INFORMING DESIGN DECISIONS:
AN APPROACH TO CORPORATE BUILDING DESIGN
by
MARC A. MAXWELL
Bachelor of Urban Planning and Design
College of Design, Architecture and Art
University of Cincinnati
Cincinnati,
Ohio
1980
IN
SUBMITTED TO THE DEPARTMENT OF ARCHITECTURE
PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE DEGREE
MASTER OF ARCHITECTURE AT THE
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
FEBRUARY, 1985
Marc A. Maxwell
1985
The Author hereby grants to M.I.T.
permission to reproduce
of
and to distribute publicly copies
this thesis document
in whole or
in part.
Signature of the author_______
Marc 1 A. Maxwell
Department of Architecture
January 16,
1985
Certified by
Ranko Bon
Assistant Professor of Economics in Architecture
la
.mam8A L
Thesis Supervisor
Accepted by
S
Kad
Chairman
Departmental Committee
for Graduate
MASSACHUSE
Studies
1i
ITUTE
(SLN
OF TECHNOLOGY
FEB 22 1985
jRotcbh
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INFORMING DESIGN DECISIONS:
AN APPROACH TO CORPORATE BUILDING DESIGN
by
Marc A. Maxwell
to the Department of Architecture on January
Submitted
fulfillment of the requirements for
in partial
1985
degree of Master of Architecture.
16,
the
thesis is an investigation into design methodologies.
This
as designers, prepare ourselves for decision
How do we,
The
evaluate our assumptions and decisions?
and
making
a basis for
information as
is to employ this
intent
of architectural design processes with economic
integration
techniques
and management
decision methods
principles,
widely used in related disciplines. Given that architects do
is
use heuristics based on common knowledge and values, it
appropriate to analyze these constructs. Re-evaluation, in
light of changes in society, .technology and the practice of
such
usefulness of
enhance- the
profession, will
our
techniques.
The myriad of decisions required in all design processes
force the designer toeconomize. Conventions are employed
to save designers from the rediscovery of past solutions.
Once a procedure or physical configuration has been accepted
how is it kept current and
into our 'set of rules',
consistent with its original intent? How can we use more
analytical procedures (i.e., life-cycle costing) to heighten
our understanding of the designs we create.
Integration of architectural design into the larger process
of building development is a parallel concern. As buildings
become more complex, so too does the process of designing
How architects interact with their clients and users
them.
The
can determine the success or failure of a project.
relationships established betwe'n collaborators in each
design exercise, also influence both the process and the
product of our efforts. This study is the author's search
for a more systematic and integrated approach to challenging
or corraborating existing conventions. Formalizing their
uses and organizing the process of acquiring such procedures
The value of such heuristics is
is equally important.
process.
design
in the building
efficiency
greater
Understanding of the overall development process can help
designers make more informed decisions, leading to better
The intent of this study is to
designs and buildings.
illustrate that issues confronting the architect's client
can aid the designer in his/her tasks and selections without
unduly constraining design goals and inspiration.
Thesis Supervisor: Ranko Bon
Title: Assistant Professor of Economics in Architecture
2
ACKNOWLEDGEMENTS
I wish to thank those who have assisted me in the pursuit of
this
project;
Park
Square Associates for allowing
me
to
scrutinize
their
pointing
building,
me
in
the
right
direction
when
I began to stray and for the
access
they
provided
to
numerous photographs and drawings I might
not
in
the
have
seen;
my coworkers and associates
otherwise
for
Facilities Management at The Boston Company
Office
of
their indulgence and tolerance of my erratic schedule, moods
and
seemingly obtuse questions; my siblings and parents for
their
unfaltering support of the never-ending process of my
gentle
Ranko
Bon for his skillful tutelage and
education;
throughout this, and previous endeavors at M.I.T.;
guidance
text,
this
and
to
David Passer for his help in preparing
and
proofreading, editing, encouragement
word
processing,
often cajoling me into completing yet another thesis.
3
TABLE OF CONTENTS
PAGE
Title page................................................1
Abstract..................................................2
Acknowledgements..........................................3
Table of Contents.........................................4
Preface...................................................5
INTRODUCTION..............................................7
What They Never Taught Me in Design Studio!..........10
Building Economics..................................14
Architecture as a Corporate Asset...................26
-Good Design is Good Business........................27
-Architecture as Negotiation.........................31
BUILDING ECONOMICS AND ARCHITECTURAL DESIGN...............45
The Economics of Design.............................49
Using Economic Analysis in Building Design...........51
What Constitutes Value in Corporate Architecture... .53
Client Investment Decisions.........................55
58
.............................
Flexibility by Design...
ISSUES IN BUILDING ECONOMICS.................................67
Life-cycle Costing
.................................. 68
Cost Planning
....................................... 72
First Costs and Recurring Costs....................75
Discounting.......................
.................. 79
Leverage...............................................81
Depreciation..........................................86
................... 87
Tax Incentives...................
Useful Lives of Elements.................................91
PARK SQUARE BUILDING CASE STUDIES........................94
Introduction to the Case Studies.....................95
The Park Square/Back Bay Market for Development....110
Park Square building Timeline........................116
Park Square Building Chronology....................117
Parapet Removal................................125
Window Replacement Project....................135
........................ 154
Office Renovation.....
Roof Expansion Project........................170
CONCLUSIONS.............................................187
APPENDICES..............................................203
Appendix A: BLCC Analyses..........................204
Appendix B: Glossary...............................241
BIBLIOGRAPHY
.............................................246
4
PREFACE
of
is a personal exploration into the process
thesis
This
Investigation began with, a
decision-making.
architectural
search of current literature as to the process of design and
viewed
the architect and the client have traditionally
how
that process. The introductory chapter is a synopsis of that
the
from
gleaned
information
including
investigation,
both
literature, interviews, work experiences in
available
a
in
recently
more
and
offices
design
architectural
Management group and research conducted
corporate Facilities
specifically
in
the
pursuit of
this
project.
"Building
of
the complilation
and Architectural Design" is
Economics
management
process,
design
the
about
theories
several
perspectives
and the synthesis of these varying
techniques
major
into a more comprehensive "model" of design. The third
"Issues in Building Economics," is a primer of the
section,
this
to
the author to be most salient
by
thought
topics
and
architects
Some explanation of how both
discussion.
included
also
such issues is
perceive
clients
corporate
here.
as
serve
Studies,"
Case
Building
Square
"Park
The
models
illustration of the concepts outlined in the previous
"thesis"
explanations. They have been used to test the
and
and
design
a
Each case was examined as
project.
this
of
the
by
was utilized
process. How economic analysis
decision
by
and
concerning the architectural design issues
designer
to
central
was
as decision information
corporate client
the
of
examples
show
to
The cases are intended
research.
this
and
opportunities
criteria,
economic
and
financial
how
building
affect
could
or
affect,
presently
constraints
also
studies
case
decisions. The
investment
and
design
of
course
the
in
generated
analysis
some additional
include
place.
took
actually
which
that
to augment
research,
this
case concludes with a short discussion of the economic
Each
indicators and analysis that might have been employed in the
to
decision process and how this could be used
and
design
inform the architect.
general
a
presents
"Conclusions,"
section,
final
The
economic
those
and
studies,
case
the
of
synopsis
the
by
explored
been
have
might
that
considerations
those
highlight
to
intended
is
essay
This
architect.
the
and financial issues that are most useful for
economic
to
expanded
be
might
methodology
designer and how our design
on
based
is
study
this
of
section
last
The
incorporate them.
this
from
that can be inferred
knowledge
conceptual
the
the
of
and analysis
The case studies
investigation.
thesis
more
new,
a
that
suggest
presented
model
theoretical
5
include
of architectural design would
model
comprehensive
the
and
by both the architect
generated
criteria
design
can
architect
this way the
In
decision-maker.
corporate
to
him/herself of the issues most important
inform
better
for
objectives
client's
the
of
satisfaction
the
architectural design and the subsequent buildings produced.
6
INTRODUCTION
7
INTRODUCTION
METHODOLOGY:
1.
A
body of
methods,
rules
and
postulates
employed by a discipline: a particular
procedure or set of procedures. 2. The analysis of
the
principles
or
procedures of
inquiry
in
a
particular field.(1)
This
thesis is an investigation
designers.
Much of
been accepted
to
teach
itself.
why
a
intuitive process, difficult
explained.
describe
The
client,
the building, came to look as it does.
is little consensus in the
what
a
comprehensive body of
design
applicable
tasks
would
While
field of architecture as to
knowledge identified
include,
and dilemmas to
evolving nature of the
and
made.
the
to speak for
architect to
design decision was
there
of
the
is left
it
has a hard time understanding how the design, or
some cases
basis
be
The product,
building,
it is difficult for
particular
similarly,
in
rarely
design, drawing or
Often
used by
the architect's design activity has long
as a personal and
and
completed
in the methodologies
there are
some
the
generally
be dealt with.
Given
role of the architect in our
in the profession, it seems prudent to
as
the
society,
investigate
how
the processes and tools of the architect might also change.
The
best
appears
teacher
to
be
of
architectural
experience
over
design
time.
The
(1)Webster's Seventh New Collegiate Dictionary
8
and
practice
appropriate
(1969).
knowledge
can be acquired, and seems to become intuitive at
some point
in the career of architectural designers.
the
transferable. Many of
knowledge base must therefore be
this
research
this
a methodology
to elucidate
is
are
time
over
of
analysis. The intent
of problem and situational
methods
learns
procedures one
and
techniques
Some of
more
for making
informed decisions in architectural design. Often this seems
to
on
rely
to
process
design
impact
as
use
practical
of
economic and
It
constrain this research
and
projects.
more
clearly
The
be
to commercial
and
realms of design
family custom housing)
these
appropriate use
but
rather
to
in
further
clients,
that
pursuits
deal
(e.g.
lend
themselves
of a more
systematic
do not
to gathering and synthesizing design
thesis
as
the
techniques
corporate
a
within
bounded
management
with personal expression and
intent of this
build,
As
product.
most appropriate
seems
While there are
discussion of the
approach
the
The predisposition of this study is
design.
architectural
to
eventual
methodologies must
design
limits.
manageable
single
the
in
enough
early
consideration, any investigation into a topic
practical
complex
questions
the correct
asking
information.
is not a more efficient diagram to
to expand
the base of
diagrams upon which to build.
9
information
and
WHAT THEY NEVER TAUGHT ME
In
the thesis topic of building economics and its
proposing
uses
in
the design process, the question was
a design
would
student be
architectural
of
student
STUDIO!
IN DESIGN
in
interested
such
"Why
issues?" As
background
a
with
design,
asked,
a
in
seems
it
planning,
and having worked as a project manager,
immensely
apropos. While we are taught to design a space or
building according
there
to its program or
rarely is
ultimate use,
or even could be
any discussion of how a project will
L)
the
developer,
of
role
for
responsibility
process.
More
the
ultimate
taking
entire
the
accept
and
control
realization
and
design
the architect is
often,
begin to
the architect
recently has
Only
realized.
designer
and
consultant to others.
The
Church
and
the
buildings,
this
buildings,
of
for various purposes.
Future of the Architectural
corporation has
With
design.
the
patrons of
building and facilitating great works of art,
architecture,
including
as
served
Royalty historically
Profession
As discussed
seminar
(2)
in
the
become the modern patron of architecture.
shift
in
the facilitators,
or
financiers
of
so to have the priorities, purposes, and process
Hence, this
potential changes
study is an
investigation into
the
in that process, given other shifts in the
Study
the Architectural Profession
of
Future
(2)
Department of Architecture, M.I.T., Spring, 1983.
10
Group,
scheme of how buildings are
overall
as
in the very recent past on
been written
Much has
building
economics,
evaluation.
The
myriad
life cycle costing,
of
publications
and
value
and
good aesthetics. However,
see
our
designs built we must
advocate
also
our
from
the
traditional
roles of architects,
existing
reconfigure
an
environment.
Time
of
and
proposed
to
comparison
redesign
to
plan
building
paper
in
the
renovation or
construction,
project to see how well
be. While no one has yet
the
level
best
interesting
is
of
topic
intended
design
is,
further
to expand
the types
designer should ask of the client to aid
11
physical
and
in
demolition
of
costs of any
additional design
determined exactly what
effort
worthy of
to
only compare the dollar
invested
time might
It
expense
small
seems a
designs
than
evaluation
of the designer's fees to the life cycle
building
study
on
in
energy expended
poorly conceived buildings. One need
value
a broadening.
but rather
a
to
expand
This study is not meant as a departure
easier
of
are
if we
expertise.
analysis
both
architecture
design,
of quality
social
far
in
imperative. The architect must
the
is
how
and
limited,
remain
actually
building
labor used in building, efficiency in the way
finite commodities is
use
and
and escalating costs of
some cases dwindling resources,
materials
topics such
illustrates
this discussion has become. Given
important
we
created.
this
too
is
investigation.
of
questions
in the
an
This
the
creation and
evaluation of architectural designs and alternatives.
discussion is not to the end of continual reworking of
This
to
buildings.
designing
and
programming
process
the
questions early on in
right
the
ask
architect
Rather it is intended as impetus to the
designs.
often
too
Far
of
enthusiasm to secure the commission and then to explore some
new
the
avenue of architectural expression propels us into
or
practical
towards
thought
business
any
preclude
of "design" should not
advocates
the
Being
proceed.
enough information upon which to
without
process
How
concerns.
frequently have we heard the proclamation, "that's a problem
for
when
engineer to solve" or "the owner will pay
the
architecture
always
buildings,
for
be
a
space,
of
over
good
financial profitability. Hopefully
there
not
are
architects
will
our thinking beyond the creation
of
parameters
it
the
expanding
how much it will add...". By
sees
he
for
necessarily
place for
exceptional
throwing
exceptional
places
buildings for that matter.
our
in
But
if
there
is no thought towards the business concerns, the long
range
benefits
and costs of a building, there will
likely
never be a realized project at all. There is a balance to be
achieved
between
good design and good business. And
while
some will argue that pure design is an artform in itself and
does
too
not require the legitimacy of physical presence,
is
a radical departure from the traditional notion
the profession of architecture.
12
this
of
If
one
accepts
the corporation as one of
the
patrons of architecture, it seems advisable
in
the language
of
the
of that
architect
increasing
field.
is the
complexity
One
of the
modern
to be conversant
monumental
role of coordinator
of
the
day
building
in
tasks
the
ever
It
process.
is
important
that
bring
in
another
which
to diffuse responsibility and liability in a project,
but
a decision
the
best
becomes
the architect
in
expert.
the best
available
more
reflects
important
not
interest
expertise.
it's
simply a
time
to
method
by
of the client
As our
to employ
building
the practice
of
technology
architecture
in a movement towards specialization.
that
we not lose control
because
of
this
paramount
that
the
consultants
This is
sophisticated,
this
recognize when
and
division
architect
of
of the overall
expertise.
know when to
be able
to evaluate
their
It
process
it
Rather
bring
in
work
in
is
the
is
right
relation
to his/her own, as the designer is likely the only member of
the
team who maintains
awhole.
Herein
lies
an understanding
a
new skill
facilitate
the
conceptual
integrity of the project.
only
use,
diverse
the design concept,
for
of the building
the
work of others while
This must
designer,
13
to
keeping
the
include
not
but the owner's thoughts about
life span and investment in the building.
as
the
BUILDING ECONOMICS
There
are a myriad of decisions in any architectural design
process,
many of which can be based on economic as well
aesthetic
and
concerns.
change
flexibility to accommodate such change over time, total
benefits
costs,
and
Life cycle costs, the need for
as
that
and
some comprehensive notion of the whole
project
expenditures
of
considered
process.
more
but
are
all
integration
decision-making
design,
from
initial
some
exclusion
be derived
additional
overall
deserves
might
The
worthy
into
intent
the
is
useful
the
in
expansion
the
of
of
process
Each
design
again,
traditional concerns
rather,
issues.
and
not
the
architectural
the
of
information
architectural
decision-making.
The
corporate
taken
the
only
a
client
of architectural services
has
long
more analytical view of buildings, seeing them
huge
capital
think
of
investment they are.
Architects need
such discussions of economics
as
as
not
"budget"
constraints. If one accepts the changing nature of buildings
and
spaces
components
use
or
practice,
entrusts
over
their lifetimes, it is
useful
and permanence consistent with this
life
span.
Barry
his
or
In a recent
LePartner
article
stated,
"Every
her assets to a designer
14
on
to
match
anticipated
professional
client
is
looking
that
to
investment.
that
maximize
spend
to
ways
effective
the
most
cost
money
does
not
Being alert of
a
client's
necessarily mean finding the cheapest way."
Issues
investment
of
new
renovation,
construction,
designer's
and maintenance can be used to the
preservation
and
in
(3)
ultimate
user's
advantage.
Building
must
economics
however, be constructively and creatively applied. Corporate
clients
from
have agendas and goals quite different
often
those of the architect, but not necessarily conflicting. The
simple
who is aware of the client's needs, beyond
designer
requirements,
programmatic
is far better prepared to
work
with and design successfully for that client. The concept of
change
life
costs,
expected useful
The
and
Design
emerges.
material
might well be based on the client's needs such as
decisions
initial
again
time
over
timing
cycle
costs,
benefits and
and
the
life span of various components or projects.
when such concepts are discussed
of
well as when they are included in
client,
as
design
process,
is
also
critical.
The
the
with
the
overall
inclination
of
architects to shun economic analysis of their designs may be
a
product
of
the past misuse of
such
devices.
Building
economics should not be employed only as a last ditch effort
to
rationalize questionable decisions, or to trim the total
(3) Lee G. Copeland, "Architectural Education: Balancing the
Record
Architectural
Humanities,"
the
with
Practical
(January 1984) Pages 45-47.
15
the "eleventh hour".
project cost in
these
raises
issues early in the design process this analysis
and
can be most useful. All too often
the
criteria
subsequent
of design decisions are known too late in the
ramifications
change
efficiently or economically evaluate or
to
process
the
the architect
If
the
If
design.
were
designer
economic
include
to
design
throughout the design process, alternative
criteria
could
Decisions
between
these
to
regards
alternatives
issues
of
could then be
decided
in
and
finance
in
investment
aesthetic and conceptual
to
addition
evaluated.
be constantly and consistently
solutions
would
Few
criteria.
dispute the notion that it is far more efficient to redesign
a building on paper than to alter the physical building, but
it is difficult to make this point to a project manager when
the
schedule.
behind
architects
Using economic criteria in design is
counter
necessarily
and
weeks
design budget is expended or the project several
to
may believe.
the
creative
The aim of this
many
as
process,
not
to explore
study is
better
illustrate how the architectural designer might
prepare him/herself with adequate tools and information with
which
to
make
more enlightened decisions
in
design
the
process.
Architects
best
time.
terms.
use
do
think about optimizing designs;
of scarce resources, including their
making
design
own
Often this process is simply not thought of in
A
great
deal of time is
16
spent
refining
the
these
designs,
toward
working
materials,
the most efficient,
craftsmanship
employing
explicit
"rules-of-thumb."
regularly
yet
and
function.
methodologies,
Empirical
utilized
analytical
in the design process.
configurations worked well
much
time
and energy is appropriate
task
and
examples
types
in
of projects
to
of economic principles
architecture. Most
of
always
do
use
techniques
are
Which
building
in past projects, how
for a specific
specialize
in,
applied to
frequently these tools
design
are
all
the practice
of
have been employed
the management of design offices.
Few
architects claim to be experts on economic
are quite
many
for
their
Design
An
savvy.
commissions
little
the
in
seems
at analyzing
as
well
market
as in
some
on
who
economically
the
secure
feasible
physical
to prepare
client's concerns for
designers
designs
it
and
do
environment.
investment
to design
17
The
this
fulfill
will
have
While
many
light
of
in buildings, and
the
in
investments.
analysis
is not always skillfully done.
made of unlike quantities.
own
the masterful designer,
ourselves
employ economic
by
and
but
demand
their
manner
constructibilty and maintenance of those
When
forces
marketing
cannot
the exceptional skills of
prudent
theory,
is not necessarily compromised
architect
impact
appreciate
it
shrewd
services,
expertise.
are
Without
architects
details and
what
balance
pleasing,
to
building
Often comparisons
objective of life
cycle
costing,
or
purely
out
to
economic
justify
higher
of a desire
building's
of
in
as
the
the
of the
is asked
to
building
investigate
grows
building
time,
it
is,
the
to
as
the
well
skills,
process.
new
Decisions
to make take on new meaning
generate
the
in
this
usually
architect
takes
inputs
preceeded
(costs) and
process.
Life-cycle
accomplish
this
process
then be
at
task.
plan,
it
is
his/her
product.
outputs
is
costing
a
As an
in
this
in
method
the
should
the
by
be
planning
which
the
to
design
regard.
of subdividing
18
of
to
investment,
(benefits)
Each major decision in
evaluated
spaces
appropriate
perspective
least considered
should beware
well
is seen as the visionary in the
the eventual
or
move
be
would
have
design through the
for,
architect
The
an architectural
or owner of
can
the architect
able to conceptualize a series of
overall
relevant
of
the designer
accounted
The
over
architect's
what decisions
process,
client,
all
It
from
costs
investment
as central
a project.
such
involvement. As
view
a project.
not
some investment decision by the client to
on
forward
and
total
expression of the
commissioning
after
advised
in
is
context.
actual
place
the
large capital
emerge
will
architect
The
to minimize
physical
economic
costs
design,
life-cycle. If a building is continually thought
terms
concerns
first
of building
to maximize benefits derived
and
expenditures
evaluation
the complex
whole
into
its
"coordinator"
the
life-cycle
the
its
or
site
they
the
in
present
architect
undertook
of
a
Profession.
assembled
economic
is a component
would
of
process
undertake
the
the
of
the
a
in
which
large
scale
market
in
if not
the
forces
expert,
context
working
are
the
of Architecture
Future
of
the
at M.I.T.
Architectural
group. Several
appropriate
the
to
The
reiterate
for traditional architectural
diminishing.
19
the
of the conclusions of
here.
many months of discussions:
probably
on
take place.
is a distillation of observations made during
Demand
The
within
author of this thesis was a member of
The
to
should be
new development.
conversant,
present
If
generation
buildings
investigating
forces
light
might be expanded
Likewise,
1983 the Department
study
report
following
from
possible demolition.
the economic
should also become
Fall
project,
of a proposed
his/her work will
the
draft
fully
the
inception
of ground.
the vicinity
applicable
which
Similarly,
the
discussion
context of
without
as
in
and
Few developers
exist.
project
of
this
architect
redevelopment, the second or third
of in
thought
the
should be considered
development of a site
use of a parcel
of
In
sequence
services
of
concept maintained.
realization
architect's
include
the
role
the whole must be kept in mind,
cost and benefits
selection
the
of
entire
through
The
suggests that
integrity
of
parts.
component
services
is
the
In
the
future, the successful practitioner
will
need
to
be
equipped
with
a
mix
of
skills,
knowledge and values...
The
architectural profession is diversifying
its
services
and
expanding
its
business
horizons
beyond traditional ones, and this is enhancing the
as
a
potential
of
the future of the profession
whole.
The
relationship
between
an architect
and
the
client
has
always been among the
most
critical
factors
in
acheiving design, as well as
project
and
business success. In this regard, helping the
their
and convey his, her, or
understand
client
helping
them
to
interpreting
them
and
needs,
constructive input during the process has
provide
complex
been important and difficult. The
always
building
of
today's
nature
and
significant
even more
projects
makes a successful relationship
important.
In his draft
report, Bruce Anderson states,
final
of
...
the
design process is not the only asset
the
architect.
In addition, for a person trained
in
the
design process to be able to apply it
to
buildings,
he
or she must understand
buildings,
products and materials, building and environmental
science, engineering and technology, economics and
finance,
planning,
landscape
architecture
and
interior
planning,
real estate
development
and
construction management, architectural history and
human sociology. (4)
The specific
several
and
of
aim of this
these
planning.
Education"
topics:
In
section
thesis
is
economics
investigation directed at
and
the
"Observations
of
this seminar
finance;
and
management
Implications
report
is
found
for
the
recommendation that future:
Report:
(4)
Bruce Anderson; Studies Director, "Draft Final
M.I.T., September
Studies of the Architectural Profession."
1983,
pg.
4.
20
...
practitioners
will
need
a full
understanding
of
basic unchanging fundamentals in various fields of
knowledge
in
which they deal.
(ie, the list of
topics
appearing above)
The
understanding
of
conceptual
emphasis here is
on
on
rote
tools not
of specific facts that change over
training
time.
Additionally, practitioners
will
need
to
have
skills
to easily
access,
interpret,
evaluate
and
synthesize
vast
quantities
of
data
and
other
information
in light of their knowledge of
fundamentals.
Skills
be useful ... (5)
resources,
Dwindling
constructing
designing
to
along with
buildings
and
organize
execution
of
more
careful
resource-using
needs
to
building.
of
different
implications
is
design decisions."
the
concerning
method
use
(5)
Ibid.,
and
in
analyzing
...
the
their
of great value
in
economics
cost
trade-offs
life-cycle
making
the
more
cost
informed
(6)
of
for
such
mandates
analyzing
of thumb,
but often
pg.17.
(6) Ibid., pg.
of their
to understand
decisions
choices,
architectural
performance
seem
economic
architectural designs exist today.
rules
do
skills
objectives
systematic
design
design
...
cost
should be trained
their
including
training,
While
to the
"Architects
consequences
of
related
It
to possess the
satisfy clients' needs, not only
but those
with
planning,
projects.
becomes increasingly important for architects
ability
will
costs associated
other
require
basic
information
18.
21
in
clear,
no
information
Practitioners
an haphazard
fashion.
Many,
especially
understandable
might
younger
knowledge
be applied.
the cadre
possess
of
little
techniques
The aim of this research
such
a
methodology.
architects
might
better
ramifications
designers,
of
is
Conversant
in
such
inform themselves of
that
to elucidate
knowledge,
the
larger
of their decisions and be more fully prepared
to communicate such facts to
their clients.
Amos
Rapoport, an architect,
writer
and educator,
recently
wrote
about
the need to downplay the importance of
studio
education in architecture:
The
purpose
appropriate
of
design is
to
the
to
provide
settings
psychological,
bio-social,
cultural
and
other characteristics
and needs
of
the
different
people for whom the design is being
done.
This means that the most important decision
is
what to do and why to do it
rather
than how it
is
to
be
done (which comes later),
with
which
has been traditionally more concerned.
design
...
Furthermore
the decision about what to do and why
must
be based on the best available
information,
on
a
body
of
literature,
on
research
on
man-environment interaction, on theory rather than
the
have
may
likes and dislikes of designers.
argued
that
in
its
strong
form
involve designing something
or
dislikes
objectives
even detests.
for design,
In
In fact,
this
position
that the designer
setting
criteria
I
explicit
are also set
for
evaluating
how successfully goals have been
met.
When
this
process is repeated, there is hope
of
developing
a
cumulative
body of
knowledge
and
theory. (7)
as a profession often lacks
Architecture
and
theory.
is
often
evaluation.
are necessarily related
attributes
it
for
criteria
As there
taught
Rapoport
to,
is
believes
and dependent
is no valid theory of design to
to teach design at all.
difficult
clear design goals
"subjective,
illogical
on,
a
transmit,
The approach
and
these
most
not cumulative."
an
Rapoport,
"Architectural Education: 'There is
(7)
Amos
of
the
to
Reduce or Eliminate the Dominance
Urgent
Need
Architectural
Record (October 1984) Pg. 100-103.
Studio',"
22
may, in fact, be caught up in the decision
Architects
HOW
build
to
rather than WHAT to build.
recent
A
of
study,
"Design Decision Making in Architectural Practice", examines
the
of information, experience and
role
influences
other
economics and the client) on the design process.
(including
(8)
This
study
provides
good description
prevailing
the
besetting
a
architectural
th
problems
design
process.
of
Employing a simplified, yet appropriate model
for design, it
defines design as the act of working on and solving a design
problem.
INFORMATION-4 ANALYSIS
SYNTHESIS
BEST
ALTERNATIVE------
From
this
study
should build, "...
idea
is
research
developed
EVALUATION
it seems clear
that
what
the
architect
receives the least attention -the
rapidly using
little
but it also rarely changes much..
information
and
This fundamental
decision is based on the designers' own experience."
Design
& Heather Mavin,
(8) Margaret Mackinder
(Building
Practice
Architectual
in
Making
Establishment,
initial
(9)
Decision
Research
Institute of Advanced Architectural Studies,
University of York,
April 1982).
23
Mackinder
Mavin's summary report
and
observations.
are
architects,
after
of alternatives.
made by less experienced
contact.
minor
The
client
contact,
staff,
of
detail,
Architects
small
irregular
spent on
changes
most often do not
negotiation
speeds
and
due
to office
statutory
difficult
in
and
meeting
the architect's
choosing
record
progress,
Projects progress
workload,
design
to
are
initiated
or
alternatives,
major
client
Therefore,
Rapoport,
pg.
little
important
in
the client's
and
requirements
100.
24
and
is
not
exists
upon
failures.
Cost
budgetary process.
on financial
criteria.
timeframes limit the
based on
resource
data
of client objectives and
are
it
design
problems
methodology
are made based
analysis
lender's
a most
successes
in
to
Performance
so
compressed
decisions
This leads
seen as
past
large decisions
including
of
in
in predicting design fees.
process.
evaluate
Unrealistic
(9)
is
collected,
constraints
Many
office.
experience
systematically
Many
delays
approvals, problems
client deadlines and
the
which
refinement,
to predict how long projects will be in
Recurringly,
in
client
and
communication, finances and site acquisition.
is
decisions
with or without
decision routes or administrative matters.
at
useful
with little
Subsequent detailed
bulk of project time is
matters
materials.
many
Initial design concepts are typically produced
by experienced
exploration
includes
cost
review.
study
of
criteria.
criteria
alone
Often no
clear
from the client
guidance
to
exists
early
enough
in
the process
be effectively used by the architect.
The
existing
pattern
of decision-making
suggests
design
solutions
are
available
only
arise
are
identified only after a fair amount of the design
budget
has been
after
working
place
too late
Many external
factors,
drawings are fairly
as
the
often
animosity
on
client.
delays
at
vagueness
scope
of
project and
Cost
and
Time
cost
users
At
that
trimming, to
stripping
often
architect
and
and
and
are being made.
features",
clients
process.
the
generating
toward
lack
his/her
appropriate
in the design process.
objectives
budget.
further
The
obscure
Changes
late
in
coupled with problems of communication, complicate
design
intent.
the
only
Analysis takes
above
influence.
of the
intent
do
but do not overtly manifest
causes backtracking
"design
that
often done
decision
mentioned
pertinent times
client
of
the
decisions
part
the
Architects,
information
process,
its
is
complete.
in
cost can become a prime
budgets,
Problems
is
effective use a design tool.
exist
detail
until
of
the
Cost estimation
in process for
information
continues.
are always present,
building
the
More detailed
process
expended.
such
themselves
meet
as the
influences
constraints
point
progressive.
process
Changes
effectively
and
often
react
to
easily
overshadow
occur faster than the
these
25
changes.
LCC
the
original
process
and
can
energy
are
conservation
conceptual
usually
not
explicit
topics
during
stages, although they are ultimately important to
the client.
ARCHITECTURE AS A CORPORATE ASSET
As
architects we must be able to see buildings through
eyes
of our clients. The
important
and
as
the conceptualization in the
is
from
the
affect
the
"
Adopting
what
of
corporate
mentality"
Michael
the observer.
Brill,
on productivity and
buildings
organization.
an
an
the developer.
high
have
and
on
our
buildings
in
While many argue
indefensible
recently
and the space they enclose are
fact
that
outlook,
and
noted
stated
that
tools
for
(10)
In the
rise
architect
design,
Buildings represent a huge capital
they
this
is
for the designer, many architects accept offered
commissions.
researcher
effect does
is
mind
from which a building
a view of architecture
the priorities
are as
designer's
standpoint of the corporate client does
especially
office
the perspective
shifted,
perception?
the
If
drawings.
viewed
perceptions of the observer
the
case of
investment on the
part of
large commercial buildings, be
or some other
configuration,
only
large
(10) Michael Brill; President of BOSTI, Buffalo Organization
for
Social
and
Technological Innovation, address
to
the
"Search
for
Excellence,
'84"
Conference,
M.I.T. Office
of
Facilities
Management Systems, Cambridge, Mass. 15
October
1984.
26
corporations and governments
command sufficient resources
undertake projects of such scale. So,
to
in studying
the effect
of
economic analysis on the design of commercial
buildings,
it
seems
most
only logical
likely
to
GOOD DESIGN
J.
Thomas
IBM
the
about
Watson
ideas
some
felt,
years
in
well
as
Chairman
of the
through
business
world.
The
by
ago.(11)
must
reflect
the
but above all,
developed
policies with
striving
strange
from an essay presented
abstracted
the
Good design
to
the
Echoing
for
IBM's products,
a
regard
practical
'good
the high
the
must
the
world
as
standards
of
its design
philosophy
and
to design management.
This
corporate
and
their
(11)
T.J.
Watson, Jr. "Good Design is Good
Art
of
Design
Management
(Philadelphia:
Pennsylvania Press, 1975).
27
design
Company and
a unified presence
employees
and
is a key element of
nation and
design Watson admired in the Olivetti
included
be
are
the people.'
he
Committee,
in
business survival."
supporting
those
role of design
responsibilities
excellence,
Executive
had what must have seemed to
business
primarily serve
corporate
of
such a project.
Jr.,
"design
aesthetic
perspective
IS GOOD BUSINESS
Watson,
following
He
instigate
Corporation,
ideas
to assume the
to
the
public,
architecture.
Business,"
The
University
of
When
queried
on
responded
that
facilitate
the
interiors
it
Tom
not
compliment
dominate
design',
human
the
Watson appeared to
architecture
endeavored
must
'good
could be
used
Watson
activity
tasks at hand. Design, color
should
although
that
what constituted
and
worker
and
building
or
customer,
understand well
the
idea
to influence behavior.
He
to make others at IBM aware that cost per square
foot was
important, but so was premium design. Watson placed
a
value
high
brought
to
the
in
"Design
practical
on the architectural quality
the aesthetic."
there
was a healthy tension to
good,
strong
The
designer and
dialogue
so
corporation,
architecture.
be
the
image,
productivity,
such
corporations
wrote,
respond
remain
if
to
like
an
this
and
the
the
advantage
investment
IBM sought "Design
But
in
their
designed,
it is
for the
28
field
began
for
to
their
In
the
buildings,
Watson
"...it
form and
rigidly
the
both.
Excellence."
It can change its
if
of
potential.
a
IBM.
and
century industry
organization is well
competitive.
believed
architect
powerful client
characteristics
the future.
the
on between
opportunity good buildings provided
of
he
of
Watson
be capitalized
to
used
Early in
realize
pursuit
Similarly,
created, between
could
a mixture
a "purposeful" company like
Corporations offered a new and
of
image
corporation.
industry usually encompasses
and
and
it
designed
can
will
and
an
inflexible,
decades."
saw
the
remain
industry can go out
Watson saw architecture
corporation he headed
if
responsive
relationship
Other
of
in the
employed
"Certainly good design
the corporation with its many
similar
be
would
similar
to
thinking
image they create
architectural
well
It
for so many years.
large corporations have begun to
advised
to further
a few
same light that he
must
to
it is to endure and continue
economically.
productive
of business within
favors
buildings
for themselves.
their
the
publics..."
understand and
their
be
have
and
the
Architects
appreciation
for
a
understanding.
The
legacy
of
architecture
Mr.
can
at
guidelines
expressed
in
Watson's
still
IBM.
theories
be seen in
The following
current corporate
the
of
business
corporate
illustrates
this
policy
point
documents.
IBM
wants
to maintain and extend its
reputation
for
excellence
in its
buildings as well
as
its
products.
Excellence
defined
as
factors:
in
architectural
design
the optimal balance of the
is
herein
following
a. Appearance- IBM building and building interiors
should
be simple, straightforward, attractive
and
contemporary.
They should
be
well
related
to
location
and community. They should be devoid
of
extravagance,
frills and unnecessary
decoration.
Within
these
limitations,
the
exploration
of
promising
is
to
new methods of architectural
expression
be encouraged.
b.
Economy
is the key to IBM's success
and
IBM
buildings
should reflect
a respect for the economy
of
their
appearance.
Economy applies
to
the
continuing costs of owning the building as well as
29
and
as
costs.
initial
the
True
economy
is
the
best
balance of cost and utility.
the building design should provide
c. Functionthe most efficient performance of its intended
function.
d. Quality- the quality of a building shall be
throughout all systems of the building
consistent
including architectural, structural, mechanical,
and electrical systems. The consistency shall
layout,
the interior design,
through
carry
furniture and furnishings. The quality should be
of a level to provide the optimum balance between
initial cost and operating cost.
the building design should consider
e. Safetyand
safety of the employees, service personnel,
visitors.
obtainable
excellence of design is
Ideally,
through architectural attention rather than extra
expenditure. However, additional investment may be
to achieve distinctive architectural
required
results. If the additional investment is needed,
project
a
should be treated as
need
the
requirement. (12)
The
to the architect are great in these
ramifications
Herein
lines.
lies
a
notion of
the
optimizing
between
the
aesthetic, the image of the building
initial
and
long
quite
most
willing
predicated
on
balance
and
the
range costs. A company like IBM
may
be
to pay more for a "better" building,
but
it
will
likely
few
a
also demand a higher
multitude of agendas.
level
of
Flushing
design,
out
the
client's priorities presents a most promising expenditure of
the architect's design time early on in any project.
IBM Corporate Facilities Practice.
(12)
Design," Document No.CFP 1200, May 1975.
30
"Architectural
ARCHITECTURE AS NEGOTIATION
of
profession
The
architects
architecture,
and
the
in
way
which
and non-architects think about the buildings and
cities we create has changed markedly in the last decades. A
in
shift
from
"professional
more
participatory
was,
and
the
of
is,
the
away
has taken place in the last 20 years,
process
design
in
attitude about the role of the architect
imperialism"
(Gans,
1978)
notion of design. The
and
toward
designer's
a
goal
create environments which meet the needs of
to
recognition
inhabitants. Implicit in this goal is some
optimization,
satisfying as many client objectives
and
needs as possible through careful design.
interaction
Architect-client
can be
developed
for
"uniqueness",
the
outside
This
essential
in
this
of design, since the objectives and needs of
process
client
is
new
thought
the
design
of as unique.
Design
new
every
solutions must be
particular circumstance.
Due
to
solutions and their consequences
expectations of the client and the
design process carries with it a high
this
are
architect.
degree
of
uncertainty regarding the outcome, product and externalities
of a project.
"Good"
design relies upon bringing together the architect's
professional expertise and the client's expertise concerning
31
his/her
own
client
and
As
needs
formulate
and desires.
the
Together,
solution, yet their
architect
Dana
and
to
light
Cuff,
client
and
in
a
formulate
series of papers about
has offered a theory that
set
interactions
of
Through
these
as
arguments
topics
better
influences
"process
hence
as design
they
the
must
be
process
of
negotiation"
of
people and
large
that
the design of
the design
involved,
with
the
the client,
actual
a convincing
part
in
spaces.
would
process
the
form of relationships
This
want
to
and
of
from
of these
line
of
look at
to begin
architect can
influence
set
emerges
the design
and decision processes
understanding
the
in
why an architect
interactions
called
conflict.
explains the complication
Cuff puts forth
between
illustrates
communicate
Cuff
papers,
negotiations
reasoning
and
as the
to how architecture
negotiations
of
goals
(13)
architecture.
such
images,
and
negotiated.
design,
By
respective
purposes, and therefore solution images, may
brought
the
architect
with.
the
network
more
easily
design
process
he/she
may
be
upon to create.
goes
on
to
show how past
study of
the
architectural
(13)
Dana
Cuff,
"Negotiating
Architecture".
Center
for
of
Research,
Department
Planning
and
Development
Architecture,
University of California, Berkeley, 1981. and
"The
Context for Design". College of Environmental
Design,
University of Colorado, Boulder, 1982.
32
design
process
coarse
activity
to
sandpaper,
generalizations
and
actually,
reduced it,
that
economically
Making
generalizations
its
respecting
objectified
neatly
to
the
design
process
about
is
intricacy
each site,
not an easy task.
client
and
program
discussion many architects will
most
a
is
for
know
how
to
with
architecture,
liability,
times
the architect as
the
or
to a strategy for design.
In
its
in
building
all
roles,
process,
is
truly
no
little
increased
technical
we must prepare
whatever means are available. The
acting
offers
the
delicate
complexity
skills, and
ourselves
"master craftsman"
us.
Few individuals
survive the present context of design and building.
33
and
at
with
era of the lone architect,
longer with
(14) Ibid.
actually
hope
and
it
of
economy,
is
of
specialization
uncertain
same
set
difficult
may be true,
this
While
this
in
the
practice.
architectural
clients and a multitude of projects does one
proceed
are
that experience
many
to
while
problem of designing for
the
one has encountered
In
after
today's
legal
generalizations
unique.
reiterate
qualification
important
guidance
a
of
Architects
Only
tasks.
set
corresponds
early that there are no grounds for
since
with
(14)
"
taught
richly
"a
as if rubbed
a nondescript,
contract.
the
is
political,
idiosyncratic,
complicated,
contingent
what
taken
has
of
the
can
Architecture
process.
the
it
can
The
then
be
a
negotiation
from
interactions between the various participants. At
times
to clearly identify the client.
theory
with
new model
a
architect
design,
known
to
while
of the early 1970's presented the
for design.
work
and
client.
complicates
obvious
client,
inhabit,
work or experience
be dealt
all,
but
and
with.
a public
corporate
advocate
"real"
the
the
the
that the
client,
client
it
architect or coordinator,
yet
of the
is
a force
company's
is
not an
When
interests.
also
who
will
must
individual
dealing
not
with a
the
designer
the
eventual
design process
Again,
at
representative,
that
clearly
in the
It
the
concerns of the
is likely a corporate
This person
requires
architecture,
is
the
of the
those
resultant
the
of
the objectives
simultaneously.
process in
Often
work through.
inhabitant,
respecting
agency or corporation.
client
in-house
the
architect
in terms
This new arrangement
further
Advocacy
is now acceptable for
work on many levels
to
both
It
for the unseen client
balancing
(paying)
architect
the
as
form emerge
planning
must
of
building's requirements and
may be difficult
the
thought
these
and
an
changes
in
overall process of architectural design has caused many
changes
practice
emerged
in
of
the way
their
between
in
which architects
profession.
the architect,
user.
34
Many
must go
new
about
obstacles
the design and
the
the
have
eventual
No
matter
communicate,
different
will
no
and
intended
not always
interests
Client and
are
Often the
to
more
be
of
development
of
about to
they
design
and
be
will
together
between
discourse
have
process.
are brought
this
parties
friendly
than
discovery
of
to
hesitant
a
common
and
or
antagonist
serves to
struggling
for
establish
corporate
attitude
toward
sums of capital
as in
forego
their
common goal.
itself,
themselves.
with
the
building
this
way
In
and
the
relationship
like
contractor.
that
businesslike
interactions
adversary
unify the client
a
the
in
design
the
good working
an uncooperative
department
lax
large
as well
only develop a
especially
is quite understandable
invest
the process
toward
projects
architect
with
a building,
understandably
attitude
team,
clients
relationships
casual
architecture. It
are
the
since
the
many clients,
uncomfortable
who
clients
Many
in
and
(15)
business
are
agree
architect
reasons.
previously mentioned,
ones,
architects
two client-architect
of
a myriad
businesslike.
As
they
the same.
exactly
is
effectively
stakes
Similarly,
for
how
into
architect
how
might
a more effective communication
the
a
the
method
with the client before such serious crises arise?
Center
for
Architecture".
Cuff,
"Negotiating
(15)
Dana
of
Architecture,
Department
and
Architecture,
Planning
University of California, Berkeley, 1981, page 2.
35
It
the
seems
promising
design process.
architect,
client
of
is more apt to
information and
throughout
for the
run smoothly if the
many
"needs"
responds to new
solutions, perhaps
architects
all
too
important
flowing
for
the
architect,
throughout
the
process.
develops.
New information and
the overall
learn
process.
not
mitigate
the
dynamic
At
in
terms
the
same
change
their
frequently. This makes communication
must
their
to
process
keep
Simply because
states
to
the design.
the
project
a part
of
like them does
One must accept
of design creation in
will learn
that
changes as a
we do not
even
information
new directions are
priorities of
architect
to
Cuff
"negotiate"
importance
shifting
successful
rightly so.
complain that clients
architect
quickly
developments.
clients are less flexible than architects
acceptable
more
involved
This task can be time-consuming
but a project
incoming
time
the client
participates in the decision-making, is kept abreast
Usually,
of
to keep
light
of
the
the corporate
client.
The
to willingly
rethink
the
problem when new information or a problem surfaces.
How
the
architect
important
not
to
aware
in
a
Ideally,
a
change
the
new
information
is
in
one
aspect
has
also
the
client
hence
fee-consuming,
clear and
36
decisive
himself
situation.
client is disappointed by
is
are
extensive
a ripple effect, the architect finds
time-consuming,
Simultaneously,
with
the overall design process. When clients
that
implications,
deals
the
so
delay.
that
the
can
architect
design
wants
solves
proceed
expeditiously,
problems
adequately.
the client's
careful
root
architecture
the
architect
who
be open
to an appropriate
is
the client's
but
the
building.
within
needs
the
and
not
integrity.
is a unique
unclear,
minded
situation
in which
negotiations
that
roles,
conclusions
feed
place
are complex.(16)
"Perhaps
prevailing
the
client
both
toward
the
do
that
process, gains, losses, progress and
crucial
making
meet
lose money or design
outcomes,
are
to
wanting
to
Because
must
of the problem of new information
architect:
wanting
But the
consideration
about the changes that will lead
The
confident
in actual
budget.
not worry
discrepancy
and
imagine terms
Clients maintain
about the
between
client's
that
is
architect
their
and
attitude
architects
pocketbook,
either
or do not
know
what things cost."(17)
When
may
the design
assume
Offices
that
is
his economic
do
prepared
as a promotional
they
understand
(16)
H.
Theory
key or
entitled
are
held most
to
sacred
situation
careful
as an
is
additional
the
process
not being
cost estimates
"additional
respected.
may use
service"
compensation.
a client
Few
for
this
which
clients
separation of the design of a building
the
and
Rittle
and M. Webber, "Dilemmas
in
the
General
of
Planning"
Policy
Sciences
4,
(1973):
pages
155-169.
(17)
to
Cuff.
page
3.
37
the
cost
to
meaning
may
estimation of that same project.
the
care
less
feasibility.
be
will
cutting
cutting
estimates
if
client's
a
the project
the
architects
Clients
total
strategy
to
its
economic
affairs,
inefficient
to
regard
the
to
seem
talking
total
benefits
save money
the bare
the
to have
about total
In
the
difficulty
might,
however,
costs
economic
the
the
cost
driving
little
architect
over
informal
single force
so
bones,
architect.
withhold
costs. The
of
To
squeezed
only
life
of
in
the
(18)
One client
her
interviewed
choices
architect
almost
by Cuff
impacted
mentioned
the budget
seemed
"impolite"
to discuss
Ibid.
38
that
significantly
knew an acceptable and more
extensively.
(18)
down
aspects important to
decision.
relationship
It
in
gets martyred.
money seems to be the
understanding
if
A developer
casual,
offices
the building
instances
project."
by the relatively
architectural
starts
sometimes
adopt
than
building
architect's side the budget may get
that
other
the
the other.
little
ramifications of their design decisions.
the
tightly
without
has
Corporate clients, savvy in business
of
financial
client
about
disquieted
operation
"From
non-architect
One
she
never
or
if
knew
her
economic alternative.
financial
matters
too
design.
satisfies
previous
the
When
decisions
that
architecture.
This
that
the
do
most
both
the
constellation
present
further
Priorities or
up
of
obviously
research argues for
building
interactions
emerges
for
the
two
are
the
interaction
an
it
information
slighted
business and human
of
the
criteria
are too easily lost as the
seem
of
design
rests
is passed up the hierarchy. Perhaps
ramifications
model,
decision
ultimate judge.
the
design)
realms
final
process
a design may be reworked several times until
hierarchy,
(the
further complicate the
representatives
Client
in
interactionist
from
the
between actors
unique
during
process. The final decision-maker may not have
in the whole set of interactions that
the
been
precipitated
design product. Since the client-architect interactions
not
happen
in
isolation, the
study
of
negotiations
between architect and consultant, and the client and his/her
will
representatives,
form
the
for
the
context
for
characteristics
of
context
client-architect relationship.
Cuff's
design.
go on to
writings
She
architecture
has
that
further examine
identified
six
make it a complex and
the
unique
practice.
With negotiation as the principle means for resolving design
problems, the basic decision-making process of architectural
design
involves two or more parties who seek to implement a
single outcome. Negotiators hold some common goal, hopefully
the
building
they are about to create,
39
in
addition to
many
potentially
are
conflicting
interests.
extracted from Cuff's paper,
The following
"The
comments
Context for Design":
1.
The Responsive Art: Architecture involves
the
union
of
art
and
business.
Without
clients,
architects
could
not
practice
their
art,
and
clients are key to an effective business operation
since
they
subsidize
the
entire
architectural
endeavor.
The ability to aesthetically manipulate
form is considered part of the architect's special
skill.
"...the
blending of esthetics,
function,
space and materials" (19)
The
"art
defense" is a justification for
design
decisions
on
the basis of subjectivity,
mystery
and
autonomy rather than rationality, explanation
or
compromise.
The
client has
every
right
to
expect
that
the architect
will be familiar
with
and
will
utilize normal procedures
of
business
administration.
There is a general attitude among
architects
that
good design cannot
always
come
from
consistent,
pragmatic
business
practices.
"Architecture
is no normal business." Good design
requires
commitment
beyond
the
allotted
time,
accountant's
ledger,
and normal
working
hours.
This
attitude
is
institutionalized
by
higher
education
in
the form of the "charrette".
While
the
dedication
of
the designer
is
a
precious
commodity,
this type of thinking spills over into
the
entire
design process. An easy expansion
of
this theory negates the architect from considering
the
economic ramifications of design decisions as
long
as the
"good design" criteria
is
fulfilled.
Designers
are capable of generating problems by a
limited
view
of
the total process
of
creating
buildings.
2. Diffuse Influence: The influence is distributed
across
a number of participants. The evolution of
a
building
always involves a number
of
people.
Each
participant
most
likely, has
a
differing
agenda,
interest, knowledge and goals with regard
to
the
final product. Their
combined
influence
upon the process then affects not only the way the
problem
is solved, but the resultant building
(19) An
Architect's
Handbook
(Washington, D.C.: A.I.A.,
1975)
40
as
on
Professional
Practice.
Chapter 4, page 3.
cannot,
design process the architect
In this
well.
buildings
not work in a vacuum. As our
will
and
the
has
too
complicated, so
more
become
have
a
must be called upon. Employing
that
expertise
does
design
architectural
to
approach
team
the knowledge base to be called upon. It
increase
of each
influence
diffuses the
further
also
ramifications,
participant. The legal
individual
hence
and
responsibility,
of
sharing
the
as a
profession
the
has greatly change
liability,
niche
Hopefully the architect can find a
whole.
coordination
and
control
of
allows some sense
that
is called upon to
the process. The architect
over
of
to the cadre
leadership and direction
provide
input
diverse
the
integrate
to
and
participants
this
do
The architect's office must
each.
from
the
contributing
"control",
of
some position
from
process.
overall
the
to
integrity
and
direction
relative
paid to the user and their
attention
The
in the past two decades has also led
satisfaction
process
increased participation in the design
to
in
this,
All
client.
the
and
user
the
by
buildings,
escalating costs of
with
conjunction
willing
created a generation of clients less
has
to subsidize architecture for its own sake.
procedures,
Ambiguity: The role expectations,
3.
any
in
expertise
and
allegiances,
authority,
of
aspects
ambiguous. Five
are
process
design
to
observed
were
negotiations
process
design
in
ambiguity
the
of
deal
great
a
capture
professional
practice.
clearest
the
provides
architect
The
Expertise:
design
since
expertise
overlapping
of
example
all
touch upon
intended to at least
is
education
contribute to making places.
that
the skills
and patron
as the initiator
The client
Authority:
But
authority.
is the ultimate
project
the
of
as
and role
expertise
of the architect's
because
to
responsibility
is often his
it
coordinator,
authority.
assume that
Expectations: When decision-making authority
Role
role
which
in
context exists
a
ambiguous,
is
architect's
The
also unclear.
are
expectations
role
will
clients
least
be modified with each client.
Because
are most often the participants with
the
they
are
experience
in
the design process,
most uncertain about their
41
role.
Allegiance: Because roles, authority and expertise
are somewhat ambiguous, there is a strong tendency
to
or
coalitions
in
order
to
form
alliances
are
These allegiances
safeguard
one's interests.
fragile.
Procedures:
unclear
Along
with the above
ambiguities,
also
are the procedures by which a project will
evolve -- the course of actions that
will be taken,
the way
to
go
about
the
sequence
of
events,
agreement, the means to develop an idea.
reaching
If the next step is
or
when a project should end.
is
the significance of the current step
unclear,
is
architects
say
a
phase
ambiguous.
Some
is
willing
to
the architect
whenever
completed
work.
quits and the client approves the
call
it
and
not
the
conclusive
The
approval,
then,
development of the work itself,
determines the end
not
intrinsically
phase.
The
work
is
of
a
agree
to
and client
but
the architect
complete,
complete.(20)
call
it
a
single,
Although
Outcomes:
Unexpected
4.
specific
solution
is
expected,
neither
the
outcome
what
that
client
knows
nor the
architect
be. The process itself
shapes the expectation
will
between
discussions
outcomes. In
and
therefore
actors
in the design process, the relationship of
not
is
project
issue to the overall
a
particular
derive
from
an
known.
Decisions
do not
fully
it.
Buildings
overall
vision, but help to create
take on character over time, through use, and must
activity
human
in relation to the
evaluated
be
to
leads
The
design process
accommodate.
they
planning
outcomes due to the principle
unexpected
which
are
conversations,
drawings
and
media,
simulations of the outcomes.
(20)
A.I.A.,
Chapter 9.
42
The
primary function
architect's
act as the owner's professional
is
to
advisor.
the
his best solution for
develops
He
criteria,
owner's
the
from
project
costs,
statements of probable
prepares
materials,
of
selection
on the
advises
systems,
and
equipment
to
be
used,
of contractors,
advises on the selection
in dealing
agent
and acts as the owner's
project.
the
with
with others associated
(21)
provided,
works with the material
architect
The
insufficient
on
blamed
be
can
shortcomings
and
information.
Open-ended Deliberation: Since the information
5.
somewhat
always
is
decisions
make
to
needed
potentially
is
issue
every
and
incomplete,
on
go
could
process
design
the
negotiable,
are
deadlines
and
Schedules
indefinitely.
consistent
clear,
is no
there
but
established
to
required
time
the
determining
for
method
to
conform
The schedules may
task.
a
complete
the
overshadow
often
which
pressures
external
the
of
(e.g. complexity
demands
time
internal
by
constrained
design process is
The
project.)
the
the number of waking hours
deadlines,
these
and
project,
the
to
devote
can
participants
projects
Architectural
economics.
take longer than expected, but
characteristically
are not endless. Architects and clients need
they
in order to find a place to start
some constraints
that
so
constants,
to establish
order
in
and
is
There
negotiable.
not
is
everything
little
too
and
much
too
simultaneously
information.
significant
Matter: The stakes are
Buildings
6.
a
have
consequences serious. Buildings
the
and
impact on the lives of architects and
significant
use
who plan them, and on the people who
clients
considered
be
can
decisions
Design
them.
risks that will have some consequences.
calculated
stakes
have significant
and client
architect
The
of
the design negotiation process. The nature
in
The
respective stakes are quite different.
those
(21)
A.I.A.,
Chapter
9,
page
3.
43
in
architectural
to invest
motivation
client's
some
of
satisfaction
the anticipated
is
design
the
of
financiers
As
desires.
and
needs
have
clearly
clients
all
enterprise,
architectural
some economic resources at stake. In addition, the
will make a statement about the
building
may or may not be able to
Clients
statement they wish to present, or
client.
the
articulate
be aware how it
recognize
to
accomplished, or be able
be
might
whether the drawings represent that building.
Cuff
of
aspects
potential
become
professional
believes
she
in
more effective
understanding
of its
intent
with her
paper
this
concludes
architectural
the
design context
design
the
the
process.
economics
to
and
and
client
participants
greater
through
For the purposes
intricacies.
research, Cuff's description of the
architect
all
of
following
section
considerations
financial
architectural design process.
44
this
interactions between the
client serve as an excellent model
The
some
This
practice.
in helping
lies
demystify
to
defines
of the
building
as they relate
BUILDING ECONOMICS AND
ARCHITECTURAL DESIGN
45
BUILDING ECONOMICS AND ARCHITECTURAL DESIGN
In the long run, buildings are judged in terms of
the
trinity of appearance, convenience and
cost.
The economic
building is not necessarily the
cheapest
building but the one that provides
the
best value for the money, that is the one that is
of
good appearance and convenience in relation to
the costs of constructing, running and
operating
it.
Building
(1)
economics
begins to give the architect a
tools by which to work toward
set
of
establishing a balance between
aesthetics, convenience and costs associated with buildings.
This
concept
the
building
utilization
wants
might also
process.
"economizing"
The
to
intent
is
optimize
in
the
of scarce resources while satisfying some human
and needs
excellent
be thought of as
for building. Architects seem to occupy
position to economize in the design process.
ramifications
of this process reach far beyond the
an
The
initial
cost of construction. In the planning and design stages of a
building,
small
relative
when
consultation
total
expenditures of time and materials
compared
fees
construction
to
the whole
small
associated
fraction
with
Design
usually amount to less than 10%
costs.
"Similarly, the
invested by the time construction
a
building.
project's
capital
and
the
costs
is completed often are but
of the operation and
the
of
are
whole
maintenance
life
cycle.
costs
The
(1) P.A. Stone, Building Economy, Design,
Production and
Organization, 2nd edition.(Pergamon Press 1976): page xi.
46
decisions
much
and
commitments made during that period
greater
influence on what expenditures later
project will be."
In
terms
have
in
a
the
(2)
of commercial and office buildings
the
relative
nature of design and construction of a building is minuscule
in
comparison
the eventual
to
carry
the investment in the building itself, but
how
more
to
inhabitants of that structure. The point is not
diminish
illustrate
to the salary expenses that will be paid
decisions made early in the design
significance
than
we
may
have
to
process
thought
and
therefore deserve more attention and analysis than they have
previously received. It is also important to understand that
the
level
product
enjoys
of
control the architect has
decreases
maximum
as
influence over the design at the
project's
architect's
ability
process
is
efficient
presupposes
architect
eventual
architect
As
wanes.
the process unfolds.
the
The
inception.
events
in
procurement
The
to
time
therefore
and
construction
ensue
regulate and alter the
and energy spent
more
effective
in
and
the
course
the
of
design
economically
in influencing the physical building. All of this
that
there
is
some need or
desire
for
the
to regain some level of control in the design and
building process.
(2)B.C. Paulson,
"Research and Development",Directions
in
Managing Construction, edited by D.S. Barrie.
(New York,
N.Y.: John Wiley and Sons 1981), pages 422-424.
47
Buildings
should
investment
be
thought of in
they represent.
terms
of
the
This is most easily
capital
understood
in conjunction with commercial and corporate buildings.
development
The
of such "non-residential" buildings is based on
some expectation of profit from the required investment.
As
with
as
other
one
factors of production, buildings are viewed
component
company
which
necessary for producing whatever it is
exists to
produce.
that
Unlike residential construction,
is more closely tied to the prevailing interest rate,
representing the cost of borrowing money, corporate building
is
contingent on potential profit. From this vantage
it
is not so difficult to view (or analyze) buildings
point
from
an economic perspective.
Architectural
design
economize in the
the
of
best.
contractor,
The
not
the
only
opportunity
They include:
the
the client,
producers of building materials,
environment
to
ability
priorities
central
actually
to
inform
of
role
articulate
the
production
the designer,
build
the
the project,
designer
as
to
but
the
the
and
in which this production takes
client's role lies not only in providing the
dollars
to
building process. It is, however, possibly
Five factors are drawn together in the
buildings.
economic
is
the
place.
investment
in
his/her
needs
and
the building. The architect must maintain
in the planning process, helping
the
needs and priorities. This is often a
48
a
client
most
difficult
then
responsibility.
unfold,
The architect's
in meeting those needs "...
expertise
with
which is economic to construct and operate."
Construction
represents
capital
a
must
solution
(3)
investment.
Corporations
frequently
use retained income to finance construction
renovation
projects.
in
and
In this way earnings can be reinvested
the business and therefore are not perceived as profits,
for tax purposes. Funds are thereby channelled into building
without
the
negates
the Keynesian investment model, which suggests
influence
need
to borrow them. This
practice
somewhat
of interest rates on level of construction.
investment
the
Such
is so financed, out of retained earnings, in the
expectation of future profit.
THE ECONOMICS OF DESIGN
Given
the
important
design
to
recognize
process.
available,
always
scarce nature of virtually all
the
resources, it
the value of economic
Since
absolute
architect
theory to
information
and the financial
that
have
just been discussed in
the
never
manager
work with assumptions. The same types of
techniques
is
is
must
analytical
relation
to
physical designs and alternatives can also be applied to the
design
process itself.
While designs may always be further
(3) Stone. Building Economy Page 4.
49
refined,
the
there is a point at which more refinement adds
to
cost of design without marginally improving the quality
or economy of the final product.
The term "good design", as
it used in this study, is intended to imply that the highest
reasonable
in
the
level of quality and utility has been
design.
diminishing
After that point in the
returns set in.
generated
design
process,
Each additional unit of design
time yields less improvement to the total design relative to
its
own
similar
aware
In undertaking
economizing
of
allocated
their
costs.
such
to
the entire
cycle-costing
techniques, the designer
issues.
The architect's
must
Law
effort.
be
costs
to
levels while insuring acceptable utility
to
time
exercises to cut life-cycle
suggests a method by which to
allocate
Buildings are made up of a variety of
systems
that
building.
system
remain
project.
Pareto's
relative
and
should
these
minimal
life
are interrelated to create the
Each
cost
to
component
system can be
the other components.
this
individual
larger
ranked
The most
total
by
expensive
components are few in number and should be given
greatest
scrutiny.
its
The architect can thereby maximize
the
the
utility of his/her time, concentrating on only those systems
and
details
which have the potential to yield the
return from design time spent refining them.
of
a
building's
development and useful life
allocation may vary.
highest
For each phase
the
optimal
The Park Square Building case studies,
found
to
in a later section of
renovation
importance
from
a
with
this document,
only limited new
of this discussion is
similar
relate primarily
construction.
not reduced,
investigation into
The
simply altered
totally new
development
projects.
USING ECONOMIC ANALYSIS
Economic
analysis
project.
The
actually
conduct
the
economic
the
designer
exercise
the
to
collect
the analysis
to assess the
upon which
criteria
this
can help clarify the objectives
need
decision-maker
IN BUILDING DESIGN
level
goals of
to evaluate
ramifications of
to offer
of detail
in
both
the project
and
require
For
information.
the designer
decisions
Key
Often
date,
calculations
the date or year
will
the
ramifications
more
this
notion, of
time
is
often
to
not
useful
to
the
While
the
relative
from which
of missing this timing.
51
very
architect's.
be made, is essential
architect
continue
in
this can serve as
frame as well as the
time
the
precipitated by
analysis contemplated
can be made
the
requires
progressively
some declaration, or at least
to
Analyzing
to be compared.
is
the
and to set
alternatives.
will become
study
strategy,
designer
for comparison. As analysis and design
The methods of economic
baseline
the
the
information
various alternatives
scenarios
fine.
owner's
forces
of generating different schemes
need
horizons.
pertinent
of
all
financial
the
financial
aware
of
Following through
the
on
LCC
requires
life
a
anticipated
span of buildings, their components and uses. Creating
climate
their
some discussion of the useful or
in which the client and the architect can
share
perceptions on such issues will provide both with new
insight into the entire design and building process.
Similarly, the architect can use this forum for ascertaining
the
owner's
are
most
important.
financial
scenarios,
functional
priorities in relation to which costs
use
discussion.
measures
quite
useful
decisions
finds
here
level
for the owner are
the
client
has
costs,
salvage
relevant
determined
and
to
set
of
economic comparison. This information can
be
to
the architect, to
a
this
focus component and design
on those characteristics and schedules the
owner
most appropriate for his/her own analysis. The
point
is
that economic analysis can be used to
discussion
of
and
the
One
should
analysis
additional
base
and investment
operations, alteration,
cost
Often
for
Initial capital
factors
and
not always
present between
architect actively engaged
not
themselves.
information
evaluate
for
the
in the design
expect the decisions to
exercises
generate
These
emerge
methods
the owner and the
client
process.
from
the
provide
architect
decisions. Making assumptions
a
for
to
the
analysis causes the participants to simultaneously step back
from and entrench themselves in the design process.
52
WHAT CONSTITUTES VALUE IN CORPORATE ARCHITECTURE
As
previously
architecture,
there
are
mentioned,
is
and
the
corporate manager
will
aesthetics,
corporate
value
costs
of
investment
has
lies
client.
and
be
the
investor.
relative
the
While
merits
of
managers are often quick to place
on a building. This may be based solely
with
that
project.
Possibly
a
been
calculated into this
method
for
the architect
dollar
to
a
on
some
the benefits derived from that building
and
amount.
educate
reasonably viewed in conjunction with the
begun
to
calculate the value
to enhanced work environments.
that
the
support
Despite
might
the
this inquiry, the interest in this research is
Corporations
generated
into
argue
or
for
benefits generated by that building. Only recently have
attached
As
Certainly
and alterations of a building. This can, however,
researchers
of
"good"
Large expenditures may be required in construction,
operation
only
long
associated
estimation
Herein
like
extremely difficult to define.
architects
the
value,
several perspectives for this question
architect
monetary
"good"
are
by their
infancy
telling.
concerned
with the cost
investment
in buildings and work spaces.
and
the
a total system, the architect might consider each
the
construction
project
and
be
(each
component,
energy
operation costs) and begin to
53
for
value
input
design,
understand
potential benefits (outputs) that are likely to result.
the
Thinking
the
focus
architect on matters of great importance to
the
with
the
concerned
and well-being of those who visit and work
satisfaction
that is but another component in
space,
this
he may be
While
manager.
business
would
process facilitated, the expended energy,
production
the
the outputs anticipated; the benefits,
about
the
in
overall
building system.
discussion of economic evaluation does not negate
This
importance
of
aesthetics in architecture.
How
are
viewed by the corporate client is of great
to
the
architect.
perception
be
By
more
fully
aesthetics
consequence
understanding
and expectations of the client as
the
the
to the output,
it production, image or investment, the designer will be
better prepared to make the decisions required by the design
the
outputs
of
the
project
are
not
process.
When
considered,
a large portion of the building life-cycle, its
ongoing use,
is probably not being fully considered.
As the profession of architecture has learned
energy
we
must
design
think about
to
conservation as a requisite of "good" design, so too
expand
decisions.
our concern
to the
other
by-products
Wasted energy is not unlike a
of
component
that cannot be serviced or easily repaired, or a detail that
requires
losses
constant
maintenance.
These add up
to
constant
in the system, dollars that must be spent simply
54
to
keep
total
the
building operating,
yet without
a
useful
product of their own.
CLIENT INVESTMENT DECISIONS
As
it is important to understand the changing nature of the
value of dollars over time, so too can costs be evaluated in
terms
of
when
life-cycle.
they
are
encountered
The client may have specific
when expenditures are incurred.
sequence
of
specific
circumstances
There
the
may
and
perspective.
parts
span
to
expenditures
concerns
about
The architect can chart the
its
importance to
given
the
The whole building
may not need
meet
to last the
the owner's
the
client.
and
entire
financial
from
all
its
expected
plan.
Total
can be broken down into their component parts,
costs, maintenance
demolition
future,
building's
well be some optimal distribution of costs
component
initial
the
events for a building or component
client's
life
in
and
and operation, replacement costs,
salvage
costs.
Criteria
for
decision-making may change given their timing in the overall
building
course
based
and
Decisions on the
of action for the corporate client are likely to
capital budgeting as well as more
on
criteria.
functional
be
The role of the
aesthetic
architect
who
the economic characteristics of the project
in
versed
thus
investment life-cycle.
expanded
information
with this additional
knowledge.
best
be
and
is
can
This
can assist the architect in channelling his/her
55
attention
the
and
time to those directions and decisions
client's
financial and functional
criteria
that
suggests.
While the architect must remain the conceptual leader of the
design project, there are often issues upon which the client
is immovable.
of little
The
Further design investigation in some cases is
value
to the process.
corporate
client
is
often
quite
sophisticated
in
investment
decision-making.
investment
independent from income and more closely aligned
with
the
prevailing
increase,
this
the
change
directly,
they
in
renovation
possible
costs
can
rent
of
interest
are
that
decisions
but
starts
of
and
each
which
components,
investment.
feel
more
of commissions
level,
This measure
rates
Architects
time, in the number
return.
from
buildings,
based
is of
When
client
the
on
the
profit
applied
to
alternatives, through life-cycle analysis, it
to determine the rate of return on
associated
components.
As
number of building
investment
rate
architectural
rate.
At the microeconomic
and
anticipated
is
the
after some lag
makes
expected
interest
level of investment drops.
receive.
(firm)
Keynesian economic theory sets
with various alternative
additional
schemes
and/or
In this way both the architect and the
client
begin to evaluate the additional benefits that might be
expected
from
expenditure.
critical
issue.
added
expenditures, as well
Timing, in some circumstances,
The client's
56
investment
as
the
total
becomes
the
decisions
are
linked
not
interest
is
to
the eventual
building,
to
but
rate and to the anticipated return.
finalized in the client's organization.
reasonable
the
The architect
only apprised of the capital budget after it
often
been
only
has
How much more
might that budget, the client's expectations and
the designer's vision be if the architect was invloved early
in
the financial process.
Additional
include
decision
payback
marginal
criteria for the corporate client
may
periods, discounted present value and
the
(described above as
the
efficiency
of investment
internal rate of return.)
methods
of evaluation.
fastest
return
consider
While payback analysis suggests the
on the investment,
long-term
costs derived in the future.
and
considers
idea
caveat
is
in
There
That
might
necessarily
over
time.
represent total
benefits
A more accurate
analysis
total benefits, minus total costs associated with
investment
some
it does not
or those accrued
benefits
value calculations better
Present
an
Difficulties exist with all these
of
over
time.
analysis
The product of this
the net benefits
in
present
dollars.
gives
The
here, as with other long-term analytical techniques,
predicting
is
future costs
and
a degree of uncertainty to all
uncertainty
associate
accurately.
benefits
of these
risk
one
without
any
is far less, however, than the
with
such
decisions
made
recognition of future or long range consequences.
57
methods.
FLEXIBILITY
As
an
design
to
BY DESIGN
example
of economic
process,
long
part
building
system
HVAC
be,
lighting,
and
in
building.
exterior
here
of
issues
to
entire
the
the
negate
effectively
flexible
the
of other
that flexibilty,
for
systems
architectural
It is therefore
thought
designers
to
the
while
discussion.
we
that
The
enclosed
spaces
however, of
of
can
the
be used.
meet the owner
The
the
and
interior
most
user's
possibly the most uncertain
58
great
The
building.
is
interest
way
in
likely
demands.
in
this
structural
which
layout
of attributes.
to
unlikely
"immovable"
the
determine
characteristics,
to
circumstances
normal
of
not
a
design of
configuration
forever
will
is
flexibility
exterior
under
the
rearrange
rarely
rearranged is,
elements
is
can
long term maintenance.
drastically
space
address
total
concern
structure,
flexibility
and
enclosure systems in buildings. The basic
many
building
The
process.
of
and
consequence
be
concept
structure
is for
by
issue
comprehensive
A general assumption
that
suggests
design
a
a hindrance
potentially,
investment in
nature,
the
the
parts must all
its
building
one central
architects
with as
dealt
the
limitations of any subsystem, for example
The
or
and
or
flexibility
and
the overall design
of
integral
system.
be
must
to
term flexibility is
For designers
corporations.
flexibility
significance
is,
to
the
of all
require
The
use
of
For
the
architect,
some understanding
organization
is helpful,
activity
of
"programming"
designer
as
to
expected.
their
must
spaces,
but
Currently,
puts
and
large demands on
individual
changeability.
Mike
Institute,
the
facilitate rapid
evaluate
for
changes
the built
light
of the
the
The
As
terms of its
of this
mentioned,
envelope,
direct
other
need
Facilities
the
key elements.
exterior
building
making up the building
flexibility.
four
major elements Wodka
system,
process
support
furnishings.
characteristics,
appropriate
Structural
for
support,
the
are
for
to
for
Management
analysis
looks at the
(4)
shell
and
the
interior
structure, embodies little
constraints do
identifies:
space
quite
architect to
like
easily
consider
impact
the
delineation
While these sound
they
be
architect
in a recent article contends that this
in
the
office
environment
rearrangement.
in
to
such flexibility
automation of
decisions
Wodka,
traditional
can most effectively take place if the designer
facility
corporate
informing
the necessity of physical
survival.
accept
the
not only for the more
Often organizations rely on
workplace
of
the
technical
and
process
complicated
explained
and
throughout
the
design process.
(4)
EOD,
Mike
Page
Wodka,
28-30.
"Flexibility:
59
The
Answer to
Uncertainty",
The
technical
system concerns the primary distribution
utility service
through a building.
For corporate users, as
technology enters the work environment,
main
the
distribution
change.
system
While
should
be
able
requirements
change.
termination
of
that
and
to expand
and
utility
the
electrical
Space
the
shell
space
they serve.
refers
to the
to divide it
process
Both
stairwells,
etc.
commonplace
in
are
consider
and
asked
to
necessity
divide their
to
discussed
the
product
(work)
in
latitude
the
open
use,
ways that
to
designed
into
When
become
designers
office
the
systems
of
space
corporate
they can
this
use
This paper
is
and
is also
a
of the durability of the materials from which
60
the
enclosures,
flexibility, it
of buildings;
and
design and
This type
permanence as well.
longevity
the
The
walls have
profession to
In relation
consider
in
repertoire.
space flexibility,
as
supports
introduced
and movable
awakened the
spaces.
important
to
system.
usable rooms,
quicKly come to mind.
has
for
fixed
the architect's
landscapes
utilization
relates
the main distribution
elements
into
the
capacity
The systems and components must be
delineation
building
fixed,
system, ventilation
so as to be easily reactive to the change
work flow of
that
accommodate
its
distribution
light fixtures are all
end user.
to
contract
The process support
must bridge the gap between
the
is essential
itself may remain
recepticle assemblies for the
outlets
it
system be designed
the service
of
has
direct
they
are
constructed.
The structure, be it steel, concrete
some
other
material, can be considered permanent
life
of that building.
or
for
the
While the exterior wall system
may
also be "permanent," there is a possibility for change.
The
core
of
a
commercial
substantially
(elevators
has
a
unlikely
order
to
therein
A
might
elements
Each of these
of permanence.
be
structure
of
is more irrevocable, without substantially altering
building, than a core built of
entire
Fixed
is
although components
plumbing fixtures).
or
descending
concrete
the
changed,
building
offices
may
be
built of
metal
masonry
studs
units.
and
gypsum
wallboard, while more temporary ones might be constructed of
some
areas
demountable,
that are of a short lived nature,
degree
of
movable,
flexibility,
will
low-height
partitioning
characteristic
space
designers
business
design
more
likely
requiring a greater
be
created
out
of
(systems
systems
Each method of space definition carries with it
furniture).
a
Work
full height partitioning system.
level of permanence and flexibility.
have
requirements,
so
such means
too must
the
to
deal
architect
accommodate
Overall building
changes
in
use
layout and configuration of
and
with
develop
that generate buildings and space that
methods
easily
developed
As
can
function.
interior spaces
can effect the flexibility as much as the method of physical
division.
Architects
often
see themselves as the only
61
advocates
of
drama
in
our
Vitruvius
called
suggests
allow
for
foot
blocks
planning."
space
for
for
6,000
that
building
spanned
to
use,
10,000
with
(columns, walls, cores).
contain
20,000 square feet with exterior core
For the flexibility required
today,
75-80 feet seems more appropriate between fixed walls.
allows
what
for
subdivision into various
years
for
building
plan,
center,
is
now
was
no
Typical
buildings, especially high rise ones,
of 35-40 feet.
Wodka
spaces
easily
office
what
Mike
As
Wodka recommends
of
areas of around
depths
architecture,
advanced, the distances
space dividers
office
floor
have
desire
architects must create
increased.
permanent
core
day
in
"two-dimensional
also
square
Despite this
"delight"
present
technologies
have
buildings.
thought
to be
This
function areas.
a imost
So,
efficient
the "donut," with its utility core
office
at
seen as a hindrance to flexibility.
the
The
narrow space this configuration creates permits only limited
options in density and arrangement.
A
potential new role for the architect includes
designing,
convincing client decision makers to build,
"breathing
and
space" into new projects.
the gross
allow
to
volume and hence the
initial cost, will
for the greatest flexibility in use.
gain
square
Additional space, while adding to
breathing space without radical
footage
individual
ultimately
Another
increases
method
in
means reducing fixed enclosed spaces,
offices,
to accommodate the largest variety
62
net
like
of
new
spaces.
Today's office uses include
communications,
printer
article,
advocates
Wodka
designer
must
his/her
more
careful
to ask
needs in
the physical
building
for
range
the
flexibility.
organization
Senior
mandated
O'Brien/Atkins
client
future
about
respond
To
this
specifically for long
management
in
flexible design to
Associates.
these
Microelectronics
the
of North Carolina was designed
his
Ultimately, the
planning process.
a recently completed project
Center
for
programming and
In
functional requirements and be prepared to
these
end,
be
rooms,
processor stations.
into our buildings from the outset.
spaces
to
and
terminal
They cited
the
the
client's
architects,
four basic principles
physical adaptability: Oversized
architectural
systems (adding floor-ceiling height to accommodate possible
use
utility
and
communication
cabled
change;
This
and
overhead wireway);
and
uses
anticipation
principle
exterior
of
from those
applied
design.
demountable
configuration
and
to
most
Inside,
topography or property boundries.
a
specifically
light
weight
panel
to allow for expansion.
63
and
are
Outside,
the
without
system,
to
offices
is such to
from
of
scenarios.
both. interior
in
material,
likely
growth
expansion
the
any of several directions
were
separation
partitions.
siting
excess
(all areas
spatial
of potential
was
architectural
constructed
providing
utility system capacity
elements
last
building
and
an
with
permanent
distribution changes);
allow
easy
constraints
The
was
cladding
chosen
This project required
additional
study
effort
future
by both the owner and
to
uncertain
engrossed
in
the
why
space
they
architect
scenarios and how the building might be
adaptable
mundane
the
needs.
Often
.planning exercises.
relegated to
are
made
become
architects
exterior image to the exclusion
of
Then architects
such
wonder
and
exterior ornamentation
to
the
clients' in-house facility staff is given responsibility far
above that of the architect.
The architect who
potentially
without
considers this space
planning function can
make more informed, larger architectural
compromising
the
client's
moves
flexibility.
The
Facilities Management Institute suggests that designers work
reduced
with
individual work station guidelines.
generation
of
circulation
to
starts
with
40% of
and
to group needs, uses and
60%
This
change
space
are
use
space.
a
a space assigned
fact alone
new
of one
computer
to
for
emerged
that
individual
buildings.
page
functions
circulation.(5)
terminal
HVAC,
reconfigure
existing
per
office
worker.
for the
utility
electrical,
data
are quite different given this
29.
64
uses
Such office automation
carries great significance
telecommunications wiring
Ibid.,
ratio
better facilitates flexibility to
a ratio
of
past
1/3:2/3
A new ratio has
rapidly replaced with new ones.
systems
(5)
used
as technology enters the workplace and
includes
This
architects
The
and
1:1
ratio.
heat
Older buildings are totally
unprepared
to absorb the
load and cabling requirements created by such computer
in
usage
demand"
office buildings.
has
been coined
to
The term,
express
this
"severest
potential
possible
condition.
Architects and their consultants must ascertain the severest
demand,
plausible
the "worst case",
for wiring,
heating and
ventilating loads and design, at least in capacity, for such
needs
into
their projects.
allow
for
additional
profession
sizing
as
has
possible,
initially,
in
utility
is
a crisis point.
as
well
relatively
as the client, to
into a project.
distribution
costs.
runs
adds
its
it
flexibility
to
system in
construction
about
building
is
this
Wodka's projection is that this
10-15%
HVAC,
lighting and
above overall
in
service
construction
up front
ultimately
between 25-60% of the original construction costs
for
This assumes a building can in fact
renovated.
While designing in
flexibility
to the initial costs, the long term value far
expense.
of
later when the need
the necessity of
Not building this potential
efficiently
by
requirements
or mechanical
inexpensive
including
subsequent alterations.
be
down
The architect must educate him/herself,
of flexibility,
level
costs
distribution
comparison to adding
at
flexibility
the
The additional capital costs to expand the
design stage
the
to projected
we have severely limited the
size,
As
to keep building costs
systems as close
those buildings.
building
loads on building systems.
attempted
mechanical
Current design standards do not
Flexibility is
not just durability,
65
exceeds
but
must
include the costs associated with a building's resistance to
change.
The
expected
payback
from
additional
initial
investment is in the ability to accommodate unforseen future
needs
at
substantially
less
expenditures.
66
cost
in
future
capital
ISSUES IN
BUILDING ECONOMICS
67
ISSUES
This
IN BUILDING ECONOMICS
section represents a primer of issues included
previous
the
economic
does
the
section. This is by no means an exhaustive list of
principles
architectural
it
in
those
topics most
studies. It also
set
preceding
be
could
to
applied
design. From the perspective of this research
include
Building case
t.hat
of "models"
to view buildings beyond
salient
to the
serves to
Park Square
further clarify the
as to how architects
might
begin
their design characteristics.
LIFE CYCLE COSTING
Buildings,
if
durable.
Their physical lifespan may be from 50-60
for
the
even
individual
of
and maintained,
materials,
to
are
very
years
centuries
The whole physical
individual
productive
meet
in
of
building systems, so too they are the collection
replacement
to
cheapest
components.
outlive
constructed
As buildings can be thought of as an aggregate
duration.
of
well
at
components.
differential
life
of a structure
Some may need
spans
from
repair
others.
life of parts depends on how well they
the
needs
or
functions
they
were
may
or
The
continue
installed
to
perform.
Life-cycle
method
by
costing
(LCC)
offers the designer
which to evaluate alternatives.
68
and the owner a
By
considering
total
costs,
in addition to initial or capital
offers
the owner greater understanding
costs.
LCC allows the decision-maker
and
expenses,
maintenance
Increasing
horizon,
construction
this
from which the architect views a design, the
more
the
span
accurate
and
intent is
the
his/her
instance
costs.
time
information
to improve the design
architect
makes,
and the owner's
use
selections
life
operating
the
encompassing
Again,
in
it
of the whole project
to calculate
as well as
perspective,
the
costs,
in
and
terms
will
be.
decisions
and
of the
economic
building's
criteria.
LCC is
a systematic method by which to assess a very complex set of
problems and
selections.
Long-term
costs
(operating
and
include
maintenance)
clients
are
capital
expenditures
little
rather
and
value
While
the
repair,
effect
and
recurring
most
corporate
ramifications
often there
replacement
the
final
should
take place
early
in
the
and
return
costs must somehow be accounted
is
too
other
on
that
Better
for.
design
of
process
than later, when corrections are both more difficult
costly.
assumptions
The
ones.
(initial costs),
that
All
this
initial
to understand
for energy,
costs
investment.
that
certain
concern
recurring
both
The
architect
will
be
called
upon
to
make
in the process of life-cycle costing exercises.
heuristics mentioned earlier in this paper are of great
in
anticipated
this
life
regard.
LCC requires some conception of
the
span of various components and the building
69
itself.
Service
knowledge.
The
experiences.
when
life
seems best assumed
architect
may
rely
on
experiential
heavily
on
past
intuitive
LCC.
Even
"Guard against unrecorded,
one alternative offers enormous economic
over
competitors,
a
recorded
LCC is
better
advantages
than
a
mental
one." (1)
of
Several
types
costing
is most
but
unsure of
provides
inital
costs
and
in
long-term
a base
method
for
assessing the
variables
range
of possible
designer
assumptions
economic
value
analysis
is
the
scope
(1)
C.W.
to
or
to
specifics
Total
methods
principles.
analysis",
of
In
a
in
a change
output.
check the validity
to
client
these
"sensitivity
resulting
of alternatives.
Griffin,
Architecture
of
of a few economic
the correctness
most useful
ones.
useful for the
outcomes can be explored.
assess
and
time required
relative effect
has on the
to a project
recurring
investment. All
be subjected
input
the
is most
understanding
also
in
life-cycle
Payback analysis
idea of the
through savings
benefits analysis
should
Each
Total
the owner committed
owner with some
costs
interested
require
useful for
exists.
the most economic components.
the
recoup
LCC comparisons
this
way
This will
his/her
of
the
the
a
help
initial
estimated
Undertaking this
kind
of
in the design process. Changes
in
of
a
"Life-cycle
(December 1982):
project
are
Costing Primer",
pages
70
61-62.
more
easily
Progressive
accomplished
early
rather
in
than
creative
in the development process,
the building
testing
advantages,
of
alternatives
they
when
itself.
can
It
allows
and
be utilized
on
for
their
to
paper,
more
relative
their
fullest
that,
past.
potential.
In
theory past
economic
Future
costs
values.
that
generated
is only worth
of a new building.
as
obtained
A change
uses
by demolition
to
is
future
repairing if
greater
than
and construction
in use may indicate this second
the more economically efficient,
of an "unreasonable",
appearance
renovating or
through alternative
which might be
scenario
are just
can be evaluated only in relation
A building
the value
expenditures
potentially
despite
the
more expensive
approach.
The
economic
physical
great
life
may,
durability
significance
thereby
architects)
Economic
life
is
structure's
in
be much
of a building.
shorter
This
than
concept
should
affected
technical
perceive
by economic
their
obsolescence
(and
buildings.
thus a
possibilities,
threatened
is
the
carries
for the way in which corporations
life-cycle
deterioration,
fact,
by
physical
and
financial
obsolescence.
The
costs
initial
of development of a building represent
expenditure.
As
previously
71
described,
only
over
the
a
life
structure's
it
must
be operated
and maintained.
servicing includes the energy to keep it and
HVAC,
running,
repairs,
replacement
maintenance.
of
life
annual
lighting
"If
is
amount
in
of maintenance
with
the
and
cost
the form of
servicing,
of building
and
in
components
the
is
addition
and
to
the
to
recurring
spread
a mortgage
usually equivalent
cost
type
worn
the construction
the building
its inhabitants
and daily cleaning,
of
This
over
the
payment,
the
average
annual
the proportions
varying
local
costs."
levels
of
(2)
COST PLANNING
client
While
budgets
stages
of building
useful
insight
maximum
price
and
design
are
"Once
design is
of
fittings
ito
the owners' strategies.
usually emerges
critical
either
and
figured
in
the
planning, these assumptions can
contractural
project
without
are only loosely
near
phases.
The
to developer
complete
it
complete
redesign
finishes."
is
difficult
or
the end
of
finances
and
A
the
early
provide
guaranteed
planning,
of a
building
corporate
clients.
to
reduce
reducing
the
the costs
standards
(3)
(2)
P.A.
Stone,
Building Economy: Design, Production
and
Organization-A
Synoptic
View,
3rd
edition
(New
York:
Pergamon
(3)
Press
Ibid.,
page
1983),
page
242.
237.
72
Given
the
importance
considerations
to
issues
enter
use
should
such
the
criteria
renovate,
buy
including
program,
the
made
in deciding whether or
budgets
designer.
Using
financial
a
for
method
discussions.
The
decisions
those
architect
often
specific
architect
"schematic"
that
lies
of magnitude
the
follow.
in
less
the
these
has
timing
enter
been
set
the
tool
to
add
the
context
for
decisions
than
the
for
and
frustration
secondary
on
determine
decisions
influencial
see
analysis as a
to
The
build,
decisions,
the decision
and economic
clients
are made based
They do
amenity and
these
to
not
Architects often
only after
of
order
schedules
of the project.
level
for
and
view them as constraints.
provides
economic
the design process. Corporate
characteristics
and
and
building process, it is clear
function,
these
financial
or rent buildings. Large initial
economics
project
of
the
ones
the
that
are
that
were
made before his/her involvement.
For
architects,
which
to
begins
configuration.
may
also
process.
wait
for
initial
suggest
External
building
envelope
and
orientation
interior
While
the
the more
"systems"
involvement
that
costs
follow,
but ongoing
therefore,
of the
these
oriented
architect
selections
ones as well.
for economic
73
and
financial
and
configurations
be predetermined by early decisions in
consultants
use,
these early decisions may concern the site,
the overall
discussions
and
may
the myriad
affect
The most
analysis
not
of
only
effective
is
in
these
larger,
mentioned,
most
expensive
factors.
As
recurring costs of energy and operations may far
costs.
The architect
must
learn
outstrip
first
building
economics as an analysis and decision
The
following
employed
in
previously
diagrams
illustrate
how such
ASSESSMENT
ECONOMIC
ANALYSIS
DECISION
NONECONOMIC
CONSEQUENCES
CHOICE
SELECTION
OF
ALTERNATIVES
ECONOMIC
ANALYSIS
DECISION
-NONECONOMIC _
'CONSEQUENCES
74
employ
tool.
techniques
the design process:
SELECTION
OF
-ALTERNATIVES
how to
are
FIRST COSTS AND
Operating
the
and maintenance costs need also
design process.
the
and
owner
the
the architect
Given
their
a life
expectancy
upkeep,
"long-term"
cost
This
during
with
attractive
for
alone
design
the
outlast
the
the
building
the owner
recurring
the original
helps
design
and
Stone.
with
the
how
can
total
better
inform
only
a
the
short
term
is
less
it
initial
costs
term total
costs.
Buildings
involvement.
This
sometimes made
in
fact
the
life-cycle economy, in favor
page
75
the
additional
developers
Economy.
If
costs of
after
portion of
is anticipated
explain why decisions are
Building
(4)
operating
illustrate
stage.
are
the owner
or
expectations
long
process that compromise
well
For
occupying
to spend
they
continuing
retired.
does begin to
of the corporate
connection
often
of
appearance
because
incurred
first costs are but a small
understanding
reduce
been
expectations
picture.
architect
has
are
design
differences
a money value."
60-100 years,
operation,
financing
range
building,
and
of
the
the differences in
given
of
"Thus
by comparing
in
gives both
indication
decisions.
attributes, which,
cannot be easily
energy,
long
the two
costs
a more accurate
can be evaluated
comfort,
subjective,
(4)
of
be considered
of continuing
the costs-in-use as against
and
to
Inclusion
ramifications
alternatives
in
RECURRING COSTS
247.
of
lower
first
costs.
It
also
which
to calculate
what level
given
the
life
future
building.
This
functional
and
questionable,
materials
financially
sound
expected
repair
This
replaced.
building
an
is
into
the
the
of
project.
to
to
or
and
is
and
in
The
alternative
in
may
soon
be
is
to
it
is
evaluation
of
each
and
predict
individual
design
the
in
this
for
the
value
It
does,
mentality"
and
relative
most
planning
costs
of
exercise,
like
design alternatives.
76
to
used
is valuable in
selection
whole
understandable.
been
components. This
techniques,
various
more
has
building
can
with
"corporate
budgeting
to
economic
difficult
architecture.
the
its
sunk costs
quite
this notion
historic
capital
often
a
altogether
if the
are
be
be
fact
redevelopment
is
the
less
less effective
should
often dubbed
architect
designs
ramifications
It
comparing
analytical
of
it
therefore, irrelevant
reconcile
costing
successfully
solutions.
both
a building
Past expenditures
old
make what
Life-cycle
effects
which
sense and are,
redevelopment
other
that
replacement,
architect
however,
span the
the
for
potentially
may
The nearer
investment decision.
intrinsic
client
in consideration, then generates new
economic
future
components,
life
maintain
and
upon
worhtwhile,
considered
inexpensive
judgement.
economic
or
life
and
is
time horizon. While
use of
durable
of the
should
financial
some criteria
of expenditure
expectation
estimate
the
provides
are often
gauging
the
The
final
realized
far
in
the
future
inticately
in
tied
they are
with
of
others,
made.
insurmountable
eliminate
and
some
task,
made
the
all
that
differences
the
alternative.
should
being
benefits
product
The
understanding
of
the
of
To simplify
not
It
those
be
benefits
in
this
should
is
the
things that
to
calculated
relative merits
such analysis
net
some made
attributes which are
should
economic costs and
also
totally
compared.
be evaluated,
Costs and
constant.
ascertain
alternatives
are
architect
from such calculations those
to
They
other decisions,
from the total building design.
seemingly
common
when
to the myriad
connection
isolation
are
from
of
each
should
be
some
time
of
each
over
possibility and its attendant costs.
Clearly,
the more certain the designer or planner
wishes to be about the accuracy and reliability
of
his choices, the more necessary it is to use these
various
techniques for evaluating his
solutions.
The
application
of
such
techniques
usually
requires
a knowledge of the technical behavior of
materials,
components, and engineering
services,
and
of
costing techniques which is greater
than
most
designers
can hope to have. Hence the
need
for
close
cooperation
between
the
various
professions with the design process. (5)
One
method
target
type.
produced
provide
value
for
initial cost
A plan
prior
(5) Ibid.,
representing
involves
each element
elemental
expenditure
to final design. While this method does
guidance
for
planning
as to
money in
each
how to maximize return
design feature,
pages 252-253.
77
it
is
not
in terms
of
can provide
an
estimation
of
building.
as
a
costs based on the various sub-systems of
Often it is more useful to consider the
whole.
comparitive
terms
of
This
be
can
cost planning,
and
cost
evaluation of each
consequences
Overall
includes square foot cost or cubic
This
of gross estimate can then be
to
the
client's
flexibility.
into
on
local
design
the
some
costs,
the
Cost plans
is whatever state
estimator
is
working
analysis of costs,
total
for
rather
estimate
floors)
specifics
and
are always
imperfect
and
roof,
calculated
of completion.
with
according
quality
(walls,
buildings and adjusted
conditions.
plans
cost
components
building
similar
market
for
cost
cost estimate.
adjusted
can then disaggregate
One
separate
based
requirements
through
alternative in
(benefits).
targeting
type
building
accomplished
better
on
Here
again,
information.
than happening
at the
budget.
and
Adjustments
the
various
evaluated
to
relation
can then
each
be made
final design. Hopefully,
the
to
component's
align
of
in
Comparative
the
comparison
cost
designer
construction
terminology).
ramifications.
to
planning
works,
estimator
target
target
between
be made with
Bid prices
can
the
some
then
be
figures.
in
isolation,
"quantity surveyor"
As the designer
then
quality
requires a more dynamic
not
(a
costs,
trade-offs
cost and component decisions can
knowledge
The
in
plans
If
end of
the design sequence, commences early, the architect can
finalize
a
generates
78
but
in
alternative
process.
with
the
a
British
design
solutions,
the estimator
places
a price
on each
alternative.
This
can be employed to establish a systematic
estimate
cost
for
alternative.
Each
potential
each building
compared
with
component
and
decision can then be
similar
project
anticipated
few
design
system,
solutions
costs.
and
At the
time
analyzed
against
of Stone's
and maintenance
Operating
subjected
to
such analysis.
evaluation
could
by this
costs
total
initial
could
method
and
writing,
comparative cost exercises had gone beyond
estimates.
the
of
cost
also
a longer
be
range
be provided.
DISCOUNTING
Long-term
debt
value
part
to
in
our
extended
by
period
money
buildings
evaluation
Discounting
escalation
the continuing
economic
Discounting
of
of money decreases over
inflations,
illustrated
are
cost-escalation
of buildings as a corporate
understanding
true
and
is
system.
streams
of time
a method
over
makes
long
of real
of
(i.e.,
this
allows
the
investment.
The
This
is
increase
in
price
levels
most
simply
is
payments
made
due
in
time.
concept
fixed
over
an
mortgages).
by which
periods of
between
also
This
to
key
one can compare
time.
comparison
The
of
for
accurate
courses
of
action.
the decision maker
79
durability
essential
alternative
value as opposed
the values
to
to
nominal
understand
inflation.
the
A
rate
discount
to
amount
is
for
expenditures
taking
and
the
investor
is
increase
value
its
to employ
(or
spent or
v alue)
that
available
over time.
lower
rate
Discounting
income
the
on
but
does take
into
future
rate
on an
When
the
or
near
decisions
value
is
account
received.
no
We often
risk
that
The
is
discount
the
way
safest
There
no
and
is
their
to
compare
to
interest
rate
or the desired
may be
rate
of
investment.
calculation
expenditures
and
long
can
be
likely
the
a
either.
one
is
applied
can compare
range consequences.
economically
analyzed
to
future
present values
Alternative
by computing
future.
As architects,
we have
alternatives on first cost alone.
limited
involvement
80
of the
architect
been
their
as
prone
This may
after
of
design
in both costs and benefits in the present as well
in
to
think of
involved
there
commonly available
discounting
payments
both
dollars
there
the
received
some
return on that money.
of
of return,
interest
return
rate
lowest
in
today,
money in
a
calculation
than those
were
a
capital
received
dollars"
"future
amount
This
an
present
of
spent or
dollars
as
provides
view
implications.
that
likely
analysis
interest income of a savings account as the
probably
of
typically expressed
long-term
have less value or worth
If the
due
a
their
fact
today.
the
is
present
Standard present value
mechanism
future
It
the
used to reduce the future dollars into
value.
reflects
to relate
future dollars.
percentage,
day
used
be
the
construction
a long
especially
in
Value
more
more
in the
The
architect
engineering
for similar
to
past
recent
formula will not
construction
against
evaluate
benefits.
and
costs
term
long
and
the precise
the
for
owner,
story.
the full
meaningful
a phrase
used
been
alternatives
project
not
the
For
stream of costs in comparable terms
engineering,
has
analysis,
is
this
period.
may be evaluated
that
units
costs.
be
is
it expresses the
because
While
occupancy
term one,
value
discounted
and
initial
and
be quoted here,
subsequent
in
fully explained when actually used
will
it
calculations.
LEVERAGE
leverage
term
The
connection with an
greater
equity,
the
estate
developer
funds
investors
funds to
By
attractive economic attribute of a project.
the
project,
is
in
at
on
an
the
through
buildings
projects
receive
to
on
interest
form of
increased
rate lower
that building.
value
of
than their
that
expected
rate
As the prevailing interest rate
81
real
very
a
a
Often,
property
do so by mortgaging
such expectations,
a
leveraging
capital.
Corporations
inflation.
as
-- defined
a return on the money
as well as his/her own invested
borrowed,
this
investor hopes
greater
The
is
leverage
financial
in
funds
For
leverage.
the financial
this
borrowed
property.
in real
investment
of borrowed
ratio
the
use of
to the
refers
and
develop
a project
of return
climbs,
expectations will carry a higher degree of
these
can
of borrowed funds
use
the
inflation
high
During times of
are, therefore, less attractive.
and
uncertainty
assuredly
more
increase the rate of return.
is
to
prudent
estate
uncertain
phase
Age
flow
is
for
The cash flow and
those on which
are
eventually
Many factors
value.
residual
ages
increasingly
financial planning
the
occupancy
becomes
and
difficult
for
a
Abandonment
be
be
life-cycle, preceding
the
based.
cash
commercial
It
less desirable.
the owner
deferred, leading to
may
this
Rents typically diminish as
to
provide
maintenance, debt service and financial return.
to
is
Benefits and
determine
fine
commercial
net benefits of
afflicts most buildings.
deteriorate.
property's
tends
the
is the sustained middle period of full
productivity.
building
next phase
initial
an
through
which is full of problems and
The
and
in transition
remain
completed and
of building systems.
buildings
of
stages
procurement
the
do
Any project will
stages.
period,
predictable
as
returns,
construction
operating
however,
The design stage requires expenditures
duration.
construction
tuning
real
that financial performance of
are,
There
immediate
without
and
remember
building investments are not constant over their
and
lifespan.
until
life-cycle, it
leverage to the concept of building
Relating
final
demolition and
82
further
step
in
a
becomes
proper
Maintenance
deterioration.
the
redevelopment.
building
Project
of
feasibility
possible
issues
analysis requires
timing
scenarios and likely outcomes.
to be included
Is
of financing
policies affect
is
market
conditions
tax
liability
and
available and at what rates?
the location appropriate
What
Some
are:
How local
assessment
project feasibility?
What kind
serious consideration
for the proposed
and
use?
apparent
in
the
encountered
in
the
investment,
and
trends are
project area?
What
problems
are
most likely to be
construction
or renovation process?
How closely
can
costs be estimated?
rate of return is
What
at what level
acceptable
of uncertainty
Revenue?
for this
(risk)?
How closely can operating expenses be estimated?
Are there any political
What
special
tax
obstacles to
relief, loans or
successful completion?
subsidy
programs
are
available?
discounting
interest
generate
if
typically
invested
attractive
is
techniques.
As previously described,
the cost of borowing
replicates
the
building costs over time requires the
of
Analysis
that
not
used
in
a
sum
invested
to
money in
the
illustrate
be
contemplated
the return on
savings account.
It
rate of return stipulated
indicates
expected
project.
or
to
10% is
money
simply
the
minimum
by the owners.
Saving
considered the "safest" possible use for the money.
83
of
discounting
the market place
might reasonably
in
use
Often
projects
that
are evaluated in light of the risk associated with
project.
which
In this case the interest plus an
the risk involved
reflects
Calculations
would
The
12-15%.
then
Federal
programs
be
used
for
evaluation.
be made with a discount
Government,
and Budget Circular A-94,
is
increment
in
the
Off.ice
rate
of
of Management
suggests a rate of 10% be used for
and projects. This rate of return is considered to
before
purchase
taxes
or
and after inflation.
lease
7%
evaluation
For
is
real
property
to
thought
be
appropriate.
Discounting
future
costs
and
benefits
realistic
comparison.
Present
accurately
evaluated
one considers
today's
the
and
less
avoid
becomes
capital
and
both
the
over
very
is
future
The
the
higher
future costs are
another way,
costs
rate
life-cycle
cycles
important
future
discount
extra
tomorrow's dollars.
Stated
costs.
if
and
by
it
is
less
longer,
expenditures
trade-offs
the
As
the
For
appropriate
to consider.
rate
initial
try
to
if
the
anticipated
to
justify
short
accuracy
calculations.
LCC analysis 10-30 year life
84
to
savings needed
long life cycles tend to be less
short ones.
to
cost
high discount rates require great
assumptions used and the
discount
Very
be
between
relative
flatten out.
more
sums may only
initial
high.
annual
for
worthwhile
increasing
relatively
allows
life
in
Analysis
valuable
than
spans seem most
In
financing
projects with large
in
time
development
along with
costs
These
the
before
incurred
of
streams
baseline date,
investment
costs
future
in
Design-build,
and
financiers'
and
fast-tracking,
date
for
or
The time horizon
requirements.
should
financial calculations
the
against
owner
renovation are all methods to meet critical
delaying
term
scheduling
The analysis of
thus be realistically compared
criteria.
investors'
used
differently from long
payments or benefits.
can
scenarios
cutoff
include functional
as
economic criteria.
well as
and
Buildings,
consultants
to
corporate
Decisions
criteria
not,
business
activity.
it,
might
are
that
often
the
negate
architectural
on
based
may seem far
however,
eventual
architects need
influence
As
issues of what to
to corporations on
build
incentives
in
to
many
serve
them,
investment
sheltering
beyond
purposes
or the
construction
capital
initial
calculations, should be evaluated
does
design and
quite
be calculated as today's dollars. These expenditures
should
how
be
can
occupancy
This includes planning,
important.
time.
to
prior
the length of
requirements
understand
expert
build
and
how
tax
architectural
process.
and
financial
investment
from the design process.
their
importance
project.
85
to
the
architect
This
DEPRECIATION
Depreciation
in
each
exist,
depreciated
one
is
depreciation
"least
of the,
important aspects of taxation."
Buildings
are
on
based
that firm.
of
production
the
revenue
allocating
incentive
allows
by
created
large
to
heavily
investing
in
assest,
capital
most
but
understood
Investment in
to
support
by
generated
that
asset.
systematic
allocation
to
be matched
to
capital
investment.
costs
to
corporations
the
This
over
time
invest
in
the
thus
buildings is
the
that
be
advantage
corporations
buildings
in
for
for
to
(7)
revenue
future
Depreciation
expenditures
by
acquired
units
specific
other
and
estate
real
buildings,
own
corporations
For
investor.
its
with
any
asset, less
expenditures
the
allocating
of
to
manner."(6)
a rational
and
aims
useful life of the
the estimated
value, over
methods
the
decisions.
"...that
cost of a tangible capital
a systematic
Many
of accounting,
a method
is
the
distribute
salvage
important
the economic ramifications of building
in
role
depreciation plays an
corporate client,
the
For
of
annual
method
of
as
an
acts
such
assets.
Financial,
Accounting:
Construction
Adrian,
J.J.
(6)
Managerial, Auditing and Tax (Reston, Va.: Reston Publishing
Co.,
(7)
Inc.
Ibid.,
1969) page 30.
page
339.
86
to
attractive
for tangible property with a useful
possible
a shorter
over
realized
the
depreciation
accelerated
period
of
life
three
are
Through
corporations.
for
attractive investments
therefore
are
requirements and
these
Buildings meet
more.
or
it even more
methods
Accelerated
investor.
the
can
benefits
cash-flow
and
to
the ability
have
actually
in
firm.
the
for
obligation
time
investor
real worth of an investment, making
the
affect
over
benefits
Depreciation
the
for
liability
cash
the
decrease
thereby
investment
methods, the
tax
the
reduce
can
buildings
years
depreciation
various
Through
be
time.
of
TAX INCENTIVES FOR CORPORATE ARCHITECTURE
Tax
proposed
changes
plan
in
allows corporations
(ACRS)
allowing
corporations
behind
this
investments,
businesses
set
of
making
and
Cost Recovery
write-off
investments
to
about $25
save
at
a
billion
to
lower
to stimulate
increased
87
taxes
capital
tax
1981
plant
By
year,
theory
The
attractive
more financially
in
per
per year.
on
System
rate.
faster
depreciation
for
was
laws
them
the
of
Accelerated
deductions
larger
proposed
parts
eliminate
these
have
may
The
expenditures)
(capital
equipment
of
they
effect
architecture.
will
Currently the
statutes.
the
Economic
the
significance
The
in
to
considered
1981.
lies
investment
simplification
and
of
Act
Recovery
corporate
being
currently
are
Changes
on
such
to
investment.
This
seems to have been a successful move, as witnessed
increased
have
construction
said
that
(buildings)
The
system
at record
previous
useful-life
of
permissible
deductions
length
an
of time
was
related
investment.
in
over
write-off
to
lead
a serious
plant
to
This
longer
This
method
was
expenditures
in
reassessment
of such
be
replaced
the concept
periods of
which an asset
to
investments
of
the
spread
time,
actually
the ACRS is repealed, corporations will no
quickly
in
rates.
allows almost all
system which
economists
investment
over 3, 5, 10, 15 and 18 years.
depreciated
the
Supply-side
ACRS has stimulated
and equipment
current
the
activity.
by
the
tied
to
used.
If
longer be able to
buildings.
This
investments
could
from
a
financial perspective.
may
Corporations
(ITC)
and
present
the
in
renovation
in
a
long
1960's
the
term
to
construction,
amounts
to
first
year
stimulate
ITC
of occupancy,
to building.
a
form of a one time deduction directly
88
the
make
expansion
and
one
tax
time
usually
while depreciation
Envisioned
investor's
might
furniture,
investment in business
reduces an
Credits
under
incentives
applicable equipment and
incentive
modernization,
the
ITC
Tax
available
economic
justifying
projects.
for
Investment
depreciation
These
set of laws.
reduction
be foregoing
accelerated
difference
taken
also
in
the
capacity
tax liability
from taxes
is
early
and
in
owed.
A
better understanding
of ITC and ACRS regulations can help
the architect advise his/her clients in making more informed
decisions
not
related to buildings, plant and equipment.
stating all the idiosyncracies of the Internal
Service
code,
used in
components
rehabilitated
rates
based
certain
it
is
on the age of the structure and
In
both
projects,
straight-line
depreciation.
with
ITC.
ITC
Qualified
20 and 25%
adherence
rehabilitation
can
be
taken
ACRS cannot
It is,
certain
by ITC.
buildings are also included at 15,
criteria.
however,
to
and
only
be
more
Revenue
that
note
buildings are covered
construction
tandem
to
important
While
new
with
applied
in
beneficial
in
immediate tax savings than any other form of depreciation.
Tangible
property, which includes raised flooring
furniture,
systems,
partitioning systems and carpeting also
qualify
for ITC.
Whether a particular capital expenditure qualifies
for
depends on the circumstances of its attachment
ITC
the building.
removable
Economic
affect
The criteria
and
for
transportable.
Recovery
ITC is met if a component
In
conjunction
Tax Act and ACRS, ITC can
with
to
is
the
significantly
the financial attractiveness of new construction and
rehabilitation
process,
projects.
property
use
Idiosyncracies of
and permanance of
the
design
building
must
be
included in determining eligibility under these laws.
"Literally
thousands
of
dollars
89
of
tax
credit
and
accelerated
thorough
evaluation
Performing
between
depreciation might be overlooked by not doing a
the initial
planning
a complete ITC evaluation may be the
stages.
difference
a financially feasible project and one that dies on
the drawing board."
For
during
(8)
corporations that base building investment on return of
investment
or
net cost after taxes, such
information
can
provide essential criteria for decision making in the design
process.
Internal
Revenue
Service
rules do change
from year
to
year,
and most are subject to interpretation. General tax benefits
for
corporate
methods of
several
be
generated
components
for
investment in buildings are complimented
and
tax
replacement.
Tax savings
of
on
in
expenditures
Occupancy related
the
year
they
can
capital
maintenance, energy and property taxes
deductible
Depreciation
tax adjustments.
from deduction of sales tax paid
operation,
all
income
by
are
are
incurred.
capital components can also be
applicable
for deductions from a corporation's gross tax liability. LCC
analysis
assess
techniques
illustrate
the need to
consider
and
the financial merits of depreciation, ITC, financing
and tax costs on the development, construction and long term
characteristics
(8)
Timothy
T.
of a building.
Tevens,
"Are
You Missing
Out On
Hefty
Tax
Credits?",
Facilities Management and Design (October 1984):
pages 76-78.
90
The
Dodge/Sweet's
Act's
depreciation
accelerated
office building boom of 1983
the
for
provisions
Often
Tax
Recovery
Economic
&
also
article
building
(9)
the
reiterates
of
connection
pattern,
office
This
construction to larger macroeconomic forces.
of construction peaked two years ago, in its
type
1984.
corporate demand for tax shelters has proved to be of
more importance than the resultant space itself.
This
the
credits
Construction Outlook
1985
cyclical
building.
prior to other categories of commercial
Besides the demand for tax shelters, this is attributed to a
change in the space/worker ratio.
has
increased
technology equipment
as the
to
due
The floor area per worker
introduction
the
of
more
high
even
(computers and their peripherals),
individual work station grows smaller.
USEFUL LIVES OF ELEMENTS
In
to
addition
buildings
and
evaluated
in
replacement
different
their
terms
cycles.
for
components
of
The
economic
use and
the functional
must
wear,
anticipated
be
span,
life
designed
periodic
renewal
useful life
the various parts. The designer can
will
and
and
be
"design
in" concurrent or differential obsolesence, depending on the
(9) "Dodge/Sweet's 1985 Construction Outlook", Architectural
Record, (November 1984): page 45.
91
durability
of the material or component initially selected.
This
provide
does
owner/client
match
to
be
quite
to
a
scenerio.
invest
project.
such
in
if
The
life
a
condition
repair
or
replace all
design
new
buildings
thoughts
systems might well
of
in
which
the
selections
life-span
term commitment
be considered.
92
be
can
seen
cannot
the
as
Directly
components
might
reasonably
As architects
for
of
might
This would
old building.
owner
owners
owner
renewal.
of them simultaneously.
and make
the
his/her
the
that the
of several
the
in
meet
costs
into an
expectancies
create
to
has a long
replacement
life
criteria
component
the owner
While
the architect might begin
It may well be
new economic
the
matching
comparison.
life-spans
periodically
reasonable
generating
schemes
considers
anticipated
investment
want
rarely
important
of a design alternative,
analysis
to
for an
renovation
contemplated
The
IRS
has
Procedure
rates
for
62-21)
cited
use
in
useful
published
for
life
tax purposes.
guidelines
As
with
(Revenue
the
above, the architect can adopt these
economic
evaluations.
USE
YEARS
BANKS
OFFICE BLDG
STORES
SERVICE EQUIPMENT
SITE IMPROVEMENT
50
45
50
10
20
BUILDING
EQUIPMENT
A/C over 20 tons
BOILERS
RADIATORS
AWNINGS
ELEVATORS:
freight
passenger
ROOFS (tar
& gravel)
WINDOW BLINDS
20
20
25
5
25
20
20
8
93
discount
estimates
PARK SQUARE BUILDING CASE STUDIES
94
INTRODUCTION TO THE PARK SQUARE BUILDING CASE STUDIES
1923 Rendering of the Park Square Building
Using
Park Square Building in conjunction with a
the
case
study methodology, the following cases are presented to both
elucidate and illustrate the decision models employed.
exploration
criteria
will include economic as well as
that
is,
decision-making.
renovation
designer.
process
architectural
process
in fact, considered in the
As previously described, looking at
is
appropriate for
the
of
the
architectural
While all the issues raised here may
95
This
not
seem
directly
applicable
similarities
are
to
the design of new
buildings,
greater than the differences.
the
Likewise,
the market for renovation and reuse of older buildings is of
great
interest
Corporate
in
to
architects
decision-makers
light of the
as a source
are
also
of
new
re-evaluating
work.
renovation
rising costs of new construction.
Each
of
the cases presented will be described in light of the actual
criteria
used,
Additional
the
in
the design
information
architect and owner
specification
and
will be provided to
process.
illustrate
(client) might have better informed
themselves for selections they would be asked to make.
methodology
will
how
compare
the
physical
design
with
This
the
economic analysis, life-cycle costs and benefits, materials,
maintenance
focusing
review
on
of
and
a
the
feasibility decisions.
specific building is
various analytical
in
The
the
advantage
of
simultaneous
techniques used
in
the
profession today, rules-of-thumb and their usefulness to the
decision-maker.
96
View from 2nd Floor Lobby into Main Entrance Vestibule
A
rich
set
examined
Park
in the Park Square Building.
Square
area
of
investment
continued
history,
of past events, tenets and
a
building
previously
varied
set
the
its
will
potential
Given its
architectural,
issues
technology
stated,
of
can
Its location in
Boston enhances
and attention.
scenarios
be
be
the
for
tumultuous
financial
As
considered.
aim of this investigation
and
is
how
designers might prepare themselves for decision-making, what
information
or analysis is perceived as useful, how
97
design
decisions
and
are made and by whom.
This particular
a series of cases constructed
be
used
as
from recent events,
The objective
a focus.
building,
is
to
elicit
will
a
more
systematic approach to design and decision-making in similar
The physical
circumstances.
be
used
The
to evaluate
is
aim
techniques
may have altered
commercial
single
which
to
its
immediate
1923 as
Boston.
largest
the
fire-proofed,
Edgar
College;
Company and
was
Company.
building and
creating
Square
a
and
critically
over
time.
Building
development
a
more
of
was
its
consortium
be the most
treasurer
Smith,
president
of
of directors.
the first president of the Park Square
of
New
Harvard
of the New England
on the original board
in
modern,
first class office building in
Adam,
built
time
Champlin, president of Massachusetts
George
served
Company
by
the direction of
Such men as Charles
England.
as a mechanism
of the
business people, it claimed to
strictly
on
decisions
Park
analysis
Concentrating
which to compare
mixed-use
under
used
follow,
and economic
Built
notable
Eliot
the
is
can
alternatives.
additional
the outcome.
will
in
context
as a landmark,
Conceived
and how,
A description
environs
architectural
from among
property
study.
bound this
understandable
in
selections
to find out if,
this
analyze
past
results of past decisions
Trust
Power
Amory
Building
The following excerpt is from the leasing brochure
published at the building's inception:
98
The
completion of this $6,000,000 development
1923
will
in
mark the fulfillment of a purpose;
to
provide
a new center for Boston's business
life.
The
Park Square Building; 600 feet
long, 75
feet
wide
and
11 stories high, will be a landmark on
account
of
it's
size.
It's appearance
and
location will make it a noteworthy addition to the
entire
city.
The
exterior is
to
be
Indiana
limestone,
with ornamental iron show windows of a
distinctive type in the first story and with steel
windows,
glazed
with plate glass throughout
the
office
floors, which materially will increase the
daylight
illumination of
the
interior.
In
addition,
the
relatively
narrow
width
of
the
building
makes
the
natural
light
unusually
efficient,
particularly
in the
large
undivided
floor
areas which are to be an important
feature
of
the building.
There are few buildings in
the
country which offer an acre of floor space on each
floor
with uninterrupted space on four sides.
The
equipment
usually found in first class
buildings
has
been enlarged and improved upon with the idea
of
leaving nothing undone which would add to
the
comfort
and
convenience
of the
tenants.
The
number
and
arrangement of the elevators
-twelve
high
speed
passenger and one freight
-has
been
determined
after the most careful compilation
of
data
in connection with comparable
installations
...
Special
attention
to the
planning
of
the
retail
stores
has
been given by
the
architect
because
of the wide streets and accessibility
of
this
district
are
sure to make it
a
prominent
retail
section
for
merchandise
of
the
better
class.
Bounded
by
Berkeley, St.
Streets,
the
buildings
constructed
The
Square
Park
concentrated
the city.
building
and
James, Arlington
is
coherent
Providence
of
commercial
representative
early in
Building
and
the
20th
lies within
collections
century in
one
of such
of
Boston.
the
structures
most
in
(1)
(1)
John H.
Englund, from an unpublished paper on the
Square
Building.
Jung-Brannen
Associates,
Boston,
October 1983.
99
Park
Mass.
This
area
terminus
was formerly occupied by railroad yards and
of the Boston and Providence Railroad.
This
the
land
became available for development early in the century, after
having
sat
unused
for many years.
Its adjacency
fashionable
Back
attractive.
As the area filled with new business
it
Bay
neighborhood
made
it
to
the
especially
concerns
became a district of office buildings, many serving
the
insurance industry.(2)
1923 Locational Map
(2) Walter Muir Whitehead, Boston: A Topographical History.
(Cambridge, Mass.:
Belknap Press of
Harvard
University
Press. 1968) pages 189-190.
100
Fr1_
-
LI-
T1L....-
L-L
IV
- --- -
-
--
A
t
- I
'
--
--
T
-
- --
C
I - L
-
*
i-
~ -_
tt
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--I
A
-
-
-
-1
i - I~r7
rRONT ELLVAT 10
-ON-.5T.-j
0
A
- NON- PAV
mEz-AVE.-
I
L 10 M
BUILDINGfOO.Lt
-
-PAita
Detail
of
the
Exterior Wall,
from
the
- SquA
R
MAI
-".Lr.VATION- ONC-HALF-oF- CrNTaf.- PAVIuLON
H OM- mT- JAMC3 'Ave-
-uAL- .. Terr - TR~usr
original
working
drawings
- -
-
The
architects
Robbins,
of the original
designed
Square
Building
Salada
Tea
they
each
was
1941,
buildings
these
Desmore,
in
1927 and the
directly across
Paine
St.
in
the
case of many of their neighbors designed
time,
enlivened
three commercial
are fairly plain.
In
simple.
Building
organization is tri-part;
or
story base,
cornice.
plain
moulded
the
exterior.
the case of
panel
buildings, as
decoration
and
102
by
other
and
in nature
the
Park
Square
characterized by
the six story body and a two
The entryway makes use
in
Surfaces are only
by low relief, classical
comparatively
three
although
in other buildings
Bay district.
the
All of
exhibit classical ornamentation,
These
the
Company
James Avenue.
Back
&
Park
by
Furniture
the
somewhat
The
the first, in 1923, followed
lack the exuberance found
architects of the
LeClear
three buildings in this area.
Building
in
building
building,
stroy
a
attic
of a vaulted vestibule,
the
rusticated
masonry of
AX
2 5-
* .
L-.
4
1923 Sketch from Arlington and Bolyston Streets
The
organization
three
of
the St. James facade is
broken
into
distinct areas horizontally as well as vertically.
A
central frontice-piece is flanked by two end pavilions, each
set
slightly forward of the main rusticated frontice-piece.
The
cornice, a decorative parapet
by
(now removed) was carried
these articulated ends visually.
103
The decorative
detail
is
thought
evidenced
to
by
exterior
is
be
from the
Classical
tradition,
its lightness and comparative delicacy.
further
punctuating
French
articulated by
lion
head
The
gargoyles
the original cornice, double pilasters and
the
stepped corners of the building.
Like many high-rise buildings of the 1920's, the first floor
is
typified
city
by a central passageway, designed to
into the base,
creators.
filled with
This suggests
the shops
some predisposition
of the time to
in collective space, an interior passage.
Square
Building
tunnels
does,
through
however,
slightly
in
Hall
Its
can
peculiar
of
the
subway
realignment,
book The City Observed, compares the
Park Square Building to
It
angling
Don Lyndon,
ground
that of
the
floor
Faneuil
Markets. (3)
long narrow concourse is lined with shops,
be entered from both
passage,
only
a
Park
in the area.
north toward the Berkeley Street end.
his
scheme
include
The
is not unlike the train and
which many came to work
the
envisioned by its
invest
arcade
let
while
through
building
St.
James Avenue and
some of which
the
others, those on the north, are
the
building's arcade.
The
interior
accessible
center
is further punctuated by a spacious lobby
(3) Donlyn Lyndon, The City Observed:
Architecture
of
The Hub. (New York:
page 191.
104
of
the
opening
Boston, A Guide to the
Vintage
Books,
1982)
to St. James Avenue. The series of ground level spaces gives
the
Park
Square
buildings
often
pedestrian
inside.
behind
lack,
lobby
potential
space
The elevators
are
Oddly,
continuing
the
the elevator shafts are
located
lit
up,
by
fenestration without a break up 11
"rendered
simply
as
a
undemanding wall." (4)
The Ground Floor Shopping Arcade today
Ibid.
105
long,
modern
invites
bulk of the building is the projection of the
lines
(4)
that
more
this lobby, linking the street level to the
above.
The
Building all the
the
directly
offices
windows,
floors.
property
uneventful,
The
building
neglect,
saved
in
this
consortium
of
Back Bay neighbors,
especially
the
due
desirable
The
a
to
building
schemes,
area
Park
flourished
in
downtown
was
perceived
it had a commercial
stock
including
the
Park
was aging
and
the
Square
Park
not
market,
the
Kevin
in the Back
aesthetically
several
redevelopment
project,
the
only
Transportation Building and work on
stalled.
The
largest
of available office space in the vicinity of the
Building
Square
characterized
structural
Square
could
office
as
among
vacancy rate of over 30%.
Boylston Street properties, were
percentage
of
as class
pessimism
Great uncertainty existed
recently completed State
the
of
the rapid redevelopment during
The
yet
new
building,
was classified
perception
prestigious
White administration.
market.
a
(5)
1970's,
with
of
The building was
The midtown and Back Bay area seemingly
compete
Bay
years
Having fallen prey to an era
building managers
commercial
area.
"only barely."
from
and essential maintenance this
office space.
the
rescued
neglect in 1980 when purchased by
superficial
During
recently
investors.
like many of its
"C"
only
Lyndon's words,
from
only
was
by
was class
construction
"B"
& "C."
This
prior to 1960,
obstructions and varying
space
often
with
levels of modernization
(5)
The
Office
Industry Survey,
Interim
Report,
Redevelopment Authority, Research Dept. 1977.
106
is
Boston
and
maintenance.
continual
Class
maintenance,
"B" space
is
distinguished
very good physical
conditions
by
and
well maintained lobby and accessways.
Typical tenant corridors prior to renovation
The
decision to invest in the Park Square Building was most
likely based on market forces similar to those identified by
the
Boston Redevelopment Authority.(6)
The
space
late
1970's brought about a tightening
market.
The
vacancy rates
early
in
the
office
in
the
decade
dwindled while inflationary pressures drove up rental
(6) Ibid.,
Part
II: Tenant Responses
107
rates,
tax rates and
for
These forces all
interest and
During
favor
the
proximity
to
with
strategies changed
(class "A")
precipitated
ultimate demand for class
became
very
an elevation
"B"
in
office space.
Park Square and Back Bay neighborhoods.
downtown,
substantially
attractive.
$25-35
of
the
lower
square foot,
Square
area,
all
the
rental
coupled with a perceived
added
decision-makers
reassurance
from
and
made
rates
businesses
this
location
to
its
employees
Center,
activity
Copley
Hotel/Condominium Building.
on
The
richness
in
desirability.
alike
have
and
taken
Street,
the
In this climate
Four
the
is undergoing a renaissance of its own.
108
the
of
image
Corporate
the area.
Boylston
Place
at
in the vicinity of
improvement
recent development in
construction
Building
rents
supportive
were $15-20 per square foot.
area,
Prudential
the MBTA and
Close
While Government Center rents were running
per
the
the
financing
this resurgence, locational factors began to work in
of
Park
As
new construction, office space
expensive.
the
energy costs.
great
Witness
at
the
Seasons
Park Square
i
View from the Eleventh Floor, looking northeast
Standard Tenant Elevator Lobby
109
THE PARK SQUARE/BACK BAY MARKET FOR DEVELOPMENT
Rendering
Within
$1/2
of the new New England
a four block radius
(7)
of the Park Square Building over
billion worth of construction and development projects
are underway.
to
Life proposal
The
following is a synopsis of those projects
illustrate the vitality of the neighborhood,
architectural
immediately to
and
a
financial
the west of the
sense.
On
in both
an
the
block
Park Square Building,
the New
England Life Insurance Company has proposed a 27 story, twin
tower
building,
buildings
space,
would
100,000
also
set on St.
include
James Avenue.
1.3 million square
square feet of retail
These
feet of
space and
new
office
underground
(7) This and the following illustrations are reprinted from
The Boston Globe, "The Livable City?", Sunday Supplement, 11
November 1984.
110
parking
John
for
1,000 cars.
Designed by Phillip
Johnson
Burgee, it is estimated to cost $288 million (or
and
$221
per square foot) and is currently under design review by the
City
of
Boston
and
the
Neighborhood
Civic
Advisory
Committee.
The Four Seasons Hotel
The
(officially named Park Plaza)
Four Seasons Hotel
and Condominium building
completion on Boylston Street opposite the
is
nearing
Public Garden.
A
brick-faced building, it will include restaurants, shops and
a
health
club,
condominiums.
introduction
in
addition to 290 hotel
This
project
represents
the
Street.
Developed by a consortium of four
Complex
the
recent Ritz-Carlton expansion
on
100
second
Arlington
investors
by the WZMH Architectural Group, the Four
will
and
of residential use in the Park Square district
following
designed
rooms
Seasons
ulitmately cost $85 million when finished
mid-1985.
111
and
in
F
JA-
. .W# "T V-7 1VO
MLRX"A-01
I
Owl
N
WOM MOP
1.
Rendering of the Haddassah Way Project; Boylston Street
As
part of the larger Park Plaza urban renewal project, the
Hadassah
feet
Way
development will include 1/2
million
square
of retail space, 90,000 square feet of offices and 111
condominiums.
complex.
Authority,
168 parking spaces will be located under the
Presently in review at the Boston
this
Architects
Collaborative
Redevelopment
design
projected cost of $78 million or $156 per square foot.
399 Boylston Street
112
has
a
One
block
north of the Park Square Building, 399
has just been completed.
Street
Boylston
This 13 story building
is
faced
with red brick and limestone, with bay windows on the
lower
floors and arched windows above.
It is topped with a
multifaceted, 5 story, reflective glass structure.
by
CBT/Childs,
cost
Bertman, Tseckares and Casendino, Inc.,
placed at $36 million for
is
Designed
209,000 square feet
it
(or
$172 per square foot).
One Exeter
built for
$158 per square foot in
down Boylston Street, at Exeter
Further
Place
Place,
is
designed
near
completion.
Built
Street,
for
$30
1984
One
Exeter
million
and
by Jung-Brannen Associates, this building contains
190,000 square feet of office space in its 14 stories.
Clad
in brick and green-tinted glass, it includes a mansard-style
roof, bay windows and a three story atrium.
113
The latest plan
Copley
Square
Following
Abbott
for Copley
to undergo yet
about
is
a national
Square
competition
of Clack & Rapuano
in
1983,
another
facelift.
the scheme
was chosen by the
of Dean
City of Boston.
Presently fund raising is underway for the $4 million needed
to
increase the grass area and rework the fountain.
Square
has
development
Public
any
anchored
schemes,
Library,
the
number
including
John
114
Tower
recent
and
past
Copley Place,
Hancock
surviving Trinity Church.
of
and
Copley
the
the
Boston
ever
A
recent
market
survey conducted by
Spaulding
and
Slye
indicated office rents in the Back Bay area running from $16
per
square
building,
Square
foot
for
the renovated
120
Boylston
to $38 per square foot for Copley Place.
Street
The Park
Building rents space at the lower end of this range,
at $19-20 per square foot.
Park Square Building
Berkeley Street
from the corner of St.
115
James Avenue and
PARK SQUARE BUILDING TIME CHART
20 1 2 3 4 5 6 7 8
9 39 1 2 3 4 5 6 7 8
9 49 1 2 3 4 5 6 7 8 9 50 1 2 3 4 5 6 7 B 9 60
1 2 3 4 5 6 7
8
9 70
1
2 3 4 5 6 7 8 9
IPRESENT
0 1 2 3 4 5 6 7 8 9 91 1 2 3 4 5 6 7 B 9 2901
>ASSEMBLAGE OF THE PROPERTY
6 DESIGN OF THE PSI
>CONSTRUCTION
>MORTGAGE OF$3,500,000.
DURATION OF MORTGAGE
DURATION OF MORTGAGE BOND
>PSB REFINANCED
DURATION OF MORTGAGE
>DEFAULT
ON THE MORTGAGE
>PSB PURCHASED BY SHERATON
>DC GENERATORS INSTALLED FOR LIGHTING/HEATING
>DEBT EXTENDED
DURATION OF EXTENTION
>PSB PURCHASED BY PSB INC.
REFINANCED FOR 15 YEARS
>PSB VALUED AT $4,600.088.
>PSB TRUST PURCHASES BUILDING
>INSTALLATION OF EXISTING A/C SYSTEM
OPERATION OF SYSTEM
>INSTALLATION OF SINGLE-PLY ROOF
10 YEAR BOND
I
>PSB PURCHASED BY PSA FOR
$14,900,I00.
DURATION OF MORTGAGE
)LEASE BY MAJOR TENANT/PARTNER
DURATION OF LEASE
>PARK SQUARE I RENVATION
DEPRECIATION PERIOD
>PARK SQUARE II RENOVATION
DEPRECIATION PERIOD
>PARAPET REMOVAL
>CLEANING OF FACADE
& WINDOW REPLACEMENT
TEN YEAR NARRANTY
I>PROJECTED NEN A/C
I
I
INSTALLATION
>PROJECTED NEW ROOF INSTALLATION
RETIREMENT OF EXISTING LONG TERM DEBT(
Park Square
Building Time Chart
PARK SQUARE BUILDING CHRONOLOGY
1893
7/19/1893:
Olde
Colony
Railroad assigns to
the
City
of
Boston
an easement to raise the level of Providence
Street
and
grade
the bank from Berkeley Street to Church
Street,
for the sum of $1.00.
1900
Site used as terminus for the Boston and Providence
Railroad
1911
3/11/1911: New York, New Haven and Hartford Railroad Company
grant
an easement to the City of Boston to grade, slope and
maintain the land abutting Providence Street forever.
1917
1/2/17:
Declaration of Trust, formation of the Park
Real
Estate Trust, made up of Armory Eliot, Charles
George Smith, Edgar Champlin, and Frederick Bradlee.
Square
Adams,
1/2/17:
New York,
New Haven and Hartford
Railroad deeds
28,681 S.F. parcel bounded by Berkeley Street to the west.
1/2/17:
Park
Square Real Estate Trust also
purchases the
rights
to land abutting Clarendon Street from N.Y./N.H. and
H.
Railroad
and M.I.T., both transactions at
an
interest
rate of 4% over 5 years.
1918
9/28/18:
Restrictions to the deed
1922
3/29/22:
Property deed transferred from New York, New Haven
and Hartford Railroad to the Park Square Building Company of
site,
balance of
the existing
Boston,
constituting the
16,758 S.F., bounded by Arlington Street.
4/6/22:
Eliot et al transfers title to entire parcel to the
Park
Square Building Company of Boston. On the same day PSB
Co. of Boston arranges with the Prudential Insurance Company
for
a mortgage of $3,000,000 at an interest rate of 6-1/2%,
to
be repaid yearly in the amount of $120,000. Proceeds
to
be
dispersed $750,000 in advance, $1.0 million at
building
erection, and $1.25 million at building completion. A serial
mortgage
bond for $1 million is issued by the International
117
Trust
Company for
the
PSB
Co.,
in
$1,000
denominations
to
be
repaid at $100,000 per year from 1933-1942. Interest rate to
be
7% per
4/6/22:
annum.
Entire site bounded by St.
James Avenue, Arlington,
Providence and Berkeley Streets now assembled; 43,458 square
feet
total area. Design begins on the Park Square Building.
Construction
commences and requires approximately 12 months
to complete building.
1923
Opening
of
the
Park
Square
Building,
4/4/23:
Lease to
initial
LeClear, and
$6,000,000, designed by Desmore,
cost
of
Robbins
Boston Elevated Railway Company,
expiring
on 6/30/33.
11/12/23:
Lease to K.M.
12/1/23:
Lease
to
Danielson,
Standard
Oil
expiring
of
on 12/31/33.
New
York,
expiring
4/30/34.
1924
1/18/24:
Lease to National
Shawmut
Bank of Boston for arcade
space, for a period of 25 years. Rent to be $15,000/year for
years
1-5,
$20,000/yr
for 6-10, $30,000
for
10-15,
and
$35,000/yr
for
the last 10 years. Duplicate leases
appear
between
the
mortgagees.
6/19/24:
International
Aggregate
mortgage
Trust
of
and
$3,500,000
Prudential
held
by
as
the
Prudential Insurance Company. $500,000 2nd mortgage taken by
the PSB Co. on this day at a rate of 6%, to be repaid in one
payment on 4/6/32.
6/19/24: Indenture of PSB serial bonds to the First National
Bank
of
Boston
as successor to
the
International
Trust
Company.
1926
8/31/26:
Old Colony Trust buys mortgage for the Park Square
Building.
1927
Salada
LeClear,
Tea Building constructed, also designed by
and Robbins
118
Desmore,
1929
12/13/29:
Old
Colony National Bank of Boston
outstanding
mortgages to
including the PSB Co.
the First
National
assigns
all
Bank
of Boston,
the
Prudential
1932
3/4/32:
Refinancing
Company,
Insurance
of
of the mortgages with
$2,660,000
6% for the first
extended
5 years and
to
4/6/42 at
a
rate
5-1/2% for the following
5
years.
1937
2/8/37:
Affidavit
affixed
to
title,
$700,000
remains
overdue,
$2,560,000 remains unpaid on the mortgage.
PSB
to
be
auctioned
at noon, 3/8/37. $75,000 cash to be
paid
at
time of auction.
2/11/37:
R.
Boston, buys
2/26/37:
G.
Emerson, for the First
the Park Square Building for
National
$700,000.
Bank
of
Discharge of obligation issued by Prudential at the
satisfaction
of
Park
6/16/37:
the mortgage.
Square Building
Inc.
agrees
to pay the
First
National
Bank
of Boston $3,454,375 on or
before
2/11/47,
payable quarterly after 6/1/37. A down payment of $87,558.33
was
made.
PSB Inc. is composed of Robert Moore,
preident,
T.S. Harris,
Treasurer, and 0. A. Schlaikjer, Clerk.
6/16/37:
Sheraton Buildings Inc. acquires PSB from the Park
Square Building Inc. Page Brown signs deal for Sheraton.
1938
Conditional
sale
of Universal Unaflow Engine and a 600KW DC
Generator
to
the Park Square Building Inc. for the sum
of
$16,000. Used to provide heating and light
to the building.
9/24/38:
Totman's Inc. leases Arcade stores #24 and 25
the
candy counter
be made.
for
$4,000 per
year,
monthly payments
and
to
1941
Paine
Furniture
James
Ave.
Desmore,
Building constructed directly
from the Park Square Building,
LeClear,
and
Robbins
119
across
also designed
St.
by
1944
8/25/44:
and
Robert
receives
Moore, president of the PSB Inc. asks
and extention of the First National
for
mortgage
until 2/11/52.
1945
12/19/45:
Dischagre of obligation
issued
by the
First
National Bank for satisfaction of the 6/16/37 mortgage.
1949
2/24/49: John Hancock Mutual Life Insurance Company finances
the
PSB
for PSB Inc.:
$2,600,000 at
4% for a period of
15
years. Quarterly payments of $52,000 to be made.
8/1/49:
Park Square Building Camera and Photo leases Arcade
stores
#18
and
19
and Storage bays #12
and
13
in
the
basement
for
the
yearly sum of $5,000
from
Park
Square
Building Inc., Page Browne, president.
1950
10/31/50: Financial statement filed
reports:
net fixed asset
value
of
the
PSB
of
$4,600,000;
yearly
income
of
$1,141,371.42;
operating
expenses
of
$492,590.00;
Real
Estate
taxes of $264,386.66; Interest
and Debt payments
of
$103,595.57;
Federal
Income
tax of $75,257.01 for
a
net
income of $121,686.80.
1951
3/9/51:
Park
Square Building Inc. and Post
Office
Square
Company
consolidate into Post Office Square Company. Signed
by
Robert
L. Moore and Ernest Henderson for PSB Inc.,
and
Ernest Henderson and Page Browne for PO Sq.
Inc..
1952
1/11/52:
Park Square Building Trust, composed of H.
Gorin,
S. Friedman, R. Cable, J. Rabinovitz.and F. Leeder; take the
deed
to
PSB
from W. E. French for the sum of
$1.00.
All
existing
leases expire on or before 7/31/85. J.
Rabinovitz
appoints
Cohen;
1/14/52:
to
Rabb as successor; R. Cable assigns
Friedman assigns
Buildings
Henry
Henry Friedman.
Indenture of lease To Park Square Camera and
Sheraton
1/30/52:
J.
an
Sidney
and S.
Photo
Inc.
Sheraton Buildings Inc.
transfers title to
Thomas
Hillen. Hillen accepts lst mortgage of $2,299,262.30 (of
original
$2,600,000) from the John Hancock Mutual
Life
120
Insurance
Company.
Sheraton
holds
a
2nd
mortgage
$1,650,000
for Hillen at 4% per annum. All existing
expire on or before 11/30/71.
1/30/52:
Hillen grants title of
Building
Trust.
the PSB to the Park
1st mortgage held by John Hancock,
of
leases
Square
2nd held
by Sheraton.
4/28/52:
Outstanding 2nd mortgage refinanced at 8% for
any
unpaid balance over $250,000.
1956
6/20/56:
trustee,
F.
Leeder
assigns to E. Leeder as
Celia Leeder to succeed Earle.
6/29/56:
S.
Friedman,
deceased
on
Friedman as successor, Henry accepts.
6/5/56,
successor
as
assigned
H.
1957
11/18/57:
F.
Leeder
to
Leeder,
appoints E.
revokes Celia as
his
be succeeded by Laurel
successor
Chase.
and
as successor,
to
1958
1/10/58: H. Friedman appoints Isay Friedman
be succeeded by Arthur Friedman.
1960
2/3/60:
Robert
Cable, deceased on 1/18/60,
Herman Cohen as successor, who accepts.
3/29/60:
H.
Judith Gilfix
6/9/60:
Gorin appoints Estelle
to succeed Estelle.
had
appointed
Gorin as successor,
and
Robert Cable, having died on 1/18/60, had appointed
Herman
Cohen
to succeed, who accepted on 2/3/60. H.
then
assigns
Austin
Cohen
to
succeed
him,
and
Purlmutter to succeed Austin.
Cohen
Irving
1966
2/2/66:
Joseph
Rabinovitz,
who succeeded
S.
Rabb as trustee
resigns
from the Trust.
3/3/66:
S. Rabb nominates Norman Rabb as successor.
1969
7/15/69.:
Earle
Leeder
accepts
appointment
place of Frank Leeder, who died 6/26/69.
121
to the Trust
in
1971
7/21/71:
H.
to
succeed
Gorin rescinds the appointment of Estelle Gorin
him and appoints Rosalind E. Gorin to
succeed,
revokes Judith Gilfix's appointment outright.
1973
8/31/73:
Herman Cohen resigns
accepts position.
from the
Trust, Austin
Cable
1975
8/6/75:
H. Gorin, deceased, had appointed Rosalind Gorin as
trustee,
Estelle
Gorin formally renounces any position
, R.
Gorin assigns Walter Salmon as successor, to be succeeded by
Estelle Gorin.
1977
1/3/77:
H. Friedman appoints Jerry Friedman to
and Ann Strem to succeed Jerry.
succeed
him
1980
Negiotaions begin on the
sale
of the building.
1981
January:
Interviews
begin
office renovation project
for designer for
1/19/81:
Park Square Building Trust
allow
PSB
Corporation to take over
Trust
if
the Corporation controls
stock. Signed by Rosalind Gorin, E.
Phase
I
articles
are amended to
all
assets
of
The
PSB
90% of
the
outstanding
Leeder, and H. Friedman.
1/30/81:
building
$1.00.
Park Square Building Trust transfer
to Park Square Building Corporation
February:
2/2/81:
Park Square
the
title
for
the
for the sum of
Building Corporation
transfers
PSB
to
the
Park
Square
Associates
for
the
sum
of
$13,950,000;
PSA is a general partnership
of TBC Associates
and
31 St. James Associates; waiver of all Corporate Excise
Tax Liens from PSB Corp. to PSA. PSB Corporation composed of
H.
Friedman,
R.
Gorin, Edward Katenberg,
E.
Leeder,
and
Austin
Cable.
Long term debt refinanced
for 15 year period,
new
owners
begin to rework tenant standards and look at
a
series
of projects
to upgrade the building, Jung-Brannen and
Associates hired as consultants to the Partnership
122
May:
5/1/81:
partnership,
Park
Square
general
partnership;
Associates.
September:
Associates
becomes
a
limited
consisting of the same parties as the previous
Phase
I
TBC
Office
Associates
Renovation
and
Project
31
St.
James
occupied
1982
May:
Demolition begins on the
II office renovation project
September:
Phase
Il
project
5th and
6th floors
for
Phase
occupied
1983
September:
Parapet
Removal
project
commences
1984
May:
Cleaning and restoration of the exterior of the entire
building
August:
Window
replacement project begins,
completion by mid-December
November:
work begins on resheathing
scheduled
for
rooftop penthouses
1985
New
air
conditioning system,
Capital Expenditure Budget
projected
December,
1983
PSB
Installation
of new emergency generators, gas turbines
related
wiring
and new roof, projected December,
1983
Capital Expenditures budget
and
PSB
1986
1991
Expiration
of TBC lease,
addendum
#3
1996
Retirement
of
Associates.
existing
long
123
term
debt
by
Park
Square
I
Fi
P
-qUa
v,.
.tA33
T T-
1922 Block plan of the Park Square Building
-1
r.7 .!
-%
n
-
A
K1~~~
Original Vestibule Lobby Plan
124
PARAPET REMOVAL
The
original
parapet
eleven foot high ferrous concrete
had
further
spalling
Reportedly,
one
morning.
sheeting
the
It
1983,
falling
had
was blamed
to
exposure
cycle,
work.
to
to
worn thin from
yearly expansion
on
prevent
sidewalk.
the
acid-rain,
Reinforcing
of the building's
time
the
from
Deterioration
cornice
concrete
shards
Fall of
a lion head gargolye fell to the sidewalk early
freeze-thaw
at
to be removed in the
decorative
steel
was
continuous
of
not galvanized
The
construction.
the repeated bending
and contraction
age
and
copper
caused
of the building
by
mass.
the
decided there was no alternative but to remove
was
entire decorative parapet.
The
removal
fifteen
stories.
largest
of
its
kind
second
brow
platform
for
choice
at
the
in
was
were
perimeter
The
floor
to have
whole
to
level
eventually
the actual demolition work. All
setting
While
St.
protect
1,400 linear
involved.
to act
as
125
the
A
a
of the
Providence Street alley
the three cranes used
the
"brow"
staging
James Avenue was
of
been
A protective
the cornice line
erected at
building.
for
believed
Boston.
second
took place from the
operation
the
ever used
building
of
is
while the work was underway above.
pedestrians
feet
small undertaking.
The assemblage
installed
was
was no
wrapped in scaffolding, reaching a height
was
building
of
project
side
logical
throughout
the
the
project,
of
City
Boston would not
and St.
permit. Arlington and Berkeley Streets,
were
thought
grant
work
such
was
a staging
disposal
project
To
was
was
also
divided
and
cornice
over
the
Providence
was
the
a rating
received
side of
stationed in the
into
difficulty
architect
city
the
cornice
St.
1.0.
duration of each,
assigned
The
to each
The basic
removal
James Avenue
above
alley.
3 component phases
contractor.
of
the building.
then
the
for
lowered
The
phase
of the more
elevator
by
126
to
the
elaborate
rated
shaftway
the
removal
a 1.5,
on
Street side was assigned a difficulty rating
2.5.
As
scheduling.
a rating of
was
and
entire
cornice
entrance
to
operator's
walkie-talkies
demolished pieces were
accurately assess the
relative
and
from the opposite
units
James Avenue
permit. Much of the crane
accomplished with the aid of
parapet
sidewalk
a
be too heavily travelled for the
to
workmen directing
the
grant
the
of
Scaffolding
on the St.
James Avenue Facade
The next
step was to seal the
of
parapet.
the
coated
that
copper
were
remainder
to
edge
to
rough edge
Jung-Brannen
left
Associates
by the
specified
for the flashing over the window
remain. Membrane roofing was
removal
lead
headstones
used
for
of the waterproofing over the new, lower
the
parapet
match the existing roofing. Repair and reflashing of new
included an 18" snow cap and a wire guard rail,
127
rather
than
the
serves
the
pipe
its
rail
after
made
methodology"
is
by
the
sufficiently sound
The issue
removal
the
rooftop mechanical
treatment
and
edge
been
has
to last
then
and
of
previously
decorative
trim
or
decision
will
replaced,
a scenario
is
provided
3-5 years
also
to
depend
in
present
piping
some concern
the wind
11'
to be
that
project
on whether
which has
the
128
by
all
is
for
the
without
the
parapet.
A
new
installed.
The
potential
does
not proceed
existing
roofing
also been
an
that
created
final disposition of the
If
by
its
visibility
by the
cornice has yet
project.
examined
and
The
recommendation is
the
equipment
rests with the
expansion
owner.
equipment, penthouses and
this
protection
the
value
The building appears bare,
There
visible.
is
altered
These decisions
"dollar
architect
of the parapet.
vulnerability
roof
the
roofing consultant. His
the
decision
review of
the
of
configuration.
exposed
This
Park Square Building.
some
encapsulation
independent
contemplated.
functional purposes but has definitely
appearance of the
were
it
originally
discussed.
the
is
A*/
74.
A*
Demolition work on the upper brow
The
final
cost
demolition
million.
and
If
of
the
project,
removal
the
roof
including
scaffolding,
of the debris came
expansion project
to
over
$1
should
come
to
fruition
the demolition expenditure will be accounted for
a
of
cost
parapet
with
approximately
that project. The estimate
for
replacing
a new decorative cornice has been
$500,000.
This
129
project was
placed
tabled
by
as
the
at
the
building
management in May of 1984, pending the outcome
of
the roof expansion and the roof replacement projects.
Deteriorated conditions of the Concrete Parapet necessitated
its removal
130
Existing
roof today, with Edge Encapsulation visible.
the pipe and wire railing detail.
131
Note
The
Park Square
Building before cornice removal.
'a.
I!
-i
U I 11.11
j~ji.
I
5.
1MILf6
-aJ
1
Aj
I
I
1~
The Park Square Building today, without parapet and cornice.
As
this case suggests, some expenditures, potentially quite
large
ones,
parapet
had
possible
most
to foresee.
The
cornice
and
removed, not only as a precursor to
the
expansion
project,
but
as
a
matter
For the owner this investment in the
likely unplanned.
rationalized
the
difficult
to be
roof
life-safety.
was
are
It also cannot
be
of
building
immediately
as adding to the revenue producing ability
of
building. It does, however, allow the owner to continue
operating
the
passersby,
reducing a great risk and liability. In this way
entire
building
133
without
endangering
the
it
not
should
be accounted
for as a "cost of doing
unlike insurance premiums. More systematic
business",
preventative
maintenance and inspection may have identified the potential
problem
at
at an earlier date, allowing for a more planned, or
least
budgeted, expenditure. It is unlikely
that
this
project could have been postponed for any substantial period
of
time.
advisor,
The
owners did chose to
coordinator
and
include
supervisor
demolition
process.
architects
to become a part of the
and
decisions
related
their architect as
for
the
subsequent
In this manner corporations are
life-cycle of
buildings
to them.
The Park Square Building
with parapet
without parapet
134
asking
WINDOW REPLACEMENT PROJECT
The
interest
in
the
possibilities
replacement
is
as
source of heat loss
a
major
Commercial
energy
and
enormous. Windows
institutional
presented
by
long have been
in
identified
residential
users are
now
window
buildings.
investigating
savings and opportunities for economic, as well
aesthetic
gains.
rehabilitation
preservation
replacement
and
In
an
reuse,
era
of
development
interests are generating
techniques and
unsurpassed
as,
building
economics
new analysis of
and
window
alternatives.
While
basic
structures
remain
serviceable,
windows, because they have been poorly maintained,
are
unsuitable
for
the new occupancy,
or
have
simply
worn out, usually need serious
attention.
Next
to
roofing systems and components,
windows
are
the
most vulnerable to the elements,
highly
susceptible
-to deterioration,
and the most likely
part
of
a building's exterior to be in
need
of
extensive
repair
or replacement.
New
uses
and
contemporary
expectations also pose unprecedented
performance
demands
on
fenestration
systems
... among
these
demands are: resistance
to
rain
penetration,
air
infiltration,
intruders,
heat
loss
or
gain, provision of visual
and
acoustic
privacy,
ventilation,
easy maintenance and
safe
use. (1)
As
with
any
replacement
building component
project
architect
and
marketing
an
owner.
entire
offers
today,
many
alternatives
A multitude of
product line,
any
for
the
manufacturers,
each
offer
(1)
Thomas
Vonier,
"Next
Window,
Architecture, (August 1984): page 104.
135
contemplating
an
Please,"
overwhelming
Progressive
number
of window types and constructions for consideration.
Each
variation
its
use,
environmental
appearance,
dealing
carries special implications pertaining
initial
with
aging
see
character-defining
fenestration
ordering
structural
and maintenance cost.
an
preservationists
elements,
(if
not
In
may
in
fact be the
device.
In
the
elements.
owners' desire
important
A
greatest
building's
single
to
case,
building,
windows as one of the most
architectural
loads,
this
historic)
to
visual
upgrade
and
modernize the Park Square Building, the windows were quickly
identified
as
standpoint,
pane,
a
steel
existing
shut
project worth pursuing.
building
frame
requires
generally
an
to
commercial
annual
heat
space.
From
with 1,425 sixty year
windows seems ripe
double-hung
and
energy
a
windows had been
for
an
energy
old
single
retrofit.
neglected,
abused for many years.
expenditure of almost
The
building
and air condition 480,000 square
feet
the
partnership's
consultants,
the
window replacement project began
year
as
for
of
Jung-Brannen
Associates,
architect
painted
$1,000,000
Employing the services of
The
of
choice,
ago. Three overall issues were immediately
over
as
a
identified
central to the selection process. They included building
operation,
architectural
detail, and energy
conservation.
Each of these issues was further defined to establish a list
of
criteria against which each potential product and method
could be evaluated.
136
Given
the
architect
window
existing rough window openings, how
proceed?
to
units
With the
window
seemed
irregular
Surveying the
from
"stock"
window
"custom"
window
market produced a long list of possible alternatives.
the
existing
frames
heat
were
frames were steel, aluminum clad or
the frames themselves.
aluminum frames
The
required a thicker section
resulting
does,
While
extruded
considered to cut down on the transmission
through
steel,
the
dimensions
and floor to floor, few
acceptable.
should
construction
and
in an "unhistoric" appearance.
sections,
maintenance.
less
colors
and
of
for strength than
Aluminum
however, offer advantages in terms of flexibility
sizes
of
coatings,
and
in
low
Aluminum framing was eventually decided to be
sturdy than the steel, especially as it related to the
attachment
of hardware, the construction of corners and the
number
components used in each individual
The
of
large
suggested
the more
plausible,
thermal
this
window
to
break.
size,
up to 4',6" x
rigid steel
frames.
investigate a steel
high,
also
A compromise seemed
frame which
Similar to the extruded aluminum
metal
components;
again adding to
parts and materials to be incorporated
solid
steel
frame, most similar to
eventually selected.
yet
6',6"
unit.
included
a
products,
would have employed a hard plastic or rubber insulator
between
A
window
quite
the
number
of
into each frame unit.
the
original,
was
Thinner than its aluminum counterpart,
strong and capable of welded joints,
137
the
steel
frame
and
was available in a diverse selection of shapes, sizes
paint/coating colors.
The steel
frame was known to
be
more expensive and to require more careful periodic painting
and
maintenance.
metal
and
frame
The conductive properties of
to
aluminum
costs
installation process.
in
insulating
the
of the new units,
savings
the
negligible
aluminum
also
less
after
frames
have
the
increased
and
frame
costs
over
piece between the new frame and
existing
cavity
and
finishing.
The
would
of
have
been
attaching
to the existing steel supports.
dictated a more complicated
the
cost of the
of the
building
fitting
expensive
total
removal
exposed
installation
of
steel
light of the
This included
loss
The decision, in
and energy savings, of
framing was made
windows,
single
made it less effective in retarding heat
condensation than an aluminum system.
respect
a
It
the
would
transition and
the existing
trim
interior finish
condition.
The
original
horizontal
window
unit.
double-hung
bar
The
window form as its
the
its mid-point is
windows
split
replicated
frame configuration
by the National
suggested
As
at
configuration,
follows
Park Service
(2)
in
the
by
an
the
new
guidelines
and
used
to
balance
the
old
precedent.
are
used
for ventilation,
the
aniquated
heating and air conditioning systems, an operable
(2)
page 107.
Ibid.,
138
was required. A fixed glass, single light
sash
was
Rather
given
have
than
lower
appearance
horizontal
minimizes
the
building
a
another
sash
was specified, allowing
much
like
framing
the
member.
physical
original,
"modern"
requirement.
double-hung configuration,
the
scenerio
decidedly
and could not meet the ventilating
appearance
type
Quickly discarded, this
discussed at one time.
would
alternative
for
an
an
bisected
awning
exterior
with
The awning configuration
stress
on the
frame
and
on
an
also
the
occupant over the lifting of a large double-hung unit.
Rendering
illustrating
at the Park Square
the predominance of the fenestration
Building
139
Antiquated Ventilating and Air-Conditioning System
The
most
difficult
installed.
decision involved the
glazing
to
be
Several alternative glazing and frame units were
installed in the Park Square Building for visual evaluation.
The
appearance
of
the
building
was
an
important
consideration, in conjunction with potential energy savings.
Reflective
conservation
image
adding
and
tinted
glazings offered
characteristics
of the building.
the
best
but compromised the
energy
exterior
Heat mirror glass was contemplated,
substantially to the initial costs. This alternative
140
would,
however,
energy
costs. The 600 feet of south facing facade seemed
have significantly lowered
the
recurring
likely candidate to make maximum use of this potential.
added
a
The
cost, however, made it seem prohibitive to use on all
four sides of the building.
Changing
the
expensive
clear
Providence
Boylston
bulk.
to
St.
on
the north
facade
to
the
Alley
and a large block
of
be
applied
used
on
protective
buildings
on
thermopane
space
interior
analyzed.
exposed
while less costly tinted
the "back" side. Clear
glass
film and several variations
were also considered.
tinted
the
St. this side of the building is shaded by its own
sunlight to be protected
glass
less
glass was another alternative. Facing
This would allow those sides of the building
could
air
glazing
glass
with
of
tinted
The decision was made to use a
glazing unit with 1/4" glazing, an
1/2"
and a film laminated to the outside face of
glass.
Each of the alternatives
Given
an
was
the
minimally
the myriad of plausible alternatives,
one
might have expected a more systematic evaluation procedure.
Each
manufacturer
year
warranty
for their portion of the project.
able
to do so,
except
and supplier was asked
to provide a
All
the Southwall Corporation, the
ten
were
source
of the HEAT MIRROR glazing discussed. They initally provided
a five year warranty, amended themselves verbally to the ten
year
duration
and never followed through in writing.
141
From
the
variety
installed
for
of
alternative
units
discussed
three
were
in the building, each by a different manufacturer
evaluation.
A
vacant suite on the fourth
floor
that
faces
south was chosen for this demonstration project. Each
unit
was
evaluated
appearance,
last
water
in
terms
of
installation,
visual
infiltration and water penetration.
The
two tests were conducted by an independent engineering
firm.
The
visual criteria
Much
discussion
unit.
Robert
harmonize
seemed the most thoroughly
took place
Brannen
with
the
considered.
over the color of
advocated
exterior
an
the
"oyster
limestone.
framing
shell"
The
to
building
management was interested in the durability and maintenance,
in addition to the appearance.
The
Hopes
steel
window
to
criteria.
be
operable
is
made
awning
the
of
a
identified
lower sash,
opening to 8".
The
all
glazing
organic
of glass with a SUNGATE LOW-E coating
surface
on
best compromise of all
glass manufactured by PPG. The glazing
1/4" light
outside
the
up of a TWINDOW unit, employing an
insulating
south
Constructed
The Hopes window includes a fixed upper sash with
an
used
choice.
frame with a SOLARBAN urethane coating, this unit was
decided
2
was the final
itself is
fused to
of inside glass. The PPG tinted glass
faces. The Heat Mirror contemplated
seal,
was
for
the
face (St. James Ave.) was eventually rejected on
the
142
basis
of
its
initial
cost,
limited
warranty
and
its
availablitity from a only a single source.
Bob Barstow, a consulting engineer, advising the Park Square
Associates,
Meeting
indicated
minutes
a "2 year payback" in
the
Partners
April, 1984, based on additional costs
of
the Sungate glazing system. Two characteristics of this unit
were
thought
overall
value
only
to be most
energy costs
influential
incurred
to a reduction in
by the building.
The winter
was estimated to be .31 for this configuration
.49
for
reduction
frame.
a
in
clear glass. This
fact
heat transmission through
The
R
the
U
while
illustrates
the
the
window
and
This
too
value was established to be 1.33.
represents
a
increasing
the reflectivity of the fenestration and thereby
lowering
the
expenditure
will
heat gain on the exposed faces.
$73,700 annually,
costs.
HM-88
installed
in
thereby
The
in
the
product,
The
PPG equivalent was
building. The use of tinted
by
initial
unit,
Barstow's calculations
While these calculations were based
Southwall
increase
costs
of an additional $90,000 for the Sungate
save
energy
potential for lessening the energy
on
for
the
in
fact
glass
will
reflectivity by 50%, cutting down on heat gain and
lessening A/C load. Double glazing will cut down on
transmission
by 50%, also lessening the load on the heating
system.
Simultaneous
system,
individual sensors and control valves, will aid the
heating
system. Both of these changes will essentially give
improvements to the radiator
143
control
the
system
manager's
will
an extra floor worth of capacity.
The
building
calculations show that the $60,000/month gas bill
most
likely
be cut by
$10-15,000/month
during
the
finish
was
heating season.
On
the aesthetic concerns, the aluminum panning
changed
was
to "oyster shell" at Jung-Brannen's suggestion.
felt
easily
is
this
worked
medium
color would be less
into tenant
finish schemes.
The
and
frame
more
itself
bronze, coated, as previously mentioned, with
urethane. Jung-Brannen
and
conspicuous
It
installation
a
was involved throughout the decision
process,
acting
as
supervisor
and
consultant on an hourly fee basis.
The
initial
affecting
glazing
Given
per
bid
the
unit.
existing
The
intial
estimate and
Associates
Sungate
million.
budget
"market rates"
$1,000
represented
an
70-80% of
leases allow for such improvements
to
be
(see escalation
This permits the expenditure to be allocated back
building tenants as a capital
actual
the
brought the final pricing to $1.5
amortized over 10-15 years at
to the
Alternatives
expenditure of $800 per window unit.
tenant
clauses).
$1,350,000.
windows, this amounts to approximately
The
anticipated
was
appearance and the addition of
system
1,425
estimate
improvement.
window delivery was 2 months late.
hoped
to
complete installation
144
by
Park
Square
winter
to
minimize
ease
the inconvenience to tenants, lessen heat load and
the
strain
on the antiquated heating system.
As
of
mid-November, 1984 the installation was still underway. Much
of
the
Only
installation took place from inside
repair
the
of the interior finishes directly
building.
around
the
window
units
floor,
with its odd window conditions and the 6th floor
required
work on the
tenant space.
The
the
Arlington Street end, with its windows blocked up
the
inside,
required
installation
removed
The
and
new
supporting
great
procedure.
deviation
from
The existing steel
the
fcame
anchors.
was
then secured
to
the
The entire perimeter of the
caulked and the glazing unit installed.
145
at
from
typical
frame units were
the wall cavity packed with new batt
steel
2nd
insulation.
old
unit
steel
was
Awning
This
Window,
project
inception
all
the
evaluating
simultaneously.
as installed
was
very
thoroughly
considered.
owners, building manager
alternatives
First
on many
From
its
and consultants were
levels
of
criteria
costs seemed to be balanced
against
long term benefits to the building's operation, maintenance,
and architectural detail. The need for ventilation generated
particular
requirements on the window and HVAC system.
architectural
respected,
character
of
the
building
was
The
ultimately
preserving the scale and setback of the original
146
units while
other
several
were
updating
Since
the building technology employed.
projects
involving
Building
the Park Square
still under consideration, the uncertainty was
potential
that
the system be
the
possibility
using
necessitated
for the roof expansion project
The
flexible
enough
to be
used
great.
in
other
ways;
enclosure
system,
compatable components to the lower building.
Another
unknown
at
the
disposition
of
possibility
of
building
in
the
of
an entirely
time
of this
glass
decision
process
reworking of the HVAC control
an addition
147
to the
the
system and the
a total mechanical upgrading of
event of
was
roof.
the
lower
ALTENATIVE WINDOW TYPES
HOPES ARCHITECTURAL WINDOWS
Steel frame, urenthane finish, anwing type operable sash
2 cam locks
butyl glazing tape
silicone sealant
1" double glazing,
PPG Twindow,
PPG Solarban coating
Uc=.49
PPG glazing with Sungate Low-E
film
aluminun panning
$1,350,000 initial
estimate
MODU-LINE
Aluminum
frame
with
operable sash
2 cam locks
butyl glazing tape
integral
thermal
break,
awning
type
thermal break,
awning
type
silicone sealant
no panning
1" double glazing
Uc=.61
$1,145,360 initial
AMS
Aluminum
frame
estimate
with
integral
operable sash
2 cam locks
butyl glazing
silicone
1"
tape
sealant
interior
and
exterior
double glazing
aluminum panning
Uc=.67
THREE RIVERS
Aluminum double hung, most similar
to existing window
1" double glazing
$950,180 initial estimate
SINGLE HUNG UNIT
aluminum frame, single pivot operable unit
most interference with existing interior blinds
1 1/2"thermalized glazing system
Uc=.67
148
In
this first case,
period
by
window
simplified
includes
the
project
a 10%
energy
framing
terms
replacement
energy
energy
to
just
and
terms.
was
used
million
energy
efficient
the
decision-makers,
to explore
in
appropriate
selection,
they
alternatives
expenditure
over
the
time
more
of
may
10 year
The
total
when one
an
not
however,
operating,
income
tax
life-cycle
considers
illustrates
in
the
this
project
in
the
how
far
such
the
an
149
amounts
and
to
explored
initial
in
to
at
the
same
more
architect,
prior
For an
the reduction
the
analysis
subsequently
study period,
the project
expensive
If
process,
have
economic
study illustrates
unit.
rigorously.
$94,500,
as
This
was
does
well
the more
employed
in
It
this case examines
use of
glazing
had
figure
impact the client
it actually happened. A second
without
This
ways.
The first analysis
project
window
requirements,
of the building.
often costly,
analysis
$9
the
credit
study.
project.
In
expenditure as
tax
as
by the architect
made
reaching,
costs,
over
consumption
decisions
This
cash
to this
$796,639.
initial
measure.
applicable
amount
is
the time of this
and
adjustments
costs
at
manufacturers.
present value of
as installed
the client's initial
maintenance
glazing
tax credit on the
taken
include
and
annual
conservation
actually
as
window replacement project, a study
of 10 years is used to match the warranties provided
the
BLCC
the
or
the
final
the
additional
life-cycle
$468,925,
costs,
mostly
in
saved
energy costs. Given the ramifications of
decision
the
and
the magnitude of the dollar value over
architect
and
alternatives.
in
offering
of
PPG
client
and
may
well
evaluated
the
sense.
Other
glazing
more
possible
a
good
materials,
greater energy conservation might have
to the client if he/she had been fully
been
apprised
financial consequences of such an investment.
however,
illustrate
the
potential
a
time,
have
product seems to have been
economic
even
the
does,
The
an
acceptable
the
investigated
systematically
choice
such
This
benefits
of
including such analysis in the architectural design process.
It
requires
mentioned,
provide
the
energy
the
or
decision
architect
to collaborate,
as
previously
with other building experts. Engineers can often
calculate
regain,
the
consumption
potential
maintain,
analysis
savings.
some
level
If
of
necessary
the architect
leadership
is
in
process he/she might use this type of analysis
illustrate
his/her understanding of the entire project
to
to
the
to
and
its consequences.
A third BLCC analysis was
12.5%,
easy
rather than the typical 10%. The program allows
the
conditions
and
exploration
alternative
program
and
be
performed using a discount rate of
of alternative financial
capital
component
schemes.
Employing
this
the architect can quickly evaluate both assumptions
variations. Those which offer some advantage could then
studied
in a more comprehensive manner.
150
The
architect
could
thus
restrict design development to those
which
seem
most promising,
design
rate
process,
of
The
period
truly
but a higher
to
project.
The
future,
for
less
of
decisions.
The
advisements
included
in
outside
the
of
the
the
discount
cost,
tax adjustments.
lenghtened
the
the
of time
with
on
with
"less
be
study
the
be
The
financial
client
are
most
could
the
selection process.
"design"
and
use of
how
the building
several
this
BLCC analysis
if
cash
criteria
and
to
such
decisions
concerns
were
following
table
fall
only
The
he/she
design
in
total
annual
informed
and comparison
151
the
are discussed
architectural
The
money
Often they presently
information
owner.
the
approximately
these
if
of
window
important
make more
client
of
the
While
year.
architect
stream
valuable"
would
capital
view
for
higher,
owner
a
this
inflation.
the building
per
contemplated
expenditure
would
costs
to
of the
normal
realm of
illustrated
the
A
life-cycle
of tax consultants and accountants.
make
affect
case
be realized
repaid
to
due
objectives
could
this
the
be
project
$100,000
presence
total
cost after
benefits
can
would
obligation
and
full
Ultimately,
replacement
and
in
perspective
payments
financed
a lower
annual
used
range
long
periodic
optimizing
20 years. This would allow the client to assume a
investment.
the
suggests
analysis
last
toward
as well as the design itself.
12.5%
$8,200,000,
a method
scenarios
in
architect
asked
for
decisions
is
runs.
the
it
can
a summary
The
more
lengthy
BLCC files
can be found
in
Appendix A.
WINDOW REPLACEMENT PROJECT BLCC SUMMARY
Project as installed:
Initial costs:
$1,605,600
$904,000
Yearly energy costs:
Total Present Value (including operating
$1,468,359
after
annual
total LCC
annual
$9,01,430
and
energy
costs)
20 year study period
10 year study period
$1,070,409
total LCC
9,113,679
tax adjustments:
$796,639
Without SUNGATE
Initial costs:
$4,895,000
$273,.850
$4,218,679
glazing
$1,511,100
Yearly energy costs:
$1,312,208
Present Value:
10 year study period
total LCC
annual
$97719,352
$1,581,780
after tax adjustments:
Total
$857,575
$5,269,425
a
yields
investment therefore
in initial
savings
$94,500
increase in 10 year energy costs, $322,499 greater
$791,423
expenditures
tax
adjustments mostly due to increase energy
for a total
life-cycle
cost increase of $374,425.
12.5% discount rate
Total Present Value:
total
LCC
annual
$8,200,079
$1,481,113
tax adjustments:
after
$4,481,475
$809,452
152
....
-........
-
r--~
Installation
Berkeley Street
-~
of
new window units on the
the
1984.
end, mid-November,
153
llth
floor,
OFFICE RENOVATION AT THE PARK SQUARE BUILDING
In
1980,
Park
by
as the partnership and
purchase agreements for the
Square Building were being finalized, plans had
one
major
investor
employees. A financial
to
renovate
in
would
be both a good investment
Boston, had determined
more
"back-room
for
its
own
investment firm, with a staff of over
1,000
its
space
begun
operation"
the Park
Square
Building
and location for several
departments.
Phase
I
of
this
project included approximately 20,000 square feet on the
floor.
Several
planning
services.
architects
were
The goals of
project
were to provide modern,
quality
space
included
300')
The
adapting
and
space
a
this
renovation
long,
first
budget, in
space
air-conditioned, class
Major
1981, was set at $20
per
"A"
difficulties
narrow configuration
(75'
for
each functional
configurations
and
base
selecting
architect
estimates
development
documents
drawings,
unit,
square foot.
planning
refining
x
systems.
requested by the client included development of
program
a
space
the design
and
materials, colors, furnishings and fixtures.
The
was
and
also
code
responsible
compliance.
process
and
held
was
to
for
firm
The final phase
culminate
specifications,
as
in
well
budget
of
this
construction
as,
on-site
installation.
Several
interviewed for the project, submitting fee
requests
supervision
firms
for
staff of 100.
the
top
interviewed
utilization of the outdated mechanical
initial
Services
for
of
of the
construction and
154
of
9.5
between
12% of the total project
questioned the $20 per
immediately
architect
budget
&
square
suggesting $25-30 per square foot
figure,
One
costs.
as
foot
more
realistic for class "A" space renovation.
Of the various work plans offered by each architectural firm
several
project
emerged.
first
of
space utilization was important.
system
Since
this
many
phases,
of standards and an appropriate design
decisions had
to
the
represented
development
for
objectives
common
been made,
was to
be
Although no
initial
the
concept
absolute
the use of an open office furniture
seriously considered.
Discussion ensued as
the optimal method to utilize the space given structural
bays
of
only 17 feet and the resulting forest of
This
focused
attention on the issues of acoustic
HVAC and lighting requirements.
both
columns.
privacy,
The need for flexibility in
space division and mechanical services also had to
addressed.
A
allowed
days for
180
schedule was developed by the
the entire project,
client
including
be
that
design
and construction.
Ultimately,
(PDI)
sole
of
with
was
the
selected by the client.
criterion,
the
the
firm of Professional
Design
Incorporated
While cost was not
the
PDI's initial fee submission was the lowest
three main competitors. Several
managers
decision process cited the personalities
involved
of
the
architects as very influential. The "chemistry" seemed right
155
with
respect to
project
While
for the corporation.
enough
to
individual
The
new
process
owners
of
Phase
The project
factor.
magnitude,
manager
decision, the client was
and not the entire
of the Park
from PDI
knowledgable
know that they would be buying the
that
the
a project of this
knew they would demand.
important to the
of
size was also a
were small enough to provide the special attention the
client
was
PDI's
enough to handle
large
they
PDI and those who would be coordinating the
services
firm.
Square Building
in
were
updating a tenant standards program at the
I renovation.
Due
to the
transitional nature
no pressure was exerted on this project
to
any prescribed specifications.
to
the client and made an allowance
for
fit-up expenditures.
identified
as
hardware;
and
conversations
controls;
cycles;
the
the
ceiling
centered
of
$8.60 per
to adhere
square foot
doors,
system.
frames
Other
radiator
Jung-Brannen
partitioning;
Associates
enclosures
to refine the building
left
specify
Flexibility,
materials
durability
window
were employed by the
Associates
to
and
for
standards,
the
and
air
treatments.
Park
while
Square
PDI
client's
and costs all appear to have
criteria for the design decisions subsequently made.
156
and
design
the base building air-conditioning and fresh
flooring;
the
building components were
system;
around
of
The Partnership deferred
Critical
lighting
the
time
building standards and the client's partnership in
building,
of
was
space.
been
The
client's decision to move into the
utilizing
systems
previous
furniture
was a
Park Square Building
great
departure
The long and narrow shape of the Park
experience.
Square Building necessitated a seemingly radical
space
planning.
antiquated
expenditure
recently
The
HVAC
more
accepted
alternative
client,
to
limited
systems
much
utility
made the
furniture
building
Architects
partitioning
partitioning
Such
tax
not available for leasehold
fixed
office
to
attached
many
work
need to
of
more
With
visual
the
ceiling,
lights
for
acoustic privacy can
environment
provides
converstaions
only
a viable
several
investment
expenditures
diffusers
to
act
a
for
be
can serve
systems do not
necessarily
in the case
Several
levels
of
by different height panels.
successively higher panel,
sound absorbtion
addition
air
wall offices.
specified for
proper
and
are possible, provided
and
have
corporate
offer
relocated with every rearrangement as
each
this
construction. Because they do not need to
traditional fixed
enclosure
the
systems qualify
stations. Mechanical
be
For
and
of
as
systems
advantages.
credits
distribution
fixed offices.
"portable"
approach to
justification
reasonable.
systems
furniture
from
a greater
be obtained.
degree
of
Panels can be
requirements. The open office
mix
of
as background
activity
sound
noises
and
masking.
With
acoustical treatment of the ceilings and floors,
in
to the panels themselves, is often preferrable
to
the relative silence of more traditional fixed office plans.
157
In
this
latter
noticeable
circumstance
and
distinct,
conversations
resulting
in
can
less
be
more
perceived
acoustical privacy.
Each
work
station
can
be
fitted
to
meet
the
precise
requirements of its occupant, while maintaining a "standard"
look.
Experience
reduction
at
the
Park
Square
Building
has
in square footage requirements per
shown
employee
over
other
methods of space division this company has used.
panel
partioning system adds to the employee perception
a
having
"territory"
flexibility,
and
reassembled
as
functional
which
organization,
his/her
recurringly
office
in
The
of
for
disassembled
needs change.
For
restructures
this
their
relatively
keep pace with user requirements.
electrical, communication and data cabling
the
As
own.
office configuration must also be
easily rearranged to
of
is
systems furniture can be quickly
corporation,
The
that
a
the
1980's
are
requirements
staggering.
Systems
furniture panels are available with "raceway" constructions,
integrated
with
can
conduits
for feeding individual
the necessary cables.
be
Compared
method
initial
serviced
with
requires
stations
Each grouping of work
stations
from a single
base
in-feed
"hard-wiring" each station or
connection.
office,
less technical installation and a
investment
Reconfiguration
work
is
in
the
furniture
system
more efficient in that the
158
this
greater
itself.
electrician
need
only
disconnect
group of linked
and reconnect the in-feed
for
each
stations.
Lighting can also be made more flexible by employing systems
furniture.
While
fixed,
lights
task
needs.
the
Ambient
general overhead
can be installed
for
building,
a
variety
but
incentive
to
is
meet
particular
Most systems
fixtures
attached
not
of
the furniture system. A
in
utilizing
service.
through
flexibility
and
remain
electrical
provided
installations,
requirements
to
can
(indirect) lighting can be added,
partition raceways for
allow
lighting
the
to
major
reduced
and
the
economic
electrical
accommodate
time
to
labor
changing
saved
in
rearrangements over more traditional space defining methods.
While
iinvestment
this
corporation
tax credits
is
were not
now
used
investigating
in
this
more
project,
rigorously
employing this
economic advantage on future purchases.
Following
renovation,
the
installation of systems furniture
(Westinghouse
Architectural
approximately
100 employees from a downtown office building
to
the
Park
developed.
Square
This
Building,
plan,
Systems)
and.the
a new master
in early
relocation
occupancy
1982,
called
plan was
for
renovation of 82,000 square feet, the entire fifth and
floors,
known as the Park Square
II project.
of
the
sixth
The space was
to
become available for renovation, due to tenant turnover,
in
July of 1982.
The occupancy plan called
159
for
relocation
of
personnel
September,
by
the
by
the
to quickly relocate five major groups from
the
demolition
client
was
at
only 60 days
for
actual
more
leaving
and
reconstruction. The
intent
expensive downtown location and to sublease
a profit
for
occupying
employed,
square
foot
entire
project
successive
was
due
A method of phased moves
sections of the
increments
moves.
late
weeks
the company.
as
total
the space
occupied
project
was
the
in
in
week
relocation
obtaining
was
20,000
completed.
over a six
Ultimately
to difficulty
that space
The
period
was
carpet
of
several
tiles
from
on the
llth
the manufacturer.
An
overall design concept
Phase
floor,
built
allows
all
was employed.
four
this
for the
sides, to
ways
All fixed
privacy
so
do
No
at
offices are
are
reaches
used
throughout
relocation
window offices
constructed
studs.
lobby,
light
of
HVAC
along
the
require
floors.
either the
diffusers.
corridors
and
2' x 2'
been
wallboard
This
nearer
built.
the
Fixed
over
allows
3
system
for
1/2"
is
easy
fluorescent light fixtures
Accent lighting is
in private offices.
160
stations.
"closed-door"
position
have
of gypsum
on
as many work areas as
A 2' x 2' lay-in, acoustic ceiling
both
windows
for open office work
the expense of a
exterior
metal
the
be used
Those functions that do
windows.
offices
perimeter space,
the natural
possible.
or
that used
in the center bay running the length of the building.
This
In
I project
similar to
used
in
Both
valance
the
fluorescent
and
Plants
planters have been included
and
"soften"
recessed
the space.
incandescent fixtures
are
used.
intermittently
to
Carpet tiles were selected for all but
the lobby and a few private offices.
The reasoning for this
was to permit maximum possible flexibility to replace carpet
as
necessary
damage.
questionable
All
of
marble
wear,
reconfiguration
was specified
wallcovering
of all the
wallcovering
for
materials
that defies
this vinyl.
it
shows
In the
two
main
seems
most
A "flocked"
maintenance.
years since installation
signs of wear, stains and damage.
wallcovering
or
repairable,
nature might have proved a better
paint
yards
of
costs
of approximately
doors
and
and touched
To
the
as an accent.
finish decisions made.
was specified
and
corridors, offices and interior partitions were covered
with
of
possible
lobby for durability and
selecion
vinyl
to
Travertine
elevator
The
due
this
glass
flocked vinyl are about to
$10,000.
frames are all
The
Some
more
other
easily
choice.
be replaced
600
at
a
exterior window walls,
painted, and have been
repainted
up as needed.
facilitate
design
of a more durable, or
much
movement
between
the two
floors,
a
major
feature was introduced into the elevator lobbies.
A
and steel stair connecting the fifth and sixth floors
was constructed, along with an atrium just beyond the stair,
facing
St.
James
Avenue.
Instead of the
161
typical
lay-in
ceiling, a smooth plaster ceiling with a sculpted light cove
The travertine marble and broadloom
was
installed.
add
to the richness of this space.
Square
Building,
metalwork,
brass
has been
As throughout the
used
for
carpet
Park
miscellaneous
in this case including trim on the stair and its
railings.
Atrium Stair greets
5th and 6th floor employees and visitors
162
Eleventh
Floor
g-J
L~J
Sixth Floor
Fifth Floor
Fifth,
Sixth and
Eleventh
Floor
Plans
Quite
late
with
respect
in the
approximately
or
how
90%
the
to
only
furniture
not
reduction
was
yet
ill-fated.
which
The
financial
are
representative
by
renovation
exhibit
the
"state-of-the-art"
Building
for
represent
being
a
the
original
the
same
this
desired
cost
this
amount
Park
quality
returned
Square
a
replacing
II
the
asset is
means
term
with
began
the
Park
projects
This
and
extent of
Simultaneous
in
project
long
by
recovered
the
the
on
Square
together
expenditure
over the remaining life of the
164
to
buildings
and
These
investment.
cost of this capital
cost
a premium cost.
facility
represents
the
expenditure
design and construction
client.
mad
save
major
the
a
construction
hindsight
expectation.
$4.7 million
Depreciation
last
Envisioned as
computer
depreciated
lease.
was
taken out of
investments in
building,
renovation,
the
was
In
at
company.
this
of
of the
of other
this
to
office
it
subsequent two years
been eliminated,
commitment
a
in the
characteristics
made
of
It is not clear why
only that
this
Many times
that
had
the
installed.
company was spent
general
Most of
order,
the
space
one-third
realized.
was
remaining
made
reduction
remove whatever could be to
Ultimately
systems
A
was
and finish materials already en route, a
ensued
reduction
budget.
by the parent corporation. With
complete
amount.
total
was to be accomplished,
made
scramble
to
10% was to be recaptured.
this
decision
process a management decision
is
existing
which
through
the
a
series
annual deductions.
would be carried
cost
the
of
remaining
years
on
difficult
expenditures
in
the
the
lease
to
financially
building.
a
shorter
to
required
their
is
it
the
total
is
This
lease
per
year
the
Park Square
including
II
over
project,
possibly peculiar
the economic
the actual
costs
over a 20 year period.
seemingly
depreciated.
useful
life
life
is
of
is
leasehold
depreciated
expenditures
is
for
over
While
to this
inflate
a
longer
percentage
or
its
replaced
economic
simply because
it
of
A
difficulty
thus
prolonged,
the
component.
the very opposite condition from when a building
corporation,
capital
as the
assets,
Each year only a very small
when
beyond
renovated
exceeded
capital
expenditure
arises
possibly
Fixed
long time,
carrying
time.
potentially
This
period
Beyond
does represent a method to
by
of
outlay
are similarly
Prior to
life.
an artifically
profits
for.
had been depreciated
company,
large
expenditures must be amortized
expenditures.
these
equipment,
useful
period
the
As
becomes
justify
Because
Greater cash
accounted
and
furniture
this
it
such as this renovation project, other
be
also
furniture
time.
repay
improvements,
must
diminish,
recovery becomes successively shorter
nears expiration, the capital
over
the project
over a period of only eight years.
increasingly
economic
In 1982 that meant
has
is
physically
life.
like
many others, fully
allocates
costs back to the user groups. Leasehold and
165
all
fixed
asset
expenditures
occupying
cost
that
are
charged
space, at a rate
to the company. This
customers,
through
corporations
leasehold
must
improvements
production.
their
product
and
the
it
on
each
representing
product
and
Ultimately,
to
division
that
year's
expenditure is in turn charged to
the
view
back
cost
fixed
of
this
their
assets
as
has a real
effect
ability
to
their
In
price.
way
buildings,
a
on
factor
the
of
cost of
compete
in
the
marketplace.
When
questioned
about
the
criteria
decisions
were made,
one corporate
One
the
for
was
design,
user
detail,
group?
occupant
a
square
budget.
the design to
The
Envisioned
percentage.
conceptual
backroom
second
in the
operation
level
expectations
buildings
The final
project
Originally this
with
its
As those groups were
the
of
only two.
the
proposed
of
those
surfaced
as
finish
units.
the
range of
caime
intended
$25-28
the
per
this criteria by
in
is the
renovation
aesthetics
at
$36.03
result
was
matched
identified for the
was
the
test was against
missed
One explanation for this
change.
function.
space,
The efficiency of
foot.
design
or layout meet the functional needs of
foot, the project eventually
large
which
executive cited
reasonableness"; did
was most critical.
estimated
square
"test
upon
elevated
Equity between
an important concern
to
the
late
to
to
per
of
a
be
a
its
eventual
meet
the
various
in
the
process of programming and design. Two managers had parallel
166
control
and
responsibility for this project.
management
came
while
aesthetic
the
Facilities
to
The
from the Corporate Real Estate
financial
executive,
and programming review lay
Manager. This arrangement is strikingly
that of the subdivision of responsibility and
with
the
similar
liability
between the architect and his/her consultants.
Operational office environment of the 6th floor, a product
of the Park Square II project, has been totally reconfigured
to meet the user group's functional needs
BLCC analysis focuses attention on several points. The study
167
period
of
8
years
anticipated
by
the
depreciated
over the remaining life of the existing
The
capital
the
systems
the
analyses
project
be
can
lease.
finish
materials
this
of
the
the
in
the
furniture
first
ITC adjustments
systems
and
project.
The
Operating
and
a tax savings
project,
order
LCC analysis
and
all
An
LCC
analysis
that
were
or used
not
$129,025 or
This savings
used
run
to offset
might
additional
at
These
an annual
have
the cost
to upgrade
LCC
taken
investment.
of
in
(This
capital
$24,185.
of
The
in Appendix A.)
initial
amount to
value
reinvested
(ITC) .
as developed.
found
includes
time
the
fully
leasehold
to outfit
tax credits
since occupancy.
the
adjustments
in
purchased
be
will
between
construction,
investment
years
two
present
divided
span
costs are based on actual building experience
represents
the
project
life
furniture is differentiated to allow calculation of
potential
(PSBIIA)
economic
wallcoverings) , mechanical
furniture
maintenance
the
and
the
The
are
including
ceilings
systems
client.
costs
expenditures;
(carpet,
represents
been
reduction
areas
or materials.
Comparative
with
the potential
appropriate
The
LCC analysis contrasts
net
the project
advantages offered
savings
of $97,500 in
realized
by the application of
knowledge of tax law and construction
present
roughly 4% of the total project costs.
67%
as
value
This is
methods.
represents
approximately
of the entire project contingency budget authorized
168
for
this
project.
The architect might have used this amount
in
more creative ways or effectively returned it to' the client,
if
the
financial ramifications of the project
design
and
components had been more fully considered.
----
COMPARATIVE LCC ANALYSIS - PARK SQUARE WINDOWS AND WITHOUT SUNGATE
----------------------------------------------------------------------STUDY PERIOD:
10 YEARS
CONSTRUCTION PERIOD:
0 YEAR(S)
STARTING DATE: 1984
BASE DATE FOR DISCOUNTING: 1984
DISCOUNT RATE: 10.0% (NOMINAL)
SALES TAX RATE:
5.0%
TAX STATUS: FOR PROFIT
FED TAX RATE: 46.0%
STATE TAX RATE:
0.0%
PROPERTY TAX RATE:
3.3%
CAPITAL GAINS RATE: 28.0%
BASE CASE LCC FILE: WINDOWSLCC
ALTERNATIVE LCC FILE: WINDlLCC
PRESENT-VALUE COSTS:
BASE CASE:
PARK SQUARE
CASH REQUIREMENTS AS OF OCCUPANCY
$1,605,600
PRIN. AND INT. PAYMENTS AFTER OCCUP.
$0
ANNUAL & NON-AN. RECURRING COSTS
$145,300
PROPERTY TAXES
$a
ENERGY EXPENDITURES
$7,271,530
INCOME TAX ADJUSTMENTS BEFORE OCCUP.
$0
INCOME TAX ADJUSTMENTS DURING OCCUP. -$4,127,430
RESALE VALUE AT END OF STUDY (NET)
$0
TOTAL P.V. LIFE-CYCLE COST
$4,895,000
ALTERNATIVE:
ALTERNATIVE
WITHOUT SUNGA - BASE CASE
$1,511,100
$0
$165,897
$0
$8,062,953
$0
-$4,459,404
$0
-$94,500
$0
S20,597
$0
$791,423
$0
-$331,974
So
$5,280,546
$385,546
REDUCTION IN FUTURE COSTS DUE TO ALTERNATIVE (SAVINGS) =
LESS: ADDITIONAL NET INITIAL INVESTMENT REQUIRED BY ALTERNATIVE*=
-$480,046
$94,500
NET SAVINGS FROM ALTERNATIVE RELATIVE TO BASE CASE =
-$385,546
169
ROOF EXPANSION PROJECT
In
the
late
of
summer
Partnership met.
Several
1983
the
Park
Building
Square
items were discussed
including
the
possibility of adding two or three floors to the Park Square
Building.
two
Jung-Brannen presented
floors of
the
a preliminary scheme
sloping glass, similar
Meridien Hotel.
The
to their
partners were enthusiastic
possibilties
presented
increase
rentable area, hence revenue,
it
the
by this project.
would generate new economic
purchased
2
on
estimates
and
established
the
skyline.
a
"critical
before
ended
of
path"
in the aging
the
as well
it
to
that
project
Long
its
cost
be
term
as existing problems with the
antiquated windows were discussed.
with
the
structure
suggested
for
for
the building,
and potentially add
It was
at
Not only could
a final decision was made.
occupancy projections,
building's
life
1/2 years earlier
visibility
renovation
of
one partner's desire to meet on
The
meeting
a more
regular
basis.
The two
the
floor addition was studied
existing
building's
would
over
need
the
roof
cooling
and
mechanical
terms of
The possibility
roof, with its
its
systems.
towers sit on the existing
to be relocated.
existing
in
many
impact on
Since
roof,
of
the
they
building
penetrations
for
mechanical supports and recent history of small leaks at the
penthouses,
was an attractive chance
170
to start anew.
A cost
of
$37,000 was estimated for the relocation of the existing
chilled
water
computer
piping,
facility
cooling
and
the
dry coolers
of
new structural supports
towers that would need to be moved.
capacity
would
one
also be required to handle
tenant's
for
those
New electrical
the
mechanical
system.
Existing
Cooling
Tower,
note
condition
of
roof
and
penthouse.
Two schemes were discussed, based on the assumption that new
windows
the
would
be installed prior to this project
heating and cooling load of the present eleven
171
lowering
floors.
The
first scheme replaced the two existing steam absorption
chillers
with
located
be
either on the new roof or in a new roof
Above
room.
that,
new and
installed.
including
the
new electric-driven centrifugal ones, to
the
existing
savings
investment
in
chillers
two new floors.
the
of
the
transitional
initial
quickly
moment
gave
was
spring
this
with
with
and fall
run
at
for
left
than
initial
the existing
and provided
loads of the
lower
$400,000.
at
in
a
trapezoidal
form
Composed
this scenario
of
the
bulk of the
either
plan
to the
rentable area.
Weidlinger
were
retained
to
introduced a
and
the
capital
additional
costs
floor
would be
would add
The next major
concern
Associates;
Consulting
conduct a structural
carry
Engineers,
feasibility
study.
building was thought to be sturdy enough
testing.
a
form running the length of the building.
that
expansion,
and
floors.
the existing building structural system to
the
50%
a
an
towers
way to a three floor design.
new load.
specific
building,
carry the new floors
of two floors
this
Although
cost,
cooling
to
to
scheme
system was placed
scheme
believed
considerably
the
the
frame and totally glazed,
incurred
was
The second
replaced
vaguely cylindrical
It
was calculated
new centrifugal chiller
for
towers would also
Greatly more efficient
current operating
place,
a
The
it
$700,000.
for
The price
cooling
mechanical
This system would carry the whole
system,
over
smaller
be
seventeen
columns
were
identified
Interestingly, one contractor
172
for
for
familiar
the
Park
structure
was.
over
600 foot length, there were no
with
its
Square Building
Despite
its
commented
total
on how sturdy
lack of expansion
major
the
joints
structural
cracks, in his experience.
While it is assumed a monolithic
concrete
as
structure
expansion
and
contraction
deterioration),
its
structural
has
faces
of
this
been
lack
the
(witness
The differential
the
three
recent
of damage
review of
undergo
the
exposed
sides
level
retained
expansion of the
and
the
brick of
suggest a problem, yet none
cleaning
of
to the exterior
three
great
parapet
basic building has seemingly
The
found.
would
cycles
shaded northern facade would
to the
A
the
integrity.
limestone
the
such
the
facades
attests
walls.
scheme advised
that
the
second
plan was more aerodynamically shaped and worked well to
the
entire
testing
at
stable.
Wind
variation was discussed.
One
increasing
floors.
this
elevator
additional
Weidlinger was directed
The
stage
the bay spacing
and usable area of
placement of elevators was also
of
shafts,
design
only
one
development.
of which
is
lobby.
These could be renovated to provide direct
and
were
identified
the new top floors.
on the east
existing
operational
use,
end
the
discussed
Three
service
to
tunnel
study the possibility of reducing the number of columns,
thereby
new
structurally
was authorized at a cost of $10,000.
structural
to
building
keep
of the
for
tenant
service
Jung-Brannen was asked- to study this
the possibility of adding limited elevator service from
173
the
present
Aside
eleventh
floor to
from structural
to
stories
questions.
How
"disrupting
can
the
additional
Building
first
asked.
Bolyston
attempt
to
coherence of a district united by
similar
the
the
important a year after
to
in
stories,
area,
have
proposed
New
Building
on
made
no
of
the
England
Life
Berkeley Street will
with
at its projected
it
two
form, height or materials
the
Square
the
the north,
the site directly across
Park
additional
less
(1)
new buildings
block
Secondly,
development on
dwarf
one
respect
district.
important
without
Several
Street,
two
three
undertaken
question seems somewhat
was
posed
such a project be
building height, materials and style?"
This
floors.
considerations, the addition of
Park Square
the
the
or
without
three
27 stories. The
more
pertinent
question lies in whether a complimentary form can
be
in
the
found
old
portion
Jung-Brannen
of
the
regard
makes
various
of the
scenarios
management
cost
telling
labelled
with
(1)
from
building.
The
no mention of the
building
is
to the new addition
document
cited
fact
overall
period,
that
estimate
latest proposal
the "French Classical"
to
to
has
Englund.
from an unpublished
paper
the
of
been
harmonize
the existing building form and derivation. Aside
John H.
from
ramifications
discussed. The
The
relationship
financial
could provide no
in itself.
in
on the
from
Park
Square
Building.
internal
document
for
Jung-Brannen
Associates; Architects and Planners, Boston, Mass.,
1983.
174
those
and
historical justifications, the
the
present
limestone
is thought
disruptive
scheme
projecting
cornice would be added
new
to
was
minimized with the
addition
in bulk, while making
At
time
being
for
removed
moving
this
the
should
project
quickly on the
further
beginnings
and
the
scenario
The
parapet
was
partners
the
was
The
need
urged
on by
once
again
space"
While the building was/is not
it does represent a style
advocated following
a
line
de-emphasize
development
importance,
creating
the
decorative
and presents a formidable presence due
Jung-Brannen
new
roof
their desire to offer "first-class office
time
size.
least
it distinctive in character.
expansion
Park Square Building.
its
the original
at a rate of twenty feet per day.
of great architectural
of
form
demolition work in progress.
expressed
at
in-curving
this
the
removal of the old
The
of
be
to visually separate
restore
parapet.
the
to
the integrity of the district. A
from the old. This would
that
juxtaposition of glass
"modern"
in
its
to
its
conceptual
statement
of
great
distinction.
A
155
foot height
dimension,
to
also
the
property
raised.
writing.
by
as did
the
limitation
constrained
the existing building
lines.
the
project
in
one
itself, constructed
The question of fire protection was
This question remains
unresolved
at
this
The entire design development process was tempered
zoning
and code
requirements, in addition
175
to
the
of
politics
would
Commission,
the
the
include
Association.
neighborhood.
by the
variances
scheme
final
Back
and
a
Architectural
Bay
the Back Bay Business Association
demonstrated
visibly
to
also
Neighborhood
Bay
to approve the
Redevelopment
Boston
the BRA's attitudes ensued.
discussion of
Review
The
project.
need
would
Authority
a
such
The
Park Square
the
and
parapet
removal
Associates'
The entire project
City Board of Appeals.
the
Back
has
activities
is contingent upon
Various
scenarios
for seeking such approvals have been discussed.
The
latest
scheme, three
stories, has the
estimates as prepared by Jung-Brannen
Floor
Gross Area
Rentable
following
Associates:
Usable
12
44,165
41,820
32,380
13
42,815
41,465
32,430
14
35,505
34,555
28,865
122,485
117,840
93,675
96.2%
76.5%
Total
Percentage of Gross Area
176
area
'977
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addition
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44
TW
ii
of .
co
N)
t
~I
Model
of the Park Square
Building with addition
5.
/
/
/
/
entire
development
the
accepts
one
Over
foot.
1986
architect's estimate of
$120
debt
and
costs
cash
(2),
the
(2)
Estimate
quarterly,
were
space
would
after
taxes,
or
expenses,
$825,000 per
operating
interest
year,
Standard
at
for
income
roughly
divided
maintenance
and
payments).
$30/square
The
If
thus be $2,271,000.
leased
of operation,
the
foot per
be $3,535,200.
the net
1986,
operating
revenue would
and maintenance
costs.
after
income
tax
extracted from Spaulding & Slye
Boston
Area
life-cycle
total
Report.
would
income generated
first year
for
(financing
per year,
rentable
be $1,264,000,
The
service
outlay,
resultant
For
deductions
between
equally
year
at
be projected
adjustments yield $1,270,425 per year,
tax
if
sqaure
per
Operating
million.
$2.7
yearly obligation of $3.5 million.
total
net
can
energy,
including
a
of
(year 1),
to $16.7 million,
amounts
financing
total
cost
annual
an
cost
investment, in discounted
the life-cycle of that
value,
present
the
interest,
13%
in
construction amounts to $15,729,000
for
Park
yields the following results. The total
analysis
LCC
has
abatements,
15 years at
over a period of
expenditure
as
credits or
owners will finance the
the
that
and
no investment tax
Building,
Square
an
the
investments in
with other recent
case
the
been
such
straight line depreciation,
Assuming
undertaking.
of
ramifications
run
long
the
illustrate
to
project
roof expansion
the
to
was applied
analysis
BLCC
Spaulding
(Boston,
project
costs
& Slye Brokerage
Mass.
October
183
Operations,
1984).
published
than its
greater
is
project
adjusted
this
by
The overall tax advantage offered
value.
present
annual
in
$588,752
or
$3,617,000
be
would
adjustments
financial
a
from
from
this
simple analysis that,
standpoint,
this
project is an attractive opportunity
clear
the
adjustments
meeting
zoning
the architect
The
is
clear
long
BLCC program allows
for
total
of the
its
for
client
term costs, and
exploration
design
The overall
the
by
evaluated
being
initial and
aesthetics,
while
It behooves
issues.
concerned with these
to understand them as well.
is
proposal
area
building code requirements, it
and
is quite
the client
rentable
increase the
to
for
undergone
investors. As the design process has already
several
is
It
life-cycle costs.
benefits.
two
initial,
story scheme. A comparative analysis explores its life-cycle
costs
in relation
the
value
life-cycle
the
cost it
story scheme discussed above.
would
The additonal
revenue.
generate
negative
savings
alternative,
to
present
considerably
for the extra
in
year
floor would
rent,
additional
period.
value of that
investment ratio
over
$1.2 million
is the
result of
than the base case.
and owner
would most likely
From this analysis
continue
The
the
the
development
of the three story scenario, undaunted by the higher
184
or
being
in this case the three story expansion,
expensive
architect
amount per
discounted
in
$7,630,000
that
if
investment
present
total
generate
also
10 year study period required
likely
more
three
two story project offers a lower
While
less
to the
initial
cost
estimate.
One
design exploration might
include
the
possibility of increasing the rentable floor area, or number
of
floors
the expansion project while
of
the
respecting
height and bulk limitations of the site.
Another
BLCC
increasing
period,
analysis
operating,
of
degree
the
and
analysis
of 7.7% in
also
accurate
assumptions
the
with
Given
for the owner
and
the
financing costs
are
lower
analysis
of
value
In
period.
the owner
effect
longer
over
a considerably
less
for this
30 year
of
ownership
might
at
the
a
recent
It
if
profit
become
increasingly
charcteristics
lengthened.
occupancy,
of
For
period.
The
actually be more
a
to
the
development
as
project
to be a very profitable
term
Recurring
the
investment.
also
is
for
profitable
total
For
the
costs
costs
horizon
time
the total building
185
extended
a shorter
that
the
total
same obligation
the
contemplating
client
of
this
over
criteria.
important
The
tax advantage
suggesting
period,
more
fact yield
architect.
spreading
is
is a major
client,
prove
The
owner.
to escalate
illustrate how shorter periods may in
annual
become
this may represent an unreasonable expectation.
trends,
does
costs
increases
analysis.
this
longer
the
Energy costs are projected
rate
this
building
with
associated
life-cycle
Over
energy
the
of
consequences
30 years.
to
important
uncertainty
period.
constant
to
maintenance
more
for
required
study
study period
the
substantially
investigates
is
long
term
design
may
a
the
architect
who
that
can
illustrate an understanding for such
client,
this
offers an opportunity to
concerns
push
project
design development into new frontiers.
COMPARATIVE LCC ANALYSIS -
2 FLOOR EXPANSION AND 3 FLOOR EXPANSION
STUDY PERIOD:
10 YEARS
CONSTRUCTION PERIOD:
1 YEAR(S)
STARTING DATE: 1985
BASE DATE FOR DISCOUNTING: 1985
DISCOUNT RATE: 10.0% (NOMINAL,)
SALES TAX RATE:
5.0%
TAX STATUS: FOR PROFIT
FED TAX RATE: 46.0%
STATE TAX RATE:
0.0%
PROPERTY TAX RATE:
3.3%
CAPITAL GAINS RATE: 28.0%
BASE CASE LCC FILE: RE2LCC
ALTERNATIVE LCC FILE: RE3LCC
PRESENT-VALUE COSTS:
BASE CASE:
ALTERNATIVE:
ALTERNATIVE
2 FLOOR EXPAN
3 FLOOR EXPAN - BASE CASE
CASH REQUIREMENTS AS OF OCCUPANCY
$101,349
PRIN. AND INT. PAYMENTS AFTER OCCUP. $11,174,920
ANNUAL & NON-AN. RECURRING COSTS
$1,551,274
PROPERTY TAXES
$818,718
ENERGY EXPENDITURES
$1,010,458
INCOME TAX ADJUSTMENTS BEFORE OCCUP.
$0
INCOME TAX ADJUSTMENTS DURING OCCUP. -$5,218,596
RESALE VALUE AT END OF STUDY (NET)
-$7,024,496
TOTAL P.V. LIFE-CYCLE COST
$2,413,626
$151,406
$16,694,240
$2,317,171
$1,223,085
$1,531,845
$0
-$7,806,211
-$10,493,910
$50,057
$5,519,320
$765,897
$404,367
$521,387
$0
-$2,587,615
-$3,469,414
$3,617,623
$1,203,997
REDUCTION IN FUTURE COSTS DUE TO ALTERNATIVE (SAVINGS) = -$1,153,940
LESS: ADDITIONAL NET INITIAL INVESTMENT REQUIRED BY ALTERNATIVE*=
-$50,057
NET SAVINGS FROM ALTERNATIVE RELATIVE TO BASE CASE = -$1,203,997
SAVINGS-TO-INVESTMENT RATIO =
186
to
-23.05
CONCLUSIONS
187
CONCLUSIONS
In examining architectural design and decision-making
their
a
visible
image
for the company.
design should be dealt with
There
architect.
objectives and
is,
design.
of discussion
the
agenda
another
however,
considering
By
aesthetics.
the
and
economic
beyond
financial
ramifications of design decisions this thesis
this other
has exposed
This
in business terms.
"creative tension" between themselves and
by
fostered
and
buildings
As such,
corporate decision-makers seek the level
Many
and cast
importance of architectural
to diminish the
not
instrumental
business, in that they support production
to
their
recurrently
have
Corporations view their buildings as
surfaced.
is
issues
several
perspective
corporate
from a
agenda.
The case studies have been used to test the models presented
the
in
nature
interrelated
decisions
or
can,
sections
first
has
of
this
of
take place
concerns. As exhibited
scope and
in
and
Few architectural
isolation from
in the office
the
Repeatedly,
financial
economic,
become apparent.
should,
text.
design
decisions
these
other
renovation case, budget
level of detail
in a project, but
affects
the
do
client's objectives for the use and flexibility
the
the
costs
resultant
of
buildings
space. Corporations also consider
constructing,
maintaining
and
that
operating
ultimately affect the price they must charge
188
so
of
the
their
for
out
importance
the
term
costs,
to
consequence
of
benefit
four times that amount.
exceed
equal
or
study
period.
year
In several
of the
Park
financing
expenditures
the
The
investment
initial
yields
is
the
ramifications
in light
in
of the
roof expansion.
Similarly,
the
are
buildings
proposed
life-cycle
tax
costs.
incentives
financial
quite great
roof
for
expansion , project
adjustments
Investment
construction
applicability,
for
corporations.
investment
The analysis
illustrates
that are larger than
tax credits
The architect and the owner should
various
and
system, which
antiquated HVAC
under consideration for replacement
potential
life-cycle
year
ten.
component
of
interrelated nature
selection on the
this
the
during
decisions can also be witnessed in
design
the
10
a superior glazing material
a
an
of
expenditure
additional
building examples energy and
Square
turn
An
of
character
life-cycle
overall
decision.
for
how
in this case energy costs, can be of great
the
architectural
$100,000
of
replacement project provides an example
window
operating
of
long
of including recurring and
in the design decision process.
costs
The
it does point
this has not been an explicit factor,
studies
Building
in the Park Square
services or goods. While
their
are also
the
in
of
total
net
important.
include discussion of how
and component selections
affect
the
and hence financial advantages, of a project
189
design.
For the owner
provide
a project
redistribute
to obtain
budget
costs
owner.
expected life-span and
The
considered
the
and
in
their
Understanding
project
the
can
architect
of
the
term benefits
building,
are most
a
investment
Often, as
the
has
several
emerged
economic
conception
their
of the
in the Park
the
design
the
task with
which
from
perspective
design
costs
begins
the design
into
initial
economically attractive
from
this
passage
is
research
buildings.
models for
far
of time and
in
equity
offer.
or a
greater
he/she
is
the
which
to
introduce
"equation".
investment
project
to
In
will
the
revenues.
that
there
Each includes
the owner's
are
some
objectives
investment. Some corporations build great works of
architecture
command.
components
the
a
considering both life-cycle costs and
owner,
should
buildings
to
architect
the
reinvestment
in
in
the
for
client's time horizon for a building
and
more
other
interested
expansion case a larger
roof
impacts
replacement cycle
desire periodic
architectural
views
generate
for
iany
Lengthening
involved.
What
owners
lead
understanding
the
to
their
appreciation
"value"
an expenditure in buildings
owner's financial objectives.
buildings.
long
of
relation
Building,
Square
economic
the greatest
the client's investment. Depreciation also
life-cycle
be
appreciable
For the architect this offers a method by which to
benefits.
for
they can
For
for
the
these
image
companies
190
and
the
visual
cost
attention
of
design
they
is
a
consortium
of
constructed
the Park
investors
originally
a
create
Still
relatively "safe,"
others
Initial
for
after
that
or no
little
investments
Building may have
durability
are
Components
"system"
costs
total
on
life-spans,
its
quick
replaced
continues
owners
and
exhaustive.
It
conception
solely
necessary
fashion
on
of
the
and
ownership,
the
can
be
Square
Park
perceive
and
are
of
to
Decisions
are
flexibility.
functional
and
and upgraded
for
clients
useful
benefits,
expected
as long as the
whole
function well and meet the needs
is
This description
users.
does
and
assets.
however
give
the
of
no
means
architect
some
by
the various perspectives clients assume. Many
investments
do view their buildings as a part of the capital
these
profit.
category.
treated much like other capital
based
and
investment.
company, or are a product in themselves,
that
build
a factor of production. They house the business
buildings as
thus
to
suggests that owners, to some degree,
model
Each
to
made
owners
this
into
fallen
is
expenditure, the building
Previous
profit.
and
producing
a brief period of
supplimental
a
are
envisioned
structure around
buildings as a means
capital
expectation
sold
see
income
the
the goal
Square Building,
largest, most modern or automated
the
of
who
like
others,
For
expense.
marketing
considered
the pursuit
decisions
corporate
of their
are
made in
from the investor seeking
191
For
objectives.
quite
a
different
only quick turnaround
and
profit.
For
all
simultaneous,
these owners, buildings have several
interrelated
lives.
tied
aesthetic characteristics, which are
to
the
The physical,
sheltering
connected
to the building's economic life.
an
building can come in the
older
In
refinancing.
in
through
simply
this
Park Square Building
the case of the
last
method has been most influencial
into
a very sturdy, yet seemingly undistinguished building.
reinvestment
Periodic
throughout
the building
perceive
works
Taking
can
and
system.
that
the
outside
total
one.
in
into
seem to
Many architects
and
of
and
investors
of buildings
the
"completed"
the
financial,
their
product.
users,
to
traditional
architects
include
these
"space-making"
building must function
building must
The seemingly
fashion.
The
but
192
a
unified
systems
should function
parts need
such a way as to be
as
somehow coincide
independent
should not only coexist,
integrated
life
of architecture.
financial
The
physical
assembled
fall
concerns
components
an
conception
their
aesthetic
Likewise,
the
from the owner,
expand
attributes
history.
characteristics
life-cycle
and
cues
its
new financial
without fully understanding
art
economic
injected
injecting new life
as finite commissions
buildings
of
has
in
of
the
recladding
or
are
turn
Rejuvenation
form of
space,
interior
renovating
facade,
properties
compatible
be
selected
with
and
in
and
with one another
not
only in
use but
the architect and
alternative
costs.
and
life-span.
Through economic
the owner can examine
selections
in terms of
Square
nature
Building
each
as a
building
cases
impacts
whole.
other
recurring
parapet
the
appearance of the
removal also
these
of
character
of
perspective.
affect
the
the
interrelated
well
hVAC
or
will,
the
be
might
life-cycle
or
process
all,
used
analysis
alter
the
serves
earlier
in the design process.
it was quite late
rather
as justification
if
as
addition,
itself.
financial
Park
Square
Repeatedly,
included
in the design
than a decision
tool.
the architect
included early in the overall process.
point
in
to bring
design,
expertise
and
in consulting
leading
to
coordination
process.
193
if
in the sequence of events
prove far more useful to
impetus
information,
system and
building.
economic analysis were
would
owner
the
is an example of the type of exploration that
included
at
closer
as
roof
economic analysis performed on each of the
Building cases
Upon
impacts that potential
has,
The
roof expansion project.
entire building and
projects
the total
the
projects as
The windows
The
the
and
to be isolated projects.
possibilities left open for
and
initial
illustrate
the
The
the ramifications of
made from a more informed
of what appear
inspection
Each
analysis
In this way total costs and benefits can be compared
decisions
Park
in
experts
more
in
This
and
It also
at
an
complete
the
design
Through
more
systematic
economic
analysis
the
architect
should be able to inform the client, as well as him/herself,
of
the
the
total
life-cycle costs and benefits
effect
of
investment.
attributes
architect
The
of
to
individual
focus
is
buildings
decisions
thereby
in addition
on
the
shifted
which are more
to
initial
from
those
important
those that the client is most often
to
the
concerned
with.
Such economic evaluation can serve as a prioritizing
device
for
the
architect, helping
design variables are
of
an
of
discriminate
"worth" additional attention
"optimal" level of design.
objectives
to
the
client
which
in pursuit
Better understanding
concerning
a
building
the
and
investment can aid the architect in his/her design tasks and
the allocation of scarce design time.
Inclusion
of
architectural
in
costs
and
benefits
to
be
derived
from
projects has not been systematically employed
decision-making.
The most difficult
task required
of
this
methodology is to accurately estimate the costs and benefits
anticipated
simplified
from
our designs.
by estimating
This effort can
same
regardless
contemplated.
evaluated
and
In
of
this
somewhat
and comparing only those variables
that change from one scheme to another,
the
be
the
way
as many costs
alternative
design
remain
approaches
alternatives
can
be
against each other by comparing their differences
considering
them
in
light
194
of
client
criteria
and
objectives.
Truly
long
term consequences have not been
considered
includes
design
in
the
design processes
systematically
examined
here.
not only financial consequences but more
physical
issues such as long term flexibility. The architects
involved
in
initial
these projects all mention flexibility in
conceptual
stages
of each project.
final
designs and documents suggest that
other
long
term considerations,
flexibility,
constraints.
The client seems partially responsible.
use
within
total process affect all
of analytical techniques
financial
complex
sets
impacts
in
however,
not
the designer
believe
design,
address many of
and the
business
that economic analysis
subjective
can
substitute
judgement.
of aesthetics in design remains paramount.
from this investigation is that
most pertinent
issues.
Architects
on
the
employed
by
corporate clients to lead the design
The
of
accepted
business
195
methods
can
What
can
the corporate
manager,
use
The
analysis
decision-makers, both the architect and
these
manager
importance
apparent
for
specifically
reasoning
focus
of
Often
objective
is
like
subsequent ones.
and economic analysis, would
issues.
the
that some of the broad conceptual decisions made
early in the
should
design
a lack of understanding of how one decision
others, and
the
fall prey to the process of
the
there is
final
However,
negotiating
The
This
add
are
process.
to
the
architect's
persuasiveness
in
this
role.
"However
convinced
architects may be of their leadership perogatives, they will
only be meaningful
The
others are persuaded
to
follow."
(1)
corporate client may represent the best opportunity
assert
or
if
this
leadership.
convincing.
Architects need
that
management
They may,
they are
corporate
concerns
architect
itust
project's
opportunities.
design
assuming
this
corporate
experts,
aware of
ones.
view.
for
what might be.
The
the
of
architectural
Considering
the
life sequences can aid the designer
But the architect should
understand
requirements
building
The providence of
envisioning
through its
to
assurance
to illustrate to
in addition to architectural
building
effort
require
be steadfast in his/her evaluation
in
lies
"whole"
however,
to
the
myriad
each project,
of
make
in
every
constraints
so that their
and
designs
can
satisfy the greatest set of client objectives.
The
corporate
relationship of
architect
economic
need
and
building
owner
initial costs
also
clearly
understands
the
to long term expenditures.
exhibit this cognizance
spatial trade-offs as well
time on the process and the building.
in
as the
Balancing
terms
of
effect
of
user needs,
financial criteria and aesthetics are critical tasks for
architect.
(1)
Martin
Firms,"
Understanding
McElroy,
"How
Architectural Record,
the long
term
196
the
consequences
Big Corporations
(October
The
1984):
Choose
of
Design
pages 41-43.
building
decisions is
also essential
to the design process.
The architect who can clearly show that his/her
expertise in
buildings goes beyond the conceptual design and extends into
the
total
life
influential
Many
sequence of a structure will be
exist
studies
might
is
today.
but one
employ.
may
example of available
day
generation
alternative
in
on
tools
soon
include
delineation
of alternative solutions and
designs.
the
beginning
to
design and
expert
of
case
architects
to the architectural
Design exploration using
economic
in
Expert systems are only now
process.
some
such
The BLCC program used
ofter promising applications
analysis
more
to the corporate user of architectural services.
readily accessible tools for performing
analysis
far
systems
constraints,
evaluation of these
"Computers soon may become
'partners'
the design process, providing expert knowledge and advice
numerous
aspects
of building
design and
construction."
improved
documentation
(2)
Computers
offer
techniques
for
and
these
aided
the
recording decision processes,
manipulation
tools
architect
of data.
in their work as
design
and
drafting
Many architects
coordination
are
employing
a matter of course.
Computer
offer
increased
(2)
Fred
I.
Stahl,
"Expert
Systems,"
Architecture, (October 1984): pages 61-63.
197
speed
for
Progressive
generating
alternatives
quickly handling the
computer
the
in
and
updating documents.
information
frees up time
flow for
the design process, the
computer
take-offs, cost estimation and
very
quickly.
is
analysis
invaluable.
Quantity
financial analysis can all
Alternative schemes can
to
a renewal
and
in
process
the
complex
choices
architect.
It
is unlikely that
of him/herself as expert
disciplines
rational
expertise
involved
approach
from the Park
in
the
in the myriad
includes
the
a project, not only when a problem
in
design.
process, the client's guardian of the
company
in
198
areas
of
at an early
is encountered
later
insists, that
of the
design
conceptual base of the
of Rose Associates
based
A
and feasibility
remain the overall coordinator
Rose,
of related,
various
The corporate client wants, often
Daniel
could
the design process.
of
development
architect
the determination of the scope
architect
Square
in addition to
(planning, architecture, engineering)
stage, during
project.
information
approach
included several expert consultants
necessary
the
more
expenditure of
multi-disciplinary
architectural design. Each example
conceive
more
coordinate
foster
Building
the
be
be
left to the designer.
need
should
to
In light of
The selection process between various design
is still
The
the
for economic
fully understood and evaluated with a minimal
time.
more
the architect,
for more creative tasks.
appropriateness herein described
generated
By
Inc.,
New York City,
stated
a
large
at
a
recent
conference
that he
"...insists on decisions by
largest possible number of experts, combining
skill.
best
The best value
experts
building
to
is
the
experience and
in our designs are obtainable with the
'design
usually
out' problems
as
good
initially.
as
the
The
'brainpower'
employed." (3)
The
architect and assembled consultants can design problems
out
of buildings with careful consideration of
and
operational
The
earlier
brought
"on
notable
results.
This
in
concerns, in addition to aesthetic
the
process of design the entire
board",
the more likely they are
multi-disciplinary
be
should
maintenance
expanded
approach to
to
include
to
design.
team
achieve
architectural
operating,
is
design
leasing
and
construction experts as well as the more common engineering,
design
in
and
legal
team.
the
design process.
between
alternatives
expertise
clients
lower
It
is
with
are
always
trade-offs
beneficial
as
as long
complete
are
possible
term investments.
anxious
knowledge
(3)
"In
Conference;
Search of
sponsored
and
by corporate
With such a perspective,
to manage those investments
equity appreciation.
initial costs do
involved
to make selections
as possible. Buildings are perceived
investors
best
There
Many
for
understand
not necessarily save money over
the
that
the
Excellence"
Facilities
Management
by
the Massachusetts
Institute
of
Technology. Cambridge, Mass. 15 October 1984.
199
long
run,
due
replacement
to
their
balance
to the likelihood of higher
costs.
investment, but only when the aesthetics
building.
Some
Scope and feasibility studies should include
the
plan
for
the development.
as well as expected ones,
perspective, given the
This
to be
allows
viewed
corporate needs and
firms are
Current
professional
studies"
of
economic
and
design.
Corporate
goals for
employing
this
literature
philosophy
is
full
as
recent projects that have successfully included
financial considerations
clients
are
into
demanding
architectural
responsive,
cost-conscious
designs.
Good design is based on problem-solving at
from
simultaneously,
is
functional
not simply
important, so
investment
Therefore,
aware
address
image,
and
architectural
passing
is the quality of
many
responsibility
architect to consultant and back to the client.
image
While
environment
and
created.
the
need
exists for
the architect to
be
of the corporate concerns for their buildings and
these issues in the design process.
aesthetics,
technology,
of
"case
creative,
levels
in
projects.
architectural
design.
in
the
costs,
particular
are
aspects of
business/financial
proper
and
Quality design is perceived as an asset
with the investment and operational
unusual
operating
function
management
and economics.
These
to
include
Changes
and organizational structures
200
more
in
will
undoubtedly
study
change
the
buildings that house them.
This
does not attempt to suggest that the architect should
simply
apply
lesson
from
every
the
rule
forma formulas to building
pro
Park Square Building case
in
set
regard
design.
One
studies is
to decision-making,
that
design
and
space delineation has many exceptions. Rather,
architectural
design
role
should
overall
process.
profession,
estate
expand
many
Allied
of
development,
analysis
to
scenarios.
test,
methodology
larger
set
attributes
This
their
its traditional
fields
lie
them, such as
just
in
the
outside
the
engineering
are already employing more
challenge
and
confirm
real
and
systematic
alternative
Architectural design should consider adopting a
similar
considered
beyond
of
in
so that our buildings might satisfy
criteria.
Aesthetic
light of the host of
design
additional
should
issues
a
be
and
of buildings.
research suggests that corporate
investment
include
this
and
long
information
range
clients
objectives.
in their
know full well
Architects must
design
criteria.
The
architect
must exhibit understanding of client concerns and
negotiate
design
credibility
and
as
within
that
context.
We
lessen
decision-makers by not informing
our clients of the full ramifications of good
design,
corporate organizational needs and
and benefits.
201
our
ourselves
building
long term
costs
It
may
be difficult to place a quantifiable value on
architectural
of
design. This does not diminish the importance
striving
largest
good
for
set
of
the
"best"
possible design,
architectural
and
meeting
financial
the
objectives.
Trade-offs are undoubtedly required. The intuitive skills do
exist,
many
architects
exhibit
them.
architecture should grow more systematic
We
must
can
in
useful
beyond
of
expertise
that
criteria
that
skills of the architect.
When
design information and
the traditional
practice
its methodology.
open ourselves up to the available
provide
falls
The
working
for
with the
knowledge of their goals and criteria to positively
impact
the
principles
toward
cannot
ourselves
in
included
broadening
effectiveness,
integral
design
buildings.
solely for architects,
we
must
user and patron alike. The economic models
information.
become
should inform
the performance of our designs and their
Architects
include
corporate clients, we
this
study should
serve
our conception of what is
Economic performance,
aesthetics and
to the
building
as a
useful
and
means
design
efficiency
and
client satisfaction should all
process of architectural
202
design.
APPENDICES
203
APPENDIX A:
204
BLCC
THE NATIONAL BUREAU OF STANDARDS BLCC PROGRAM
A
computer
prepared
program,
by
Standards.
the
and
the
project
is
program.
capital
tool
calculates
as
for
a
buildings
for
National
been
Bureau
interest
and
a
generated
tax
rates,
depreciation
design
solutions
such
depreciation
recapture
use with desk-top computers.
is
for
building
life-cycle
of
through use
standards
user-oriented
comprehensive
of
testing purposes only,
Meeting ASTM
and building systems and
alternative
recently
has
the
costs
gains and
designed
analysis
of
life-cycle
BLCC includes
allowances,
It
Peterson
BLCC,
cases include estimations and comparisons
BLCC
analysis,
as
Currently distributed
following
building
of
Steve
known
cost
economics
The program
analysis
capable of
in terms of
taxes.
of
comparing
their
relative
economic performance.
BLCC
requires user input.
as
financial
of
10%
assumptions
is
of
other
to clarify the
Additional
"study
Building
basic
financial
provided.
A discount rate
be
is
refers
private-residential
profit,
and
in
to the
evaluated.
for'
assumptions
A
is
short
included
process of economic analysis performed.
definitions appear
period"
costs will
must be
assumed unless changed by the user.
description
here
Project and building data as well
The
the Glossary section.
number of years
tax status for the
although BLCC can
tax
exempt status.
205
over
The
which
Park Square
calculate
for
Income
tax
savings
costs
from depreciation, operating
and
rental
gains are included for
capital
properties.
are
rates
escalation
and maintenance, energy
The
discount,
all
in nominal
and
commercial
interest
and
include
and
terms
price
general inflation.
The property tax rate
pay.
Square
Building.
years,
the
duration
of the
tax
special
While the
economic
capital
past
based
on
the
long
is
set at
as capital
Tax.
life
although
30
is
the
As
included in
they might have been.
A sales tax
this
reflect
is
This
insistence that
rate of
in
no
Park Square building,
Straight line depreciation
gains.
Park
is
term financing of this project.
cost of major components to
the
expect
15 years which
Park Square Associates'
are contemplated.
Sales
life
expected building
credits or compensations are
analysis,
to
rates
is that of the existing
expenditures at the
first
taxed
gains
capital
those that a profitable corporation might
represent
to
income tax and
federal
marginal
The
none
is used and
is
applied
5% is
Massachusetts
Current law allows for the deduction of
sales
tax from taxable income.
For
analysis, a property tax assessment factor is
The Park Square Building
assessed
has
City
the
and
value.
is taxed at a rate of
applied.
32.54% of its
This rate has changed over the years,
as
assessment, due to administrative policies of
the
Combined Federal and State marginal
tax
County.
206
rate
is
set
reflect
at 46%
accepted
investors.
and capital gains tax
financial
These particular
analysis of corporate real
The
BLCC
the
costs
provides
a
with
as
investigation
previously
The
program.
not
light,
Each
but
These
calculate
and
proposed
Building.
run
long
the
BLCC also served
the
to
This
decision-maker
corporate
for data collection.
prior
had
BLCC
to
attempting
term
in
this
Many
not
of
been
the
run
such analysis techniques might
problems
architectural
Characteristics
costs
in
a
different
and estimated
which
following pattern.
File appears
economic terms.
are
assumptions
analysis
(1)
in a more informed fashion.
in
project
loan
to
The
BLCC analysis conforms to the
Building
recent
assessing
actions.
architect using
approach
only
and
a checklist
considered
to
corporate
this study to
several
for
required
variables
in
at the Park Square
method
ramifications of their
the
estate transactions.
the architect
ready
for
28%
figures are taken from similar
for
projects
architectural
analysis
standards
program has been used
life-cycle
rate at
Capital
describing
component,
the
estimated
energy costs are then
exhibited.
the
life-cycle
used to
contains
first,
The
two
calculate
parts.
The
first
is
a
Estate:
Real
"Corporate
& T. Steinberg,
Neidich
(1) D.
(July-August
Review,
Source of New Equity", Harvard Business
1984):
pages 76-83.
207
reiteration
component
of
basic
cost
and
characteristics,
financial
including
requirements.
initial
Part
II
represents the life-cycle cost analysis, beginning with cash
requirements,
operation,
liabilities.
Income tax adjustments are then figured
finally
subtracted
maintanence,
from projected
energy
life-cycle costs.
change
in building or project characteristics
a
analysis
new
be
computed.
alternative
projects
comparative
life-cycle
The
BLCC
to be compared and
cost
analyses do
section.
208
and
tax
and
Each
requires that
does
several
appear
allow
of
in
for
these
this
WINDOW REPLACEMENT
209
PROJECT
BUILDING CHARACTERISTICS FILE
FILE NAME: WINDOWS
FILE LAST MODIFIED ON 12-13-1984 00:14:00
PROJECT TITLE: PARK SQUARE WINDOWS
BASIC LCC ANALYSIS ASSUMPTIONS:
STUDY PERIOD:
10 YEARS
CONSTRUCTION PERIOD (PRIOR TO OCCUPANCY): 0 YEAR(S)
PROJECT STARTING DATE: 1984
BASE DATE FOR DISCOUNTING: 1984
DISCOUNT, INTEREST, AND PRICE ESCALATION RATES INCLUDE INFLATION (NOMINAL)
DISCOUNT RATE (ANNUAL): 10 %
TAX STATUS: FOR PROFIT (1)
MARGINAL FEDERAL INCOME TAX RATE: 46 %
MARGINAL STATE INCOME TAX RATE: 0 %
PROPERTY TAX RATE (% OF ASSESSED VALUE): 3.254 %
PERCENT OF CAPITAL GAINS SUBJECT TO INCOME TAXATION: 28 %
DEPRECIATION RECAPTURE METHOD: 3
DEPRECIATION BASIS ADJ. FACTOR: 0 %
SALES TAX RATE: 5 %
CAPITAL COMPONENT AND REPLACEMENT COST DATA:.
NUMBER OF CAPITAL COST COMPONENTS: 2
CAPITAL COST COMPONENT DATA:
FRAMIMG
COMPONENT NAME
INITIAL COST
1460000
70.00%
PORTION SUBJECT TO SALES TAX
10
EXPECTED COMPONENT LIFE(YRS)
DEPRECIATION METHOD
(3)
5
DEPRECIATION LIFE (YEARS)
DEPR. ACCELERATION RATE
0.00%
SALVAGE VALUE (CONSTANT $)
0.00%
ADD'L FIRST YR DEPRECIATION
0.00%
AVG PRICE ESC RT DURING CONST.
0.00%
7.00%
AVG PRICE ESC RT DURING OCC.
PROP. TAX ASSESSMENT FACTOR
0.00%
TAX CREDIT (% OF 1ST COST)
10.00%
0.00%
RESALE VALUE (% OF 1ST COST)
NUMBER OF REPLACEMENTS
0
SOLARBAN G
90000
100.00%
10
(3)
5
0.00%
0.00%
0.00%
0.00%
7.00%
0.00%
10.00%
0.00%
0
COST-PHASING SCHEDULE BY YEAR OF CONSTRUCTION AND AT OCCUPANCY:
AT OCCUPANCY
100.00%
100.00%
NO REPLACEMENTS TO ANY CAPITAL COST COMPONENTS
210
.................
OPERATING AND MAINTENANCE COST DATA:
ANNUAL
ANNUAL
NUMBER
ANNUAL
ENERGY
$18600
RECURRING 0 AND M COST =
RATE OF INCREASE FOR A.R.C. = 5.00%
OF NON-ANNUAL RECURRING 0 AND M COSTS = 0
0.0%
RATE OF INCREASE FOR N.A.R.C. COSTS =
COST DATA:
NUMBER OF ENERGY TYPES = 2
ENERGY TYPE NO. 1 = ELECTRICITY
$559000
ANNUAL COST =
NUMBER OF DISCRETE TIME INTERVALS =
# DURATION ANNUAL
RATE
(YEARS)
7.7%
10
1
ENERGY TYPE NO. 2 = FUEL
$345000
ANNUAL COST =
NUMBER OF DISCRETE TIME INTERVALS =
# DURATION ANNUAL
RATE
(YEARS)
7.7%
1
1
2
9
7.7%
1
2
211
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*
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*
*
*
*
*
*
*
*
*
*
PART I
*
*
*
*
*
*
*
*
*
*
*
A N A L Y S I
S
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
******
*
*
-
INITIAL ASSUMPTIONS AND COST DATA
*
*
*
*
*
****
**
PARK SQUARE WINDOWS
PROJECT NAME:
RUN DATE:12-13-1984 00:43:37
BLDG. CHAR. FILE NAME: WINDOWS , LAST MODIFIED 12-13-1984 00:14:0
LCC OUTPUT FILE NAME:
WINDOWSL, CREATED 12-13-1984 00:40:35
STUDY PERIOD: 10 YEARS (1984 THROUGH 1993)
OCCUPANCY BEGINS: 1984
AFTER-TAX DISCOUNT RATE:
10.0% (NOMINAL)
TAX STATUS: FOR PROFIT
INCOME TAX RATE:
46.0%
(COMBINED FEDERAL, STATE, CITY)
12.9%
EFFECTIVE CAPITAL GAINS TAX RATE:
NOMINAL PROPERTY TAX RATE:
3.25%
NOMINAL SALES TAX RATE:
5.00%
INITIAL CAPITAL COMPONENT COSTS
(NOT DISCOUNTED)
SALES
TAX
ACTUAL
COST
TOTAL FOR FRAMIMG
TOTAL FOR SOLARBAN GLAZING
TOTAL PROJECT COST
TOTAL
COST
$1,460,000
$90,000
$51,100
$4,500
$1,511,100
$94,500
$1,550,000
$55,600
$1,605,600
FINANCIAL REQUIREMENTS (NOT DISCOUNTED)
INVESTOR'S INITIAL CASH REQUIREMENTS (UP TO AND INCLUDING OCCUPANCY):
(NOT ADJUSTED FOR INCOME TAX SAVINGS)
A.
AT OCCUPANCY
YEAR
PROJECT
1984
$1,605,600
$0
$0
$1,605,600
$1,605,600
$0
$0
$1,605,600
TOTAL
'POINTS'
TOTAL
INTEREST
PLUS PREPAID PROPERTY TAXES AT OCCUPANCY
$0
$1,605,600
TOTAL CASH REQUIREMENTS
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
212
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* * * * * * * * * * * * * * * * * * * * * * * * *
PART II
-
LIFE-CYCLE COST ANALYSIS:
* * * * * * * *
DISCOUNT RATE = 10.0% (NOMINAL)
PRESENT VALUE
(1984)
A. INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
SUBTOTAL
C. OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
E. INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM SALES TAX:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
DURING CONSTRUCTION
DURING OCCUPANCY
TAX CREDITS:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL.
SUBTOTAL
F. REMAINING VALUE AT END OF.OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
SUBTOTAL
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER INCOME TAX ADJUSTMENTS
*
ANNUAL VALUE
$0
$0
$1,605,600
$261,304
$1,605,600
$261,304
$145,300
$0
$7,271,530
$0
$23,647
$0
$1,183,408
$0
$7,416,830
$1 ,207,055
(
$3,411,742)
(
(
$574,779)
$0)
(
(
$0)
$0)
(
(
$0)
$0)
$555,245)
$93,543)
$0)
*(
$0)
$0)
$0)
$0)
(
(
$140,909)
$0)
$22,932)
$0)
(
$4,127,430)
$671,720)
(
$0)
$0
(
$0)
$9,022,430
$4,895,000
(
$0)
$0
$0)
$1,468,359
$796,639
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* * .* * * * * *
* INCOME TAX SAVINGS ARE DISCOUNTED FROM THE END OF THE YEAR I N WHICH THEY ARE
EARNED;
TAX CREDITS AND TAX SAVINGS FROM SALES TAX ON INITIAL INVESTMENT
*
213
BUILDING CHARACTERISTICS FILE
FILE NAME: WINDOWS1
FILE LAST MODIFIED ON 12-13-1984 00:24:04
PROJECT TITLE:
PARK SQUARE WINDOWS WITHOUT SUNGATE
GLAZING
BASIC LCC ANALYSIS ASSUMPTIONS:
STUDY PERIOD:
10
YEARS
CONSTRUCTION PERIOD (PRIOR TO OCCUPANCY): 0 YEAR(S)
PROJECT STARTING DATE: 1984
BASE DATE FOR DISCOUNTING: 1984
DISCOUNT, INTEREST, AND PRICE ESCALATION RATES INCLUDE INFLATION (NOMINAL)
DISCOUNT RATE (ANNUAL): 10 %
TAX STATUS: FOR PROFIT (1)
MARGINAL FEDERAL INCOME TAX RATE: 46 %
MARGINAL STATE INCOME TAX RATE: 0 %
PROPERTY TAX RATE (% OF ASSESSED VALUE): 3.254 %
PERCENT OF CAPITAL GAINS SUBJECT TO INCOME TAXATION: 28 %
DEPRECIATION RECAPTURE METHOD: 3
DEPRECIATION BASIS ADJ. FACTOR: 0 %
SALES TAX RATE: 5 %
CAPITAL COMPONENT AND REPLACEMENT COST DATA:
NUMBER OF CAPITAL COST COMPONENTS:
CAPITAL COST COMPONENT DATA:
COMPONENT NAME
INITIAL COST
PORTION SUBJECT TO SALES TAX
EXPECTED COMPONENT LIFE(YRS)
DEPRECIATION METHOD
DEPRECIATION LIFE (YEARS)
DEPR. ACCELERATION RATE
SALVAGE VALUE (CONSTANT $)
ADD'L FIRST YR DEPRECIATION
AVG PRICE ESC RT DURING CONST.
AVG PRICE ESC RT DURING OCC.
PROP. TAX ASSESSMENT FACTOR
TAX CREDIT (% OF 1ST COST)
RESALE VALUE (% OF 1ST COST)
NUMBER OF REPLACEMENTS
1
FRAMIMG
1460000
70.00%
10
(3)
5
0.00%
0.00%
0.00%
0.00%
7.00%
0.00%
10.00%
0.00%
0
COST-PHASING SCHEDULE BY YEAR OF CONSTRUCTION AND AT OCCUPANCY:
AT OCCUPANCY
100.00%
NO REPLACEMENTS TO ANY CAPITAL COST COMPONENTS
214
*
*
*
**** *
*
*
*
*
*
*
*
*
*
*
*
B L C C
*
*
*
*
*
*
*
*
*
*
*
*
PART I
*
*
*
*
*
*
*
*
*
*
A N A L Y S I
S
*
*
*
*
*
*
*
*
*
**
*
*
-
INITIAL ASSUMPTIONS AND COST DATA
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
**
PROJECT NAME:
WITHOUT SUNGATE
RUN DATE:01-05-1985 00:14:31
BLDG. CHAR. FILE NAME: WINDOWS1, LAST MODIFIED 01-05-1985 00:11:4
LCC OUTPUT FILE NAME:
WIND1LCC, CREATED 01-05-1985 00:13:24
STUDY PERIOD: 10 YEARS (1984 THROUGH 1993)
OCCUPANCY BEGINS: 1984
AFTER-TAX DISCOUNT RATE:
10.0% (NOMINAL)
TAX STATUS: FOR PROFIT
INCOME TAX RATE:
46.0%
(COMBINED FEDERAL, STATE, CITY)
12.9%
EFFECTIVE CAPITAL GAINS TAX RATE:
NOMINAL PROPERTY TAX RATE:
3.25%
NOMINAL SALES TAX RATE:
5.00%
INITIAL CAPITAL COMPONENT COSTS
(NOT
SALES
TAX
ACTUAL
COST
TOTAL FOR FRAMIMG
TOTAL PROJECT COST
DISCOUNTED)
TOTAL
COST
$1,460,000
$51,100
$1,511-,100
$1,460,000
$51,100
$1,511,100
FINANCIAL REQUIREMENTS (NOT DISCOUNTED)
A.
INVESTOR'S INITIAL CASH REQUIREMENTS (UP TO AND INCLUDING OCCUPANCY):
(NOT ADJUSTED FOR INCOME TAX SAVINGS)
AT OCCUPANCY
YEAR
PROJECT
1984
$1,511,100
$0
$0
$1,511,100
$1,511,100
$0
$0
$1,511,100
TOTAL
'POINTS'
INTEREST
PLUS PREPAID PROPERTY TAXES AT OCCUPANCY
TOTAL CASH REQUIREMENTS
TOTAL
$0
$1,511,100
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
* * * * * *
215
-F
*
*
A
A
A
PART II
.
A A
I
A
A
A
A
A
*
*
*
*
A
A
.
A
A
A
A
A
LIFE-CYCLE COST ANALYSIS: DISCOUNT RATE = 10.0%
-
PRESENT VALUE
(1984)
A. INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
SUBTOTAL
C. OPERATING, MAINTENANCE & RELATED.COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
E. INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM SALES TAX:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
DURING CONSTRUCTION
DURING OCCUPANCY
TAX CREDITS:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
F. REMAINING VALUE AT END OF OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
SUBTOTAL
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
ANNUAL VALUE
$0
$1,511,luu
$245
$1,511,100
$245,925
$165,897
$0
$8,062,953
$0
$26,999
$0
$1,312,208
$0
$8,228,850
$1,339,207
,
$0
925
$616,035)
(
(
$541,405)
$0)
$88,111)
$0)
(
(
$0)
$0)
$0)
$0)
(
(
$0)
$0)
$0)
$0)
(
(
$132,727)
$0)
$21,601)
$0)
(
(
$4,459,404)
(
$0)
$0
(
$0)
*
*
*
*
*
*
*
*
(NOMINAL)
$725,748)
------- $0)
$0)
$0
(
$0)
$9,739,950
$5,280,546
*
*
$3,785,271)
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER INCOME TAX ADJUSTMENTS
*
*
A
(
(
SUBTOTAL
*
AA
$1,585,132
$859,385
*
*
*
*
*
*
*
*
*
*
*
* INCOME TAX SAVINGS ARE DISCOUNTED FROM THE END OF THE YEAR IN WHICH THEY ARE
EARNED;
TAX CREDITS AND TAX SAVINGS FROM SALES TAX ON INITIAL INVESTMENT ARE REALIZE
D
IN THE FIRST YEAR OF OCCUPANCY.
216
COMPARATIVE LCC ANALYSIS -
PARK SQUARE WINDOWS AND WITHOUT SUNGATE
10 YEARS
STUDY PERIOD:
0 YEAR(S)
CONSTRUCTION PERIOD:
STARTING DATE: 1984
BASE DATE FOR DISCOUNTING: 1984
DISCOUNT RATE: 10.0% (NOMINAL)
SALES TAX RATE:
5.0%
TAX STATUS: FOR PROFIT
FED TAX RATE: 46.0%
0.0%
STATE TAX RATE:
3.3%
PROPERTY TAX RATE:
CAPITAL GAINS RATE: 28.0%
BASE CASE LCC FILE: WINDOWSLCC
ALTERNATIVE LCC FILE: WINDlLCC
PRESENT-VALUE COSTS:
BASE CASE:
PARK SQUARE
ALTERNATIVE:
ALTERNATIVE
WITHOUT SUNGA - BASE CASE
CASH REQUIREMENTS AS OF OCCUPANCY
$1,605,600
PRIN. AND INT. PAYMENTS AFTER OCCUP.
$0
$145,300
RECURRING COSTS
ANNUAL & NON-AN.
PROPERTY TAXES
$0
$7,271,530
ENERGY EXPENDITURES
INCOME TAX ADJUSTMENTS BEFORE OCCUP.
$0
INCOME TAX ADJUSTMENTS DURING OCCUP. -$4,127,430
RESALE VALUE AT END OF STUDY (NET)
$0
$1,511,100
$0
$165,897
$0
$8,062,953
$0
-$4,459,404
$0
-$94,500
$0
$20,597
$0
$791,423
$0
-$331,974
$0
$4,895,000
$5,280,546
$385,546
TOTAL P.V. LIFE-CYCLE COST
REDUCTION IN FUTURE COSTS DUE TO ALTERNATIVE (SAVINGS) =
LESS: ADDITIONAL NET INITIAL INVESTMENT REQUIRED BY ALTERNATIVE*
-$480,046
$94,500
NET SAVINGS FROM ALTERNATIVE RELATIVE TO BASE CASE =
-$385,546
217
COMPARATIVE LCC ANALYSIS - WITHOUT SUNGATE AND PARK SQUARE WINDOWS
STUDY PERIOD:
10 YEARS
CONSTRUCTION PERIOD:
0 YEAR(S)
STARTING DATE: 1984
BASE DATE FOR DISCOUNTING: 1984
DISCOUNT RATE: 10.0% (NOMINAL)
5.0%
SALES TAX RATE:
TAX STATUS: FOR PROFIT
FED TAX RATE: 46.0%
STATE TAX RATE:
0.0%
PROPERTY TAX RATE:
3.3%
CAPITAL GAINS RATE: 28.0%
BASE CASE LCC FILE: WINDlLCC
ALTERNATIVE LCC FILE: WINDOWSLCC
BASE CASE:
ALTERNATIVE:
ALTERNATIVE
WITHOUT SUNGA
PARK SQUARE W - BASE CASE
PRESENT-VALUE COSTS:
CASH REQUIREMENTS AS OF OCCUPANCY
$1,511,100
PRIN. AND INT. PAYMENTS AFTER OCCUP.
$0
ANNUAL & NON-AN. RECURRING COSTS
$165,897
PROPERTY TAXES
$0
ENERGY EXPENDITURES
$8,062,953
INCOME TAX ADJUSTMENTS BEFORE OCCUP.
$0
INCOME TAX ADJUSTMENTS DURING OCCUP. -$4,459,404
RESALE VALUE AT END OF STUDY (NET)
$0
TOTAL P.V. LIFE-CYCLE COST
$5,280,546
$1,605,600
$0
$145,300
$0
$7,271,530
$0
-$4,127,430
$0
$94,500
$0
-$20,597
$0
-$791,423
$0
$331,974
$0
$4,895,000
-$385,546
REDUCTION IN FUTURE COSTS DUE TO ALTERNATIVE (SAVINGS) =
LESS: ADDITIONAL NET INITIAL INVESTMENT REQUIRED BY ALTERNATIVE*=
$480,046
-$94,500
NET SAVINGS FROM ALTERNATIVE RELATIVE TO BASE CASE =
$385,546
SAVINGS-TO-INVESTMENT RATIO =
ADJUSTED IRR (@ REINVESTMENT RATE OF 10.00%) =
*
5.08
29.41%
NET INITIAL INVESTMENT IS THE CHANGE IN CASH REQUIREMENTS AS OF OCCUPANCY
LESS THE CHANGE IN INCOME TAX ADJUSTMENTS BEFORE OCCUPANCY.
218
*
*
*
*
*
*
*
PART II
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
LIFE-CYCLE COST ANALYSIS: DISCOUNT RATE = 12.5%
-
PRESENT VALUE
(1984)
A.
INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
SUBTOTAL
C.
OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM SALES TAX:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
E.
DURING CONSTRUCTION
DURING OCCUPANCY
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
$0
$290,006
$1,605,600
$290,006
$129,780
$0
$6,464,699
$0
$23,441
$0
$1 ,167,665
$0
$6,594,480
$1,191,106
$547,909)
(
(
$547,368)
$0)
$98,867)
$0)
(
(
$0)
$0)
$0)
$0)
(
(
$0)
$0)
$0)
$0)
(
$0)
$0)
(
SO)
*
*
*
*
*
*
*
*
*
*
*
$24,886)
$0)
(
(
$671,661)
$0)
(
$0
$0)
$1,481,113
$809,452
$8,200,079
$4,481,473
*
*
(NOMINAL)
$3,718,606)
-------- $0)
*
*
$3,033,461)
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER
INCOME TAX ADJUSTMENTS
*
*
(
SUBTOTAL
SUBTOTAL
*
ANNUAL VALUE
$137,778)
$0)
F. REMAINING VALUE AT END OF OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
*
$0
$1,605,600
TAX CREDITS:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
*
*
*
*
*
*
*
*
*
*
*
*
*
* INCOME TAX SAVINGS ARE DISCOUNTED FROM THE END OF THE YEAR IN WHICH THEY ARE
EARNED;
TAX CREDITS AND TAX SAVINGS FROM SALES TAX ON INITIAL INVESTMENT
219
* **
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
B L C C
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
A N A L Y S I S
*
*
*
*
*
*
*
*
PART I - INITIAL ASSUMPTIONS AND COST DATA
---------------------------------------------------------------------------
--
PROJECT NAME:
PARK SQUARE WINDOWS 20YEARS
RUN DATE:01-01-1980 01:23:28
BLDG. CHAR. FILE NAME: PSB620
, LAST MODIFIED 01-01-1980 01:20:1
LCC OUTPUT FILE NAME:
LCC620
, CREATED 01-01-1980 01:21:24
STUDY PERIOD: 20 YEARS (1984 THROUGH 2003)
OCCUPANCY BEGINS: 1984
DISCOUNT RATE:
10.0%
(NOMINAL)
TAX STATUS: FOR PROFIT
INCOME TAX RATE:
0.0%
(COMBINED FEDERAL, STATE, CITY)
EFFECTIVE CAPITAL GAINS TAX RATE:
0.0%
NOMINAL PROPERTY TAX RATE:
3.25%
NOMINAL SALES TAX RATE:
5.00%
INITIAL CAPITAL COMPONENT COSTS
--
(NOT DISCOUNTED)
--------------------------------------------------------------------------SALES
TAX
ACTUAL
COST
TOTAL FOR FRAMIMG
TOTAL FOR SOLARBAN GLAZING
TOTAL PROJECT COST
TOTAL
COST
$1,460,000
$90,000
$51,100
$4,500
$1,511,100
$94,500
$1,550,000
$55,600
$1,605,600
FINANCIAL REQUIREMENTS (NOT DISCOUNTED)
--------------------------------------------------------------------------INVESTOR'S
A.
INITIAL CASH REQUIREMENTS
YEAR
AT OCCUPANCY
PROJECT
1984
TOTAL
(UP TO AND INCLUDING OCCUPANCY) :
'POINTS'
INTEREST
TOTAL
$1,605,600
$0
$0
$1,605,600
$1,605,600
$0
$0
$1,605,600
PLUS PREPAID PROPERTY TAXES AT OCCUPANCY
0
TOTAL CASH REQUIREMENTS
*
* *
*
*
*
****
*
*
*
*
$1,605,600
*
*
*
*
*
*
*
*
220
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* * * * * * * * *
PART II
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
LIFE-CYCLE COST ANALYSIS: DISCOUNT RATE = 10.0%
-
PRESENT VALUE
(1984)
A.
INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
SUBTOTAL
C.
OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
ANNUAL VALUE
$0
$1,605,600
$0
$188,593
$1,605,600
$188,593
$236,549
$0
$7,271,530
0
$27,785
SO
$854,111
$0
$7,508,079
$881 ,896
F. REMAINING VALUE AT END OF OCCUPANCY
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
(NOMINAL)
$0)
$0)
$9,113,679
$1,070,489
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
INCOME TAX SAVINGS ARE DISCOUNTED FROM THE END OF THE YEAR IN WHICH THEY ARE
EARNED;
TAX CREDITS AND TAX SAVINGS FROM SALES TAX ON INITIAL INVESTMENT
*
221
PARK SQUARE II
222
OFFICE RENOVATIONS
BUILDING CHARACTERISTICS FILE
FILE NAME: PSBII
FILE LAST MODIFIED ON 12-20-1984 00:27:22
PROJECT TITLE: PARK SQUARE II RENOVATION
BASIC LCC ANALYSIS ASSUMPTIONS:
STUDY PERIOD:
8 YEARS
CONSTRUCTION PERIOD (PRIOR TO OCCUPANCY): 1 YEAR(S)
PROJECT STARTING DATE: 1982
BASE DATE FOR DISCOUNTING: 1982
DISCOUNT, INTEREST, AND PRICE ESCALATION RATES INCLUDE INFLATION (NOMINAL)
DISCOUNT RATE (ANNUAL): 10 %
TAX STATUS: FOR PROFIT (1)
MARGINAL FEDERAL INCOME TAX RATE: 46 %
MARGINAL STATE INCOME TAX RATE: 0 %
PROPERTY TAX RATE (% OF ASSESSED VALUE): 3.254 %
PERCENT OF CAPITAL GAINS SUBJECT TO INCOME TAXATION: 28 %
DEPRECIATION RECAPTURE METHOD: 3
DEPRECIATION BASIS ADJ.. FACTOR: 0 %
SALES TAX RATE: 5 %
CAPITAL COMPONENT AND REPLACEMENT COST DATA:
NUMBER OF CAPITAL COST COMPONENTS: 2
CAPITAL COST COMPONENT DATA:
COMPONENT NAME
L EASEHOLD
INITIAL COST
21 58130
PORTION SUBJECT TO SALES TAX
0.00%
EXPECTED COMPONENT LIFE(YRS)
15
DEPRECIATION METHOD
S.L . (1)
8
DEPRECIATION LIFE (YEARS)
DEPR. ACCELERATION RATE
0.00%
SALVAGE VALUE (CONSTANT $)
0.00%
ADD'L FIRST YR DEPRECIATION
0.00%
7.00%
AVG PRICE ESC RT DURING CONST.
AVG PRICE ESC RT DURING OCC.
7.00%
PROP. TAX ASSESSMENT FACTOR
0.00%
TAX CREDIT (% OF 1ST COST)
0.00%
RESALE VALUE (% OF 1ST COST)
10 0.00%
NUMBER OF REPLACEMENTS
0
SYST FURN
380000
100.00%
10
S.L. (1)
8
0.00%
0.00%
0.00%
7.00%
7.00%
0.00%
0.00%
0.00%
0
COST-PHASING SCHEDULE BY YEAR OF CONSTRUCTION AND AT OCCUPANCY:
1
0.00%
0.00%
100.00%
AT OCCUPANCY
100.00%
NO REPLACEMENTS TO ANY CAPITAL COST COMPONENTS
223
OPERATING AND MAINTENANCE COST DATA:
ANNUAL
ANNUAL
NUMBER
ENERGY
RECURRING 0 AND M COST = $210160
RATE OF INCREASE FOR A.R.C. =
3.70%
OF NON-ANNUAL RECURRING 0 AND M COSTS = 0
COST DATA:
NUMBER OF ENERGY TYPES = 2
ENERGY TYPE NO. 1 = ELECTRICITY
ANNUAL COST =
$186333
ANNUAL RATE OF INCREASE DURING CONSTRUCTION =
PRICE INCREASES DURING OCCUPANCY:
NUMBER OF DISCRETE TIME INTERVALS = 1
# DURATION ANNUAL
(YEARS)
RATE
7.7%
8
1
ENERGY TYPE NO. 2 = FUEL
$115000
ANNUAL COST =
'ANNUAL RATE OF INCREASE DURING CONSTRUCTION
PRICE INCREASES DURING OCCUPANCY:
NUMBER OF DISCRETE TIME INTERVALS = 1
# DURATION ANNUAL
(YEARS)
RATE
7.7%
8
1
224
=
7.7%
7.7%
*
***
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
PART I
*
*
*
*
*
*
*
*
*
*
A N A L Y S I
B L C C
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
S
*
*
*
*
*
*
*
-
INITIAL ASSUMPTIONS AND COST DATA
PROJECT NAME:
PARK SQUARE II RENOVATION
RUN DATE:12-23-1984 09:21:41
, LAST MODIFIED 12-20-1984 00:27:2
BLDG. CHAR. FILE NAME: PSBII
PSBIILCC, CREATED 12-21-1984 00:05:43
LCC OUTPUT FILE NAME:
8 YEARS (1982 THROUGH 1989)
STUDY PERIOD:
1 YEARS (1982 THROUGH 1982)
CONSTRUCTION PERIOD:
OCCUPANCY BEGINS: 1983
10.0% (NOMINAL)
AFTER-TAX DISCOUNT RATE:
TAX STATUS: FOR PROFIT46.0%
(COMBINED FEDERAL, STATE, CITY)
INCOME TAX RATE:
EFFECTIVE CAPITAL GAINS TAX RATE:
12.9%
3.25%
NOMINAL PROPERTY TAX RATE:
5.00%
NOMINAL SALES TAX RATE:
INITIAL CAPITAL COMPONENT COSTS (NOT DISCOUNTED)
--- -- -- - --- --- -- --- -- - -- -- - -- -- - SALES- ------- - --- -INVESTMENT
CATAGORY
LEASEHOLD
--
YEAR
COST .
PHASING-
1983
100.0%
$2,309,199
$0
$2,309,199
100.0%
$2,309,199
$406,600
$0
$20,330
$2,309,199
$426,930
$406,600
$20,330
$426,930
$2,715,799
$20,330
$2,736,129
TOTAL FOR LEASEHOLD.
SYST FURN
1983
TOTAL FOR SYST FURN.
TOTAL PROJECT COST
TOTAL
COST
SALES
TAX
ACTUAL
COST
FINANCIAL REQUIREMENTS (NOT DISCOUNTED)
INVESTOR'S INITIAL CASH REQUIREMENTS (UP TO AND INCLUDING OCCUPANCY):
(NOT ADJUSTED FOR INCOME TAX SAVINGS)
A.
TOTAL
INTEREST
'POINTS'
PROJECT
YEAR
$0--$0--$0
$0---1982--1982
$0
$0
$0
1983
$2,736,129
$0
$0
CONSTRUCTION
DURIN
DURING CONSTRUCTION
AT OCCUPANCY
TOTAL
$2,736,12.9
$0
$0
$2,736,129
$0
$2,736,129
$0
PLUS PREPAID PROPERTY TAXES AT OCCUPANCY
$2,736,129
TOTAL CASH REQUIREMENTS
B.
(1)
*
*
BORROWING REQUIREMENTS:
TEMPORARY FINANCING (DURING CONSTRUCTION):
YEAR
AMOUNT
BORROWED
INTEREST
RATE
1982
TOTAL
$0
$0
0.00%
*
*
*
*
*
*
*
*
*
*
*
*
*
*
POINTS PAID
--------------AMOUNT
%
0.00%
$0
$0
*
*
*
*
*
225
*
*
*
*
TYPE
PAYMENTS/
YEAR
--------0
---------------
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
PART II
-
LIFE-CYCLE COST ANALYSIS: DISCOUNT RATE = 10.0%
PRESENT VALUE
(1982)
A. INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
SUBTOTAL
C. OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
E.
INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT
REPLACEMENTS._T. !;APITAL
TAX SAVINGS fR'Mo"SAI S TAX:
INITIAL INVESTE T'
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
DURING CONSTRUCTIQN
DURING OCCUPANCY
TAX CREDITS:
INITIAL INVESTMENT.
REPLACEMENTS TO CAPITAL
SUBTOTAL
F. REMAINING VALUE AT END OF OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
SUBTOTAL
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER
INCOME TAX ADJUSTMENTS
(C
(NOMINAL)
ANNUAL VALUE
$0
$2,487,390
$0
$466,246
$2,487,390
$466,246
$1,103,052
$0
$2,148,680
$0
$206,760
$0
$402,757
$0
$3,251,732
$609,518
$1,495,796)
$280,378)
$691,132)
$0)
(
(
$129,548)
$0)
$7,729)
$0)
(
(
$1,449)
$0)
(
(
$0)
$0)
(
$0)
$0)
(
(
$0)
$0)
(
$0)
$0)
(
$2,194,657)
$411,375)
(
$1,729,842)
$202,406
$324,249)
$37,940
$1,527,436)
$286,309)
$4,211,685
$2,017,029
$789,455
$378,080
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* * * * * * * * *
* INCOME TAX SAVINGS ARE DISCOUNTED FROM THE END OF THE YEAR IN WHICH THEY ARE
EARNED
*
226
BUILDING CHARACTERISTICS FILE
FILE NAME: PSBIIAFILE LAST MODIFIED ON 12-21-1984 00:11:09
PROJECT TITLE: PARK SQUARE IIA
BASIC LCC ANALYSIS ASSUMPTIONS:
8 YEARS
STUDY PERIOD:
CONSTRUCTION PERIOD (PRIOR TO OCCUPANCY): 1 YEAR(S)
PROJECT STARTING DATE: 1982
BASE DATE FOR DISCOUNTING: 1982
DISCOUNT, INTEREST, AND PRICE ESCALATION RATES INCLUDE INFLATION (NOMINAL)
DISCOUNT RATE (ANNUAL): 10 %
TAX STATUS: FOR PROFIT (1)
MARGINAL FEDERAL INCOME TAX RATE: 46 %
MARGINAL STATE INCOME TAX RATE: 0 %
PROPERTY TAX RATE (% OF ASSESSED VALUE): 3.254 %
PERCENT OF CAPITAL GAINS SUBJECT TO INCOME TAXATION: 28 %
DEPRECIATION RECAPTURE METHOD:. .3
DEPRECIATION BASIS.ADJ.;FACTOR:'100 %
SALES TAX RATE: 5 %
CAPITAL COMPONENT AND REPLAMENT COST DATA:
NUMBER OF CAPITAL COST COMPONENT: 2
CAPITAL COST COMPONENT DATA:COMPONENT NAME
LEASEHOLD
INITIAL COST
-2158130
PORTION SUBJECT TO SALES TAX
0.00%
EXPECTED COMPONENT LIFE(YRS)- .
15
DEPRECIATION METHOD
S.L. (1)
DEPRECIATION LIFE (YEARS)
8
DEPR. ACCELERATION RATE
0.00%
SALVAGE VALUE (CONSTANT $)
0.00%
ADD'L FIRST YR DEPRECIATION
0.00%
7.00%
AVG PRICE ESC RT DURING CONST.
7.00%
AVG PRICE ESC RT DURING OCC.
PROP. TAX ASSESSMENT FACTOR
0.00%
TAX CREDIT (% OF IST COST)
5.00%
RESALE VALUE (% OF 1ST COST)
100.00%
NUMBER OF REPLACEMENTS
0
SYST FURN
380000
100.00%
10
S.L. (1)
8
0.00%
0.00%
0.00%
7.00%
7.00%
0.00%
10.00%
0.00%
0
COST-PHASING SCHEDULE BY YEAR OF CONSTRUCTION AND AT OCCUPANCY:
1
0.00%
0.00%
AT OCCUPANCY
100.00%
100.00%
NO REPLACEMENTS TO ANY CAPITAL COST COMPONENTS
227
***
* ** *
*
*
*
*
*
*
*
*
*
*
*
*
*
B L C C
*
*
*
*
*
*
*
*
*
*
*
*
PART I
*
*
*
*
*
*
*
*
*
A N A L Y S I
S
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
-
INITIAL ASSUMPTIONS AND COST DATA
*
*
*
*
*
*
*
*
*
*
***
PARK SQUARE IIA
PROJECT NAME:
RUN DATE:12-23-1984 09:31:31
BLDG. CHAR. FILE NAME: PSBIIA
, LAST MODIFIED 12-21-1984 00:11:0
LCC OUTPUT FILE NAME:
PSBIIALC, CREATED 12-21-1984 00:03:51
STUDY PERIOD:
8 YEARS (1982 THROUGH 1989)
CONSTRUCTION PERIOD:
1 YEARS (1982 THROUGH 1982)
OCCUPANCY BEGINS: 1983
AFTER-TAX DISCOUNT RATE:
10.0% (NOMINAL)
TAX STATUS: FOR PROFIT
INCOME TAX RATE:
46.0%
(COMBINED FEDERAL, STATE, CITY)
EFFECTIVE CAPITAL GAINS TAX RATE:
12.9%
NOMINAL PROPERTY TAX RATE:
3.25%
NOMINAL SALES TAX RATE:
5.00%
INITIAL CAPITAL COMPONENT COSTS
INVESTMENT
CATAGORY
YEAR
LEASEHOLD
COST
PHASING
1983
ACTUAL
COST
SALES
TAX
COST
$2,309,199
$0
$2,309,199
100.0%
$2,309,199
$406,600
$0
$20,330
$2,309,199
$426,930
TOTAL FOR SYST FURN
$406,600
$20,330
$426,930
TOTAL PROJECT COST
$2,715,799
$20,330
$2,736,129
FINANCIAL REQUIREMENTS
(NOT DISCOUNTED)
INVESTOR'S INITIAL CASH REQUIREMENTS (UP TO AND INCLUDING OCCUPANCY):
(NOT ADJUSTED FOR INCOME TAX SAVINGS)
YEAR
DURING CONSTRUCTION
AT OCCUPANCY
1982
1983
TOTAL
PLUS
PREPAID PROPERTY
PROJECT
'POINTS'
INTEREST
TOTAL
$0
$2,736,129
$0
$0
$0
$0
$0
$2,736,129
$2,736,129
$0
$0
$2,736,129
TAXES AT
OCCUPANCY
$0
$2,736,129
TOTAL CASH REQUIREMENTS
B.
TOTAL
100.0%
TOTAL FOR LEASEHOLD
SYST FURN
1983
A.
(NOT DISCOUNTED)
BORROWING REQUIREMENTS:
(1) TEMPORARY FINANCING (DURING CONSTRUCTION):
YEAR
---1982
TOTAL
AMOUNT
BORROWED
INTEREST
RATE
$0
$0
0.00%
----------
POINTS PAID
-------- -----%
0.00%
AMOUNT
$0
$0
TYPE
PAYMENTS/
YEAR
--------------0
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
228
* * *
*
PART II
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
LIFE-CYCLE COST ANALYSIS: DISCOUNT RATE = 10.0%
-
PRESENT VALUE
(1982)
A.
INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
$0
$466,246
$2,487,390
$466,246
$1,103,052
$0
$2,148,680
$0
$206,760
$0
$402,757
$0
$3,251,732
$609,518
(
$1,495,796)
$280,378)
(
$651,401)
$0)
(
(
$7,729)
$0)
(
(
$0)
$0)
(
$0)
$0)
$129,025)
$0)
(
$24,185)
$0)
C. OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
SUBTOTAL
F. REMAINING VALUE AT END OF OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
SUBTOTAL
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER
INCOME TAX ADJUSTMENTS
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
ANNUAL VALUE
$0
$2,487,390
SUBTOTAL
E. INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT,
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM SALES TAX:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
DURING CONSTRUCTION
DURING OCCUPANCY
TAX CREDITS:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
(NOMINAL)
*
*
$122,101)
$0)
(
(
$1,449)
$0)
$2,283,951)
$428,113)
$1,729,842)
$194,198
$324,249)
$36,401
$1,535,644)
$287,847)
$4,203,477
$1,919,526
$787,917
$35.9,804
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* INCOME TAX SAVINGS ARE DISCOUNTED FROM THE END OF THE YEAR IN WHICH THEY ARE
EARNED;
TAX CREDITS AND TAX SAVINGS FROM SALES TAX ON INITIAL INVESTMENT ARE REALIZE
IN THE FIRST YEAR OF OCCUPANCY.
229
ROOF EXPANSION PROJECT
230
BUILDING CHARACTERISTICS FILE
FILE NAME: RE3
FILE LAST MODIFIED ON 12-23-1984 11:06:35
PROJECT TITLE: 3 FLOOR EXPANSION
BASIC LCC ANALYSIS ASSUMPTIONS:
STUDY PERIOD:
10
YEARS
CONSTRUCTION PERIOD (PRIOR TO OCCUPANCY): 1 YEAR(S)
PROJECT STARTING DATE: 1985
BASE DATE FOR DISCOUNTING: 1985
DISCOUNT, INTEREST, AND PRICE ESCALATION RATES INCLUDE INFLATION (NOMINAL)
DISCOUNT RATE (ANNUAL): 10 %
TAX STATUS: FOR PROFIT (1)
MARGINAL FEDERAL INCOME TAX RATE: 46 %
MARGINAL STATE INCOME TAX RATE: 0 %
PROPERTY TAX RATE (% OF ASSESSED VALUE): 3.254 %
PERCENT OF CAPITAL GAINS SUBJECT TO INCOME TAXATION: 28 %
DEPRECIATION RECAPTURE METHOD: 3
DEPRECIATION BASIS ADJ. FACTOR: 0 %
SALES TAX RATE: 5 %
CAPITAL COMPONENT
AND REPLACEMENT COST DATA:
NUMBER OF CAPITAL COST COMPONENTS: 1
CAPITAL COST COMPONENT DATA:
COMPONENT NAME
CONSTRUCT
INITIAL COST
14700000
PORTION SUBJECT TO SALES TAX
0.00%
EXPECTED COMPONENT LIFE(YRS)
30
DEPRECIATION METHOD
S.L. (1)
DEPRECIATION LIFE (YEARS)
10
DEPR. ACCELERATION RATE
0.00%
SALVAGE VALUE (CONSTANT $)
100.00%
ADD'L FIRST YR DEPRECIATION
0.00%
AVG PRICE ESC RT DURING CONST.
7.00%
AVG PRICE ESC RT DURING OCC.
7.00%
PROP. TAX ASSESSMENT FACTOR
32.54%
TAX CREDIT (% OF 1ST COST)
10.00%
RESALE VALUE (% OF 1ST COST)
100.00%
NUMBER OF REPLACEMENTS
0
COST-PHASING SCHEDULE BY YEAR OF CONSTRUCTION AND AT OCCUPANCY:
1
0.00%
AT OCCUPANCY
100.00%
NO REPLACEMENTS
TO ANY CAPITAL COST
COMPONENTS
231
&
_ .....
....
.
MORTGAGE LOAN DATA:
--------------------LOAN NUMBER
% OF TOTAL COST MORTGAGED
LOAN TYPE
ANNUAL INTEREST RATE
LIFE OF LOAN (YEARS)
NUMBER OF PAYMENTS/YR
POINTS PAID (% OF LOAN)
CONSTRCT.
LOAN
PERMANENT
LOAN(S)
-
100.00%
2
13.00%
0
1
0.00%
1
100.00%
1
12.75%
15
12
0.00%
OPERATING AND MAINTENANCE COST DATA:
ANNUAL
ANNUAL
NUMBER
AMNUAL
ENERGY
RECURRING 0 AND M COST = $362556
RATE OF INCREASE FOR A.R.C. =
3.70%
OF NON-ANNUAL RECURRING 0 AND M COSTS = 0
RATE OF INCREASE FOR N.A.R.C. COSTS =
0.0%
COST DATA:
NUMBER OF ENERGY TYPES = 2
ENERGY TYPE NO. 1 = ELECTRICITY
ANNUAL COST =
$119192
ANNUAL RATE OF INCREASE DURING CONSTRUCTION =
PRICE INCREASES DURING OCCUPANCY:
NUMBER OF DISCRETE TIME INTERVALS =
1
# DURATION ANNUAL
(YEARS)
RATE
1
9
7.7%
ENERGY TYPE NO. 2 = FUEL
ANNUAL COST =
$73733
ANNUAL RATE OF INCREASE DURING CONSTRUCTION =
PRICE INCREASES DURING OCCUPANCY:
NUMBER OF DISCRETE TIME INTERVALS =
1
# DURATION ANNUAL
(YEARS)
RATE
1
9
7.7%
232
7.7%
7.7%
*
*
***
**
*
**
*
*
*
*
*
*
*
**
*
*
*
*
*
*
*
*
*
*
PART I
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
A N A L Y S I S
B L C C
*
*
*
*
*
*
*
*
*
*
*
-
INITIAL ASSUMPTIONS AND COST DATA
3 FLOOR EXPANSION
PROJECT NAME:
RUN DATE:12-23-1984 11:12:05
, LAST MODIFIED 12-23-1984 11:06:3
BLDG. CHAR. FILE NAME: RE3
, CREATED 12-23-1984 11:11:16
LCC OUTPUT FILE NAME: RE3LCC
STUDY PERIOD: 10 YEARS (1985 THROUGH 1994)
1 YEARS (1985 THROUGH 1985)
CONSTRUCTION PERIOD:
OCCUPANCY BEGINS: 1986
10.0% (NOMINAL)
AFTER-TAX DISCOUNT RATE:
TAX STATUS: FOR PROFIT
46.0%
(COMBINED FEDERAL, STATE, CITY)
INCOME TAX RATE:
12.9%
EFFECTIVE CAPITAL GAINS TAX RATE:
3.25%
NOMINAL PROPERTY TAX RATE:
5.00%
NOMINAL SALES TAX RATE:
INITIAL CAPITAL COMPONENT COSTS (NOT DISCOUNTED)
SALES
ACTUAL---- ---- --- -- --- -- -- ---- ----COST
PHASING
YEAR
INVESTMENT
CATAGORY
1986
CONSTRUCT
ACTUAL
SALES
COST
TAX
-$15,729,000
100.0%.
TOTAL---- -TOTAL
COST
$0
$15,729,000
TOTAL FOR CONSTRUCT
$15,729,000
$0
$15,729,000
TOTAL PROJECT COST
$15,729,000
$0
$15,729,000
(NOT DISCOUNTED)
FINANCIAL REQUIREMENTS
INVESTOR'S INITIAL CASH REQUIREMENTS (UP TO AND INCLUDING OCCUPANCY):
(NOT ADJUSTED FOR INCOME TAX SAVINGS)
A.
1985
1986
DURING CONSTRUCTION
AT OCCUPANCY
TOTAL
TOTAL
INTEREST
'POINTS'
PROJECT
YEAR
$0
$0
S0
$0
$0
$0
$0
$0
$0
$0
$0
$0
PLUS PREPAID PROPERTY TAXES AT OCCUPANCY
$166,547
TOTAL CASH REQUIREMENTS
$166,547
B.
(1)
BORROWING REQUIREMENTS:
TEMPORARY FINANCING (DURING CONSTRUCTION):
---1985
TOTAL
TYPE
POINTS PAID
INTEREST
RATE
-------13.00%
AMOUNT
BORROWED
-------$0
$0
YEAR
---------------
---------------
AMOUNT
0.00%
PAYMENTS/
YEAR
- 1--
INTEREST ONLY
$0
$0
-
(2) PERMANENT FINANCING (AT OCCUPANCY):
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
0
PAYMENTS/
YEAR
--------12
TYPE
POINTS PAID
-----------------------------PERCENT AMOUNT -------------$0 AMORTIZED
0.00%
$0
INTR.
LIFE
AMOUNT
LOAN
RATE
BORROWED
NO.
------ ----------------1 $15,729,000 15 YRS 12.75%
TOTAL $15,729,000
*
*
*
*
*
233
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
-
PART II
LIFE-CYCLE COST ANALYSIS: DISCOUNT RATE = 10.0%
PRESENT VALUE
(NOMINAL)
ANNUAL VALUE
(1985)
A. INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
$0
$0
$0
$0
$0
$0
$7,094,131
$9,600,107
$1,154,537
$1,562,373
$16,694,240
$2,716,910
$2,317,171
$0
$1,531,845
$1,223,085
$377,109
$0
$249,301
$199,052
$5,072,101
$825,461
$2,282,020)
$371,388)
SUBTOTAL
B. FINANCING PAYMENTS
PRINCIPAL
INTEREST
(AFTER OCCUPANCY):
SUBTOTAL
C. OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY
ENERGY COSTS
RECURRING
COSTS
PROPERTY TAXES
SUBTOTAL
E.
INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM SALES TAX:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
DURING CONSTRUCTION
DURING OCCUPANCY
TAX CREDITS:
INITIAL INVESTMENT
(
(
$0)
$0)
(
(
$0)
$0)
(
(
$0)
$0)
$0)
$4,224,275)
(
(
$0)
$687,481)
$1,299,917)
$0)
(
(
$211,556)
$0)
$7,806,211)
(
$1,270,425)
$11,148,810)
$654,896
(
$1,814,417)
$106,581
REPLACEMENTS TO CAPITAL
SUBTOTAL
F. REMAINING VALUE AT END OF OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
SUBTOTAL
G.
TOTAL
LIFE-CYCLE
**
*
*
*
*
$10,493,910)
$1,707,836)
$11,423,830
$3,617,623
$1,859,176
$588,752
PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER
INCOME TAX ADJUSTMENTS
* * * *
$0)
$0)
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
I
U
U
234
BUILDING CHARACTERISTICS FILE
FILE NAME: RE2
FILE LAST MODIFIED ON 12-23-1984 10:21:17
PROJECT TITLE: 2 FLOOR EXPANSION
BASIC LCC ANALYSIS ASSUMPTIONS:
10
YEARS
STUDY PERIOD:
CONSTRUCTION PERIOD (PRIOR TO OCCUPANCY): 1 YEAR(S)
PROJECT STARTING DATE: 1985
BASE DATE FOR DISCOUNTING: 1985
DISCOUNT, INTEREST, AND PRICE ESCALATION RATES INCLUDE INFLATION (NOMINAL)
DISCOUNT RATE (ANNUAL): 10 %
TAX STATUS: FOR PROFIT (1)
MARGINAL FEDERAL INCOME TAX RATE: 46 %
MARGINAL STATE INCOME TAX RATE: 0 %
PROPERTY TAX RATE (% OF ASSESSED VALUE): 3.254 %
PERCENT OF CAPITAL GAINS SUBJECT TO INCOME TAXATION: 28 %
DEPRECIATION RECAPTURE METHOD: 3
DEPRECIATION BASIS ADJ. FACTOR: 0 %
SALES TAX RATE: 5 %
CAPITAL COMPONENT AND REPLACEMENT COST DATA:
NUMBER OF CAPITAL COST COMPONENTS: 1
CAPITAL COST COMPONENT DATA:
COMPONENT NAME
C ONSTRUCT
INITIAL COST
98 40000
PORTION SUBJECT TO SALES TAX
0.00%
EXPECTED COMPONENT LIFE(YRS)
30
DEPRECIATION METHOD
S.L . (1)
DEPRECIATION LIFE (YEARS)
10
DEPR. ACCELERATION RATE
0.00%
SALVAGE VALUE (CONSTANT $)
10 0.00%
ADD'L FIRST YR DEPRECIATION
0.00%
AVG PRICE ESC RT DURING CONST.
7.00%
AVG PRICE ESC RT DURING OCC.
7.00%
PROP. TAX ASSESSMENT FACTOR
0.00%
TAX CREDIT (% OF 1ST COST)
1 0.00%
RESALE VALUE (% OF 1ST COST)
10 0.00%
NUMBER OF REPLACEMENTS
COST-PHASING SCHEDULE BY YEAR OF CONSTRUCTION AND AT OCCUPANCY:
1
0.00%
AT OCCUPANCY
100.00%
NO REPLACEMENTS TO ANY CAPITAL COST COMPONENTS
235
MORTGAGE LOAN DATA:
--------------------LOAN NUMBER
% OF TOTAL COST MORTGAGED
LOAN TYPE
-ANNUAL INTEREST RATE
LIFE OF LOAN (YEARS)
NUMBER OF PAYMENTS/YR
POINTS PAID (% OF LOAN)
CONSTRCT.
LOAN
100.00%
2
13.00%
0
1
0.00%
PERMANENT
LOAN(S)
1
100.00%
1
12.75%
15
12
0.00%
OPERATING AND MAINTENANCE COST DATA:
ANNUAL
ANNUAL
NUMBER
ANNUAL
ENERGY
RECURRING 0 AND M COST = $242720
RATE OF INCREASE FOR A.R.C. = 3.70%
OF NON-ANNUAL RECURRING 0 AND M COSTS = 0
RATE OF INCREASE FOR N.A.R.C. COSTS =
0.0%
COST DATA:
NUMBER OF ENERGY TYPES = 2
ENERGY TYPE NO. 1 = ELECTRICITY
$79860
ANNUAL COST =
ANNUAL RATE OF INCREASE DURING CONSTRUCTION =
PRICE INCREASES DURING OCCUPANCY:
NUMBER OF DISCRETE TIME INTERVALS = 1
# DURATION ANNUAL
(YEARS)
RATE
7.7%
9
1
ENERGY TYPE NO. 2 = FUEL
$47400
ANNUAL COST =
ANNUAL RATE OF INCREASE DURING CONSTRUCTION =
PRICE INCREASES DURING OCCUPANCY:
1
NUMBER OF DISCRETE TIME INTERVALS =
# DURATION ANNUAL
RATE
(YEARS)
7.7%
9
1
236
7.7%
7.7%
******
*
*
*
*
*
*
*
*
*
*
*
*
*
B L C C
PART I
*
*
*
*
*
*
*
*
A N A L Y S I
*
*
***
*
*
*
*
*
*
*
S
INITIAL ASSUMPTIONS AND COST DATA
-
PROJECT NAME:
2 FLOOR EXPANSION
RUN DATE:12-23-1984 11:20:37
BLDG. CHAR. FILE NAME: RE2
, LAST MODIFIED 12-23-1984 11:18:5
LCC OUTPUT FILE NAME:
RE2LCC
, CREATED 12-23-1984 11:19:58
STUDY PERIOD: 10 YEARS, (1985 THROUGH 1994)
CONSTRUCTION PERIOD:
1 YEARS (1985 THROUGH 1985)
OCCUPANCY BEGINS: 1986
AFTER-TAX DISCOUNT RATE:
10.0% (NOMINAL)
TAX STATUS: FOR PROFIT
INCOME TAX RATE:
46.0%
(COMBINED FEDERAL, STATE, CITY)
EFFECTIVE CAPITAL GAINS TAX RATE:
12.9%
NOMINAL PROPERTY TAX RATE:
3.25%
NOMINAL SALES TAX RATE:
5.00%
INITIAL CAPITAL COMPONENT COSTS (NOT DISCOUNTED)
INVESTMENT
CATAGORY
YEAR
COST
PHASING
1986
100.0%
ACTUAL
COST
TOTAL
COST
$10,528,800
$0
$10,528,800
TOTAL FOR CONSTRUCT
$10,528,800
$0
$10,528,800
TOTAL PROJECT COST
$10,528,800
$0
$10,528,800
CONSTRUCT
FINANCIAL REQUIREMENTS
A.
SALES
TAX
INVESTOR'S
(NOT DISCOUNTED)
INITIAL CASH REQUIREMENTS (UP TO AND INCLUDING OCCUPANCY):
(NOT ADJUSTED FOR INCOME TAX SAVINGS)
YEAR
PROJECT
1985
1986
DURING CONSTRUCTION
AT OCCUPANCY
TOTAL
'POINTS'
INTEREST
TOTAL
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
PLUS PREPAID PROPERTY TAXES AT OCCUPANCY
$111,484
TOTAL CASH REQUIREMENTS
$111,484
B.
BORROWING REQUIREMENTS:
(1) TEMPORARY FINANCING (DURING CONSTRUCTION):
AMOUNT
BORROWED
YEAR
--------
---1985
TOTAL
POINTS PAID
INTEREST
RATE
%
0.00%
13.00%
$0
$0
TYPE
----------------
PAYMENTS/
YEAR
--------------INTEREST ONLY
AMOUNT
$0
$0
1
(2) PERMANENT FINANCING (AT OCCUPANCY):
LOAN
NO.
LIFE
AMOUNT
BORROWED
INTR.
RATE
POINTS PAID
---- --------- ------ ------
*
*
*
*
*
*
*
*
*
*
PERCENT
0.00%
15 YRS 12.75%
1 $10,528,800
TOTAL $10,528,800
*
*
*
*
*
*
*
TYPE
---------------
*
*
*
*
*
237
-------------AMORTIZED
AMOUNT
$0
$0
*
*
*
*
PAYMENTS/
YEAR
--------12
*
*
*
*
*
*
*
*
*
*
*
*
*
*
PART II
-
LIFE-CYCLE COST ANALYSIS:
DISCOUNT RATE = 10.0%
PRESENT VALUE
(1985)
A. INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
SUBTOTAL
C. OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
E. INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM SALES TAX:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
DURING CONSTRUCTION
DURING OCCUPANCY
TAX CREDITS:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
(
$0
$0
$0
$0
$4,748,724
$6,426,194
$772,833
$1,045,833
$11,174,920
$1,818,666
$1,551,274
$0
$1,010,458
$818,718
$252,463
$0
$164,447
$133 ,243
$3,380,450
$550,153
$1,520,770)
$247,498)
(
(
$0)
$0)
(
(
$0)
$0)
SUBTOTAL
**
*
**
**
*
*
*
*
*
*
*
*
*
*
*
*
$0)
$0)
$460,191)
(
(
$141,613)
$0)
$5,218,596)
$849,302)
C
$7,462,875)
$438,380
$1,214,549)
$71,344
(
$7,024,496)
$1,143,204)
$7,632,222
$2,413,626
$1,242,109
$392,806
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER INCOME TAX ADJUSTMENTS
*
$0)
$870,149)
$0)
(
(
SUBTOTAL
$0)
$0)
(
(
$0)
$2,827,678)
(
(
F. REMAINING VALUE AT END OF OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
ANNUAL VALUE
$0
$0
SUBTOTAL
B. FINANCING PAYMENTS (AFTER OCCUPANCY):
PRINCIPAL
INTEREST
(NOMINAL)
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
IU
U
I
I
238
*
**
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
B L C C
*
*
*
*
*
*
*
*
*
*
*
*
PART I
*
*
*
*
*
*
*
*
*
*
*
A N A L Y S I
S
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
***
*
*
*
*
*
*
*
*
*
*
*
*
*
*
-
INITIAL ASSUMPTIONS AND COST DATA
*
*
3 FLOOR EXPANSION (30 YEARS)
PROJECT NAME:
RUN DATE:12-23-1984 11:32:01
, LAST MODIFIED 12-23-1984 11:30:2
BLDG. CHAR. FILE NAME: RE330
, CREATED 12-23-1984 11:31:21
LCC OUTPUT FILE NAME:
RE330L
STUDY PERIOD: 30 YEARS (1985 THROUGH 2014)
CONSTRUCTION PERIOD:
1 YEARS (1985 THROUGH 1985)
OCCUPANCY BEGINS: 1986
AFTER-TAX DISCOUNT RATE:
10.0% (NOMINAL)
TAX STATUS: FOR PROFIT
INCOME TAX RATE:
46.0%
(COMBINED FEDERAL, STATE, CITY)
12.9%
EFFECTIVE CAPITAL GAINS TAX RATE:
3.25%
NOMINAL PROPERTY TAX RATE:
NOMINAL SALES TAX RATE:
5.00%
INITIAL CAPITAL COMPONENT COSTS
INVESTMENT
CATAGORY
YEAR
COST
PHASING
1986
100.0%
ACTUAL
COST
SALES
TAX
TOTAL
COST
$15,729,000
$0
$15,729,000
TOTAL FOR CONSTRUCT
$15,729,000
$0
$15,729,000
TOTAL PROJECT COST
$15,729,000
$0
$15,729,000
CONSTRUCT
FINANCIAL REQUIREMENTS
A.
(NOT DISCOUNTED)
(NOT DISCOUNTED)
INVESTOR'S INITIAL CASH REQUIREMENTS (UP TO AND INCLUDING OCCUPANCY):
(NOT ADJUSTED FOR INCOMETAX SAVINGS)
YEAR
'POINTS'
PROJECT
INTEREST
TOTAL
$0
DURING CONSTRUCTION
AT OCCUPANCY
1985
1986
TOTAL
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
PLUS PREPAID PROPERTY TAXES AT OCCUPANCY
$166,547
TOTAL CASH REQUIREMENTS
$166,547
B.
BORROWING REQUIREMENTS:
(1) TEMPORARY FINANCING (DURING CONSTRUCTION):
YEAR
---1985
TOTAL
AMOUNT
BORROWED
INTEREST
RATE
$0
$0
13.00%
--------
POINTS PAID
-------------%
0.00%
AMOUNT
$0
$0
TYPE
PAYMENTS/
YEAR
--------------INTEREST ONLY
1
(2) PERMANENT FINANCING (AT OCCUPANCY):
LIFE
INTR.
AMOUNT
LOAN
RATE
BORROWED
NO.
------ ----------------1 $15,729,000 15 YRS 12.75%
TOTAL $15,729,000
TYPE
POINTS PAID
-----------------------------PERCENT AMOUNT
-------------$0 AMORTIZED
0.00%
$0
PAYMENTS/
YEAR
--------12
* * * * * * * * * * * * * * * *
* * * * * * * * * * * * * * * * * * * *239
239
* *
* * *
PART II
* * * * * * * * * * * * *
* * * * * * * * * * * * * * * *
LIFE-CYCLE COST ANALYSIS:
-
DISCOUNT RATE = 10.0%
PRESENT VALUE
(1985)
A. INVESTOR'S INITIAL CASH REQUIREMENTS:
(EXCEPT PREPAID PROPERTY TAXES)
DURING CONSTRUCTION
AT OCCUPANCY
$0
$0
$0
$0
$6,075,188
$10,957,800
$644,451
$1,162,395
$17,032,980
$1,806,846
$4,608,823
$0
$4,052,475
$3,061,805
$488,901
$0
$429,884
$324,794
$11,723,100
$1,243,578
(AFTER OCCUPANCY):
SUBTOTAL
C. OPERATING, MAINTENANCE & RELATED COSTS:
ANNUALLY RECURRING COSTS (NON-ENERGY)
NON-ANNUALLY RECURRING COSTS
ENERGY COSTS
PROPERTY TAXES
SUBTOTAL
E. INCOME TAX ADJUSTMENTS * :
TAX SAVINGS FROM 0 AND M COSTS
TAX SAVINGS FROM DEPRECIATION:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM SALES TAX:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
TAX SAVINGS FROM INTEREST AND POINTS:
DURING CONSTRUCTION
DURING OCCUPANCY
TAX CREDITS:
INITIAL INVESTMENT
REPLACEMENTS TO CAPITAL
(
$5,264,590)
(
(
$0)
$0)
$0)
$0)
(
(
$0)
$0)
$0)
$0)
$137,894)
$0)
( $11,385,190)
$1,207,732)
(
SUBTOTAL
G. TOTAL LIFE-CYCLE PROJECT COST:
BEFORE INCOME TAX ADJUSTMENTS
AFTER INCOME TAX ADJUSTMENTS
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
$0)
$511,375)
(
(
$1,299,917)
$0)
(
(
F. REMAINING VALUE AT END OF OCCUPANCY
LESS: CAPITAL GAINS TAX LIABILITY
*
$558,464)
$0)
$4,820,685)
SUBTOTAL
*
ANNUAL VALUE
$0
$0
SUBTOTAL
B. FINANCING PAYMENTS
PRINCIPAL
INTEREST
(NOMINAL)
$6,412,842)
$709,873
$680,270)
$75,303
$5,702,969)
$604,967)
$2, 461,519
$1,253,786
$23,204,530
$11,819,340
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* INCOME TAX SAVINGS ARE DISCOUNTED FROM THE END OF THE YEAR IN WHICH THEY ARE
EARNED;
TAX CREDITS AND TAX SAVINGS FROM SALES TAX ON INITIAL INVESTMENT ARE REALIZE
IN THE FIRST YEAR OF OCCUPANCY.
240
APPENDIX B:
241
GLOSSARY
GLOSSARY
Accelerated depreciation:
A depreciation method
resulting
in larger deductions from income in the early years than the
straight-line method.
Amortization:
The periodic repayment of debt under a loan
agreement; payments made to reduce debt on a periodic basis.
Annual
benefit:
expected
to
result
The dollar value of goods
from a program or project
and
for
services
each of the
years it is in operration.
Annual cost:
The expected annual dollar value
goods
and
services required to establish and
program
or
acquisition,
project.
All
possession
economic
and
of resources,
carry
out
a
costs
operation
including
costs
muct
be
included.
Benefit-cost
ratio:
present value cost.
Present
value
benefit
divided
by
Cash
flow schedule:
A schedule of anticipated cash
intake
and
outgo
over
time, ordinarily
reflecting
anticipated
revenues
from sales or
rentals,
anticipated
operating
expenses and debt-service requirements, any cash contributed
by the
owners
or
by others and the
resulting
net
cash
returns
to
the owners after payment of operating
expenses
and debt service.
Cash flows may be discounted to arrive at
an
estimate
of
investment analysis.
their
Construction
construction
loan:
present
value
for
purposes
of
finance
the
An interim loan used to
of buildings
and other
improvements
on a
site.
Discount
factor:
The factor for any specific discount rate
which
translates
expected cost or benefit in any specific
future
year into its present value.
The discount factor is
equal to 1/(l+r)t , where r is the discount rate and t is the
number of
years since the date of initiation,
renewal
or
expansion of a program or project.
Discount
rate:
The interest rate used in calculating
present value of expected yearly costs and benefits.
242
the
Double
declining
balance depreciation:
A method
of
straight-line
that begins by calculating the
depreciation
resulting
rate, doubling it and applying the
depreciation
to the undepreciated portion of the cost or value of
factor
Depreciation
in each accounting period.
the
improvements
undepreciated
in
each period is deducted from the
taken
in
declining
results
that
this method
balance
so
depreciation estimates over
time.
This method is
also known
as 200 percent declining balance; other percentages, such as
also be
150 percent
or 125 percent of straight-line, may
used and are permitted for certain classes of property under
existing
income tax law.
estate
The value of the owner's interest in real
Equity:
cash
and above any leins against it; the owner's
has
over
augmented by any debt reduction or value gains;
investment,
the
value of the property minus any existing mortgages
and
leins.
costs
which
costs:
Those
annually
recurring
Escalating
which
escalate
in
real value such as: service/maintenance
building/components
increasing amounts of work as
involves
age
and/or
inflation;
an
from
general
replacements which
escalate
escalation in cost different
fuel costs; frequent
at a different rate than general inflation.
Gross
space
the
floor area: The area determined by measuring all
the
inside
floor, or in the building, from
on
the
finished surface of the exterior walls.
a
A short-term loan, ordinarily secured by
Interim
loan:
and
acquisition
used to finance property
mortgage,
forst
an
acquisition,
of
the
form
take
May
improvements.
development or construction loan.
more
or
A legal arrangement in which two
Joint
venture:
of
a
rewards
and
the risks
share
to
undertake
parties
venture on an agreed basis.
Leasehold:
The lessee's ownership interest in the property.
property
The use of fixed-cost funds to acquire
Leverage:
that
is expected to produce a higher rate of return either
by way of income or through appreciation.
243
partnership: A form of ownership in which partners
Limited
or
partner
the general
classes:
two
into
are divided
and
group
the
of
operations
the
partners who actively manage
limited
responsibility for its affairs, and the
full
bear
amounts
the
to
limited
whose exposure is normally
partners,
of the
terms
the
under
which they are obligated
for
the
over
control
no
have
agreement and who
partnership
affairs of the partnership.
ratio:
Loan-to-value
of
amount
principal
a
original
the
between
ratio
The
or
actual
the
mortgage loan and
appraised value of the property.
A
Mortgage:
instrument under
legal
the payment of a
which
debt
property
to
secure
subject
to
statutory requirements governing the
for
foreclosure
in
the
is
obligation,
or
pledged
procedure
event of default.
Gross property income less operating
operating income:
Net
further
Does not reflect any
expenses and property taxes.
deductions for mortgage payments, income taxes, depreciation
or non-operating expenses.
Non-recurring
replacement;
implementation
future costs:
non-annual
costs
including such needs as: major
repair;
and
maintenance
for major alterations
to
that
which
already exists.
Each year's expected yearly benefit
Present value benefit:
its discount factor and then summed up over
multiplied by
years of the planning period.
all
yearly cost
Each year's expected
value cost:
Present
all
by its discount factor and then summed over
multiplied
years of the planning period.
The difference between
Present value net benefit:
value benefit and present value cost.
Rentable
area:
The actual
space on each floor,
present
rented by
a
areas,
of the public
share
including his/her
tenant,
the
by
used
space
of
washrooms, lobbies, and pro rated share
stairs).
fire
and
entire building (i.e. elevators
244
or
Sale
and leaseback: A means of financing the ownership
property
the
by
purchasing
development of improved property
it back to the owners or developers at a rent
leasing
and
requirements plus
normal debt-service
cover
to
intended
the
required by
any profit
costs including
transaction
purchaser.
Development costs other than those devoted
Soft
costs:
land
and actual construction, such as interest on
funds,
architectural
and other
fees, marketing
to
borrowed
costs
and
incidental costs.
deduction
depreciation
A
depreciation:Straight-line
by subtracting from the initial cost or value of
calculated
then
and
anticipated salvage value
any
improvements
the
dividing
the
estimated economic life of
the
improvements
The resulting amount is the same for each
into that figure.
term
the economic life of the property, hence the
of
year
"straight-line."
Sum-of-the-years-digits depreciation:
A depreciation method
anticipated
on the
based
an arbitrary formula
using
yields
This method
life of the improvements.
depreciable
roughly comparable to those of the double declining
results
balance method and is generally allowed where that method is
permitted
under
existing
law.
irrevocably
or
spent
funds already
Those
costs:
Sunk
construction
Such costs include: study costs;
committed.
the
started or completed; design costs where
already
work
design
of
regardless
contract
by
is
obligated
expense
life-cycle
in
ignored
should be
costs
Sunk
solution.
costing calculations.
Actual costs and benefits in future years are
Uncertainty:
of
time
the
at
expected
those
from
differ
to
likely
reasonable
For those cases for which there is a
decision.
costs and
future
the variability of
estimate
basis to
benefits, the sensitivity of proposed programs and projects
to this variability should be evaluated.
Uniform
annually recurring
costs:
Expenditures
including:
service contracts; preventive maintenance; scheduled minor
in
annually recurring costs which increase
replacements;
inflation.
general
as
rate
same
price at the
245
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