Designers Give A Damn But Does The Money? Yes!

Architecture for Humanity has now posted sign-like-you-give-a-damn-live”>updates and media files from Design Like You Give A Damn: Live! DLYGAD Live unites designers, architects, planners, community based NGOs, public sector practitioners and a few investors to reflect on smart, responsive, inclusive design in marginalized communities. In this alone, it achieves what few can, not only highlighting how design improves lives in marginalized and disaster-struck communities all over the world, but also keeping design grounded in practice and action, even in the face of daunting odds.

This year’s hands-on jamboree of humanitarian design activism included seminars with senior government, community development finance, sustainable real estate, academic and non-profit practitioners looking at sustainable building investments, disaster resilience and green schools, among other topics. In the session I attended (10/22/11), Investing in Social and Sustainable Real Estate, David Devos of Prudential Real Estate Investors, John Ducey of the Calvert Foundation, Constantine Kontokosta of the NYU Schack Center for Real Estate, Marc Norman of Deutsche Bank’s Community Development Finance Group and DouglasLawrence of Five Stone Green Capital – all working at the nexus of sustainability, business, real estate and impact – shared their insights:

Entry points to sustainability vary but financial viability is both a constant and a necessity. Constantine Kontokosta’s projects combine resource efficient construction and local economic development, including use of modular construction for a hotel and sustainable retrofits featuring solar PVs and wind power. Marc Norman reminded us that banks’ CRA-driven investments still could achieve a triple bottom line by focusing on water, air quality and energy efficiency. In greening Prudential’s $45 billion portfolio, of which $4 billion is LEED certified, David Devos’ priority is on enhancing net operating income (NOI) to raise capital values. John Ducey’s work at the Calvert Foundation relies on financial discipline to link thousands of investors with opportunities to make a difference. Even melding impact investment with community development finance, the portfolio loss rate of <1% illustrates the conservative credit culture. Doug Lawrence hit the crucial point that improved green operations and management can drive a 4-8% improvement in net operating income, an often-missing aspect in the economics of sustainable building.

Market making and risk mitigation require metrics. Returns and performance data – financial primarily but also environmental and social – are needed to broaden sustainable building practice, as Kontokosta noted. While multiple initiatives, local and national, are under way to address this data gap, retrofits, for instance, rely more on anecdotal evidence than robust performance data. Ducey agreed that the community development industry needs to measure impact better, pointing out that architecture professionals could play a natural potential role in identifying and advocating for green design elements with short payback periods.

Domestic projects with local economic development impacts have potential despite the crisis. Kontokosta observed that cities will be sustainable building “market makers” through regulation and PPPs. Lawrence’s Anacostia project proposal in Washington, DC displays the high potential of domestic community development in marginalized urban communities – with plans to use public land to develop mixed housing with efficient modular construction, green light industrial activity from data centers for jobs (and recaptured heat), green space and gardens and non-discretionary retail for stability and income enhancement.

International projects need clear economics because of the early stage of subsidies, policy and experience. Despite emerging markets’ lacking comprehensive incentives and policy frameworks for sustainability, David Devos mentioned, for instance, how well-accepted transit-oriented development is in Asia, especially for retail-driven mixed use projects. Prudential also learned that industrial developments in Mexico needed to encompass housing and services for workers to make them economically and socially viable. On the opposite economic spectrum, Marc Norman had engaged on projects in Haiti, with capital donated made the bank’s trading desk, to promote land ownership, mortgage markets and financing for home improvements and incremental building.

Takeaways on building the ecosystem. Afterwards, when the panelists generously shared insights at breakout tables, the challenging questions about how “green” and “community” square with capital, returns and efficiency suggests a lingering divide between the idealism of design and the calculation of money. One DLYGAD event a year can encourage some otherwise rare conversation on those connections. But what’s missing to build commonality between groups with limited mutual understanding?

David Devos had one good answer: he felt he had to get his MBA to do his job. Another participant mourned that designers weren’t trained on project economics. By the same token, how many MBA types have the LEED AP (I do, BTW) or have to do coursework in social or environmental design as an employment condition? Graduate programs on both sides of the divide should see a double green opportunity in this challenge.

As social and environmental metrics are increasingly mainstreamed into performance data and data quality, in turn, improves, this should create more opportunities to knit these disparate elements together. Regulatory changes will drive this even further as green building codes demand more substantive involvement of sustainable design professionals.

With human capital, data, metrics and policy, investors will eventually have to embrace the triple bottom line. While real estate has been mainstreaming sustainability, investors have been slow to think triple bottom line and impact investment. With the social and economic dislocation of the financial crisis, as well as urbanization pressures overseas, risk and viability will have to be linked to social and environmental factors as well.

Finally, AfH shows us how important it is to have enabling organizations advocating for more balance between people, planet and profit. Their cross-stakeholder network-building makes an underappreciated contribution to filling this gap.

Photo credit: Architecture for Humanity

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