About the Author
Chad Swiatecki is a 20-year journalist who relocated to Austin from his home state of Michigan in 2008. He most enjoys covering the intersection of arts, business and local/state politics. He has written for Rolling Stone, Spin, New York Daily News, Texas Monthly, Austin American-Statesman and many other regional and national outlets.
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Developers join city in considering climate resiliency as Austin grows
Thursday, August 22, 2024 by Chad Swiatecki
While the city considers its options for dealing with extreme weather and increasing resiliency across the area, the same questions about the role of climate change in large-scale building projects are top of mind for developers and financial leaders active in Central Texas.
In addition to policies affecting building standards and public financing for needed infrastructure, panelists at a recent Urban Land Institute Austin discussion talked about the role of the state in addressing resilience. Doug Gilliland, managing director of Taurus Investment Holdings, said the fragility of the state power grid in recent years has caused his and other peer companies to become far more involved with utility providers in areas where they are building.
“Texas is supposed to be the leader in energy, and we discovered how fragile the energy grid is in Texas and beyond, so part of our risk assessment is looking at what can we do in working with utility companies to deal with this stress that’s in the energy grid?” said Gilliland, whose company is behind the Whisper Valley geothermal community east of Austin. “Then we also assess public policy. … It feels like a political issue, but I’m seeing cities begin to rethink how they deal with this through land use policies, so we’re working closely with cities about developing policy to deal with climate change.”
Among the challenges developers and related parties often encounter when proposing projects with features included to withstand extreme weather is an unfamiliarity with those materials and practices, said Justin Westmoreland, regional president of Texas Prosperity Bank.
Westmoreland said that hesitancy combined with ongoing high interest rates make it difficult to prioritize resiliency in new projects, even if the resulting commercial or residential spaces are expected to be more durable against weather-related damage.
“There’s a desire to look at a project that is resilient to try to find those (comparisons) in different markets, and there can can be an additional challenge there,” he said. “Banks can be pretty nimble and change quickly when the market changes and there’s a market that’s calling for that type of product. Once we see more of that happen in the market – and there is a rent premium for those projects, and there is a seller willing or a buyer willing to pay more for those projects – that’ll create more opportunities for banks to get involved.”
Erin Nellis, managing partner for SEEN Properties, said cities like Austin that are encouraging density with shared amenities are moving in the right direction. That practice comes in contrast to the worries of major insurance companies over severe weather, with some carriers ending their coverage of rural, freestanding major construction projects that could be exposed to wildfires or other catastrophic events.
“We definitely need to influence state and local governments and public financing vehicles because not all of them are structured to be able to provide the innovation that this is going to require,” she said. “Success is building a culture of conservation, so if we can get everyone to embrace that this is standard practice and it’s standard practice for all new development, then that’s a success.”
Mansoor Ghori, CEO and founder of Petros PACE Finance, said financiers like his company are embracing solar energy and geothermal climate systems in addition to lighting and plumbing systems in commercial projects that are made to require fewer natural resources over the multiple decades they back projects.
“We moved on to water conservation, and we’re looking at things like low-flow toilets and sinks, low-flow shower heads and then irrigation systems and renewable energy,” he said. “The way that PACE is different than traditional bank financing is the fact that it’s very long term, with 20 to 30 years on average what we’re looking at for our financing.”
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