by Ravi Malhotra, founder and president of ICAST

For those who are still not familiar with the benefits of making their MF property energy efficient, here is a summary:

1. Reduced operating costs from lower utility bills and O&M costs.
2. Increased NOI/profitability because of reduced turnover and increased occupancy due to happier tenants as a result of more comfortable units.
3. Increased property value from the upgrades and increased NOI.

 

The influx of new MF properties will eventually cause a drop in the occupancy rates, from current highs and MF properties, especially the older properties will need to do "something" to attract tenants. One smart solution is to obtain an ENERGY STAR certification because it not only provides the benefits listed above but also because ENERGY STAR is the most influential consumer symbol in the nation with over 85 percent of Americans recognizing the ENERGY STAR label.

The ENERGY STAR certification became available to MF properties in late 2014, and is perhaps the most cost-effective way to show potential tenants that you have a green property (as compared to LEED or other labels). An ENERGY STAR certification could cost as little as $1,000! And because ENERGY STAR is a rating system, it also expressly states that your property is more efficient than your neighbors!

On average, ENERGY STAR certified buildings use 35 percent less energy than similar buildings (which, by the way, makes your property more affordable to you and your tenants).

 The first step to getting an ENERGY STAR label is Benchmarking, i.e. comparing your property against your peers. A recent study by EPA found thatmerely benchmarking a building consistently reduced its energy use by 7 percent over 3 years, at no-cost, simply by paying attention to the energy and water consumption and reacting to negative trends.

 

ENERGY STAR provides financial value

Fannie Mae rewards MF properties that earn the ENERGYSTAR certification by providing a lower interest rate of 10 basis points – if the market rate is 5 percent then the ENERGY STAR certified MF property will receive their loan at 4.9 percent. In addition, Fannie Mae will increase the size of the loan, typically by 5 percent, because it factors the energy and water utility cost savings as lower operating costs.

 

EPA Portfolio Manager

EPA created Portfolio Manager® (PM),an online tool to measure andtrack energy and water consumption. PM provides a secure online environment to log your MF property data and obtain a rating for your property – all for FREE (no cost). PM can benchmark the performance of onebuilding or a whole portfolio of buildings. It also quantifies the benefits from the efficiency upgrades you make to yourMF property.

MF buildings with an ENERGY STAR rating greater than 75 earn the ENERGY STAR certification, i.e., your property has to be in the top quartile (25 percent) of efficient buildings to be certified as ENERGY STAR.

 

Base Requirements for ENERGY STAR Certification

1. MF building must have more than 20 units and should have at least 75 percent occupancy.

2. Building attribute data such as sq. ft., utility consumption, etc., must be for the whole building– you cannot get ENERGY STAR certification for a portion of the building.

3. Primary function of the building must meet the definition of multifamily,e.g., mixed use properties are typically not eligible.

4. Building attribute data must be correct and complete – as the old adage goes: garbage in, garbage out. So inaccurate and/or incomplete data will not get your MF any rating or certification, when the required verification is done by an independent 3^rd party.

5. Must be asingle structureas defined by EPA, i.e., a structure in which the exteriorwalls are not substantiallyand indivisibly connected to any otherstructure. For example, a MF property with say an atrium connected to a retail center, all on the same HVAC system, will not qualify.

6. Each building is independently rated and certified i.e. a property with 8 buildings will receive 8 individual ENERGY STAR certifications.

7. Include all of a property’s floor area in its ENERGYSTAR application including the outside walls.

EPA allows exclusion of actual energy consumption of structures that are exterior to and not related to the operation of the building, such as: parking structures or retail outlets.

 

Five Simple Steps to get your ENERGY STAR certificate

1. Set up a free and secure Portfolio Manager account: 

• Enter basic property information (name, address, sq. ft., etc.)
• Select property type/use details
• Enter last 12 months of utility data

2. Get your ENERGYSTAR score! If your score is above 75, then:

3. Complete and submit the online application to have a PE or Architect conduct a site visit and audit

4. Respond to any clarifications from EPA

5. Help the PE or Architect complete their site visit and audit and answer their questions

Show-off your ENERGY STAR certificate and enjoy the benefits!

 

About ICAST (International Center for Appropriate and Sustainable Technology):

ICAST (www.icastusa.org) was founded in 2002 as a 501c3 nonprofit to provide economic, environmental and social benefits to communities in a manner that builds local capacity. ICAST currently designs and implements turn-key Smart rehabilitation projects for multifamily properties across Colorado, New Mexico and Texas. Mr. Ravi Malhotra is the Founder and President of ICAST.