Building Green takes a team

I’ve never built a house before.  I don’t know what others’ experiences have been.  What I’m learning, though, is that we won’t be successful on this build without working as a team.  Or, I should put my lesson in its more positive context: we are working together as a team in order to make sure we complete this build and end up with the house we’ve dreamed.

We started as a team of 2: Nick and I.  We had an early lesson in teaming, a story I’ll share quickly called “The 40’ Ladder.”  20 years ago, we painted the trim on the outside of our MD house.  We were working with a 40’ extension ladder to reach 2+ floors up to the trim along the roof, moving it around from one spot to another.  Nick’s an engineer by training.  I learned to work ladders and to paint from a professional painter.  He knew how ladders should behave; I knew how ladders often behave. We had to listen and cooperate and compromise to move and plant and hold and climb that ladder. When we finally washed up the last paint brush, we laughed that if we could survive that 40’ ladder, we’d survive anything.  In the earliest days of dreaming a house in 2007-2008, we had to practice the same skills.

In 2008, we found our architect.  We had talked to a couple of other professionals: the first would only work on his own without input or cooperation—we would buy the land and give him a contract and get outa the way; the second could talk but couldn’t listen—his idea of dreaming a house was 2 hours over coffee and he was ready to draw up plans.  You know the saying, “Three strikes and you’re out.”  In our case, we swung three times and the third was a home run.  We were lucky in finding our architect for a number of reasons; high on that list was that he listened. So our team became 3.  Give and take, imagine and erase, until we had the house that felt like home.  And it looked almost nothing like we had first envisioned, nothing like the previous designer had sketched.  Then the architect was perfectly content to let us find the land and let the land dictate the final design.

Next to join the team was our builder.  One of the first things we did once we had a contractual relationship was to hold a charrette.  Here’s the Wikipedia definition: The word charrette may refer to any collaborative session in which a group of designers drafts a solution to a design problem…for…dialogue. Such charrettes serve as a way of quickly generating a design solution while integrating the aptitudes and interests of a diverse group of people. The architect and the builder and his foreman/partner spent 2 days working together with us on the design.  The goal was to find cost savings because the design as bid was going to cost more than we could afford.  Nick’s experience in low-income housing development back in DC suggested that a charrette would be a good way to brainstorm alternatives.  The builder brought in his major trades: the prime contractor who would do the framing and other critical tasks, the electrician, the plumber, the solar (pv and thermal) expert.  Again, the goal was to get the input of all the trades on ideas, savings, alternatives; a secondary goal was to get their buy-in into the BGNM requirements which are far beyond what they had probably built to, to date.  Also, the BGNM rater came up from Las Cruces and spent one of the two days reviewing with the builder, his foreman and his primary contractor the BGNM requirements, answering questions and making suggestions.

As we’ve moved along on the build, the team has only strengthened.  The builder went to a National Home Builders conference in Florida specifically to attend the sessions on building green.  He came home not just with a better understanding of what needs to be done with our house, but with enthusiasm and heightened commitment!  He joked that he and I would be racing each other around the house with caulk guns to seal up every crevice and seam to meet the BGNM requirements.

We—the builder, Nick and I—hold weekly meetings. One week we review the progress of the build and discuss problems and what’s next.  The opposite week, we go through our BGNM spreadsheets to make sure we’re not missing anything.  When BGNM, design or construction questions come up, the builder and the architect are in contact and questions are also directed to the BGNM rater as appropriate.  But Nick and I are included in these discussions and solutions.  I have found that my suggestions and problem solving have been not just solicited, but incorporated.  Now THAT’s a good feeling!

I have spent 20 years teaching team building.  Theoretically, I know how teams develop – all the stages they go through, many of the pitfalls they encounter.  I have designed classroom activities to push learning teams through experiencing each stage.  I have coached teams in real time, mediating – or attempting to mediate their stuck-ness.  I can tell you that the key to teams of any type collaborating for any goal is trust.  With trust, teams can achieve whatever goals they set for themselves.  Without it, they don’t get past talking. 

I’ve come to see that this team has come to trust each other.  What a concept!

Building Green – Got Money?

No? Got to get a mortgage.  Or at least try and try again.

We needed to place a mortgage on our new home, not just for construction but a permanent mortgage.  As part of our planning, I started exploring construction loans with two general sources: first tried our long-time bank, then our long-time credit union and then USAA (who offers mortgages as well as insurance); secondly, spoke with a local bank here in Silver City with a good reputation, Western Bank.  Our credit union proved not to be an option because they aren’t local enough and USAA, the same.  They both could help with the permanent mortgage, but that wasn’t my immediate concern – or so I thought.  One phone call to our long-time bank sadly convinced me that customer service wasn’t their immediate concern! When it came time to move from planning to financing, we went with Western*.

Western could provide us with the construction loan, but they don’t hold permanent mortgages; they resell them onto the secondary market.  This is typical of almost all banks, whether local or national.  It’s how lenders like Citi Mortgage and the infamous CountryWide became and remain such giants in the mortgage market.  It’s also where our challenges began.

We had no problem qualifying for a mortgage to bridge the difference between the cost of the house and our assets from the sale of our previous house in MD. We were close to the ideal borrowers for a mortgage: no debt to speak of; home ownership for most of our adult lives; good credit rating; and enough assets to make 30% or better down payment; that after paying off the land purchase. Looking for a typical 30-yr fixed, nothing exotic. So where was the problem?!

The problem was green.  In retrospect, I’m still stunned that there’s such a discrepancy – nay, a chasm between talking green and doing green when it comes to financing.

The first loan application to a secondary mortgage company produced the following results, although mostly this is a reconstruction (forgive the pun) of events based on a couple of phone calls.  The appraiser picked up the house plans and went to work. He did a very good job of researching recent comparable sales and general market conditions.  Appraisals are, of course, based on what’s sold – comparable sales – not what’s on the market or what other homes cost to build.  The market sets the value.  Therein lay the first problem: NO green comparables. We anticipated that this could have a negative impact on the house valuation – or at least be neutral. 

Because there had been no homes sold in this region in the last 2-3 years with passive solar design, solar photovotaics or solar thermal, there was no value that could be assigned to those features.  Same with the high performance windows. Same with the other elements of design that set the house apart from typical construction.  Not that there were no homes in the region that have these features – just that none had been sold.  Again, the market sets the value.

The appraisal was submitted to the lender as “conforming with the neighborhood.” That meant that the size, style and construction (frame/stucco, without regard to the green elements) is similar to the other homes in the general neighborhood.  The solar PV and solar thermal was noted on the appraisal along with the other key green design elements, even though no dollar value was added.  If I understood the situation correctly after the fact, the bank contacted the appraiser and instructed that the appraisal be changed from “conforming” to “non-conforming.”  And then turned down the loan application as being “non-conforming”! Ouch.  Don’t explain to me that lenders are very risk averse right now, though that might be the truth.  Don’t tell me that they only want to loan money against “plain vanilla” houses, though that may also be true.  Something about this whole deal smelt!  Yes, truly fishy!! Actually, downright illegal, given that appraisals are supposed to be blind, such that the local bank can’t recommend a particular appraiser and the lender can’t direct the appraisal.  But this was the story as I got it.

I did a lot of internet research and spent hours on the phone calling banks around the state and even FreddieMac (or was it FannieMae).  The reason I spent so much time is that everywhere I looked on the internet, I found references to “green mortgages.”  I was determined to find that green needle.  What I found instead was:

·        Build Green New Mexico’s website listed two lenders that purported to make green loans.  I learned through personal phone calls that one was out of business and the other only made construction loans in Santa Fe and sometimes Albuquerque. 

·        There was and is lots of information on the internet about Energy Efficiency Mortgages, sponsored by HUD/FHA (EEMs) a program started in 1995 by FHA to help homeowners finance the cost of the energy efficiency technology, such as solar pv, solar thermal and wind.  The program is supposed to apply to both new home and renovation/additions to existing homes.  I also found a lot of information on the National Association of Realtors website.  However, after a number of calls to lenders and banks, I found no one – not a single one who’d ever heard of EEMs.

·        When I called FannieMae (or was it FreddieMac) they refused to talk with me, the consumer. I was told that they only talk to lenders. Not what I wanted to hear.

Those are the highlights of several hours on the phone. Meantime, Western worked diligently to present us with options.  The best option was to have them submit our loan package to another secondary lender.  Which entailed another application, another appraisal and another appraisal fee.  Different appraiser this time.  Thankfully, different results. Although the second appraisal still didn’t assign any market value to the solar, etc, at least the appraisal came in at a value that allowed the mortgage to be guaranteed.  Thus, Western was able to proceed with the construction loan.

And all it cost us was a 4 month delay!  Well, plus the additional appraisal fee.

I’ve since learned that in other areas of the country there is an effort to assign value to the technology of green construction.  In places like Santa Fe, the appraisal forms and even house listing forms are now including check boxes for green elements like solar pv, solar thermal, etc.  That means that a database of market value will begin to be built on how much a house with those elements sold for. Which in turn means that lenders will begin to appraise the value and loan against the value of the green elements.  And maybe even EEMs will make a debut somewhere other than on government programs and websites.

About time, I’d say.

*Western’s reputation is well deserved.  They have worked with us every step of the way, going far above and beyond to help get us financing.  What a difference from the national bank where we and I have had accounts since I was knee-high to my dad and through 4 mergers!