Public-Private-Partnerships

With the recent ‘bailouts’ of GM, AIG, Citi, and so on, the public sector has involved itself very directly in the private sector on a massive scale. Although some call this communism, it is as American as apple pie. Nobody complained about GM working for the government during WWII when they stopped making cars and started making tanks. As in the case of the New Deal, the railroads, or the Erie Canal, substantial economic progress has always been made when the government was participating. In the modern era, the great opportunity to build a new world is in ‘going green.’

While government has often been reluctant to get involved, a quasi-governmental organization, the non-profit US Green Building Council (USGBC), has stepped into the vacuum and come up with a system of certification, Leadership in Energy and Environmental Design (LEED). This standard not only provides market credibility, it also provides a framework for builders, guiding them through the ‘green’ building process to maximize effectiveness. LEED has been so successful that more than 200 municipalities are now referring to it in legislation (1). One good example is Chicago,where all publicly built buildings must be LEED certified (2). In DC, a phased building code will by 2012 require all commercial buildings over 50,000 sq ft to be LEED certified (3).

Governments, which typically build and own their own buildings, are an ideal position to invest in themselves by building sustainably as they are ultimately responsible for the full life-cycle costs of their buildings including utilities, maintenance, repairs, and most importantly the people who work in those buildings. When considering this full life-cycle cost, the actual cost of building only accounts for 10% of the total, making the relative cost of building ‘green’ at 1-7% of building costs, a minuscule 0.1-0.7% of lifetime building costs. Given that municipalities have so much to gain in efficiency with a marginal incremental investment it is no surprise that government projects account for 29% of LEED buildings.

‘Green’ schools are the best example of the extraordinary benefits of ‘going green’ for municipalities. A study of hundreds of schools that had built ‘green’ found that over 70% reported both improved student performance and reduced absenteeism. ‘Green’ schools also have lower teacher turnover and of course lower energy, water, and maintenance expenses. In the end the cost of ‘greening’ a school can be estimated to be $3/ft2 while the benefits total $74/ft2. That is not a typo; it is a nearly 2,500% return on investment. These astounding results prompted the president of the American Federation of Teachers, Edward J. McElroy to say “this important study persuasively demonstrates that it costs little more to build high performance, healthy schools and that there are enormous financial, educational and social benefits to students, schools, and society at large (4).”

Another great example of how municipalities can benefit from ‘going green’ is the Chicago Police Department’s 9th District headquarters, which was renovated to LEED Gold certification. In this new building they went from averaging 20 officers sick a day to 12 a day, their energy costs went down 20%, and they increased their community connectivity by providing publicly available meeting rooms that with such an inviting building are always in use. For more on how the city of Chicago has embraced and benefited from going green see:

 

For more on how LEED can help work with government see, click here.