Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable PropertiesThe primary purpose of GBFC’s Cost-Benefit Checklist is to provide an organizedinventory of potential costs and benefits for sustainable property investment. For valuers orunderwriters, the checklist can help in the determination of data and analysis requirements,and provide a comprehensive questionnaire to ensure key costs and benefits are fullyidentified and addressed.An important secondary use of the checklist is as a due diligence framework for use by duediligence officers and investment/lending committees. The checklist suggests questions toask borrowers seeking a mortgage or operators seeking equity to develop judgments aboutthe quality of thought and analysis that potential capital seekers applied in preparing theirinvestment packages.The process for implementing the checklist for valuers and underwriters starts with aninventory of the specific costs and benefits that might be applicable to the subject property.To do this, the valuer/underwriter needs to go through the GBFC Sustainable PropertyCost-Benefit Checklist presented in summary form in Exhibit V-5 and in significant detailin Appendix G.Appendix G provides important detail on each of the potential costs and benefits identifiedin Exhibit V-5. Benefits and costs are described, and the process for assessing the potentialapplicability of a benefits and costs from the general checklist to specific properties ispresented. Additional detail on development and cash flow risks is also presented inChapter V, Section H: “Step 6: Risk Analysis and Presentation.”Key questions to be addressed for each potential cost or benefit include:1. Is the specific cost or benefit applicable to the subject property?2. How was, or will, the specific benefit or cost be achieved?3. What evidence supports the existence of the specific cost or benefit for thesubject property?• Performance information• Research and risk analysis• Quantitative or qualitative assessments4. What evidence or analysis supports the magnitude of the specific cost or benefitat a property level?5. Is there evidence from the “Process Execution” or “Feature/System Performance”(see Appendix C) that provides support for the quantitative assessment ofcosts and benefits, and/or that provides insight into potential mitigation of costconcerns?6. Which specific financial model inputs will be influenced by the specific cost orbenefit?109