This week’s Green Scene column in Crain’s Chicago Business: Food distributor passes century mark with a big bet on green technology

Family-owned Testa Produce is investing big in green technology in hopes of ensuring that its next century in business is just as successful as its first 100 years.

Peter Testa, the company’s president and third generation family member overseeing the produce distribution business started in 1912, convinced his brother and other family members to go along with his vision of adding renewable energy and water management systems into a new produce distribution center they built last year in the Back of the Yards neighborhood. The 91,000 square foot facility was constructed on a restored brownfield site that the wholesale produce distributor uses for receipt and delivery of the fresh and frozen fruits and vegetables, appetizers, and other local or organic sourced products it sells to the foodservice industry in Illinois and Wisconsin. Clients include hotels, restaurants, hospitals, corporate dining centers and schools.

The new plant is equipped with 180 photovoltaic solar panels (for electricity) and the first 238-foot freestanding wind turbine installed in Chicago. The turbine is expected to generate more than 30% of the facility’s energy needs, says Mr. Testa, 59. The entire plant, including refrigerated and frozen areas, has energy efficient LED lighting. The water management system consists of a retention pond that holds 800,000 gallons of water, bio swales, an internal rainwater-harvesting system and a 50,000 square-foot barreled green roof that slopes down in the front of the building for the “wow factor” when visitors and clients stop by, notes Mr. Testa. The combined water systems are designed to prevent stormwater runoff and reduce the facility’s water demand by more than 40%, he explains, adding that so far, the water bill has been almost negligible.

The sustainable features included in the new facility resulted in the U.S. Green Building Council (USGBC) certifying it as the first LEED Platinum refrigerated foodservice facility in the U.S.

Earlier this month, the USGBC’s Illinois chapter recognized Testa with one of its annual Emerald Awards it gives to companies in the state for green building innovation. And next week (June 8), the Illinois Chamber of Commerce and Illinois Development Council will honor Testa with an “Edie” Award (Economic Development in Illinois) at a ceremony to recognize a handful of Illinois businesses for significant economic development projects completed in the prior year.

Crain’s met up with Mr. Testa to learn the reasons behind the company’s green agenda and the financing needed to make it happen.

Crain’s: Testa Produce isn’t the sort of business you’d expect to seek out the highest green building and energy standards possible, so why are you doing this?


Peter Testa

Mr. Testa: It matters to my clients and it matters to me. I’ve been in the agricultural business for 40 years. I’m familiar with pesticides and the effects they have on the environment and I’m concerned about that. At an early age I wanted to make sure if we do this kind of business, let’s be as environmentally friendly as possible, even witih our buildings.

I’m also in a family-run business, so I have to differentiate myself from the rest of the pack of larger companies. I want clients to say they like that I’m using renewable energy, and that I’m a pretty good produce company too. All the fancy bells and whistles won’t do squat if you don’t execute on your core business.

Crain’s: Why did you choose to set the bar so high by going for LEED Platinum certification, which has the toughest standards to meet?

Mr. Testa: My construction people said I couldn’t do it, but we’ve always tried for excellence and I don’t believe you can’t do something you really want to do. If I’m going to have a 30% electric bill savings each year going forward (by adding renewables), why wouldn’t I do it?

Our builders looked at the power we generate to cool our facility and the energy points were very difficult to get (to achieve Platinum status) unless you can figure it out from renewable sources. We wanted to show people that this is possible. Also, I’m not a corporation, so I have the luxury of pursuing these things without board approval. I just had to convince my brother to go along with it.

Crain’s: How much money did the company invest in all the green features of the new building project and how did you finance them?

Mr. Testa: Green technology is 10-20% of the cost of a building and ours was closer to 20% because we addded so many features. That cost was about $3-4 million.

Banks don’t like to finance green technology because they look at your building as a whole and they initially may discount it so it doesn’t add to the appraisal. It was a big leap of faith for the banks to step up and finance this project. As time went on, they realized the green features aren’t a detriment, they’re a plus because they saw our reductions in water and energy costs.

Crain’s: What’s the expected ROI on these systems?

Mr. Testa: Those are floating numbers. With the wind turbine, we expect a payback in about 8-9 years if it continues to generate a little more than 30% of the facility’s energy needs. The solar panels may take 3-4 years or sooner. The water harvesting can give us a return on investment in less than two years. I thank the mayor for that because he raised the water rates.

We’re applying for government grants (to offset costs) even though we know it’s a long process and we don’t know if we’ll get any. You can’t count on that as part of the financing mechanism, but if we get any money, we agreed with the bank that we’d use it to help pay down the debt.

Crain’s: Lots of business owners say they’re waiting for renewable energy costs to come down or hoping for better federal and state incentives. Why did you decide to move forward?

Mr. Testa: Everyone needs to stop waiting for the government to do things for them. The green technology market is underutilized and we could use it to make ourselves self-dependent. Oil and coal are finite resources. Last time I checked the sun is free and right now we have plenty of water.

We’re even moving to electric trucks (at Testa) to get us away from diesel fuel, which I would love to get rid of immediately. I have two electric trucks coming in a month. The range is only 100 miles, but I’m only four miles from downtown and those smaller trucks are actually better to get around in that area. I have about 60 trucks on the road and we use close to 1,500 gallons a day, but I won’t buy more electrics until we get a longer range.

Crain’s: What advice do you have for other Chicago companies that are considering adding green building features in a renovation or new construction project?

Mr. Testa: Do your research. Don’t take the first person who comes to you with green technology. Know what things should cost, know where to look for them and know who’s going to fix it if it breaks. You don’t want to buy something from Germany if it takes an engineer from Germany to fix it.

There’s nothing that can intimidate someone about green technology as long as you can read. I was raised in the produce industry, and I certainly wasn’t a green expert. You just need to invest a little time, just like you’d do research before buying a car.

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This week’s Green Scene column in Crain’s Chicago Business: Clean-tech networking heats up in Chicago

Chicago entrepreneurs in the clean-tech sector are making time for a networking event that’s gaining popularity.

The Chicago Clean Energy Alliance has amassed an email list of more than 6,000 individuals who either work in the clean-tech industry or in a related field, says David Carman, one of the alliance’s co-founders. Mr. Carman, a former options trader at the Chicago Board Options Exchange and currently president and CEO of Business Network Chicago, says the group was formed by people who want to see growth in the renewable energy sector even though they generally aren’t active players in that market. The other co-founders are Bryan Villano, Darrin Stern and Dan Fedor.

The CCEA is a volunteer-run organization that focuses primarily on organizing quarterly networking events around Chicago. Unlike the Clean Energy Trust, the alliance doesn’t have staff to offer mentoring.

However, both organizations now have one feature that’s similar: a fast-pitch competition that invites renewable energy companies to present their business models to a panel of judges. Winners either get cash prizes (from the Clean Energy Trust) or move on to the next round (after the CCEA) for a shot at getting face time with prominent investors. Participants at the Clean Energy Trust event typically are early-stage firms.

Last month, the CCEA held its first live Clean Tech Competition where 10 later-stage companies pitched their stories to 10 judges and about 125 attendees. Of the total, six companies were selected to move to the next round of fast pitches that will be run by the Global Cleantech Cluster Association in Savannah, Ga., next October. The GCCA has 38 member groups worldwide, including the Chicago alliance.

Midwest players among that group heading to Savannah include H.E. System Technologies and Xolve.

Crain’s met up with Mr. Carman after the recent fast-pitch competition to talk about how the Chicago alliance fits into the local green business landscape.

Crain’s: How long has CCEA been around and why was there a need to form this organization?


David Carman

Mr. Carman: We had our first networking event in December 2009 at the Mid-America Club. We knew we were onto something when we had to close registration before the event because we already hit the max at 500 people. We wanted to start a network to bring out the top players in Chicago working in clean energy or related to it in some way. A more typical gathering these days brings in 150 to 250 people.

We also want to showcase promising clean-tech technologies. At one of our events, we brought out a Tesla ($100,000-plus electric car), a Chevy Volt and others for people there to check out. We even had an electric motorcycle at the 95th at the top of the (John) Hancock building for people to drive around up there. We can’t show a wind farm, so there’s limits to what we can do.

Crain’s: What else happens at the events you organize?

Mr. Carman: We always have a speaker or panel discussion. We’ve brought in state representatives and senators to talk to our members. We also have people come and talk about cutting-edge ideas and disruptive technologies. We haven’t made a concerted effort to reach out to venture capitalists, but some of them show up at our networking events. We’re still evolving.

Crain’s: How would you characterize the availability of Midwest venture-capital investment dollars in the renewable energy sector?

Mr. Carman: Getting funding for clean tech is tougher than getting into an Ivy League school. There are some sources of capital for clean tech in Chicago, but it’s not easy to get. The hottest area right now is in the digital space, and few of those companies are actually getting funding. The returns on clean tech haven’t been as great as those at digital companies and (the clean tech businesses) won’t ever go viral. There aren’t going to be any Facebooks in this sector.

Crain’s: Do you have any predictions about future VC funding for local entrepreneurs pursuing renewable energy products and services?

Mr. Carman: I don’t think this space is going away anytime soon and I think it will thrive. But many government subsidies are coming to an end and the big money often goes to a few concentrated deals. I’m sure there will be a lot of (VC) money, but startups are inherently risky and you’re trying to get someone to give you their hard-earned money. Getting funding is like a crusade: You have to beat the drums consistently.

Crain’s: When is the alliance’s next gathering?

Mr. Carman: Sometime in June, but we haven’t set an exact date or location yet. We’ll post it on our website soon.

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This week’s Green Scene column in Crain’s Chicago Business: Chicago developer adding renewable energy to low-income housing projects

Residents at close to two dozen affordable housing buildings will soon be getting electricity from the sun via solar panels on their rooftops.

Hippolito “Paul” Roldan, president and CEO of Hispanic Housing Development Corp., is kicking off a $7 million renewable energy initiative this month at 13 housing projects in Chicago neighborhoods including Humboldt Park, Logan Square, West Town and Rogers Park. More than 3,900 photovoltaic panels and other retrofits will be installed on 21 buildings with 1,300 apartments. Co-generation systems that direct energy from hot water tanks back into the building power supply will be added as another renewable feature.

Mr. Roldan created Affordable Community Energy Inc., a new for-profit subsidiary within HHDC, to carry out these efforts. He estimates the program will result in a 17 percent annual energy savings and an 850-ton reduction in carbon dioxide emissions. The program will be offered to other building owners and managers of affordable-housing projects if the upcoming pilot is considered a success. He’ll also expand the program to the remainder of HHDC’s buildings throughout the city.

This isn’t Mr. Roldan’s first energy-focused foray in lower-income housing. Between 2007 and 2010, HHDC completed $1.5 million in energy efficiency improvements at some of its buildings with the help of the Center for Neighborhood Technology and others. Those efforts led to a 26 percent reduction in annual energy usage, he said.

As co-chair of Mayor Rahm Emanuel’s Green Ribbon Committee and a member of the original group established by Mayor Richard M. Daley, Mr. Roldan had helped implement the Chicago Climate Action Plan’s strategies for reducing the city’s carbon footprint. A key component of that plan calls for retrofitting existing buildings in the city with more energy efficient systems and non-fossil fuel energy options to reduce carbon dioxide emissions and slash utility costs as well. Mr. Roldan decided to do his part, beginning with buildings in his company’s own portfolio.

In recognition of his commitment to greening the Chicago residential and economic landscape, Mr. Roldan last week was honored as a “Partner in Change” by the Delta Institute, a nonprofit that works to boost the local green economy.

Crain’s caught up with Mr. Roldan this week to talk about his upcoming renewable energy venture.

Crain’s: Will the solar panels and co-generation systems power the entire building once they’re installed?


Hippolito Roldan

Mr. Roldan: The solar photovoltaic panels and co-generation will generate energy for the common areas of the buildings and will generate 20 percent to 25 percent of the buildings’ total energy consumption. It will also reduce the risk of future spikes in energy costs because they’ll be making some of their own energy, and it will help these buildings deal with failures in the grid. Combined, they’re expected to generate over 1 million kilowatt hours a year.

Crain’s: Were you able to tap any state or federal incentive programs to help finance the $7 million price tag for this project?

Mr. Roldan: We’re getting a 30 percent federal tax credit for the solar panel costs and 10 percent for the combined heat and power (co-generation), which totals a bit over $1 million. We’re also benefiting from a federal new market tax credit of about $1.4 million that supports businesses in economically distressed areas. (The U.S. Department of Housing and Urban Development) is giving us $900,000 to test leading edge business models and tools. Also, we got a grant from the Illinois Department of Commerce and Economic Opportunity and another for energy audits from the Center for Neighborhood Technology. We also have our own project reserve money for improvements that are being used to invest in these efforts.

Hopefully in the next 10 years there will be so much efficiency in renewable energy (that’s widely known) that we won’t need public subsidies to get these projects done. My prediction is that very quickly technology will outstrip the need for these public subsidies, but right now we can’t do it without them.

Crain’s: What’s the timeline for finishing this project and then offering to install these systems for others?

Mr. Roldan: We’re starting with one apartment on California Avenue this month and then we’ll continue from there. We’re in the experimental stage and using 25 percent of our own portfolio for that purpose. If the reality matches our pro forma (in energy savings) and it makes sense to move forward, we’ll use more of our own properties and offer it to others as well. There are 60,000 affordable housing apartments in Chicago and we’ll probably begin to reach out to other owners soon to see if they’re interested.

Crain’s: How do residents of these affordable-housing projects benefit from the energy cost savings if they don’t directly pay their utility bills anyway?

Mr. Roldan: There are benefits to the property itself because over time it will have reduced operating costs from the renewable energy systems. That sets the stage for getting additional income in the operating mix and onsite managers will have the option of what to do with the extra capital. They can make improvements in the building or directly in some of the apartments.

We also plan to set up a pilot program for behavior change (in energy usage) among our residents. Once we install the new energy systems, we’ll try to create some type of incentive program with their help, track its impact and share savings with the residents if it gets them to change their behavior to be more energy efficient.

Crain’s: In the bigger picture, how are you engaged in the mayor’s Green Ribbon Committee?

Mr. Roldan: The Green (Ribbon) Committee was Mayor Daley’s idea, but Mayor Emanuel has a different approach to it. He’s focusing on job creation and entrepreneurship in a very powerful way to get the private sector involved in realizing that substantial savings can be achieved (in the green economy). We put together a strong marketing approach and now we’re reaching out to the private sector. If we’re successful, our children and their children will benefit from these efforts.

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Remodeling Reexamined in USA Today’s Green Living Magazine

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This week’s Green Scene column in Crain’s Chicago Business: Rebate aims to entice Illinoisans to rev up electric cars

A new state rebate program for electric vehicle charging stations could inspire businesses and others to rev up their commitment to battery-operated cars.

The Illinois Department of Commerce and Economic Opportunity (DCEO) recently launched an EV Charging Station Rebate Program that will give cash back to anyone in the state who installs them by June 15 this year.

So far, six rebate applications have been submitted, according to a DCEO spokesman.

Some consider the reluctant embrace of electric vehicles to be a chicken-or-egg dilemma: What needs to come first, consumers and businesses buying the cars or the infrastructure that would let them recharge these vehicles with ease?

“A lot of companies that have been on the fence from a cost perspective will now be able to reduce a great portion of the cost and that will get them to the finish line,” says Brian Levin, vice president at Carbon Day Automotive, a Chicago-based startup that’s the Midwest distributor of electric car charging stations manufactured by Coulomb Technologies of Campbell, Calif. “We think this (rebate program) will set the tone that it’s okay to buy an electric vehicle because more charging stations will be available.”

I-GO CarSharing, a non-profit member organization that loans cars for short-term use, hasn’t applied for any rebates with the new program even though it’s moving forward with a plan to boost its own electric car fleet and the charging stations it will need to power them.

The non-profit already has seven charging stations installed around Chicago for eight electric cars in its total fleet of 235 vehicles. A handful more are in the process of going up in public parking lots in downtown Evanston, which will be connected to solar canopies so the energy source for those stations will be renewable, says Sharon Feigen, CEO of I-GO, which is a division of the Center for Neighborhood Technology. There are plans to grow the electric fleet to a total of 36 cars with 36 charging stations.

The state’s rebate program, along with a combination of more city investment in fast-charging stations and continued rebates for electric cars, will push hesitant Chicago consumers to take the plunge and buy electric, Ms. Feigen predicts.

“I think there is this range anxiety people have — it’s a fear that they’ll run out of power and have nowhere to charge,” she says. “In reality, most trips aren’t that long for people who live in the city especially. But having that public infrastructure is a big reassurance to electric car owners because if they need to charge it while they’re out, they’ll have that opportunity if there’s more charging stations.”

A massive billboard for the electric Nissan Leaf hovers over the busy intersection at North, Damen, and Milwaukee Avenues, just a few blocks from I-GO CarSharing and CNT’s offices in Wicker Park. Ms. Feigen hopes the DCEO’s rebate program helps speed up the time to the day those vehicles aren’t considered a novelty.

“Electric cars are part of the future of the car world,” asserts Ms. Feigen.

“We’re not going to have oil forever and this is a really good way to reduce our dependence on foreign oil.”

IN OTHER GREEN NEWS:

Chicago has been selected as the host city for the 2013 Sustainable Meetings Conference, according to the Green Meeting Industry Council (GMIC). Hundreds of meeting planners from around the world and companies that supply eco-friendly goods and services to those events will gather locally next April. The GMIC conference is among a handful of upcoming industry group meetings in Chicago with a sustainability focus. In October, the 10th annual Green Roofs conference will convene in Chicago, and the city will welcome tens of thousands of attendees from all corners of the globe next spring for the Solar Power International Conference.

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