Atlanta’s leading commercial real estate players blindsided by Mayor Reed’s sustainability plan

By David Pendered

Major real estate interests in Atlanta, including Cousins Properties, Inc. and the Atlanta Hotel Council, said Tuesday they were blindsided by Atlanta Mayor Kasim Reed’s proposed water and energy sustainability program.

Cousins Properties, Inc. purchased and boosted occupancy from 20 percent to 90 percent at 191 Peachtree in downtown Atlanta. A company official said the firm was not informed of Atlanta Mayor Kasim Reed’s proposed sustainability ordinance for commercial properties. File.

“I can tell you, last week, when this was first being presented to council, I got a call from corporate and they had just heard of it,” said Michelle Dixon, who oversees Cousins’ 191 building in downtown Atlanta.

Cousins’ president and CEO is Larry Gellerstedt, the current chair of the Metro Atlanta Chamber. Gellerstedt is the immediate past chair of the board that oversees the Woodruff Arts Center.

Environmentalists headlined by Rutherford Seydel prevailed against Cousins and other real estate interests in a vote by an Atlanta City Council committee.

The Atlanta City Council’s Community Development Committee approved the proposal and scheduled it for a vote at the next council meeting after spring vacation, April 20. The committee provided the industry with a formal method for suggesting amendments to the legislation over the next three weeks.

The financial stakes are significant in Atlanta, where compliance costs could reach $50,000 per hotel, according to Ron Fennel, executive director of the Atlanta Hotel Council.

Fennel said he learned only recently of the city’s sustainability plan. After 16 years of serving the hotel council, he said he expected the city would not overlook him or the hotel industry.

“Not one of these meetings included me,” Fennel said of meetings that Reed’s administration evidently convened with unspecified interests to discuss the proposed legislation.

Reed’s deputy chief of staff, Katrina Taylor Parks, characterized the uproar from the commercial real estate sector as a dispute over a measure that has very few teeth to curb consumption.

“We have made the paper almost to the point of being innocuous,” Taylor Parks advised the Community Development Committee at its Tuesday meeting. “What I am saying is that this department [sustainability] and administration have worked tirelessly to make concessions. … We have bent over backwards to work with the industry.”

Denise Quarles, Atlanta’s sustainability director, said the proposed ordinance would apply to 2,400 of the 17,000 commercial buildings in the city. The ordinance has four components:

• Benchmarking: Each building must compile the monthly billing start date, end date, and usage of water and electricity.
• Transparency: The usage data must be submitted to the city at least once a year. The information will become available to the public.
• Energy audit: An energy audit must be completed at least once a decade to determine possible energy saving procedures. There is no requirement to complete any recommendation.
• Retro commissioning: On a voluntary basis, buildings can be updated at least once a decade to reduce usage of water or electricity.

Penalties for non-compliance are $1,000 for failure to complete an annual benchmark report on water and energy consumption; and $1,000 for failure to complete an energy audit once a decade, Quarles said.

The proposal was submitted March 2 by one of Reed’s allies on the council, Councilmember C.T. Martin. The proposed ordinance was assigned to the council’s Community Development Committee and evidently flew under the radar until the committee put the proposal on the council’s March 16 agenda. Fur flew and the council voted unanimously to refer the matter back to the Community Development Committee for further discussion.

Seydel was the marquee name in a contingent of advocates supporting 15-O-1101. The list of supporters included Jamestown Properties, the Sierra Club of Georgia, Center for Sustainable Communities, a doctoral candidate at Georgia Tech, and Southface Energy Institute.

The Hyatt Regency is among a number of hotels in Atlanta that have invested heavily in sustainability, according to the industry’s representative. File.

“I wanted to bring something, and take time myself to come down here,” Seydel said. “We can survive without oil. We cannot survive without water.”

Seydel took a moment to remind listeners that he and his spouse, Laura Turner Seydel, built the first Gold Leed certified home in the southeast. It may have been the first in the country, he said, referring to a designation by the U.S. Green Building Council. Seydel and his spouse helped create the Chattahoochee Riverkeeper, which filed a lawsuit against Atlanta that resulted in the city’s $4 billion-plus effort to upgrade its water and sewer systems.

“One thing I promise you is that we’ll need water,” Seydel said. “We’ll also need electricity. … We can’t generate electricity without water. Water is important and we can’t generate electricity without water.”

Jim Early, with Georgia Power, followed Seydel. He said the power company sees opportunties and concerns. The concerns he cited appeared to outweigh the benefits, with a list that included an increased workload to perform energy audits and increased costs to customers if they wait till yearend to ask for help performing an energy audit.

Nancy Duncan took the podium a few speakers after Early. As a general manager with Portman Management Co., Duncan oversees SunTrust Plaza and noted that the cost benefits of energy savings accrue to tenants even as the cost of such improvements are paid by Portman.

“We have been part of the Atlanta Better Buildings Challenge,” Duncan said, referring to a program that provides incentives for commercial buildings to reduce consumption. “What we would like to see is more support for that program. It is a carrot, rather than a requirement, and we feel that is a better approach.”