and
transportation have partnered.

They're now giving grants to Ms apologies
for planning housing transportation and

land use.

Together.

And I've participated myself in a program.

That was sponsored by
the Urban Land Institute and

we done it now in about twelve
cities across the country

where we're given the demographics
of the population growth and

we're given the housing types and
then we're trying to construct.

How do we grow.

In every single city.

The answer was transportation oriented

compact development a transportation
oriented development.

It makes a lot of sense but that's And

so I would really encourage to see
the government now looking at that and

actually giving grants out
to cities to plan these.

And other words there's hope for it.

We could learn from our past mistakes and
could create a new.

Future for ourselves and
since I'm ending on a note of hope.

I'll close with some visual examples of
how well designed compact development.

Can Transform neighborhoods and
let's take the first one.

Take a neighborhood commercial center.

And this is you know for you guys this is.

Technology from the one nine
hundred eighty S. But you know it.

It has you know you'll see.

There's your neighborhood
commercial center.

That's a face lift at some density.

Another example of that as a measure for
transit oriented areas.

And we see a lot of these and infill
areas and cities today strip malls and so

on and again you can see just imagine the
possibilities when you can transform these

into something much more vibrant and

then finally an industrial
site that's been underused

but it will and that is it.

Thank you very much for having me today.

How did you write it

and I know you still have a lot
where there's a lot of you're really

you know a lot of that
probably saying it was you or

I that you are right now

I do remember one reason it

really was more I might

look like that it was I think you know
again it depends on what you're doing.

Out there.
There are triple net leases that you.

You know and there are people who
are paying residents who are paying for

their utility usage.

There's lots of different scenarios
out there but you're I mean I think

the since we're not seeing
any development right now.

Already we're looking at redevelopment or

we're looking at retrofitting is what
it was going on and I think we've

just come through a period of over eight
million job losses and that's hurt.

Occupancies and
owners were looking for any

opportunity to reduce their expenditures
and those are some of the things that they

that they found where they can control
expenses and they can then save.

So it.

It varies I hear you but
it varies all over the lot.

Yeah

well

what we're what I'm reading and learning
today for is that there's a there's

a movement toward the urban
core which is understandable.

I mean I think you all
would like to be were.

Where you could walk to recreation jobs.

Whatever And you'd like to be where
the action is you know the assumption

all along has been that they don't want to
have their little detached house with it

with the stereotypical picket
fence around it in the suburbs and

so I think it isn't necessarily
owning versus running at all.

Basle I think it is it is it is urban it
is it is a reconnection with the urban

core that's going on in my in my view.

Yeah yeah.

It Again it's a new
technology fuel cells and

it was something they just had a difficult
time getting their hands around.

I think we see that now and cutting edge
technologies is you have standards and

codes that are designed for an earlier era
and you have new technologies coming on

top of that and it's a matter of
getting their hands around it.

The same thing with the E.P.A.
and the storm water management.

Is it just didn't fit in
their box of approvals and

what they wanted to do so I you know I can
send you some more information up there.

Debbie on that Connecticut case
if you're incident doing that.

Yeah.

You are going to slide your housing.

I don't see it it doesn't it doesn't but

your folks

that's going to want your mortgage.

Well I think you know
first of all in many cases

there's a there's a rent and
ownership gap and the cost just of.

The cost to your monthly principal
interest payment to own and

your monthly cost to rent but
forty percent on average each year

goes to property taxes property insurance
routine maintenance upkeep and so on.

So that's forty percent you can take and
put into the stock market and

studies have shown that money
put aside rather than put into.

That homeownership situation where the
average annual increase since World War

two was a little over one percent annual
appreciation in housing prices the annual

freesheet and stuff in equities average
annual is a little under five percent.

So that's my case you know and
you can save some money that you

would put into all those things I talked
about with homeownership and invest it.

And that's where it comes.

It isn't just evaluating that money
you're seeking into the house versus

the right you're paying.

Because the rent is a sunk cost I agree
with you but if the opportunity cost.

Yes.

Well

one thing that that that I get from
having all these gray hairs is that been

through some cycles.

So I will never say never to you.

So right now underwriting is tighter.

Right now we're going
back to what is the norm.

Which is looking at a person's
credit worthiness their credit score

the down payment.

They can muster and their net worth.

Will that last forever.

Haha.

No it never does.

I mean and you know I I must tell you I
lived through the eighty's when we had no

documentation no down payment
mortgages just go right.

Mortgages that were teaser with teaser
rates on them and I said that and

it blew up and we had millions of
people who lost their homes and

I said this will never happen again.

Well Recently Goldman Sachs you've been
following the news reports on them.

One of the big problems

they had was with these cults
collateralized debt obligations that they

were selling all over the world that
were all kinds of things backing them.

And we said when the.

All blew up this will never happen again.

What's happening again.

Well as soon as you give

Wall Street an inch they will go
back to what they do to make money.

And as soon as soon as the housing
market recovers the wrong.

You know they will go back
to more lax underwriting and

you know they'll start cutting down
payment requirements and so on.

It will not last forever.

I guarantee it.

Unfortunately that's.

I'm really talking about
the health of the region and

when you have a weak downtown core.

And Atlanta sort of a you
know we can use Atlanta.

I mean you know all the growth was pushed
out and now only now recently last five

years has the has there
been a real emphasis on

downtown living and yet what happens
on most nights at five o'clock.

Everybody goes home.

So there's a lot more interplay
between the urban core and

the and the close in suburbs in particular
as the healthier the urban core gets.

There's an economic multiplier
effect that takes place again

if they give me your your contact
information I'll give you the booking

study because that really gets
into great depth thought I guess.

You mean really.

I mean

you know we hear the benefits but
what do you.

Well I think the hard part is that rents
are priced in a competitive marketplace.

And they're not dictated by
the federal government and

when a developer comes in to price it.

If he has to look at the he or
she has to look at the cost of single

family housing the cost
of other alternatives.

And what type of housing that
that that that building is and

what type of units they have.

So you've got that whole
thing goes into the mix.

And in certain cases the rents
are already priced competitively.

And if.

The owner wants to to put
that investment in and

try to get paid back for it he may not be
able to in that kind of environment there.

So it's we can do all the educating we
want but if sometimes it comes down to

economics and people can't afford and
they'll go somewhere else

rather than pay the premium that
they're being asked to pay for having.

You know unless you know we'll
have to go that the the resident

will gain over time through the kind of
savings but we don't have the longitudinal

studies we don't have the data yet because
a lot of the changes a bit taking place.

I've been taking place over
the last three or four years.

So we just don't have the data to
use right yet but it's coming.

And the other thing is we're going to be
mandating performance going forward and

that's just going to
accelerate things I think yes

but I

did I did I move wrong of yours
that if you're sorry this morning.

We're at a very difficult juncture
right now with affordable housing.

The low income housing tax credit program

was designed to produce about one
hundred thousand units a year.

It.

It's put it was predicated on healthy
profitable companies buying tax credits.

Which then were funneled into
the to the development of those and

brought the cost down.

The big buyers were Fannie Mae and Freddie
Mac. And Bank of America top three.

Well two of them are rather
unprofitable now and

don't need tax credits only one of them.

It just now returning to
profitability that Bank of America.

So you get a program that was delivering
one hundred thousand units of housing and

practically gone right now we
have to reinvent the program.

The other issue is that it's

affordable housing requires
different layers of

subsidy frankly I mean if you want to push
out the housing cost down to a point where

you're reaching somebody who's making
sixty percent of the area median income.

It requires subsidies that have
to come from the locality perhaps

a nonprofit maybe the developers
taking advantage of some incentives.

A lot of it's a layering subsidies
that really have to get you there.

And that's the difficulty in it and
frankly the reason most of

my members build what's called market rate
apartments and those are still by the way

affordable to people who make one hundred
percent a very mean income and down.

Is because it's so
difficult to push that affordability down

to the point where it really
reaches significant levels and

it's a frustration we all have and
it's not going away.

It's only getting more acute right now.

So I'm glad you're working in that area.

I have a passion for that Dr Phil.

Yes I did like my answer before.

OK Let me see

what you see right here.

I have a guest lecturer with me.

Are you.

Yeah no I mean there are plenty of cases
of brownfields being reclaimed and

it's very important work
that's going on the picture.

How are you going to see this even if you

did that frankly is the key
is because it isn't

just having it in full every where you
have a shopping center that they developed

that went bad and basically But you've got
train tracks and you've got Brownfield and

you've got an industrial site that's
that's been polluted and so on but but

those in here in particular I asked Bill
to come up because they dealt with that.

Did you not with the Atlantic Station we
developed a lot of station I used to be

the C.E.O. company and
we did the next station.

It really comes down to first of all
the federal government to help you.

We had to get the first
approval was the bridge.

So you get that really you were had a
disconnected Brownfield that no one could

get to so the feds agreed to do the bridge
and it was HUGE not twenty five.

So it was outrageous and then the second.

D.P.A. to agree to moving don't take

hundreds of thousands of
tons of brownfield dirt but

that thirty eight acre parking deck
is built on somewhere over there.

There's really big flowers growing and

there are really I mean
there's a lot of stuff to do.

OK people with three hands ask me you know
we moved dirt and then it was approved and

then we started building and now if you
notice there's twenty almost twenty

five hundred apartments units over there
some of them were converted to condos.

Why because the for sale market was hot
but going back to one of the questions.

If you were on my side of the equation and
you're looking down at the pro-forma and

my investor says Gee Bill.

I'm going to get a thirty percent return.

But if you put all those
environmental things in there and

that's going to cost me a couple
hundred couple million dollars.

I'm only going to get a twenty
eight percent return.

Well that's fine.

All of you here would be glad to pay
an extra fifty dollars a month of RAM

correct though right.

So you're not going to go up pain fifty
dollars over the hose property Drago here.

So it's driven by the rance the enable
the pro-forma to give you the return.

You know is it is someone's
money that expects a rate and so

it's all well and good to say that you're
going to support green but the way to

support green is like you know at the end
of the day someone has to pay for it and

unfortunately since we don't have good tax
credit or structure around incentives.

It tends to be the developer or
the investor.

So yeah I live in in
Bethesda Maryland which is

just outside of D.C.
and we ended up cutting through.

A couple of streets and they ended up.

Paving over an old unused railroad track
where people can now commute from Bethesda

by bike down to D.C. I even do it
occasionally and so I come right

by the Watergate and back through Georgia
by with George Washington University and

it up to my office and just having that
and cutting a couple roads opening up.

It's just it's just it's going
through a rebirth and now the young

people want to one of Bethesda and look at
the subway and go down to work downtown.

It's a very walkable community right now
but the answer your earlier question.

There in a city I can think
of a major city were were

people aren't looking at brownfield
development opportunities.

Working their way through the system
which is very cumbersome.

I mentioned the P.A. just in this
one little storm water project.

But dealing with the brownfields

complicated on top of
complicated to do and costly.

Thank you for coming up at seven
years seven years from the first

to be some others started
talking government for so long.

Thank you Bill.