Mr. Weissman

Eco-Friendly Practices

Top Government Incentives for Greening Your Hotel

By Arthur Weissman, President and CEO, Green Seal, Inc.

Tax(1) incentives that are currently offered by state and local governments fall primarily into two categories: "hard" incentives such as grants, loans, tax breaks, or rebates that are given to developers and their clients by an agency; and "soft" incentives which include expedited plan review, permitting, and training or marketing assistance. The main difference between the two types of incentives is that hard incentives tend to focus more on building new relationships with prospective businesses to ensure resource-efficient facilities, and soft incentives tend to focus more on strengthening existing business relationships with a community to increase public awareness of environmental accountability. One example of a very common soft incentive that many state governments have already adopted is marketing to and encouraging their employees to use facilities for business travel and meetings that are managed in an environmentally responsible manner.

In comparison, hard incentives also tend to be very short-term and performance-based, which means they are awarded only after a developer completes the required design, construction, or operational requirement specified by the program. The extensive adoption of the US Green Building Council's LEED criteria by local agencies as metrics for grants or tax rebates is an example of incentives that are offered for energy, water, and resource-efficient planning and design by developers. The rebate programs from Southern California Edison1 and Pacific Gas & Electric(2) are examples of more long-term hard incentives for environmentally responsible operations and management.

A very thorough and updated listing for Energy Efficiency Incentive Programs available throughout the United States can be found in the North Carolina Solar Center's Database of State Incentives for Renewables and Efficiency (DSIRE)(3). Cities are also starting to offer carbon reduction benchmarking grants to businesses which voluntarily participate in third-party certification programs or other performance-based operational monitoring programs. Additional environmental planning, design, finance, and construction resources for developers can be found on the Green Building Finance Consortium(4) website.

Surprisingly, however, studies by both the American Institute of Architects (AIA) and the National Association of Industrial and Office Properties (NAIOP) have found that developers would rather see more soft than hard incentives offered by agencies. Since many environmental efficiency calculations now require specialized training and assistance from agency staff for businesses(5) and LEED criteria for building design and construction are becoming more popular for new real-estate development projects in the United States, developers are now asking how using environmental incentives will affect the speed at which any given property can come online and begin generating revenue(6). In response to this need by the development sector and to improve their ongoing support for existing businesses, many cities are now streamlining and consolidating their environmental incentives into green business programs.

Green Business Programs of Chicago, Los Angeles, and New York - Examples of Consolidated Government Assistance

In 2008, both the City of Chicago and the City of Los Angeles launched green lodging recognition programs as components of their larger green business engagement efforts; in early 2009, New York City and State have also begun discussions with their lodging associations regarding the benefits of green recognition programs. These cities, like many others which are working to develop city-wide climate action plans, are interested in developing green business programs as a means to re-engage with the local business sector and realize their commitments to the U.S. Conference of Mayors Climate Protection Agreement(7). In addition to recognizing local lodging facilities which are making efforts to adopt environmentally responsible practices, other business sectors covered by the green business programs of Chicago, Los Angeles, and New York also include restaurants, museums, office and retail spaces, and automotive services.

What is unique for each program, as a partnership with the private sector, is that they are making purposeful efforts to consolidate information and resources for their private-sector partners in the following areas: 1) All the business development and operational incentives offered by the various city departments, including economic development, permitting, planning, and environmental compliance for waste, water, and biodiversity preservation;2) Incentives that result from special climate change partnerships between the city and external groups or local utilities; and 3) Local supply sourcing and waste management networks that can help interested businesses realize their environmental goals. (8), (9).

In addition to these city-wide resources, both the Chicago and Los Angeles programs have developed specific marketing incentives within their green lodging tracks where lodging properties seeking certification by a third party receive co-branding opportunities with the city or achieve special recognition within the local market from the city for their environmental efforts. (In the interest of full disclosure, Green Seal is the third-party certification program chosen by Chicago and Los Angeles for their green lodging programs.) In addition to marketing, city employees managing these programs actively work with applicant properties to identify incentives that are most appropriate for the property's environmental compliance needs and goals.

Program managers also have held a series of informational workshops for interested property GM's to ask questions and learn more about the details of participating in the program.

Another potentially soft, but analytically helpful, incentive for participation in either Chicago's or Los Angeles's Green Business Program is access to the online databases that each program is beginning to develop in partnership with the International Council for Local Environmental Initiatives (ICLEI). By using ICLEI's Clean Air and Climate Change(10) software to benchmark applicant lodging properties and other companies, city program managers are beginning to track how the efforts that are being made by resident businesses reduce the overall greenhouse gas emissions output of the city. These databases are similar in design and reporting function as the environmental management and monitoring software systems currently in-use by individual lodging properties and chain brands. Participation within the city programs, where individual property metrics can be uploaded into the CACP database, can also provide an additional marketing analysis tool for property and chain managers who are interested in understanding and adapting their current environmental policies to the metrics used in the cities in which lodging properties are located.

Butler also points out that many of the incentives that are currently available from local governments for energy efficiency will only be around as long as green building standards are not the norm (11) As the incentives disappear, regulations stricter than California's AB32(12) may come into force, and include carbon taxation regimes for businesses operating outside the energy-efficiency targets of the city or state where properties are located.

While many hotels are incorporating environmentally responsible design, construction, and management polices into their operations, additional help for fully integrating environmental construction and management into lodging properties can be sought out from cities like Los Angeles, Chicago, New York, and others which are actively seeking ways to consolidate and package their technical services and fiscal incentives for businesses that share the communities' environmental performance goals. As environmental design and management become the standard, these opportunities are likely to be replaced with stricter regulation and taxation for businesses that do not comply with city, county, or state environmental goals. Why wait until then?

Preliminary research for this article was done by Rani A. Bhattacharyya, Executive Assistant to the CEO, Green Seal, Inc. She holds an M.S. in Recreation Parks and Tourism Management from Western Illinois University and has assisted rural communities in the United States and internationally with tourism development projects.

References

(1) "Case Studies: Hospitality". Southern California Edison. 12/30/08
(2) "Energy Savings & Rebates". Pacific Gas & Electric Company. 12/26/08
(3) "State & Local Energy Efficiency Incentives". Database of State Incentives for Renewables and Efficiency (DSIRE). NC Solar Center. 12/30/08
(4) "Section 11: Gov. Regulations and Incentives & Section 50.5 Trade Groups: Real Estate". Industry Resources Webpage. Green Building Finance Consortium (GBFC). 12/26/08
(5) "Local Leaders in Sustainability". The American Institute of Architects. 12/15/08
(6) "Green Building Incentives That Work: Look at How Local Governments Are Incentivizing Green Development". For The National Association of Industrial and Office Properties Research Foundation (NAIOP) By Yudelson Associates 12/10/08
(7) "The U.S. Conference of Mayors Climate Protection Agreement". The U.S. Conference of Mayors. 01/09/09 http://usmayors.org/climateprotection/agreement.htm
(8) "Where We Have Been". Chicago Climate Action Plan. City of Chicago. 01/09/09
(9) "Proposed City of Los Angeles Certified Green Business Program." EnvironmentLA. City of Los Angeles. 01/08/09
(10) "CACP Software". ICLEI. 01/08/09 http://www.icleiusa.org/action-center/tools/cacp-software
(11) Butler, James. "The Compelling "Hard Case" for "Green" Hotel Development." Entreprenur.com. Cornell Hospitality Quarterly. 01/09/09.
(12) "California Global Warming Solutions Act of 2006". State of California. 01/09/08.

Arthur B. Weissman, Ph.D., is President and CEO of Green Seal, Inc. He has experience in environmental science, policy, and standard-setting in public and private sectors. He has led the non-profit's resurgence as a force to make the economy more sustainable. He served as an international convener in developing the ISO 14000 standards for environmental labeling, and was the first Chair of the Global Ecolabeling Network. He has developed policy for the Superfund waste-cleanup program, served in the U.S. Senate as a Science Fellow, and worked for The Nature Conservancy. Mr. Weissman can be contacted at 202-872-6400 or aweissman@greenseal.org Extended Bio...

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