Vancouver Valuation Accord Value & Sustainability: Standards & Examples Peter Clark Chris Corps 21 st May 2009 ��������� ��������� ������
Changing Values � The environment is changing how business works � The world is using new ways to define value, profit & performance, e.g.: � Elkington's 'Triple Bottom Line' � Hawkens' 'Restoration Economy' � Global Reporting Initiative � Principles for Responsible Investment � The London Principles � EU Emission Trading Scheme ��������� ��������� ������
The Vancouver Valuation Accord ����������������������� ��������� ��������� ������
Vancouver Valuation Accord's Purpose � Highlighting the importance of sustainability to economic prosperity and social cohesion � Describing the nature of linkages between valuation and sustainability � Profiling how sustainability factors can add value to property � Emphasizing the importance of the rigor of valuation and the professional capacity of Valuers � Identifying opportunities for valuation and sustainability practitioners to work together to advance understanding. ��������� ��������� ������
Accord Signatories � The Hon. Gordon Campbell , Premier of British Columbia � Bob Elton , President & Chief Executive Officer, BC Hydro � Brian Fellows , President & COO, Workplace Solutions Inc (WSI) � Chris Corps , Principal, Asset Strategics Ltd.; Past Chair of RICS � Sandy Wiggins , Chair, US Green Building Council � Kevin Hydes , Vice President, Stantec Consulting Ltd. � Jim Amorin , Vice President, Appraisal Institute � George Maurice , Vice President, Appraisal Institute of Canada � Thomas Mueller , President & CEO, Green Building Council � Louis Armstrong , CEO, Royal Institution of Chartered Surveyors � Philip Parnell , Partner, Drivers Jonas � Stephen Williams , Partner, Williams Murdoch � Clemencia Parra , Director, UPAV � Graham Hill , Mayor, Town of View Royal � Peter Clark , The Appraisal Foundation ��������� ��������� ������
Accord Case Studies � Purpose � Independent, peer reviewed examples analysing the link between sustainability and value � Establish understanding, inform both professionals and non-professionals on value & sustainability � Seven initial studies � More to follow ��������� ��������� ������
Common Points of Understanding � The mechanisms and precepts of Valuation are critical to business transactions, worldwide � Valuers and appraisers are required to provide independent professional rigor to the process of valuation �������������� � Valuation professionals are governed by standards, practices, expectations and statutes that vary by location � The study of integrating sustainability factors into valuation and appraisal is ‘breaking new ground’ � �������������������� There is a lot that is to be learned by many valuers about sustainability ��������� ��������� ������
Issues of Convergence: Key Areas for Collaboration � Organizational Collaboration: Cooperation between disciplines, Valuation organizations, educational institutions, sustainability experts. � Application of Sustainability in Valuation: What sustainability actions make the most difference under various market conditions on value: this study might include analyzing markets in various parts of the world. � ‘Value of Valuation’: A holistic and collaborative approach where valuation and sustainability represent a “sum that is greater than the parts” ��������� ��������� ������
Accord Aspects � Standards review and adjustment � Professional Enhancement � Profession adds value beyond competing disciplines � Professional Training and Development to include sustainability issues and factors � Evidence of where sustainability has impacted asset and property value. � Academic/Educational Capacity Development ������������������������� ��������� ��������� ������
Where Next? � Improve knowledge, analysis & reporting � More business cases � Assess value of sustainability: what works & what doesn’t � Training & education – academic & practitioner � Move to adjust standards � RICS – September, 2009 � 2010 Accord conference ��������� ��������� ������
Sustainable Valuation Thinking Green? ��������� ��������� ������
Green Value � Analyse the value of sustainability � Three countries, two continents � Multiple uses � Initiated 2004, published November 2005 � Literature & best practice review � Reviewed green building value aspects � Subsequent studies now improving analysis, better data now available "There is a relationship between the market value � of a real estate asset, its green features and related performance." ��������� ��������� ������
Green Value Summary � � Sponsors: 18 project reviews in: � � RICS San Francisco, California � � BC Hydro Minneapolis, Minnesota � � Canada Green Building Council Oberlin, Ohio � � English Partnerships (UK) New York City, New York � � Greater Vancouver Regional District New Westminster, Vancouver, Victoria, BC � Green Buildings BC � Kitchener, Ottawa & Toronto, Ontario � Natural Resources Canada � Montreal, Quebec � RealPac � 6 UK projects � Others: CMHC, City of Vancouver � Team � Cushman Wakefield LePage, Busby Perkins + Will, BuildGreen, DTZ (UK) ��������� ��������� ������
Green Value: The Main Value Benefits 1. Lower operation/maintenance costs 2. Energy & resource savings 3. Grants, subsidies, inducements etc. 4. Attract tenants faster (i.e. absorption) 5. Higher rents, investment/sale value 6. Lower turnover/vacancy 7. Reduced fitting-out costs (i.e. TI's) 8. Lower internal move costs (i.e. churn) 9. Increased productivity Vancouver Island Technology Park, BC 10. Faster, better public process 11. Improved risk, marketability ��������� ��������� ������
Examples of Green Value � Pennsylvania Power and Light conversion's power savings: � Traditional energy saving: 4.1 yrs payback, 24% ROI � Green Value: 69 days payback, 540% ROI � Difference: largely productivity benefits � Reno Post Office upgrade: � Improved productivity gains paid for the $500,000 renovation in under a year � Annual energy savings a 'free bonus' Mountain Equipment Co Mountain Equipment Co- -op, Montreal op, Montreal ��������� ��������� ������
Example: Dockside Green Creek discharge from treatment plant, Dockside Green 26 June, 2008 ��������� ��������� ������
A Shrimp vs. Mangrove Analysis: "Holistic" Value [Public Interest Value] $4000 ���������� ���������� ����������������������������� ����������������������������� Private Public Private Public Mangrove: $91 $+1,000 - $+3,600 Mangrove: $91 $+1,000 - $+3,600 Shrimp Farm: $2000 $-5,400 - $+200 Coastal Shrimp Farm: $2000 $-5,400 - $+200 Protection Value (per hectare) Value (~$3,840) $2000 Net: $2,000 (Gross $17,900 less costs of $15,900) Less: subsidies (-$1,700) Fishery nursery ($70) Timber and Non- Less: Pollution Costs (-$230) timber products ($90) 0 Mangrove Shrimp Less: Restoration (-$8,240) Farm ��������� ��������� ������ Source: Millennium Ecosystem Assessment; Sathirathai and Barbier 2001
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What is IRM? ������������������ � Integrated Resource Management Reduce GHGs by 25-33% � Sustainable valuation rethink of Power the equivalent of 10% of infrastructure using “Value First” homes � A new approach to water, waste and Heat the equivalent of 30% of homes energy management Run the equivalent of 10% of cars � Turns waste from a cost into a Recover, recycle and re-use clean potential profit water � Generates energy Flexible, scalable, local, incremental, Just-in-Time � Reduces or eliminates waste Least expensive or potentially � Supports healthy ecosystems profitable Reduces risk ��������� ��������� ������
IRM Flow Diagram ��������� ��������� ������
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