Costs Should Not Stop Certification of Eco-Friendly Senior Living Buildings

With the exception of affordable senior housing communities, the senior living industry has been slow to pursue sustainable building certifications such as LEED. This lag is happening in large part due to financial considerations but could be short-sighted, given changes in building codes and consumer expectations.

State and local building codes across the country are constantly evolving, mandating the use of energy-efficient heating, mechanical, electrical and plumbing systems, and low-energy building materials are making sustainable housing easier to build, Direct Supply Aptura Director of Development Services Gaurie Rodman told Senior Housing News. Milwaukee-based Direct Supply Aptura provides senior living interior design and construction management expertise.

“Most buildings being constructed today will be 80% of the way toward LEED [certification],” she said.

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A growing number of senior living operators are pursuing LEED certification. Atria Senior Living has 13 LEED-certified communities, according to the United States Green Building Council (USGBC), and the Louisville, Kentucky-based operator is making significant investments to get more communities certified, Atria Public Relations Manager Cait Crenshaw told SHN. Mather LifeWays’ upcoming $460 million highrise in Tysons, Virginia is seeking LEED Gold certification, a designation its life plan community in Evanston, Illinois earned in 2012. Belmont Village Senior Living earned LEED Gold certification for its community in Berkeley, California in March.

What we’re finding is there is very minimal cost involved to go from basic green architecture to LEED, and we see that threshold going up to LEED being rather easy.

Woda Cooper Companies Vice President of Development Joe McCabe

For many operators, LEED can be expensive to consider, as well as a time-consuming process. But future residents are demanding some level of sustainable housing, however, and there are alternatives to LEED that are not as costly that can be achieved in a fraction of the time that operators can consider.

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A costly, detailed process

The biggest obstacle standing between a senior housing community and LEED certification is cost, Rodman told SHN. Construction costs in residential and commercial real estate have skyrocketed the past four years. Commercial real estate construction costs increased nearly 6% between the first quarter of 2018 and Q1 2019, according to quarterly data from Chicago-based construction firm Turner Construction Company.

construction costs Turner Construction
This graph shows how construction costs have risen from Q2 2015 through Q1 2019.

The LEED certification process is also expensive. The U.S. Green Building Council, which coordinates and measures LEED certification, charges up to $1,500 for developments to register for the process in each of the following categories: building design and construction; interior design and construction; building operations and maintenance; neighborhood development and campuses. The USGBC also charges per-square-foot fees for each category, as well as qualifying for credits and five-figure fees for expedited reviews.

All of that must be paid up front, often before construction even begins, Worn Jerabek Wiltse Architects Partner Todd Wiltse told SHN. Chicago-based WJW designed two LEED Silver-certified senior housing communities in the Chicago area — Montclare Senior Residences of Lawndale in Chicago, and Countryside Senior Apartments in suburban Countryside.

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In addition to the fees, LEED certification comes with a paperwork process that, considered in conjunction with the fees, prevent many developers from pursuing the certification.

The ones who do commit, however, view certification more as a marketing tool. These developers recognize the LEED brand carries weight among prospective residents and are willing to shoulder the extra upfront costs, if it leads to a faster lease-up and stabilization process.

“Showing that a building is LEED-certified is healthier for residents,” Wiltse said. “Savvy operators and owners see it as a marketing opportunity.”

Architecture and design firms wind up shepherding developers through LEED certification, acting as consultants and assuming responsibility for managing the process, Koo LLC Project Architect Andrew Buck told SHN. Chicago-based Koo was the architect on ThornCreek Apartments, a LEED Silver-certified senior apartment community in Thorndale, Illinois. Buck was the primary architect on the project.

Having the architect run point on LEED certification is essential, Woda Cooper Companies Vice President of Development Joe McCabe told SHN. Headquartered in Columbus, Ohio, Woda Cooper exclusively builds affordable housing, including senior housing.

McCabe acknowledges that state and local building and energy codes are being constantly updated, but they vary by location and do not address every detail the USGBC looks at when certifying for LEED.

However, the details of LEED certification are also in constant evolution, which is why architects and designers are the ideal conduits between developer and contractor.

“Without that, you’re just getting typical tradesmen doing what typical tradesmen do,” he said.

Tax credits bridge the gap

Typically, Koo pursues LEED for residential project because, compared to larger commercial properties, the cost prohibitions are significantly lessened. 

Koo was able to work with ThornCreek’s developer, Turnstone Development, on the LEED Silver process because it was a government-funded project — the community is owned by the Cook County Housing Authority — with minimal requirements for sustained design.

The funding sources for affordable senior housing is one of the biggest drivers in pushing the communities toward sustainable certification. Most senior housing developments with tax credits in the capital stack come with credits that can be applied to sustainable certification, Wiltse told SHN.

McCabe has similar experiences with using tax credits to facilitate the move to LEED.

“What we’re finding is there is very minimal cost involved to go from basic green architecture to LEED, and we see that threshold going up to LEED being rather easy,” he said.

sustainable senior living, LEED Certification Courtesy of Worn Jerabek Wiltse Architects
Countryside Senior Residence, a senior residence designed by Worn Jerabek Wiltse Architects, achieved LEED Silver certification in 2011.

The cost for LEED certification is gradually decreasing, as well, and is in growing alignment with state energy codes, making the value proposition for certification more palatable, particularly in urban developments where USGBC scores higher for credits.

“The incremental aspects for LEED are not that onerous,” Wiltse said.

LEED alternatives

When the cost of LEED certification remains a non-starter, there are alternative certifications that cover many of the same touchpoints as LEED, and at a lower price.

The International WELL Building Institute has its own certification process, the WELL Building Standard, which places a greater emphasis on sustainable interior design and its contributions to community health.

“We’re big proponents of that in senior living and believe it will become bigger,” Wiltse said.

The National Green Building Standard is run through the National Association of Home Builders. It focuses mainly on single-family homes, covers many of the same areas as LEED at a lower price point for certification, and has been extended to include larger residential communities including independent living and assisted living. Wiltse is seeing more developers use that. In addition to the lower costs, the documentation is not as extensive and it is easier to achieve.

A newcomer to the space is Passive House certification, a rigorous, voluntary standard for energy efficiency in a building, which reduces the building’s ecological footprint. It results in ultra-low energy buildings that require little energy for space heating or cooling. Passive House certification is common across Europe, and its certification process is stricter than LEED, McCabe told SHN.

Showing that a building is LEED-certified is healthier for residents. Savvy operators and owners see it as a marketing opportunity.

Worn Jerabek Wiltse Architect Partner Todd Wiltse

Last December, Woda Cooper Companies opened Fairwood Commons, an $11.6 million, 54-unit affordable senior housing community in Columbus which was the first multifamily property in Ohio built for Passive House certification. Additionally, it is expected to achieve LEED Platinum certification.

As an affordable housing developer, McCabe believes Woda Cooper has an obligation to provide its tenants with housing that instills a sense of dignity, and allows them to age in place longer while extending their limited financial resources. Anything Woda Cooper can do to help its residents save in utility bills means there is a greater likelihood they will be able to pay rent and, ultimately, be a long-term tenant.

“There are a lot of social implications of the type of housing we build,” he said.

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