Presentation is loading. Please wait.

Presentation is loading. Please wait.

7 World Trade Center New York City’s First Green Skyscraper Jonathan Mendelson Josh Kunin-Goldsmith John R. Forbush May 4, 2007.

Similar presentations


Presentation on theme: "7 World Trade Center New York City’s First Green Skyscraper Jonathan Mendelson Josh Kunin-Goldsmith John R. Forbush May 4, 2007."— Presentation transcript:

1 7 World Trade Center New York City’s First Green Skyscraper Jonathan Mendelson Josh Kunin-Goldsmith John R. Forbush May 4, 2007

2 7 WTC is the first building to open on the site destroyed on 9-11  Symbolic value to City, State, and Country  Built by developer Larry Silverstein  Building green was a big selling pointselling point ample natural light superior air quality energy and water conservation

3 Several ‘green’ studies were combined for this analysis  California Green School CBA, 2006  Massachusetts State Green Building Cost- Benefit, 2005  Green Office Buildings Development Guide, 2006  New York State Energy Research and Development Authority  Numerous other articles, press releases, and sources

4 7 WTC has been Gold certified by LEED

5 The EIA predicts steady real energy prices over the next 20 years Crude Oil Electricity Coal Natural gas ProjectionsHistory 2005 dollars per million Btu

6 Green Building CBA uses alternative energy pricing forecasts  From 2003-2006 Electricity prices rose 6% Natural gas prices rose 14%  A recent study school of green schools predicts for both gas and electricity a real 3% increase equal to 5% nominal

7 7 WTC energy savings varies substantially with different forecasts  With a 33% energy reduction and a 7% discount rate the 30 year PV of savings is; 2003-2006 growth continues= $42 million School study estimate= $25 million EIA projection= $18 million

8 Increased efficiency would eventually decrease nationwide energy demand  Lawrence Berkeley National Laboratory – reduced demand leads price reduction of 100% to 200% of the direct energy savings”  Massachusetts state report - 90%  Even at 75% 7 WTC being green yields in $19 million indirect savings (30 yr. PV)

9 Energy savings enhance property value “Increasing Net Operating Income increases appraised value by 10x Cost Savings…”  7 WTC = 1.7 million sq ft  1 year Energy Savings = $.67/sf/yr  7 WTC worth $11.4 million more than without energy savings  The more energy prices increase, the more valuable these ‘green increases’ become

10 Green buildings have other benefits  Productivity Benefits/Health $2.00 /sq.ft  $45.6 Million 30-year PV  Existence value How much is society willing to pay for development at 7 WTC?

11 Cost savings in 7 WTC go beyond strictly ‘green’ benefits  Tax Incentives ‘Green’ tax incentives $.34/sq.ft Special WTC Rent Reductions $3.80/sq.ft Sales Tax Savings (no est) Commercial Rent Tax Savings (no est) Low. Manhattan Relocation Assist (no est)

12 WTC 7 benefits from ‘green’ tax credits offered by NYS  Estimated $1.72/sq.ft in ‘green’ tax credits over five year period  Equates to $.34 tax annual credit  1.7 M x 1.72 = $2.9 million ($2.4 million 5-year PV)

13 NYS subsidizes the first 750,00/sq.ft. rented in 7 WTC  $3.80/sq.ft for first 750,000 sq.ft rented  $2.8 million nominal amount  $33 million 30 year PV (7% Discount rate)

14 Silverstein “prices in” almost $20 extra into 7 WTC’s rental price  Avg Lower Manhattan Class A Office space = $34/sq.ft  7 WTC = $50/sq.ft That extra rent "sits in the context of a lot of new vacancy" downtown, said one real-estate broker who asked not to be named. – Tenant Wise ‘05

15 Symbolic value of WTC site pressures NYS to pass incentives o June 2005 bill passes NYS legislature awarding tax credits to WTC site o Governor assigns “a message of necessity” to the bill, a tool used to bypass the state’s constitutional requirement that the final version of a bill must be on each legislator’s desk for three days before it can pass. o As a result, many legislators were forced to vote on the bill almost immediately after receiving it.

16 Who gets the benefits?  Indirect energy savings Lower prices = Public  Existence value Symbol = Public  Reduced energy costs Higher rent = Silverstein  Property value Higher price = Silverstein  Health, productivity and others Higher rent = Silverstein  Tax credits/exemptions incentivizing occupancy Public Money = Silverstein

17 LEED promotes green through its point system

18

19 The cost of achieving LEED points can vary o Mainly front-end o Many factors: o Location o Weather o Bidding climate

20 California study: average cost premium of LEED Gold is about 2%

21 Langdon study: cost premium of “green” can vary greatly

22 Green premium: 7 WTC o Under 5% of cost o At $700M, green premium of $0-35M o At 2%, would be $14M premium

23 Financing for 7 WTC: Mainly Liberty Bonds  $475M in tax-exempt bonds  Three types: Issue A, 10 years, 6.25% Issue A, 30 years, 6.5% Issue B, 10 years, 6.75%  Callable after 4 years at 3%

24 Liberty Bonds: cost to federal government in lower tax revenue  Joint Committee on Taxation: $8B bonds to cost $1.23B in tax revenue over ten years  But higher than normal interest rates  Cost depends when called $114M if after 4 years $220M if after 10 years $265M if not called

25 Liberty Bonds: significant benefits to Silverstein  If bonds decrease interest rates by even 1%, benefits to Silverstein at least: $20M if called in 4 years $33M if called in 10 years $41M if not called

26 Conclusion: Net benefits TypePresent Value Beneficiary Energy$25 mSilverstein Property Value$11.4 mSilverstein Aggregate Energy$19 mPublic Productivity$45 mSilverstein ‘Green’ Tax Credit$2.4 mSilverstein WTC Rent Credit$33 mSilverstein Total Benefits$135.8 m

27 Conclusion: Cost of green premium, Liberty Bond effects Cost TypePresent Value Source affected Green premium$0-35 mSilverstein Liberty Bond Effect Present Value Source affected Benefits$20-41 mSilverstein Costs$114-265 mFed Gov’t


Download ppt "7 World Trade Center New York City’s First Green Skyscraper Jonathan Mendelson Josh Kunin-Goldsmith John R. Forbush May 4, 2007."

Similar presentations


Ads by Google