Phius Co-Founder and Executive Director Katrin Klingenberg shares her takeaways from the 2024 Phius Policy Summit.
Sources, uses and NOI.
Sean Meyer’s (Threshold Development Group) slide is still clear as day in my mind.
What he was talking about during his excellent developer’s-view Policy Summit presentation was the infamous additional cost required to realize passive projects. Yeah, the one many perceive as the one major hurdle to make passive building mainstream – and even code.
But he presented a compelling argument against that idea.
In his presentation, sources are a nod to the capital it takes to build. This includes incentives that might be available to make passive projects a reality and close that additional upfront financial gap.
Uses refer to the secret sauce in passive buildings: the dramatic overall operational energy and carbon reduction and the cost savings that come along with it. This is the “tiny use” compared to existing buildings that results in direct monetary savings while operating it over the lifetime of the building – 40-60% in multifamily buildings. That also includes savings from peak load reductions, which lead to much smaller active heating and cooling systems and further cost savings. And with smaller active systems and high-quality construction comes a lower maintenance footprint. All that can be calculated and projected.
I’m just thrilled by the many great nuggets I picked up from everyone else’s presentations – excellent speakers all around.
And then there is NOI – net operating income. Buildings are valued based on the income they can generate. If homeowners or tenants are expected to value the property higher and are willing to pay more for it because of the higher indoor air quality, comfort, safety, durability and resilience (we are seeing increasingly extreme climate events after all), then the building is worth more. That is beneficial in a few ways, including a higher appraised value to borrow against.
This is developer financial systems thinking at its best.
Sean’s presentation during the summit was a huge “aha!” moment for me. And that was just one presentation. I’m just thrilled by the many great nuggets I picked up from everyone else’s presentations – excellent speakers all around.
I was so impressed by the maturity and confidence that our presenters spoke with on the topic of policy. It was eloquent and at a clearly high and sophisticated level, understanding all aspects of policy and how they interrelate to make the individual efforts a success. Between them, they clearly demonstrated a wealth of experience. We have come a long way thanks to such dedicated advocates in the field.
Beverly Craig from the Massachusetts Clean Energy Center blazed the trail with her experience as a key catalyst in implementing passive buildings as code in Massachusetts – something that has never been done before in this country on that level. It takes a lot of courage and determination. And thanks to her and her fellow trailblazers, we now have what I would call a replicable template that can easily be applied elsewhere. It is working!
Katie Kaluzny with Illinois Green Alliance has been chipping away on the policy side in Chicago and Illinois for a long time, so she knows the politics of it inside and out. The midwest is a tough nut to crack, but it seems we are getting there. She stunned me with the announcement of the City of Chicago having finally corrected their Sustainability Development Policy point structure. It now proposes to value Phius projects for their energy efficiency, health, durability and resilience with 90-95 points out of 100 right out of the gate! That is huge.
Elizabeth Turner from Precipitate Architects showed beautiful, large, affordable projects from Minnesota and made absolutely clear that affordable housing and passive building are a perfect match, and it really should not be done any other way. She described her policy efforts in getting passive included in the Minnesota Qualified Allocation Plan (QAP) like groups around the country have successfully done in 17 other states. She showed a range of already realized and impressive new multifamily Phius projects in the state. Hopefully many more to come!
And huge thanks to Lauren Westmoreland. I’ll wrap up my thoughts with observations from her presentation. I learned about her organization, Stewards of Affordable Housing for the Future (SAHF), only recently and I am so very impressed by it. It is an affordable housing advocacy group where they share experiences, and support each other in this very important goal of assuring affordable housing for the future for everyone.
Many of those involved with SAHF have already been implementing new and some retrofit passive projects, especially now with significant incentives being available for Phius projects from the U.S. Department of Housing and Urban Development (HUD) under the Green and Resilient Retrofit Program (GRRP). Experience exchange and support is invaluable to secure success as many affordable housing developers now embark on embracing passive building standards more broadly on new construction and rehab projects nationwide. The amazing glowing testimony video featuring one of the tenants on how much he appreciates living in a Phius project still resonates in my mind today.
Major thanks to all who made this Summit yet another splendid success! This also goes to Phius staff and especially to: Isaac Elnecave and Zoe Rader for so knowledgeably setting the stage for the Policy Summit on both days and all your hard work leading up to it, and to Jennie Eber for the impeccable organization of it all – thank you all for your participation!
