Gerding/Edlen Development Company, LLC, Portland, Oregon, USA

A Natural Step Case Study

Background
Gerding/Edlen Development Company is a commercial real estate development firm, specializing in mixed-use urban renewal projects. Its projects include condominiums and apartments; build-to-suit projects for high-tech clients; public-private partnerships; and mixed-income housing. It currently has 17 employees (including the managing partners). The firm was created in 1996 when developer Mark Edlen joined forces with Gerding Investment Company.

Bob Gerding, one of the founders, has long been concerned about environmental and social issues, but it wasn’t until 1993 when he was able to put those values into practice at work. The Pacific Gas Transmission building in Portland was the first private energy demonstration project, funded by the Oregon Department of Energy, giving his firm experience in a number of leading edge energy saving technologies including solar studies, certain window glazing, light shelves, and an ice-generating system to cool the building. While the construction costs, with the help of government tax credits, were comparable to other buildings, the building’s energy use was half that of similar buildings.

Inspiration
Through Bob Gerding’s long-standing relationships with members of the Northwest Earth Institute (the founder of the Oregon Natural Step Network), Gerding was invited to workshops on The Natural Step in 1997. Perceiving that the TNS Framework made business sense, Gerding encouraged his firm to hire someone who could apply it at the project level. The firm hired Dennis Wilde as senior project manager in 1997 to champion the effort.

Action
Wilde describes his initial efforts as “not cohesive.” Using peer pressure he tried to educate and influence employees, architects, and contractors. In 1998 the firm conducted an internal executive briefing on TNS, closely followed by training for the rest of the staff. While the training was useful in introducing the TNS framework to employees, the firm did not follow up with a vision for using the framework in its development projects. A watershed event for Wilde was participating on the Oregon Natural Step Network construction peer-learning group, in which a group of architects, engineers and designers applied the backcasting process to commercial buildings. The peer-learning group published a paper about its experience and created a vision for a sustainable commercial building. The resulting paper gave Gerding/Edlen specific outcomes to pursue and a clear vision it could share with others.

Around the same time, LEED was also being developed. The managing partners at Gerding/Edlen committed to pursuing LEED certification for their own Brewery Blocks projects. Wilde saw LEED as a useful tool, but the Natural Step helped him see all that it did not include. “LEED, by itself, doesn’t provide
a comprehensive overview. It’s really only a yardstick. For us, TNS provides the framework.” And so with each ensuing project, Wilde pushed the teams to exceed the accomplishments of the earlier ones.

Each project within the Brewery Blocks has included efforts that go beyond LEED such as, reduction of PVC-based materials, a central chilled water plant to improve energy efficiency, eco-roofs, even photovoltaic panels. Gerding/Edlen's goal is to create buildings that create more energy than they use, keep all stormwater on site, eliminate toxic materials, and create a sustainable environment for people to live and work.

Bob Gerding describes the business this way: “We sell being the thoughtful, responsible developers. We walk the talk and can tell people, 'we’ve done this in our own buildings and we can prove the long-term benefits, that this will save you money.’”

Gerding/Edlen has integrated The Natural Step framework into its integrated design process. “I can’t imagine doing a traditional design anymore,” says Wilde. “All the different players have to understand how their decisions affect the others so you can come up with an optimal solution.”

In particular, Gerding/Edlen has embedded the Natural Step backcasting process into its ecocharrettes (design meetings). “We spend most of our time talking about the system conditions and backcasting, trying to envision the building as sustainable and working backward from there. We spend a very little time at the end on the LEED score sheet.” See the appendix for a more detailed agenda.

Gerding/Edlen also has tried to influence its tenants through the creation of a tenant manual that explains the importance of green design and gives the tenants suggestions for how they can be more sustainable. It is working with its janitorial vendor to provide environmentally preferable cleaning products to the tenants as well.

Results
Wilde strongly believes that pursuing sustainability has made good business sense, for Gerding/Edlen and its clients. The extra construction costs of the Brewery Blocks for green design were approximately $700,000. However, Gerding/Edlen was able to offset these costs two-fold with grants, assistance, and tax credits. The most obvious source of funds to offset the cost of energy improvement measures is the State of Oregon Business Energy Tax Credit (BETC). Other sources of assistance include : Northwest Energy Efficiency Alliance (NEEA), The Energy Trust of Oregon, the City of Portland Office of Sustainable Development, the Climate Trust, PGE EarthAdvantage and PPL FinAnswer programs.

At the time of this writing, Gerding/Edlen's condominium project, "The Henry" has sold out in record time at record high prices in a bad economy. Wilde estimates that the average homeowner will save $600 per year in utilities based on the green design features around energy and water use. About 10 percent of condominium buyers said that the sustainability features were important to their purchasing decision and another 25 percent said they were really glad to have them, in part because of the energy saving features.

Wilde concedes that many customers won’t pay extra for green features. To convince reluctant building owners, he emphasizes both the tangible and intangible savings: reduced operating costs, tenant comfort and retention, employee productivity, reduced absenteeism, resale value, etc.

When Gerding/Edlen first began its emphasis on green building, many of its contractors were resistant and charged higher rates to use non-traditional building techniques. Now, many of its consultants are bringing them position papers, having analyzed alternative materials or systems in light of the system conditions. (See the sidebar listing of existing position papers.) And as its contractors gain experience in green design, cost premiums are coming down. In addition, job candidates are seeking positions within the firm. “Young people, in particular, are drawn to this,” says Wilde.

Gerding/Edlen has position papers on the following products:
*  Building Integrated Photovoltaics
*  Solar Domestic Water Heating
*  Radiant Heating and Cooling System
*  Rainwater Recovery
*  Living Machine
*  Elimination of Mercury from Lamps
*  Elimination of all PVC from Electrical

Products
One of the biggest benefits is the publicity and visibility. Wilde said, “We couldn’t have bought all the PR that this has brought us. We’ve had one or two articles published about us or our projects every week for the past two years.” Managers are being interviewed by local and national media. Hundreds of people have toured their buildings. This is all part of creating awareness about green design, developing the demand, and promoting themselves as leaders. Wilde confesses: “Initially, we had to try to identify the benefits. We were fearful of spending more. Our customers weren’t asking for it. People wanted to know if we could afford to go green. But at some point, you take the plunge and then you discover paybacks you never dreamed were there.”

Challenges
Despite all their success, keeping sustainability on the front burner is still a challenge:

· Leadership takes time, attention, and money. Bob Gerding admits that the firm has sometimes trimmed its profit margins to implement leading-edge building practices. “If you’re trying to build something at the lowest cost to maximize profits, you can’t lead. Like all the greatest companies, you have to reinvest in R&D. But I’d rather lead than follow. Being a leader is a marketing advantage.”

· Getting everyone on board. While sustainability is here to stay at Gerding/Edlen, Wilde is still the biggest advocate, pushing to raise the bar on each project. “If something happened to me, would Gerding/Edlen continue to pursue sustainability? Sure. Would it make as fast progress? Maybe not.” And as it has grown, it has been a challenge to bring new employees up to speed. Public workshops are not always available when they need them.

· Finding sustainable alternatives. It can be a challenge to find a product that is environmentally preferable and that performs as well as its environmentally inferior counterpart. For example, Gerding/Edlen was thrilled to have recently discovered a paint to use on metal stairs that is as durable as previously used products but has a low level of VOCs (Voluble Organic Compounds). Wilde would like to make a PVC-free building but this goal has proven elusive because he has been unable to find alternatives to some of the PVC (Polyvinyl Chloride) products such as electrical conduit, water and soil pipes, electrical insulation, roofing, wall covering, flooring, carpeting, paint, rubber base mold, and many others that are found throughout virtually all buildings. Wilde and his colleagues continue to search for alternatives, and with each project, they uncover a few more products that can be integrated into future designs.

· Focusing internally. Gerding/Edlen has focused most of its attention to applying sustainability in its building projects as opposed to in its own office. The firm's building projects certainly create the greatest environmental impacts. However, the firm believes that it should be more systematic about applying sustainability in its internal operations to maintain its credibility. . It has switched to highrecycled
content paper, encouraged recycling and switched to environmentally friendly janitorial  products. Nevertheless, the firm struggles with how much effort it should expend on greening its internal operations and what to take on next.

· Making sense of system condition #4. Gerding/Edlen has made great strides reducing the environmental footprint of its projects. However, the firm struggles with the social side, what Wilde refers to as “how to move beyond our consumptive lifestyles.” Gerding/Edlen does take into account the impact its projects have on the community but it could do more to integrate the fourth system condition into its decision-making and practices.

Appendix
TNS Backcasting Charrettes for Sustainable Developments
Over the past several years, owners, architectural design professionals and consultants, and contractors have utilized a number of techniques to optimize integrated design teams through eco-charrettes (also referred to as sustainable design workshops), to optimize the performance of energy-efficient and environmentally responsible buildings. In the mid-1990’s, eco-charrettes were an effective means of bringing together a project’s team early in the design process to identify environmental performance goals and strategies through brainstorming and the formulation of goals and objectives. With the launch of the US Green Building Council’s LEED rating system in 2000, eco-charrettes became redirected to focus upon the attainment of a LEED rating, by directing the design and construction team, point by point, through all 69 potential points. While LEED provides valuable performance metrics and a means to structure building performance evaluations, it does not address the overarching sustainability goals for projects, such as those represented by the four System Conditions of The Natural Step. A TNS backcasting charrette can be a high-leverage collaborative planning mechanism for a group, regardless of whether planning for an architectural design project or an organizational development venture.
Backcasting charrettes are generally composed of three sequential steps:
1. Formulating aspirations and a vision for a preferred future
2. Conducting a SWOT (strengths, weaknesses, opportunities, and threats) of current conditions, and
3. Projecting back from a time in the future (30 to 50 years) to the present and mapping the key
elements that contributed to the preferred future.
Backcasting charrettes can be designed to last from a half-day to two days, depending upon the complexity of the project, the size of the group, and the level of detail desired. The following represents a sample agenda for a half-day TNS backcasting charrette involving approximately eighteen multi-disciplinary individuals for a commercial building project:

8:00 – 8:30 (30 minutes) Welcome, purpose, and introductions
8:30 – 8:45 (15 minutes) Project overview
8:45 – 9:00 (15 minutes) TNS overview
9:00 – 9:45 (45 minutes) Future scenario
9:45 – 10:15 (30 minutes) SWOT analysis
10:15 – 11:15 (60 minutes) Backcasting
11:15 – 11:45 (30 minutes) Action plan
11:45 – 12:00 (15 minutes) Concluding remarks

Backcasting charrettes utilizing the System Conditions of The Natural Step hold the potential to yield multiple results. One of the most direct impacts of backcasting charrettes is to expand the time frame of participant’s reference for decisions, from short-term to long term. The process of dialogue and disclosure among a design team in a charrette process results in a robust strategy for a given project towards a preferred future.