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Green Lending Picks Up Despite Credit Market Woes

By: Barbra Murray
Commercial Property News
February 9, 2009


At a time when securing a real estate development loan is an uphill
battle, ShoreBank Pacific has decided to pave the way for those builders
who are dedicated to eco-friendly development. With the establishment of
its new Green Building Loan Program, the bank has joined the ranks of
those financial institutions that are making an extra effort to step up
the support of green commercial development in the midst of the credit crisis.

"The only people who are going to build today are, one, very serious
builders--no one's building on spec unless they're idiots--and, two,
people with a fair amount of capital who are building for themselves. So
if they're doing that and they're adding green elements to the building,
we can help them get there," David Williams, ShoreBank Pacific CEO, told
CPN. The 12-year-old Washington-based bank serves the Pacific Northwest
and its new green building loan program, created in conjunction with the
bank's nonprofit affiliate ShoreBank Enterprise Cascadia, offers green
builders financing of up to 85 percent loan-to-value, a ratio that is hard
to come by for most developers these days. ShoreBank Pacific's partnership
with its affiliate allows it to provide higher lending amounts; loans
range from $1 million to $10 million.

The program is designed for the truly committed green developer. Proposed
projects must be designed to meet ShoreBank Pacific's internal
sustainability guidelines or the qualifications for Earth Advantage,
Energy Star or LEED certification. "We also have scientists on staff who
get out and assess the projects," said Williams. "It's all part of our
strategy to help folks become more sustainable. A lot of green building
starts with strategy; there's pre-thinking that goes into a building that
works, and the scientists can help them think further, more deeply into
what they want to do."

In general, it costs more to develop a certified green building than a
traditional one, so in the midst of a bleak economy, why would a bank
promote the more expensive development concept? "The long-term costs of
building are reduced if you follow green building strategies," Williams
noted. "And our approach is different from banks that are just out there
chasing the deal. Our whole message is to focus on building sustainable
communities. For example, if we're dealing with a retailer, we get
ourselves completely involved in the industry; we say, 'we can create a
market for your product,' so that reduces the risk for the bank."

Green lending is still a niche market, but more than a few financing
entities specialize in this area, including Houston-based Green Bank and
San Francisco's New Resource Bank. In Austin, a group of banking and
environment industry experts is planning to open One Earth Bank this
spring; the entity will incorporate sustainable business practices and
will provide financing with a focus on environmentally friendly projects
and business pursuits. And despite the challenging economic environment,
traditional banks are continuing to jump on the green bandwagon. In
November of last year, Roseburg, Ore.-based Umpqua Bank joined forces with
Energy Trust of Oregon to form GreenStreet Lending, a program that
provides loans to businesses and homeowners to make their properties more
energy efficient.

While ShoreBank's green building loan program is brand new, it is clearly
already on developers' radar. However, this route to financing isn't for
borrowers who decide to go green simply to get the loan. "We've gotten a
lot of calls from desperate developers, and that's not useful," Williams
said. "It's got to be in their bones to do this."


April 23, 2009
Only a year ago, the International Monetary Fund predicted growth of 1.9
percent for the world economy in 2009, a prediction that seems positively
quaint now. On Wednesday, the IMF called the current crisis "by far the
deepest global recession since the Great Depression," and urged
governments to stimulate their economies more. The organization is now
predicting a worldwide economic contraction of 1.3 percent in 2009, with
the U.S. economy shrinking 2.8 percent, a largest decline since 1946.
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