(To read more about Real Estate Media’s Green Initiative, please click here, and for more on the debt and equity markets, click here.)

SAN FRANCISCO-New Resource Bank, which launched operations in November, is trying to make a name for itself by supporting sustainable development. Since its grand opening in November, the locally based bank has financed a number of green projects in California including a housing development in Martinez and smart growth, transit friendly projects in the urban cores in Berkeley and Oakland, and in Sonoma wine country.

The bank is taking its effort one step further now by offering financial incentives for green building projects. It will provide more money at a lower cost, with incentives that include lower interest rates and higher loan-to-value to help developers and investors profit more from building green.

The bank’s founder and chairman Peter Liu tells GlobeSt.com that the bank’s emphasis on financing sustainable resources has helped it draw like-minded depositors from as far away as New York, Tennessee and Virginia. “We’re getting very strong deposit flow from the local community and beyond,” Liu tells GlobeSt.com. “I would say the green side if a strong driver, especially on the consumer side.”

That strong deposit flow on the consumer side is, in turn, allowing the bank to finance more sustainable commercial and multifamily residential developments. To that end, the bank is now offering a 1/8th percent discount on loans to “green” commercial and multifamily developments. For a $5-million permanent loan, the discount could translate to $60,000 in savings over a 10-year period. This boosts returns for developers or investors in a sector where reducing costs is important to returns, Liu says.

The bank will also loan more money to green projects. Instead of the typical 65% to 75% LTV the bank is offering up to 80% LTV for projects designed and built with sustainability in mind. The higher LTV also will apply to green commercial real estate in refinancing or acquisitions, Liu says.

The incentives aren’t just marketing, they’re warranted, Liu says, and the bank plans to actively keep track of how returns on high performance building investments justify greater leverage. “The incremental green cost doesn’t really change the budget, but if as a result you can market the product more easily or achieve greater rents because of it, there is a higher return,” he says.

Initially, the bank will make its “green” determinations based on the LEED (Leadership in Energy and Design) criteria established by the US Green Building Council. However, Liu says the bank is open to alternative approaches that demonstrate green design excellence.

The bank cannot, of course, discriminate against developers seeking loans for projects that aren’t green. However, it can try and sell them on the concept. Liu says the bank’s senior vice president for construction and real estate, Ron Steager, recently took conventional developer clients to the West Coast Green building conference to expose them to new green building options. “People see that green can be beautiful, green can be strong, green can be efficient and most importantly, green can be marketable,” Liu says.

Among the bank’s founding investors are Greg Kats, a former DOE official and advisor to the California Green Building Task Force; Jonathan Rose, a developer of sustainable communities who also recently launched the Rose Sustainable Growth Fund; Malcolm Lewis, president of CTG Energetics and a leading green building engineering consultant; and Ray Anderson, the founder and chairman of Interface Inc.

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