Green Lease Case Study: New Life Cathedral

NEW LIFE CATHEDRAL

GREEN LEASE CASE STUDY

FROM PRAYERS TO

SAVINGS

THE CHALLENGE When New Life Cathedral was founded in 2010 and took ownership of the the building at 16200 Euclid Avenue in East Cleveland, Ohio, the first winter was difficult for the church and its pastor.

The boiler was starting to break down, and with little to no funds to repair or replace it, Pastor Braxton resorted to anointing the boiler to make it through that first year. Whether it was the power of prayer, or just luck, the boiler made it through the winter. However, Pastor Braxton knew the church needed to set out on a better energy management pathway. So he and the congregation sought a way to gain a better grasp on everything by engaging with the Council of Smaller Enterprises (COSE) to conduct an energy assessment and establish a baseline. Pastor Braxton convened a team of parishoners and staff to champion these efforts going forward.

Once the congregation reserved enough money, a new system replaced the antique boiler to provide heat to the building, giving adequate comfort to its parishioners and partnering organizations (i.e. tenants). Today, six different nonprofit organizations utilize and lease space from New Life Cathedral and pay only for the space, as utilities are included in their base rent.

Over the last couple of years, the church has pushed forward to better understand their energy usage, and capitalize upon ways to maximize savings each time they consider renovating or upgrading, all while adhering to historical preservation standards.

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New Life Cathedral New Life Cathedral is seen as a center of faith, healing, help, and more recently— energy performance in East Cleveland.

WITH A RICH HISTORY DATING BACK TO THE EARLY 1800’S, THE CHURCH AND ITS BUILDING ARE A WELCOMING PILLAR OF THE COMMUNITY. ERECTED AND ORIGINALLY FOUNDED AS THE FIRST PRESBYTERIAN SOCIETY OF EUCLID, IT WAS EVENTUALLY TAKEN OVER BY NEW LIFE CATHEDRAL IN 2010.

OVER THE DECADES, THE CHURCH HAS CONTINUED SOCIAL ACTIVISM THROUGH SPONSORING A DAYCARE, HOUSING THE COMMUNITY NEWSPAPER, OFFERING COMMUNITY MEALS, AND SUPPORTING INTERRACIAL EFFORTS SUCH AS THE EAST CLEVELAND THEATER.

ENERGY CONSERVATION MEASURES: Currently the building consumes 2,529 Mcf of natural gas and 109,102 kWh of electricity per year for a total annual energy expenditure of $32,605. Based on the utility data that COSE analyzed, the facility had an annual Energy Use Intensity (EUI) of 119 kBtu per square foot. Out of the many of Energy Conservation Measures (ECMs) considered, 11 rose to the surface as candidates for implementation. If all ECMs were implemented, the facility could expect to reduce natural gas consumption by 59 percent and electricity consumption by 31 percent. This would produce an annual operational savings on the order of 1,423 Mcf and 35,845 kWh for a combined $15,427 of utility, operation, and maintenance expenditure reduction. The full cost of carrying out these projects was estimated at $127,976, yielding a simple payback of 8.3 years. ECMs included sensors, controls, lighting, advanced thermostats, insulation, air sealing, and reduction of plug load.

Typically, churches have uneven and limited operating hours that challenge the economics of energy projects. However, New Life Cathedral is occupied seven days a week, with its tenants occupying the space at varying hours of each day, which made the recommended ECMs more attractive and economical.

WHAT’S FIRST? For many, the energy assessment report seems overwhelming and starts to collect dust because the reader doesn’t know where to start. With New Life Cathedral, the case was no different. Pastor Braxton knew he needed to act, but he also needed guidance. So COSE stepped back in with its contractor partners to help lay out a cost-effective energy management strategy for the Cathedral that included upgraded lighting, advanced controls, and modifications to the tenant leases.

THE SOLUTION New Life Cathedral was generous with its tenants and continued to solely pay for upgrades, not passing on costs to them. Knowing this, COSE and the Institute for Market Transformation (IMT) teamed up to provide the church with recommendations that would enhance their existing leases and utilize sustainability best practices.

While a green lease is not necessary to implement basic energy efficiency measures, research has found that it makes the process of sharing costs and benefits much easier for both landlords and tenants.

Specifically, New Life Cathedral was looking to develop and adopt sustainability principles that would be shared and embraced by its tenants, parishioners, and visitors. To that end, it agreed to develop an ongoing sustainability plan that is revisited regularly with its tenants. By having a mutually agreed-upon sustainability plan, it encourages all to work toward a greater good of the building.

After COSE and IMT reviewed New Life Cathedral’s current leases, it was recommended that the church consider the following: SUB-METERING LEASED SPACE is an effective technique to engage tenants in energy efficiency and sustainability

Research has found that it makes the process of sharing costs and benefits much easier for both landlords and tenants. efforts financially incentivizing them to use less electricity because they pay directly for it.

UTILITIES AND ENERGY CONSUMPTION DATA SHARING increases transparency. This in utility data creates greater awareness about energy usage as well as builds trust between the landlord and tenant and encourages both parties toward investing in deeper energy-saving strategies.

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CAPITAL EXPENSE SHARING: From time to time, capital expenditures may be incurred during the lease term on the tenant’s or landlord’s end for energy efficiency retrofits and upgrades. The lease can be used to communicate the benefits, costs, rights, and obligations to the landlord, its tenants, and its appropriate legal parties.

INSERTING A PASS-THROUGH CLAUSE in the lease is a great way to address capital improvements and overcome split incentives.

A pass-through clause is lease language in which capital expenses are amortized to the tenant over the useful life of the energy improvement.

By doing so, both the landlord and its tenant can capture the savings from capital improvements.

Inserting a pass-through clause in the lease is a great way to address capital improvements and overcome split incentives.

LANDLORD & TENANT MAINTENANCE—SUSTAINABILTY BEST EFFORT: This clause describes best efforts both parties will take towards greener and more energy-efficient operations. What started as a simple, one project at a time approach, has been elevated to an energy and sustainability strategy. New Life Cathedral sees the value in leaping forward, instead of incrementally chipping away to achieve greater comfort, savings, tenant satisfaction, and overall preservation of the building.

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