Interview with Jonathan Rose on Green Real Estate

Generous funding of the Carnegie Council's 2010-2011 sustainability programming has been provided by Hewlett-Packard and by Booz & Company.

JULIA TAYLOR KENNEDY: Welcome to Global Ethics Forum. I'm Julia Taylor Kennedy, here with Jonathan Rose to discuss his career in green real estate development.

Rose was one of the sustainability movement's early adopters. He led the way in developing green affordable housing and continues to focus on green building and transportation as key drivers in combating climate change.

Rose is president of the Jonathan Rose Companies. He also cofounded the Garrison Institute, an organization in New York's Hudson River Valley that considers environmental issues through a moral and theological lens.

Jonathan Rose, welcome to Global Ethics Forum.

JONATHAN ROSE: Thank you so much for having me.

JULIA TAYLOR KENNEDY: You're a third-generation real estate developer, right?

JONATHAN ROSE: Yes.

JULIA TAYLOR KENNEDY: How did you decide to enter the family business?

JONATHAN ROSE: I was very lucky because I really grew up with a calling. When I was a very small child, I had three interests. I loved the idea of building cities and buildings, and I used to visit construction sites with my father as a little boy, and I loved the smell of the concrete and all of that.

At the same time, I was deeply interested in the environment. I used to play in the woods all the time near our home. I just loved to be connected to nature.

Also, my mother was a civil rights/social activist who spent her life educating teachers in inner-city communities. I had a deep commitment to social justice.

I always knew that I wanted to bring these interests in building, in environment, and in social justice together. From the time of being a very small boy, I was trying to figure out how I could do that. There was never a question for me as to whether or not I was going to do that.

JULIA TAYLOR KENNEDY: Was that something that your father encouraged you to do from a young age?

JONATHAN ROSE: My father wanted me to be a builder, so he encouraged me to think about construction. He was not so enthusiastic at the time about the integration of all these things. He always thought that I was thinking too broadly and wanted me to be more focused.

It was just who I was. My family was extraordinarily ethical in its business dealings. It was a family who was known for their handshake as their bond, and that their word was good. They always did the right thing. That became an incredible credit when I entered the business. The fact that my last name was Rose, in real estate meant that I was trusted. That's a very valuable thing.

My family also had a very deep philanthropic commitment. My family started as a small immigrant family, like most others in New York. As their prosperity grew, they gave a lot back.

I come from a different generation, and it's a generation that asked the question:"Instead of making money on one hand and giving it away with another, can we actually integrate these two streams?"

Both streams were very vibrant in my family.

JULIA TAYLOR KENNEDY: How did you go about bringing that interest in the environment and in civil rights into your career?

JONATHAN ROSE: Social justice, civil rights, and the issues of low-income people was actually easier, since I was following my father's footsteps. My father had worked in several community development organizations as a volunteer board member and rose to be the chair of the Federation of Jewish Philanthropies, which oversees all Jewish philanthropies in New York City.

When I joined the family business in 1976, he said, "Go pick any agency you want and work with them."

I started working with the Educational Alliance, which is in the Lower East Side. At that time, the Lower East Side was extremely poor and very drug-ridden. I was the only guy who knew about building on their board. I became at a very young age, in my late 20s actually, in charge of all of these small development projects.

We began building some of the very first housing for homeless people, for people with disabilities, and for runaway youth. This was a vehicle by which I really engaged in the social service community within poor communities.

JULIA TAYLOR KENNEDY: That must have been a very interesting time to do so in New York.

JONATHAN ROSE: Every time is interesting.But yes, that was a very interesting time.

At the same time, I was very interested in environmental issues, but there was not an environmental infrastructure. Back then, for low-income housing issues, et cetera, there was an emerging set of not-for-profits that one could work with, but we didn't have green standards. You couldn't buy green materials. There was no integrated way to even think about urban green buildings.

People had been thinking about hippie farms in the country and how to make themselves sustainable. But urban environmental strategies were much harder to come by.

JULIA TAYLOR KENNEDY: When did they emerge? When in your career did you start to weave them in?

JONATHAN ROSE: I began seeking them very early. I left my family business in 1989 and formed my own business. I took my secretary. There were just two of us. We were in the middle of a recession. It was a quiet time. There wasn't much happening in mainstream real estate.

I actually find these quiet times are very good windows of opportunity. I began to try and figure out how one could do green buildings.

One of the first major projects I did was in Denver, Colorado. It's a building called the Denver Dry Goods Building. It was a renovation of a wonderful old department store.

I brought in the Rocky Mountain Institute, Amory Lovins' organization based in Aspen, Colorado, to help think through green strategies.

JULIA TAYLOR KENNEDY: This was in the early 1990s?

JONATHAN ROSE: This was in the early 1990s. When the AIA [American Institute of Architects] began its list of the Ten Greenest Buildings, this was on its first list.

JULIA TAYLOR KENNEDY: How have you seen the industry change over these 20 years, as you are, as I mentioned in the introduction, an early adopter?

JONATHAN ROSE: The first thing is that the industry now fully recognizes the value of green and green building.

For the Denver Dry Goods Building I hired the Rocky Mountain Institute for $1,200 to do a green analysis. This was a joint venture with the Denver Urban Renewal Authority. The Urban Renewal Authority refused to pay the bill. They said, "This is an invalid self-indulgent expense." That was a reflection of the times.

We jump forward to the late 1990s, and the U.S. Green Building Council got formed. We began LEED [Leadership in Energy and Environmental Design] ratings, which are ever improving. We now have guidelines and standards, and there are now green materials.

Very early in my career, I remember in the late 1970s wondering, "How can I tell if a piece of wood comes from"—here wasn't even the word then—"a sustainably managed forest versus a rape-and-pillage forest?" There was no way to know.

Now we have chains of custody and FSC [Forest Stewardship Council] ratings. There are so many more tools to be able to make responsible green decisions.

We are in a much better position now.

JULIA TAYLOR KENNEDY: I want to go back to the struggle you had in Denver. In green building, I can imagine there is this push and pull between serving the client and pushing the client in a certain direction.

How do you manage that when you're working, especially with so many municipalities who are concerned with the bottom line of projects?

JONATHAN ROSE: Since the very beginning, our goal has always been to be as green as possible and simultaneously, to include as much affordable housing or low-income housing in our projects as possible. Since those are part of our mission, they're just part of who we are.

There's not as much a negotiation with the client, because if we can't find a fit on those issues, life is too short and there's more than enough other things to do.

We're working on over 40 projects now.The key is to find clients, partners, investors, collaborators, and colleagues who share our view of the world. Some are further along on the path. Some are earlier on the path. But if you don't have that core foundational agreement on what your larger mission and objectives are for a project, then it's very hard to achieve it successfully.

JULIA TAYLOR KENNEDY: What a great position to be in.

JONATHAN ROSE: Yes. When we were probably in the first ten years, or maybe twelve years, of my company's history, we were considered an outlier.

Since the 1970s, I've been involved with a global organization, the Urban Land Institute, which is the leading organization of developers, planners, city officials, and investors on urban issues.

We had a very funny thing happen in the early 1990s, where some developers were complaining about the Endangered Species Act in California and how it was stopping them from being able to sprawl into the most rare areas because they weren't allowed to develop there. They demanded that ULI [Urban Land Institute] form something called the Environmental Council.

I didn't know from the name that it was supposed to be against the environment. They said,"Who wants to join the Environmental Council?" About six or eight guys and I who were very pro-environment showed up. We had this big fight because who knew what was the purpose of the Environmental Council? That would be unimaginable today.

Fast-forward to today. Every issue of the Urban Land Institute's magazine, at the very core of its statement, the core of everything it does, is a deep commitment to sustainable communities in every way—economically sustainable, environmentally sustainable, socially diverse and sustainable. There has been a complete transformation of the field.

JULIA TAYLOR KENNEDY: Let's talk a little bit about your company, because as you mentioned you're sort of on the leading edge and choose your projects selectively. You have four locations now, right?

JONATHAN ROSE: Yes.

JULIA TAYLOR KENNEDY: How do you make sure that your ethics and your values permeate all four locations that you're overseeing, because it looked like from your website that a couple of them are partnerships?

JONATHAN ROSE: In Denver and Albuquerque I have two wonderful local partners, Theresa Bell in Albuquerque and Chuck Perry in Denver, who deeply care about our mission and have been leaders in helping to turn it into reality.

We select employees who care about the things we care about. We're in a very lucky position. We're a growing, thriving company, so we've been continuously hiring, even during this downturn. I have this early and long track record in bringing together economic, social, and environmental responsibility, so for young people or people anywhere in their career who want to integrate a personal mission with their work mission, we are one of the first places they come to look.

I get hundreds and hundreds of applicants for jobs. Part of what my mission does is it allows me to hire the very best. It's actually a hiring advantage.

What it means also is that I can select people who have superb technical skills, who know all the things you've got to know to do the complex work we do, but also deeply care about doing it in the right way.

JULIA TAYLOR KENNEDY: Let's talk a little bit about one of your current projects that has gotten a lot of publicity, which is Via Verde in The Bronx."Via Verde" in Spanish means "green path" or "green way."

Tell me a little bit how you got involved in the project and how it's progressing.

JONATHAN ROSE: At the time, the head of New York City's Housing Department was Shaun Donovan, who now is Secretary of HUD [Housing and Urban Development], and he was really interested in seeing if we could push the envelope on both urban design, making better buildings, and making greener buildings.

The City took a very awkward, difficult site in the South Bronx, and did an international design competition, working with the American Institute of Architects' local chapter and Enterprise Community Partners. They did this design competition that said,"Come back with the best ideas." We came back with the best idea and we won.

I had been doing green affordable housing for a long time and this provoked us to think about: What is really next?

We spent a lot of time listening to the community. Fortunately, they set up some community listening sessions as part of the design process. What we heard was the community was really interested in health. Too much of the environmental movement is focused on energy. We decided to design a building that had all of the green aspects but had a particular focus on health.

The building starts very tall in the north side of the site and steps down as it goes to the south side of the site so as to bring more sunlight into the building.

We looked at the wind patterns on the site. The building is thinner than normal so that we can get a lot of cross-ventilation in the apartments for natural cooling. That's healthier and it also uses less energy.

As the roof stepped down, we have all these south-facing roofs and we turned them into gardens. At the top we have a meditation garden. As you step down, they become more and more public. There is a senior garden, an exercise garden and they open into a vegetable garden, orchard, and then an amphitheater. We're going from the private to the public.

I mentioned health really matters for us. We are using a lot of very green materials that are non-off-gassing, non-toxic materials.

In the base of the building, we have a branch of Montefiore Hospital, a community health clinic.

We did things like moving stairwells to the outside of the building and we gave them windows so that people would be encouraged to use the stairwells. Often in affordable housing, or in any apartment building, stairwells are in the center of the building and they're the place to avoid. We've tried to make these the place to be.

JULIA TAYLOR KENNEDY: And in affordable housing they're often dangerous.

JONATHAN ROSE: Right. By making them visible and daylit that will help to make them more active.

We've done a whole series of things. By the way, it's also a beautiful looking building. Our architecture team is Grimshaw, an award-winning leading British firm, and Dattner, a great New York-based firm. We have a beautiful, very green, and very healthy building.

It's halfway built. I can't wait until it's done.

JULIA TAYLOR KENNEDY: What has the response been from the community in the South Bronx?

JONATHAN ROSE: The community is so proud of this building. At our groundbreaking ceremony, the Bronx Borough President said, "I can't believe that we, The Bronx, have the greenest building in the world."

I'm not sure it's the greenest building in the world, but there is a sense of pride in that it is an architecturally beautiful building and a green and great building. This will be a building that, at least for urbanists and architects, will be on the tour. When people come to New York, this is one of the buildings they are going to want to see.

They are very proud that it is in their community.

JULIA TAYLOR KENNEDY: Tell me how you've seen green affordable housing catch on, because these concepts sort of seem at first blush possibly antithetical, because everyone thinks of green as expensive and affordable housing as not having the greatest budget.

JONATHAN ROSE: Many years ago, I joined the board of Enterprise Community Partners. Enterprise is an amazing organization founded by my hero, a developer, Jim Rouse, who is one of the original great green community developers. Enterprise works with over 2,000 not-for-profit groups around the United States and brings in over $1 billion a year of funding to build affordable housing.

When I went to Enterprise and said, "We've got to go green," they said: " America builds 100,000 units of affordable housing a year. If green costs 1 percent more, that means we're only going to build 99,000 a year and there will be 1,000 families that won't be housed. This is not acceptable." That was the prevailing view at the time.

As I exposed them more to affordable housing, they got that there were benefits to the greening of affordable housing. Enterprise started something called the Enterprise Green Community Program, which brought ultimately $750 million to the greening of affordable housing, through tax credit equity and through funding of not only research but grants that went to developers to learn how to go green, to bring on green consultants, et cetera, so they wouldn't have that problem of the unpaid green consulting bill.

More importantly, they went to the levers of affordable housing. All affordable housing needs subsidies. All subsidies are distributed. The most important subsidy is low-income housing tax credits distributed by the states. The states give it out on a point system. They went to every state and said, "Add green points."

At this time, if you want to get a low-income housing tax credit allocation, which is the only way you can build affordable housing, in some states you have to be green; in some states you are more likely to get the funding if you are green. Almost every state now has a green bias, and that is rapidly increasing.

Sean Donovan, now the Secretary of HUD, has a green bias. You are going to see basically form follows finance, and the money is going to require everybody to be green. Affordable housing is very likely to be the first field in America in which 100 percent of its new buildings will be built green.

You'd think it would have been hospitals, schools, churches, synagogues, or mosques, who really would have health and green embedded in their mission. I'm very proud to say affordable housing is definitely going to be first.

JULIA TAYLOR KENNEDY: When you're working on a specific project and you have to make decisions about what to spend the money on—Do we go LEED Platinum? Do we go LEED Gold? Do we put out a bike rack? Do we put in an expensive energy-generating system? When I've been talking to other architects about green building, these are the quandaries that come up for everyone.

From a real estate developer's perspective, how do you make those decisions?

JONATHAN ROSE: Let me give you an example. We just finished a building in Harlem, called Castle Gardens, for the Fortune Society, and it will provide housing for people getting out of the prison system. We put a gas-fired boiler on the roof rather than in the basement. When a gas-fired boiler is on the roof, it uses 3 percent less fuel because it doesn't have to heat the flue gases to rise through the building.

It also doesn't have a flue. The flue costs $10,000 a floor. It's a 12-story building. It saves $120,000.

Not having the flue also gives you the space of about a walk-in closet, so that you actually can make a bigger apartment.

Here is a case where you have something that has a lower operating cost, lower capital cost, and better quality of life. That's what we're always seeking.

Then we can take that $120,000, and in this case, put it on the south side of the building to create sunshades, which will automatically in the summer shade the residents' apartments, which means that they will have lower electric bills for air conditioning. We also give them ceiling fans often in our buildings too.

Really integrated design is this ability to match your savings and your expenses and try and come out as neutrally as possible.

We don't focus a lot on technology. My favorite green technology is insulation. We really try to make buildings as naturally passively self-balancing as possible.

As I said before, we really focus on non-toxics. You can now buy non-toxic carpets, paints, glues, caulks, kitchen cabinets, et cetera, for the same price as toxic stuff.

JULIA TAYLOR KENNEDY: Let's talk about the Garrison Institute. It's an institute in the Hudson Valley that you cofounded with your wife about ten years ago.

JONATHAN ROSE: Yes.

JULIA TAYLOR KENNEDY: What opportunities does the Garrison Institute afford you to step back and think about these bigger questions?

JONATHAN ROSE: The Garrison Institute is housed in an old Capuchin monastery. We decided that we really needed a monastery of the 21st century.

The first thing it does, is it provides an extremely contemplative, reflective environment, which in fact hosts great teachers of contemplation from all religions.

There's a lot of neuroscience that describes how the meditative, contemplative, reflective mode of mind is much more integrated.

Remember I described integrated design?

JULIA TAYLOR KENNEDY: Sure.

JONATHAN ROSE: It turns out you need to think integratively to design integratively. The Garrison Institute is leading in understanding the nature of this reflective, cognitive process and how to apply it to issues.

In the environment we were looking at the issue of climate change. There are many critical things that we need to do to solve the issue of climate change. We need better regulations, such as green building codes; we need to shift how we invest; we do need some form of carbon regulation, whether it's the carbon tax, cap-and-trade, et cetera.

In addition, we need to shift human behavior. The earth was doing fine until humans started putting out all this carbon.

We asked the question: How can we take all that we know at the Garrison Institute and the many organizations we collaborate with about the nature of the mind and apply this to shifting behavior?

Here's the amazing thing about shifting behavior. It's free, it's instantaneous, and we can get results very quickly. It ties into happiness because what we've learned is the best way to shift behavior is to do it in ways that make people happier or more satisfied.

We formed a program, called Climate, Mind and Behavior, which is the nexus of all this amazing cognitive research and application in the field.

For example, there is an organization at Columbia University, called CRED [Center for Research on Environmental Decisions]. They did a study in which they mailed people in a town a letter asking them to recycle. Then the same letter was mailed to people in a county, from the county asking people to recycle. They got three times higher recycling rate when the letter came from the town, because people respond socially more closely to the people they affiliate with more closely.

One of the things we have learned—and there is wonderful work by a guy named David Gershon at the Empowerment Institute—is if you create neighborhood voices for environmental responsibility for collective action—in all kinds of neighborhoods, by the way, Republican, Democrat, rural, urban—but if you get a neighborhood to work together, you get tremendous results.

We were ahead of our times when two years ago we started the idea that we can shift behaviors in positive pro-social ways. It is catching on like wildfire.

JULIA TAYLOR KENNEDY: You are able to draw out what you are learning in these events at Garrison Institute and implement them in what you are doing.

JONATHAN ROSE: Absolutely. We deeply believe that you have to distribute ideas. Just as Enterprise took the idea of green affordable housing and literally transformed the field, Garrison Institute works with very strong partners, like Urban Land Institute, Enterprise, USGBC [U.S. Green Building Council], and ICLEI [Local Governments for Sustainability]. There are all kinds of tools that we use to distribute the ideas so that we can have larger impact.

JULIA TAYLOR KENNEDY: I covered real estate for a few years and noticed that if you want someone who's great at marketing, you talk to a real estate developer. They really know how to promote their projects and get out there in the community.

Another avenue that has been huge for marketing is now green. How do you approach marketing at Jonathan Rose Companies and what that's like, because you're talking about marketing the Garrison Institute ideas as well.

JONATHAN ROSE: The company has no PR person.We don't actively market the company, but we actively market the ideas. Our mission is to repair the fabric of communities in ways that are environmentally, socially, and economically just.

We can't do it all alone. We are growing, but we are still small. We try and sell our best ideas.

Since, many people in the company share our mission and ideas, they are spokespeople and speak frequently at conferences and are leaders of organizational groups. We have been real seed planters of great ideas.

Then we have projects themselves that we have to market. The good news about affordable housing is that there is unfortunately an infinite demand. With poverty going up in America even more, unfortunately, the demand is even larger.

Our issue typically in our projects is selecting residents in ways that qualify. There are all kinds of rules and regulations as to how you do that.

Typically, marketing is not a main issue for us. We are building more and more mixed-income housing now, so we do need to market the market-rate components of those. We are growing more and more green retail. We find that marketing works best by exposing the market to the quality of what we are doing.

Interestingly, we have found that across our portfolio, in the market-rate portions, we don't get higher rent for being green or for being mission-based. What we absolutely get is greater affiliation and higher occupancy.

Typically, when recessions happen and markets go down, in places like Denver and Seattle now, where occupancy rates are 85 percent, we'll be 95 percent occupied. We are typically 10 percent better occupied simply because people want to be in a place that has good values.

We created the country's first green real estate investment fund, which has been buying real estate all across the country and greening it. That fund is significantly outperforming normal investment funds. It's not because of the savings, that because our buildings are green we're using less energy—that’s a very little part of the budget.

Our occupancy is so high in all these buildings because people want to be there because of the quality of the experience they are getting and their individual commitment to being green.

JULIA TAYLOR KENNEDY: Do you ever think back to the late 1980s/early 1990s when you decided to leave the family business and start your own—and now, of course, you're very successful and there is all kinds of demand. But I can imagine it was a gamble at the time.

Do you think back on how you made that decision and sort of pat yourself on the back for it?

JONATHAN ROSE: It's interesting, because this week I am giving a talk to the Social Venture Network, an organization that I was a member of in the late 1980s and early 1990s, that really inspired me to leave the family business.

I saw people like Ben Cohen of Ben and Jerry's Ice Cream and Anita Roddick of The Body Shop and others there who were doing amazing things. It struck me: If somebody can transform the ice cream and the cosmetic business, certainly somebody can transform the real estate business. I had inspirers that were very important to me.

The second thing was it was really about being true to myself. Ultimately, being true to yourself, whoever that is, whatever it is that you want to do and be, is always going to be more satisfying.

JULIA TAYLOR KENNEDY: I really appreciate your coming in and talking to me. It has been lovely to speak with you, Jonathan.

JONATHAN ROSE: It has been wonderful being here. Thank you so much.