Development Magazine Spring 2014

Development - Ownership

Better Stormwater Management For a Better Bottom Line

Harley Marine Services’ LEED Gold certified corporate headquarters, built on a “capped” Superfund site on the Seattle harbor, uses rainwater collected from the roof (which is then stored in a repurposed underground tank) for restrooms and irrigation. Photo by Benjamin Benschneider, courtesy of Mithun

Developers and commercial property owners throughout the U.S. are undertaking stormwater management initiatives that are making their properties more sustainable, reducing their fees and taxes and, in many cases, reducing development costs and increasing profits.

Many cities and counties are under federal court orders or U.S. Environmental Protection Agency (EPA) requirements to reduce stormwater runoff into waterways and to reduce pollutants in the remaining stormwater that will flow into these waterways. Municipalities are aggressively looking for ways to pay for these programs; U.S. water rates went up by approximately 10 to 12 percent per year between 1989 and 2009, and have grown even higher in recent years, according to a September 2012 EPA report. As many as 1,400 U.S. jurisdictions have imposed stormwater management (SWM) fees or taxes on water or sewage bills or property tax bills. These fees can run up to hundreds of thousands of dollars a year — and are only going higher. Related entitlement and hookup fees are rising as well.

To date, jurisdictions in 39 states and the District of Columbia have imposed an SWM fee or tax. (Most use a fee rather than a tax.) SWM fee structures employ lot size, land use, impervious area, water use, soil types, average rainfall or other factors to calculate a property owner’s fee. While most larger cities have adopted these fees, a few — including Hartford, Conn.; Newark, N.J.; New Orleans; New York; Omaha, Neb.; and Providence, R.I. — have not. A number of SWM fees have faced legal challenges but — at least so far — the majority of courts have upheld them. A federal court has even upheld the SWM fee that the District of Columbia has imposed on the federal government, ruling that the fee is not a tax.

Municipalities may, however, reduce both up-front entitlement and hook- up fees and annual SWM fees if a developer or property owner can show that it has taken steps to reduce or clean up stormwater runoff. The leading example of an SWM fee coupled with fee reductions for reducing or cleaning up stormwater is found in Philadelphia, but many cities offer similar programs.

exterior view of the Paseo Verde mixed-use development

The main entrance to Paseo Verde, a mixed-use, transit-oriented development in Philadelphia, features planted areas that absorb rain and runoff. Photo courtesy of Jonathan Rose Companies, by Jeffrey Totaro

In addition, a number of communities have enacted green building requirements, or offer green building incentives and even grants to developers and building owners who incorporate sustainable features in their projects. Better SWM can be a key part of a developer’s response to these sustainability programs. Many sustainability awards, certificates and recognition programs such as LEED and Green Globes allocate points for SWM initiatives. And some businesses are projecting lower costs or higher sales as a result of smart SWM. What follows are five examples of highly innovative SWM approaches at new and existing industrial, mixed-use, retail and office projects around the U.S.

Philadelphia Leads the Way

“Brilliant” is the U.S. Environmental Protection Agency’s off-the-cuff description of the Philadelphia Water Department’s (PWD’s) SWM annual fee and fee reduction program. PWD imposes substantial annual SWM fees based on impervious square footage and overall parcel size, but reduces those fees by up to 80 percent (but not more than $100,000 per year) when a property owner installs agreed-upon SWM improvements. PWD also has grant money available for exceptional projects.

Many U.S. municipalities have adopted similar fee reduction and rebate programs. Some offer imaginative variations, such as the District of Columbia’s draft plan, which envisages a cap-and-trade system under which an owner can apply SWM credits from one site (where the improvements may be less expensive to build and operate) to another.

For a CFO with a sharp pencil, the PWD rebate is large enough to justify limited SWM improvements, but not enough for what may be needed at most urban or industrial sites. However, since SWM offers additional financial returns, this hasn’t stopped companies in Philadelphia and elsewhere from moving forward.

Retrofitting a Manufacturing Plant

Newman & Company Inc. purchases millions of gallons of water each year for its Philadelphia papermaking plant, which produces 70,000 tons of paperboard annually, and the facility’s water rates are going up. In 2009, Mike Ferman, vice president, operations, got notice that the city was increasing Newman’s SWM bill by $129,600 per year. The company retained AKRF, a Philadelphia-based engineering and environmental consulting firm, and asked it to explore whether the company could harvest precipitation falling on Newman’s 40-acre industrial property, use the captured water in making paperboard, and dramatically reduce its potable water and SWM bills.

exterior courtyard with two buildings

The courtyard is actually a green roof (over a parking deck and a stormwater infiltration basin) that provides open space while capturing and filtering rainwater. Photos courtesy of Jonathan Rose Companies, by Jeffrey Totaro

After testing the roofwater runoff for quantity and quality, AKRF determined that Newman & Co. could use 4.8 million gallons per year of its own recycled rainwater in its manufacturing process without affecting the quality of its paper products. This would amount to the rainfall from 265,000 square feet of roof area.

AKRF and Newman then took a detailed look at the financial implications of this idea. The review included planning and buildout investments, financing costs, operating and maintenance costs, potable water charges and SWM fees. They determined that Newman could use a 30,000-gallon water tank already on the site, saving capital costs. The tank would collect 721,000 gallons of water per year from about one acre of rooftop. This was Phase I of the project, which Newman brought on line in 2012. Moving forward step by step has enabled Newman to save money and apply lessons learned from the first phase to the next.

Newman has moved ahead with planning for Phase II, which, according to Kevin Flynn, a senior engineer at AKRF, will add another 200,000 gallons in storage capacity and capture the additional 4.1 million gallons per year. Both phases will use existing gutters and downspouts, as well as additions. AKRF developed devices to add to the downspouts that remove some impurities before the water goes through a minimal underground filtration and settling process. The water flows by gravity as much as possible, reducing pump, maintenance and operating costs. Many of the pipes carrying water from the downspouts to the treatment process will be underground. PWD and the Philadelphia Industrial Development Corporation were so impressed with the project that they have promised Newman a grant (for an as-yet undetermined amount) to defray some of the Phase II planning and building costs. Implementation of the full project is expected to save the company almost $50,000 per year in water bills and SWM fee costs.

Harvesting Rainwater at a New Mixed-Use Development

Jonathan Rose Companies, a national developer of multifamily housing and mixed-use properties, and Asociacíon Puertorriqueños en Marcha, a Philadelphia nonprofit organization, started with an urban brownfield property in a neighborhood prone to flooding, next to one of the busiest stations on the Philadelphia subway system. There, they have built a model mixed-use, transit-oriented development called Paseo Verde. The project includes 120 one- and two-bedroom affordable and supportive apartments; nine townhomes; 30,000 square feet of drugstore, restaurant, office and clinic space; and covered parking at a ratio of one-half space per residential unit. A series of garden courtyards serve as green roofs as well as common space amenities for residents and office workers. The complex, which is near the Temple University campus, opened in late 2013 and has earned LEED Platinum-Neighborhood Development certification.

Paseo Verde also features a 34,995 -square-foot “blue roof” that collects and retains rainwater. It uses that water to irrigate the project’s 15,659 square feet of green roofs as well as ground-level planted areas. These planted areas help filter the water; they and below-grade infiltration features provide staged infiltration of water into the ground. The combination of these features is a first in the Philadelphia area.

Paseo Verde’s SWM system reduces flooding in the surrounding neighborhood, reduces the need to purchase potable water and provides for a rebate of almost all of the development’s annual SWM fee. The project does not reuse harvested rainwater for toilet, maintenance or laundry purposes. According to Paul Freitag, managing director, development, at Jonathan Rose Companies, although the developer could not make reuse of this rainwater cost efficient at Paseo Verde, it has developed projects elsewhere that reuse water in these ways, as well as for air conditioning.

Branding a Proposed Suburban Mixed-Use Project With Green Infrastructure

Arcadia Land Company of Narberth, Penn., is in the entitlement process for its proposed Wayne Glen community on a 36-acre tract in the Trout Creek watershed in Tredyffrin Township, King of Prussia, Chester County. The site is outside the city of Philadelphia, so the project is not subject to Philadelphia’s SWM fee or eligible for the rebates that result from SWM improvements. The township, however, has enacted zoning incentives allowing up to 4.5 times the by-right residential density, attached housing and an extra story of commercial space if a developer provides for better SWM.

Arcadia’s application, which does not request the maximum number of units for the site, is seeking conditional use approval for 104 residential units and 120,000 square feet of office space. The Wayne Glen development has been planned to capture, store, clean, release and infiltrate stormwater with green roofs, porous pavement on many of the streets and roads, and a series of pocket parks, rain gardens, landscaped swales and basins. The project would protect an existing road from frequent flooding with a more than five-acre stormwater basin in a modified existing floodplain and a landscaped berm that also would provide view protection.

exterior view of a Whole Foods grocery store

The cistern outside the entrance to the Whole Foods store at the Market at Colonnade in Raleigh, N.C., is one of three that hold roof-runoff rainwater, some of which is used in the store’s restrooms. This cistern has become a key element in the shopping center’s branding.Photo courtesy of Soil & Environmental Consultants PC/Regency Centers

These SWM measures would retain and infiltrate 100 percent of precipitation from up to a two-year storm, and would sharply reduce downstream flooding in the watershed. But the developer says the benefits of these SWM measures go beyond water issues and translate into sales appeal.

Capturing Rainwater at an Infill Shopping Center

Several years ago, Regency Centers had the opportunity to build a retail and commercial center on 6.25 acres of infill land in Raleigh, N.C., and the likelihood of obtaining Whole Foods as an anchor tenant. The vacant site was surrounded by existing development. As Mark Peternell, vice president, sustainability, at Regency explains, “several other developers had looked at the site, expecting to use an above-ground runoff pond to handle SWM, and couldn’t get the numbers to work. A conventional approach would have required 20 percent of the land for the pond, and the rest of the site would have been too small.”

Regency engaged Soil & Environmental Consultants PA, an engineering and environmental consulting firm based in Raleigh, and together they came up with a first-of-its-kind plan to capture rainwater (up to 800,000 gallons at a time), use some of it in the grocery store restrooms, retain and filter the rest of the water underground, and infiltrate it into the local aquifer. They won a $560,000 state grant for the project (by then named the Market at Colonnade), obtained startup and annual SWM fee reductions, qualified the 57,000-square-foot building for LEED Silver designation and brought the project to completion in 2011.

An above-ground cistern that is about 16 feet high flanks the Whole Foods main entrance. The cistern, with its rainstorm logo, is now iconic; it has become a key element in the center’s branding, known to thousands of customers and local residents. (The building has two other less-prominent cisterns.) According to Peternell, the success of this project “has opened doors for Regency and has transformed our thinking about the return on investment on green infrastructure.”

Using SWM at a Brownfield Shipyard/Office/Port Complex

Seattle-based Harley Marine Services is in the business of petroleum products storage and transportation nationwide. The company is known for its environmentally sensitive operations, including towing and offloading oil products from damaged or wrecked oil- and chemical-carrying vessels. Harley’s principal location in Seattle’s harbor includes a cargo handling facility, corporate headquarters and repair yard. The company is redeveloping the site and has paid special attention throughout the design process to environmental features, consistent with Harley’s environmental services brand.

rendering of Harley Marine Services' corporate headquarters

Harley Marine Services’ headquarters building incorporates a wide range of water management and other sustainability features. Rendering courtesy of Mithun

Last year, Harley opened its new 47,000-square-foot office building, which won an Office Development of the Year award from NAIOP Washington State’s 2013 Night of the Stars program. The building has been certified LEED Gold.

The Harley site is a “capped” Superfund brownfield, which means that no new SWM installation could penetrate the impervious protecting the ground from any toxic materials buried below. The site did, however, contain an old but intact underground oil-water separator with a 20,000-gallon tank. The company and its architect, Seattle-based Mithun, determined that Harley could collect rainwater from the new buildings’ roofs, store it in the tank (repurposed as a cistern), and employ that graywater for restroom and irrigation uses in the new complex. The availability of the old tank reduced the capital cost of the SWM installation considerably. The project’s reduced needs for city water are a recurring cost-saving feature of the SWM investment.

Before the project began, much of the rainwater falling on the impervious and capped ground surfaces simply ran off into Puget Sound. As part of the new construction, Harley installed infrastructure to filter this runoff and allow solids to settle out before the water is sent into the sound, reducing the calculation of the site’s effective impervious area.

The planning for the Harley Marine project also involved exploring additional SWM measures. As Douglas Leigh, a partner at Mithun, explains, “we considered using green roofs as an additional stormwater feature, but when we determined that the abandoned oil-water separator could be reused as a cistern for rainwater, and that photovoltaic (PV) roof panels were feasible, it was decided that the roofs were best used for the PV panels and just collecting the rainwater. Using the roofs this way, and adding planters, offered a substantial reduction in the amount of nonpervious area as compared to preimprovement conditions.”

Seattle is working to improve environmental practices along its industrial waterfront, and Harley intends to continue to be a part of these efforts. The company has opened a training center in the new complex; the center will offer courses to Harley Marine and other employees on good environmental practices in the maritime field and prepare employees for certificates and licenses leading to green jobs.

Conclusion

SWM is a fast-moving field. The good news is that SWM approaches and technology are becoming more cost efficient. In addition, consumers and commercial markets are becoming more receptive to green SWM features. The best SWM can create substantial real estate value and help meet environmental requirements. This can make SWM an even better deal today for an imaginative developer or owner with a sharp pencil.  

Seven Stormwater Management Lessons Learned

1) Retain a specialist.

2) Get ready to think outside the box.

3) Apply for local grants as well as zoning incentives, exceptions, variances or plan amendments, and entitlement-stage hookup, impact fee and other savings.

4) Apply for any available sustainability and smart growth awards, recognitions and certifications.

5) Be aware of the operating and maintenance costs of better SWM, but also recognize the many kinds of bottom-line returns that can accrue from better SWM.

6) Consider to what extent your tenants, customers and employees would react favorably to green features and branding for your facility and company.

7) Partner with local authorities and make them look good.

Eight Examples of SWM Improvements

Stormwater management (SWM) improvements typically consist of on-site actions that imitate what nature does to retain, use or filter, and delay the release of stormwater. These include the following features, many of which can be used in combination to capture, treat and sometimes reuse water instead of sending it, untreated, into sewers or waterways:

1) Storage ponds, especially as part of landscaping or parks;

2) Green roofs;

3) Permeable pavement;

4) Planted areas, planter boxes, flow-through planters, tree planters, rain gardens and bioswales;

5) Water evaporation from water features, misters, storage ponds, landscaping and industrial processes;

6) Water capture (via downspouts and cisterns or a “blue roof”) and storage for use in landscaping, water features, misters, heating/cooling, maintenance, cleaning or toilets;

7) Water capture, storage, settling and filtration for industrial use or for sale to tenants or to adjacent properties; and

8) Dry wells and other systems for infiltration of water into the soil/aquifer.

For more information:

The Green Edge: How Commercial Property Investment in Green Infrastructure Creates Value,” by Janet Clements and Alexis St. Juliana, Natural Resources Defense Council, December 2013

From the Archives: Development Ownership Articles from the Previous Issue

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