Reframe Pod Ep4 - Perry England
[00:00:00] Jeff: I'm Jeff Nichols. Welcome to Reframe, the show about the forces driving sustainability in our built environment. You know, there's been a consistent thread that has run through our first couple of episodes. Something that each of my guests have called out, and that is that there is a huge lack of awareness in the marketplace around these energy incentive programs.
[00:00:40] Building owners, who are the primary beneficiaries of these programs. Aren't leading the conversation and don't understand these incentives. Well in some cases cpas who do understand Tax code and these incentives, you know are Uh coming to the conversation albeit late, but in many cases, they're still playing catch up And then often cases, the architects, designers, and general contractors, they're not even engaged in the conversation, but it's an important topic.
[00:01:12] And if we don't continue to raise awareness of these programs and the benefits from these programs, we're never going to make headway in the fight against climate change. Today, we are actually going to talk to somebody who leads these conversations with building owners, who is truly an expert, who has literally helped draft policies and recommendations and regulations in this space.
[00:01:37] So I'm thrilled to introduce Perry England, who's the Vice President of Building Performance at McDonald Miller. Thanks for joining me, Perry. Thank you. It's great to be here. So Perry, how, how would you describe your role in what you do?
[00:01:51] Perry: I would call myself a building performance ambassador, basically just out there evangelizing the law, what the process looks like, making sure building owners are adequately prepared in planning for compliance, understanding the consequences of noncompliance.
[00:02:07] So I would say. Call me your building performance ambassador. At the day, that's kind of how I see my role today within the organization and for the industry.
[00:02:18] Jeff: You know, for me, it's not every day that I get to talk to somebody who has worked in and around nuclear power plants. And so Perry, we got to start at the beginning.
[00:02:30] How in the world did you get into this industry and how did you end up working at a nuclear power plant? Tell us the story.
[00:02:37] Perry: Oh, geez. Um, well, it started with the need and desire to get a job relevant, relevant to my pursuit as a mechanical engineering degree at the university of Tennessee. So. Um, that's, that's how it all started.
[00:02:50] I was a starving, uh, freshman, uh, at the university and I needed to get a job that was somewhat aligned with the education I was seeking. And so, um, after lots of phone calls my freshman year and interviews and, um, during that time, people really weren't hiring, unfortunately, that was early eighties, mid eighties, early eighties, actually.
[00:03:12] Um, but, uh, gentleman named Walter Macaulay with United Test and Balance took me underneath his arms and. And, uh, introduced me to the test and balance, air and water balance world, working inside existing buildings and he had a network out there. And, uh, I went back to college and, um, started leveraging that network and, which ultimately landed my first job at the Department of Energy Facilities in Oak Ridge, Tennessee.
[00:03:37] Um, so I was a environmental control design engineer. And so my boss and I were the only two that had a test and balance background and experience. And so, uh, we were selected to go down and help, uh, Tennessee Valley authority, start up the, uh, nuclear power plant in Saudi Daisy, Tennessee. So that was kind of a fun experience for sure.
[00:03:58] Jeff: Yeah, for sure. As, as a young guy starting out his career, getting to run around in a nuclear power plant must've been pretty cool.
[00:04:05] Perry: Oh yeah, oh yeah, I learned, learned how to be safe around radioactive material. That's for sure. That's something you don't want to mess with.
[00:04:13] Jeff: Well, and fast forwarding to, you know, McDonnell Miller and building performance management.
[00:04:18] Tell us a little bit about, you know, what is that, what does building performance management mean? And, and tell us a little bit about it. about what you do at the company.
[00:04:25] Perry: Yeah. Today, uh, building performance is all about making buildings work better. You know, it's, it's just a simple tagline. Um, there's a lot to it though.
[00:04:34] Um, there's a lot of, a lot of moving pieces and parts and technology, uh, automation specifically that exist inside the built environment. And, um, part of my. My role here at McDonnell Miller for the past 18 plus years has been to, uh, harness the skill sets of those that are on our workforce and being able to really work with customers and deliver on making their buildings work better.
[00:04:59] That's, that's been my history here has been kind of my passion of the industry since 1985. And it's fun to still be doing that. And now with the new legislation that's, uh, Been in, been, uh, enacted in the state of Washington and, and also in Oregon. Um, I'm leading the charge for the organization to be in the forefront of helping buildings comply with these new performance standards inside the built environment.
[00:05:25] Jeff: Well, it's interesting as we were chatting before, you mentioned something that, you know, for building owners, this is a very unique environment. And, you know, in many cases, it's, uh, these are things you should do. But we're kind of facing in this climate, you know, this is a matter of survival and not just in terms of trying to combat climate change, but, but just, you know, in terms of this asset and how we continue to maintain it and really optimize it.
[00:05:54] This is a really key juncture. Tell us a little bit about some of those conversations you're having with building owners and you know, what, what are those conversations sound like?
[00:06:03] Perry: Um, they usually start off pretty prickly, um, because usually it's just another government regulation that they're having to grapple with as building owners, and especially right now with the economy and the cost of financing improvements inside the built environment, end of useful life upgrades, things of that nature, it's very costly and straining the financials for building owners.
[00:06:27] This is the reality of life right now. And I think one of our successes, especially with my knowledge of working inside of buildings for my career, is the fact that we can make it as simple and cost effective as possible for them to get through the compliance process. We've really studied the law. We have a good working relationship with the department of commerce, who's the agency responsible for enforcement of the legislation, and so we we've really learned how to make.
[00:06:58] This as painless to building owners. Um, and so I think that's been at the cusp of some of our success so far.
[00:07:05] Jeff: How are building owners looking at energy tax incentives and, you know, trying to leverage those to help pay for some of these improvements?
[00:07:12] Perry: I'm always amazed at what I don't know, uh, that I think people should know.
[00:07:17] Um, it's, it's, uh, you know, that's a continual part of the education process and we take it personally. That's our responsibility, uh, to educate building owners and, and operators on what's available to them, especially when it comes to free money. And so we've worked very closely and one of my jobs here has been to treat our utility companies as a business partner.
[00:07:41] We treat them just like we treat our customers. The reason why is really because we want to, we want to help them evolve their incentive programs. We're fairly blessed here in the Northwest to have utilities and legislation in place that has supported energy conservation. Utilities were a key delivery of energy conservation since they're providing all the power to buildings, both gas and electricity.
[00:08:07] Having those relationships with utilities, being able to be their trusted partner and advisor on how they evolve their incentive programs allows us to bring those incentives directly to building owners and quantify them around getting energy efficiency improvements done, um, with, with additional help to offset some of those capital costs.
[00:08:28] What's a couple real examples? There's, there's lots of them. We work both in the public sector as well as the private sector. I tend to favor private sector just because that's a core part of our service base as a service provider in the Northwest. And so we've really tailored our offerings to, to align with the private sector, financial buying criteria.
[00:08:53] When you can bundle together incentives from utilities, as well as some state incentives that are offered directly to private sector building owners, and couple that with also some federal tax credits, uh, through the internal revenue services, uh, 179 D tax deductions and, and most recently direct pay tax credits.
[00:09:14] You start getting to a point where through the energy savings coupled with all these incentives and other financial benefits to the building owner, uh, you can actually reduce the owner's capital outlay by as much as 70%. We've got examples of that in the commercial real estate business. So when you have a down payment of 30 percent to get a, you know, of, of let's just say 300, 000 on a million dollar project, that's a pretty damn good deal.
[00:09:39] Yeah. And that pays for itself over well within the useful life of the improvements. So less than 10 years. And so it makes it a really financial attractive deal for building owners once they understand the business financial math that goes into making that all a reality. Absolutely.
[00:09:57] Jeff: What, what would you say is the biggest stumbling block in, in getting building owners to understand that potential benefit?
[00:10:05] Perry: Patience, patience to listen and understand that simple access to the CFO of a real estate portfolio owner, um, is extremely challenging. And so just getting access and the time on the calendar for them to Not have other influences and other priorities so that they can actually listen and understand and actually work with us with spreadsheets and whiteboard conversations.
[00:10:34] Um, it becomes reality. Um, but until a billion owner, whether it's a CEO, CFO, the executive board, um, that are making the financial decisions for that asset, unless they are willing to take the time to learn and understand, it's very, very challenging to ever, Move the, move the needle forward.
[00:10:54] Jeff: So if I'm a building owner, why should I care about some of these performance initiatives?
[00:11:00] Talk to me a little bit about, you know, you know, some of the policies, especially in the Pacific Northwest and just across the country and walk us through that.
[00:11:08] Perry: You know, I think it goes beyond just regulatory environment in the respect of whether it's a city jurisdiction, like in Seattle with emission standards or at the state level in Washington state with the clean buildings performance standard.
[00:11:22] I think it goes beyond just those regulatory environments. I think there's also a shareholder, uh, when publicly traded companies, you have SEC regulation that's, uh, that's requiring ESG reporting at a corporate level, um, That gets passed down to landlords that have publicly traded companies as tenants.
[00:11:44] So what we're seeing is those other types of community engagement, employee engagement, social justice, kind of, uh, initiatives and interest, whether it be a future tenant, prospective tenant, a current tenant, or just the local community, we're finding those elements. Of running a business and managing a real estate portfolio of properties, uh, are even equally important in driving the need to embrace energy efficiency, decarbonization strategies within the built environment.
[00:12:18] Jeff: From the time that a building owner recognizes that, you know, they need to take some steps here to address efficiency or building performance in their building, walk us through what that journey is like and how long does it take from start to finish?
[00:12:33] Perry: You know, there's two parts to, to, um, to the answer to that question, Jeff, this is getting a little technical, but there's, there's an initial part of the first exercise I call it exercise number one.
[00:12:45] So, as the first step of moving through the compliance cycle, and that's basically using Energy Star Portfolio Manager, which is a federal tool that's been around for decades, uh, getting your building, uh, Record it or connect it to energy star. And, and that basically is the first piece of, of the exercise.
[00:13:05] The other piece is evaluating your building to what the state said it needs to perform at. And that exercise, that exercise number one is considered the benchmark. Call it the benchmarking exercise. So that ultimately is the beginning of the game. And so you, what you. Finish that process, you have a decision, you have a outcome, and that outcome is either you're meeting the target that the state's established, or you're not.
[00:13:33] It's a binary decision, right? Yeah. So with that outcome, if you're above your target, so you're consuming more energy than the state says you should, then that process could be like another two and a half year cycle. Because it requires identifying what improvements need to be made, getting the capital raised and allocated to fund those improvements, and then measuring the outcome for at least 12 months after those improvements are made to make sure that you're below your target.
[00:14:04] Before you can submit your paperwork to the state for compliance, that cycle is a two and a half year cycle on most, you know, what we see on average, a two and a half year cycle can be longer and it can be shorter. Right? If you're of the 52 percent of the population of buildings that are below their target.
[00:14:23] That's the statistical number that we're finding in the work that we've been doing, that 52 percent of the buildings are below their target, so they're performing better than the state said they should, then that process could be somewhere on average seven months, maybe a month or two faster or a month or two longer, depending on the flow of information and the readiness of the organization to embrace their new roles.
[00:14:48] So that's, that's the range on a good day, seven months, if you're below your target on a rainy day, a two and a half year process that gets you to the end goal.
[00:14:57] Jeff: So when work has actually been completed, the efficiency improvements have been performed and done.
[00:15:03] Perry: Um, got it. Very cool. And your, and, and performance has been validated for 12, 12 continuous months.
[00:15:09] Even though you get the work done, you still have 12 months of validation that the work. Is getting you to below your target. So you got to add at least another 12 months. We suggest at least another 16 months. So that way we have four months of tuning and making sure things are going to perform right when we get into what's called a performance period, which is that 12 month cycle.
[00:15:34] Jeff: We're in Washington state where the clean buildings performance standard is starting to take effect. What are you seeing? What are the conversations that you're having right now? A
[00:15:43] Perry: lot of it is education. It is really challenging to get the word out. You know, the department of commerce, who is the authority having jurisdiction over the compliance of this legislation, they've sent letters out to all the building owners that are covered.
[00:15:58] They continue to send reminder letters out on a systematic basis. Um, many of our. Non governmental organizations, trade organizations, nonprofit organizations are standing up free webinars, similar to what McDonald Miller is doing for the industry, but it's really getting the word out, having people understand what the potential impacts are to their business.
[00:16:23] If they don't take action, that is my personal biggest fear is that we don't do a reasonable enough job at educating the marketplace and they're caught blinded. Who's accountable for that. And so canvassing the industry, making sure that we're covering all corners of the States that, and all properties of all sizes and ownership structures is critically important right now so that no one can say, I didn't know.
[00:16:51] Jeff: What's the ramifications of, of, you know, somebody getting caught flatfooted? Like, what, what are we talking about here?
[00:16:58] Perry: I consider it a notable fine of a dollar a square foot plus a $5,000 just administrative assessment and a up to a dollar 50 a square foot. Wow.
[00:17:09] Jeff: Yeah. So for like a 20,000 square foot building.
[00:17:11] And is that, is that $20,000, is it a one-time penalty or is it.
[00:17:16] Perry: Yeah, in the state of Washington, and also the rules are being finalized in the state of Oregon, but it's a five year compliance cycle. So every five years, it's kind of what I, what I liken to a rinse and repeat. Um, the, the standards and the rules get revised every five years and then you have another five year compliance cycle.
[00:17:36] Right. And so that fine continues on over perpetuity, um, until you get your building into compliance. Okay. So it can be pretty significant, especially when you're already stressed financially on property, on your real estate portfolio, because of tenant changes that are happening inside of buildings right now with, um, post COVID type situations.
[00:17:57] And so when you combine all that, in addition to. Basically additional fines that basically have to go to the financial profitability of the business, uh, because you cannot pass through fines to your tenants. So those things, um, really start compounding, you know, the financial security of, of building owners.
[00:18:18] For sure.
[00:18:19] Jeff: And I imagine there are going to be other partners that building owners have to deal with that probably are not going to look very favorably on those buildings that don't take some action.
[00:18:29] Perry: Yeah, I think the, I think that's spot on, Jeff. Let's just take this up one level and look at it just from an overall climate regulatory environment right now, climate policy that's happening at the federal, state, and local jurisdiction levels.
[00:18:43] In the state of Washington. The Clean Buildings Performance Standard is only one of a stack of seven pieces of climate legislation that have all been adopted by the state that affect everything from the decarbonization of our utility infrastructure, to transportation, obviously, to even industries that are considered trade exposed industries that are the high polluters, high greenhouse gas emission emitters.
[00:19:09] Buildings are only one portion of that stack of legislation. In the state of Oregon, The building performance standard in the state of Oregon is one of a stack of 24 climate policies. And it varies state to state, jurisdiction to jurisdiction, but there's over 33 states that have climate action plans adopted by the local jurisdictions, and they range in blue states to red states.
[00:19:33] So it's independent of politics. It really is, I think, a movement that's happening in the nation, as well as in the world. Internationally as well, Europe has led this way for at least for a decade or more. And so, so I think all those different factors that I can only impress on building owners, you can't continue to not pay attention.
[00:19:53] So I think those things are, are definitely factoring in. And as you indicated, Jeff commercial lenders, your risk underwriters. Insurance companies that is, your appraisers, uh, evaluators of your asset value are all paying attention to this issue. And, and especially if you're in coastal communities or a hot, humid climate communities, such as the Southeast and Southwest, you better darn toot in they're paying attention to protecting their asset and whether or not they want to provide funds to your building.
[00:20:26] Jeff: One of the things that really shocked me, Perry, as I was, you know, getting educated is that how big the built environment and buildings are in terms of greenhouse gas emissions. Can you speak a little bit about that and help educate the audience as to, you know, the role that buildings play while it's just, you know, one part of the overall climate picture?
[00:20:48] It maybe is more significant than people think.
[00:20:52] Perry: Yeah, and I conditioned my response to the Northwest. We're in an environment where we've had clean energy through hydro with Bonneville Power Authority, BPA. And so we're pretty rich in hydropower, which is considered clean energy from an electricity standpoint.
[00:21:09] And the reason why I preface it that way is the fact that when you look at other states, power is more on the larger greenhouse gas emitters, so the built environment. Becomes a more dominant player in reducing greenhouse gas emissions within that jurisdiction because of the carbon intensity of of the electricity source or the use of natural gas in the Northwest, the built environment, the commercial building space.
[00:21:36] Is the second largest greenhouse gas emitter in the state of Washington and also in Oregon, transportation is number one, but it's like really close within percentage points of one another, but buildings are the second largest emitter in the state of Washington. And so hence the reason why for the state of Washington to achieve their 2050, um, re greenhouse gas emissions.
[00:22:01] Mandates, buildings have to become part of that solution.
[00:22:06] Jeff: Yeah, you know, those, I think that maybe think, Oh, this is a fad, you know, and, and you're going to come and go. When you look at, you know, some of the actual data, it's pretty hard to think that they're not going to have to be a part of the solution.
[00:22:20] Just driving electric cars doesn't get us to net zero, right? As much as, you know, uh, Elon Musk would want us to believe that, right? So, um, so let, let's switch gears, you know, back to building owners and, and okay. So they're starting to understand, all right, there are these regulations, you know, nobody, uh, probably, you know, loves additional kind of regulations.
[00:22:43] Tell us a little bit about the types of building owners that you meet and, and where they are as they, they begin to internalize what this means for them.
[00:22:51] Perry: Usually the first acquaintance. You have those that are opposed based on ideology. So this is something that came out of Olympia, kind of his initial response, right?
[00:23:03] Olympia is our state Capitol, you know, when like the public sector, they're just mandated to do it, right? So they're driven to do this and they just have to figure out how to get the funding and the resources to make it happen. Uh, but there's no getting around it. Um, and then you have, uh, those building owners that understand the need to incorporate these new compliance obligations into their business planning.
[00:23:27] And so they're willing to listen and to engage in conversations. And so that's to me, kind of the three variations of building owners that are out there based on attitude and temperament and also compliance regulatory authority.
[00:23:45] Jeff: So how do you maybe temper your message for each of those, you know, audiences?
[00:23:50] Perry: It requires Empathy, empathy. Um, you have to be empathetic with those that ideologically are opposed to additional regulatory environment. And so you listen and be a sponge to absorb and empathetic to their concerns and, and impacts to their business. But at the day, you. We have to get to a conversation that's constructive.
[00:24:18] We have to respond because it is law. And so you have to get to a point where you're willing to listen about what is it going to take to comply, or what's it mean to me if I don't. There's a business decision. You have to be informed. Regardless, you can choose to pay the fine and move on. No one's telling you not to do that, but you need to understand that and equate that into your business model.
[00:24:42] Is it worth it? And then I think those that are receptive and understand the importance of regulating the performance of buildings as it pertains to achieving our overall greenhouse gas emission reduction objectives. Um, those building owners are definitely engaged in a lot easier conversation or are moving faster than the others.
[00:25:08] Jeff: It seems like there is more capital than ever, you know, at a federal, state, even utility level to help building owners, you know, take action. Is the money there or are we, is it, is it just have to come out of the pocket of the building owners?
[00:25:25] Perry: Some of the money is there. Unfortunately, or obviously, the incentives that are offered by utilities can cover somewhere between 10 and 30 percent of the first cost.
[00:25:36] That's not uncommon, at least in the Northwest, specifically in Washington state. The state. In the state of Washington has set aside additional incentive dollars for building owners that are basically the higher energy consumers in the state, and there's definitions around what constitutes a reasonable application to acquire those additional incentives, and they can be fairly notable.
[00:26:04] I mean, it's 85 cents a square foot. In the state of Washington. And so for a hundred thousand square foot building, um, in addition to the utility incentives that are available and also the, uh, federal tax credit incentives to building owners, um, that's where you can get into something that's pretty notable reduction in your first cost and the benefits to the building owner.
[00:26:29] They don't cover a hundred percent. Yeah, and I don't think that's reasonable to expect them to cover 100 percent because these are investments, energy efficiency investments or investments that pay for themselves and and the other kind of indirect benefit. It also improves the comfort of the environment.
[00:26:50] So your tenants, your occupants become more comfortable as a result of smart energy efficiency investments. So there's other benefits involved. Plus your useful life, your equipment gets extended, your repair costs go down. There's a lot of factors and benefits to building owners so that the value proposition just only magnifies.
[00:27:11] Jeff: At the federal level, 179D, you know, is a tax deduction that, you know, gives you a benefit per square foot. Would you say that building owners, do they understand that? Are there many that are looking to take advantage of that? Or what's kind of your read on the perception around 179D?
[00:27:30] Perry: It's really hard to know, um, because that's really, uh, at the, uh, under the umbrella of the owner's tax consultant who prepares their tax returns, I would say your large firms, tax firms that, that, uh, Work with a lot of the portfolio managers and stuff are fully aware of the 170 90 D deductions and work with their clients to acquire that.
[00:27:55] I know as a business, McDonnell Miller takes advantage of those as well. Um, so I think historically the more sophisticated building owners, uh, with, with professional techs. Firms, accounting firms that support them, um, have taken advantage of the 179 D. The inflation reduction act definitely has sweetened those incentives, those credits, as well as offering to the first time that I'm aware of nonprofits and tribal entities and governmental entities, a direct pay tax credit.
[00:28:29] That could be 6 to 30 percent of the cost of the, of the qualified improvement. And so for the first time, non private tax exempt entities can take advantage of these different tax credits, which is great, especially when it's energy related and, and benefits the community.
[00:28:47] Jeff: I've heard quite a bit around, um, you know, not for profit hospitals as well that, you know, are looking to invest in solar charging stations, geothermal as well, that there's some pretty cool incentives that are out there for those types of institutions to pay for some of these improvements.
[00:29:06] Let's switch gears and talk a little bit about, uh, going back to this fear. You know, one of your greatest fears I heard is that building owners are just not going to get the message that there's this lack of awareness, understanding education. What else do you think we can do about, you know, addressing that fear?
[00:29:24] Perry: One of the things I've been advocating for, I think what we have found is when the cities specifically get involved and create their city councils, allocate dollars to hire a consultant, to create incentive programs, to support their Building owners that are covered by this legislation that's impactful when the city's saying we want to help you and here's some dollars and in a professional organization to be able to support you through the compliance process, we've seen significant uptick and and.
[00:30:00] Willingness to engage and get through the compliance process. So those types of programs continuing, unfortunately, we only have two cities that have stood up incentive programs in the state of Washington. Uh, we have a long ways to go to get others to get the allocation of dollars and get similar types of programs created.
[00:30:19] But I think we need to replicate those programs because they have shown and demonstrated notable uptick and participation. Yeah. The others is utility companies play an important role in this too. They have direct connect to their, their customers in their communities. And so, um, I think many, if not most of the utilities in the state of Washington have already embraced the clean buildings performance standard, have stood up incentive programs, such as a clean buildings accelerator program, which, uh, is focused on working with building owners that want to do this work themselves.
[00:30:55] Putting them through kind of a cohort educational kind of environment to be able to complete the process of compliance independently of having the higher service provider. So those programs are working. And then outside of that, it's just working with the trade organizations that represent billion owners and management.
[00:31:14] Industry and getting sitting now one-on-one conversations and lunch and learns and things of that nature that are supported by those organizations.
[00:31:23] Jeff: That's cool. About the cohorts. I didn't actually know about that, but that makes a lot of sense. The buildings that are very similar in size and, and age and scope and all that sort of stuff to, to learn from others right in their peer group.
[00:31:35] That seems like a really, really, really cool approach. Talk to me a little bit about. How are you guys trying to lead the way, you know, obviously the Pacific Northwest, maybe a little bit different environment than other parts of the country, but how is McDonnell Miller really looking at this and what's the opportunity you see and how are you trying to lead?
[00:31:55] Perry: Uh, we've been, you know, I think we took this on as a corporate initiative back. Once we saw the legislation evolving in 2019, we were prepared. We already started having the conversations internally from an executive leadership perspective. And once the law was adopted, the rules were completed in 2020.
[00:32:17] We came out of the gate fast. We have an obligation to our, to our customers. And we took that seriously. And so that's why we took this on in the early stages and really focused on our existing service base. Um, as a consequence of that. It's also a market differentiator for us, right? Because people see us.
[00:32:38] We're engaged with the cities, uh, running their programs. We've been actively involved with the Department of Commerce at the state level. We're working on the work groups down in Oregon with the rulemaking that's happening right now with their building performance standards in Oregon. So there's a, definitely an uptick in our business.
[00:32:58] You know, we are, we are a for profit company. And so, But we're using this as a way of supporting our current and prospective customers.
[00:33:07] Jeff: When you look into your crystal ball, what do you see in the next
[00:33:12] Perry: five years? I think the building performance standards are going to continue to evolve. There's many states.
[00:33:20] Probably, I think, at least two dozen states that I'm aware of that have similar type of legislation, all regulating and structured slightly different. Um, New York City is a, you know, major part of that as well, so it is happening across the nation. I see that those types of programs are going to continue to happen.
[00:33:41] Right. They're going to, it's just going to be a natural part for all the many reasons we've stated previously. Um, it's just all part buildings are a big part of the climate resiliency solution set. The other piece, I think we're going to see more involvement and engagement for commercial lenders.
[00:33:59] Insurance underwriters and the evaluation industries. I think the appraisers are going to become more involved. I think brokers are going to have to start paying attention to this as well. So I think the brokerage industry is going to have to get up to speed on this because I can only anticipate that the need to find buildings for their client that.
[00:34:22] Meet certain ESG and sustainability and climate resiliency objectives is going to become more and more important to companies that are seeking space in the local markets. And so I think those things are going to continue to evolve and become higher and higher priorities. And so you're going to see the need for billion owners to pay more attention and where it's kind of a survival of their business to be able to accommodate those, those demands, those requests.
[00:34:52] Jeff: It's interesting. I think so often the topic can get politicized, right? Or it brings a lot of baggage into it versus one of the things that I think is important is, is just the conversation, you know, green is green, you know, uh, lead buildings, right? Command higher rents. That when you have buildings that are efficient and, and really, um, you know, run well, not only does it save you money, but you know, it allows you to command a premium.
[00:35:19] So I, it's one of the things that I try to really promote that, you know, to me, it's just logic. You know, how do we have a common sense? Sends conversation around some of these topics. It's, it really is about, you know, the financial performance of this asset versus, you know, an ideology necessarily, or, you know, one way or the other.
[00:35:38] So I certainly agree with that. Anything else that we didn't discuss that you, you think is really important?
[00:35:46] Perry: Just to kind of like the general messaging to building owners, please be aware you'll, you know, quit. Ignoring this as a real topic to, to understand, I think it's important that you engage, it only takes 30 minutes to understand the law and the compliance process.
[00:36:06] So that's, that's the number one thing. Uh, I think the other thing is, it's going to become the new norm. The, the billing performance standards are not going to go away. They're just going to intensify. And, and so I think that's the other thing is embrace it, get started now. Is the other item, Jeff, I think, quit being on the sidelines.
[00:36:28] Time is running out. Uh, time is of essence. And, and so I think the other thing is it's better to start planning and understanding what reality is versus ignoring it.
[00:36:41] Jeff: Absolutely. It's just phenomenal to, to learn from you and some of your experience and what really sticks out. And I just can't thank you enough, Perry, for your time and your insight and your wisdom.
[00:36:52] And, uh, we are very lucky to have you in the Pacific Northwest helping to lead the charge on really, you know, helping building owners to just tackle everything that is coming their way. So thanks for your time. Really appreciate it. Thank you, Jeff. Enjoyed it. What a great conversation with Perry. And I think he opened certainly my eyes to a couple takeaways.
[00:37:17] Here are the three that I would offer. The first is this not getting caught flat footed. And what I heard Perry say was that whether we care about this or don't care about this, the reality is in the case of Washington state, this is coming down the pipe. And so as a responsible business owner. Even if we may not like this new regulation, it's in our best interest to get ahead of this, not wait till the last minute.
[00:37:47] So that's the first thing. Let's not get caught flat footed. The second thing is really around the process and how long it takes. I wasn't even aware This process can take two and a half years from the time you do your initial benchmarking to you implement some sort of corrective action or energy efficiency improvement to then measuring the results of that improvement.
[00:38:09] So it's not like we just have to, you know, implement something new. We actually have to monitor and measure it and tune it over time. So this is a long cycle. The key is to get started now. And then the final thing, well, Perry didn't mention this, you know, explicitly. To me, the takeaway is, if you're a building owner, your mechanical contractors are one of the most important partners for you to engage with.
[00:38:36] They understand the systems, they understand how to get more out of your building and its performance. And so if you don't have a strategic relationship with them, if you're not engaging them, To understand both kind of where your asset is, where you're building, you know, is today and what can be done to continue to improve it, you're really missing out on an opportunity.
[00:39:00] Here's the reframe for me. We often think of laws and legislation as bad. And after talking with Perry, I actually think the opposite. We do want a level playing field and clear rules and regulations. There's no doubt that our buildings are inefficient. And that they are a major contributor to climate change.
[00:39:21] And in the case of our buildings and how we make our buildings greener, laws like the Washington Clean Buildings Act really help create clear rules that building owners need to play by. And that's a good thing. In our conversation, Perry talked about how we can expect more compliance and programs over the next several years.
[00:39:40] As Perry mentioned, 33 states have action plans in the works or already on the books. And given the impact buildings have on climate change, this is one immutable truth. Our buildings, both in terms of how we build them and how we operate them, will need to become greener. Building performance matters.
[00:40:00] Facility managers and building owners that understand this will be ahead in the game. So we're going to be dedicating an entire episode to how compliance and policy around building performance may play out across the country. Stay tuned for that. So with that, I hope you join me in our next conversation as we explore the forces that drive sustainability in the built environment.
[00:40:23] Until next time,
[00:40:25] Announcer: you've been listening to Reframe the show about building sustainability presented by pilot light opinions shared by the reframe guests aren't necessarily the views of their companies. If you'd like to learn more about the podcast, the show's host guest or topics, check out this episode's show notes, or visit pilot light.
[00:40:43] ai slash podcast. Got a question for the reframe team. Drop us a note at reframe@pilotlife.ai. The reframe podcast features original music by Dyaphonic. The show's produced by Robert Haskitt with Eric Opel and the show's host Jeff Nichols. Before you go, this would be a great place to hit pause in your podcast app and then hit that little plus sign up in the corner to follow the show.
[00:41:13] That way, you'll never miss an episode. Thanks for joining us.
