Save Money. Save The Planet.

A push towards sustainability is being made from property owners, construction companies, lenders and more as they begin to understand the long-term benefits to the planet, as well as their pocketbooks. “Green” loans are lending programs that can lower the total cost of loans if sustainability criteria during construction or renovation, which means big savings for pockets and our planet. These green programs can be found with big lenders such as Fannie Mae and Freddie Mac, as well as other smaller lenders and banks. The result of these green loans is a win/win for everyone involved in the process, including the end users of construction. Let’s take a look at some of the highlights of these programs.

Go Green To Save Green.

Like traditional loans, green loans are a type of debt financing. The difference is that projects and borrowers are required to meet specific sustainability criteria such as green building certification, energy and water reduction, or other sustainability factors.

In the past few years, Fannie Mae and Freddie Mac increased their foothold in the market by creating green lending programs specifically aimed at both new construction as well as reinvestment in existing properties. By taking measures to reduce energy and water consumption, applicants can receive an interest rate on their loans that can be as much as a quarter percentage point lower than prime interest.

In areas eligible for Property Assessed Clean Energy (PACE) programs, building owners get energy efficiency funding in exchange for a tax assessment levied against the property. The lien is collected along with property taxes. This allows a property owner to finance the up-front cost of eligible green improvements on a property and then pay back the costs over time through a voluntary assessment.

Many municipalities are offering initiatives that building owners can take advantage of as well. In 2011, the Santa Monica City Council adopted a new plan aimed at reducing water use by about 20% by the year 2020. Local agencies contacted Community Corporation of Santa Monica with an idea for a pilot program to retrofit properties using product rebates funded by The Metropolitan Water District of Southern California. Within the first year after the retrofit, Community Corp’s 5th and Wilshire property saved more than 720,000 gallons of water and reduced utility costs by over $10,000 when compared to the previous year. Since the retrofit, the property has experienced 20-25% decreases in its annual water consumption and corresponding bills.

Can Your Project Qualify?

Requirements differ from lender to lender, but historically any building that can show a projected 30% reduction in energy and water consumption can apply for a green loan. Lenders are now granting as much as a 10-basis point reduction on the standard interest rate of a multifamily refinance, acquisition, or supplemental mortgage loan when utilizing a green loan.

For example, if the market interest rate is 4 percent on a conventional multifamily new construction loan, by meeting green loan requirements the interest rate would dip to 3.9 percent using the 10-basis point standard. On a $10 million loan amortizing over 30 years, the owner would save $95,000 in interest payments in just ten years! Plus, long-term operating costs will be lower due to the energy-efficient measures of the building design.

Long-Term Benefits of Water Conservation

Lower financing interest rates reduce your costs and look great on a property’s income statement. A great way to reduce long-term operating costs and achieve your lending program’s energy savings requirements is to install ultra-high-efficiency toilets. Inefficient toilets have long been a culprit of hidden costs for building owners. Niagara toilets can save you thousands or even tens of thousands of dollars a year with toilets using as little as 0.8 GPF and powerful flushes that eliminate double flushing and clogging. And if your tenants pay their own utilities, buildings that are “green” tend to lease faster.

Water Conservation without sacrificing performance

No need to choose performance over water conservation. Provide both with Niagara toilets. They are designed to stay cleaner, save water and be virtually maintenance free and are backed by a 10-year warranty. All Niagara toilets are both EPA WaterSense and MaP Premium certified, ensuring that water is not being wasted while still packing a powerful flush. With toilets that use as little as 0.8 GPF, Niagara offers options that exceed the 30% water reduction required by green lending groups.

Achieve Green Loan Requirements with Niagara

Utilizing green lending programs is a great way to lower the cost of your project while also increasing the property’s value, lowering long-term utility costs and creating an environment of sustainability that tenets and customers alike continue to crave.