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Business Plan: Taking UBC's Residential Environmental Assessment Program (REAP) Beyond the UBC Campus Bahirat, Dhanashree 2010

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 -1-   Business Plan TAKING UBC’s RESIDENTIAL ENVIRONMENTAL ASSESSMENT PROGRAM (REAP) BEYOND THE UBC CAMPUS        With special thanks to Brenda Sawada, Alison Aloisio, Jorge Marques and Helen Goodland, who helped us when we were struggling with the concept, and the UBC SUSTAINABILITY office for providing us with this opportunity.    TEAM 8 DHANASHREE BAHIRAT· CRISTINA ENDARA · RAHUL MOHANDAS · SHIRLEY WANG   -2-  TABLE OF CONTENTS   1. INTRODUCTION.................................................................................. 1 1.1. Vision....................................................................................................................... 1 1.2. The Opportunity....................................................................................................... 2 1.3. Corporate Social Responsibility .............................................................................. 2 2. BENEFITS................................................................................................. 2 2.1. Existing Barriers for Promotion of REAP ............................................................... 2 2.2. Advantages of REAP ............................................................................................... 3 2.3. Energy Simulation Results....................................................................................... 4 2. REAP ORGANIZATION ..................................................................... 4 3.1. Organizational Structure .......................................................................................... 4 3.2. Culture...................................................................................................................... 5 4. OPERATIONS.......................................................................................... 6 4.1. Procedure for REAP certification ............................................................................ 6 4.2. Management Information System for Monitoring and Evaluation.......................... 7 5. MARKETING........................................................................................... 8 5.1. External analysis – Porter’s 5 Forces Analysis........................................................ 8 5.2. Secondary Research ................................................................................................. 9 5.3. Segmentation............................................................................................................ 9 5.4. Value Proposition................................................................................................... 10 5.5. Eco-labeling ........................................................................................................... 10 5.6. Promotional Strategies ........................................................................................... 11 5.7. Expositions............................................................................................................. 11 5.8. Website .................................................................................................................. 12 5.9. Publications............................................................................................................ 12 5.10. The Marketing Calendar ...................................................................................... 13 6. FINANCIAL PLAN  - REAP 2007-2010 .............................................. 14 6.1. Market And Sales Forecast Of Certifications ........................................................ 14 6.1.1. Revenue........................................................................................................... 14 6.1.2. Expenses ......................................................................................................... 15 6.2. Financial Statements .............................................................................................. 16 6.2.1. Income Statement............................................................................................ 16 6.2.2. Balance Sheet.................................................................................................. 17 6.2.3. Financial Performance – Breakeven and Sensitivity Analysis ....................... 18 7. RISKS AND CONTINGENCY ............................................................. 19 8. FUTURE PROSPECTS ......................................................................... 20 APPENDIX.................................................................................................. 21 REFERENCES............................................................................................ 33      -3-    EXECUTIVE SUMMARY  The demand for sustainable construction is rapidly increasing in both private and public sectors. This is mainly due to the fact that the meaning of sustainability is making more and more sense to the owners of these development projects. Sustainable construction not only helps provide social and environmental benefits, but it also provides economic benefits in the long run1. Consequently the importance of Green Building Rating Systems has been growing with time, and so is the demand and willingness of customers to pay more for an apartment in a green certified development. In Canada, the number of members of CaCBC (Canada Green Building Council) has gone from 0 in 2003 to 800 in April 2005. The number of projects registered in Green Building Rating Systems doubles or triples each year2. Currently the two most popular rating systems that are being employed in Canada are LEED and Built Green. LEED (Leadership in Energy and Environmental Design), designed by the US Green Building Council (USGBC) provides a list of norms for sustainable construction3. LEED is currently the most popular Green Building Rating System in the US and some parts of Canada. However LEED has attracted criticism from some developers because of its extremely stringent and sometimes impractical norms and the high certificate fees. Built Green, a rating system, owned and managed by the Built Green Society of Canada. can only be applied to single-family homes or row houses. It is currently a very popular rating system in both BC and Alberta4. Thus there is a need in the market for a more practical green building rating system, a system that could be used on a broader domain of project types rather than being  -4-  streamlined on a particular type of project, a system that could be less complex and more practical providing the developer with much needed experience in undertaking green projects, a system that could be more affordable than other expensive rating systems. UBC’s REAP is one such rating system that satisfies this market requirement. However till date this framework has only been implemented on the UBC Campus. UBC however sees the opportunity of promoting this framework within British Columbia thus using REAP as a tool to realize its vision of putting Sustainable Development in to practice and developing a sustainable community thus enhancing UBC’s reputation as a leader in sustainability5 6. This opportunity can be realized by developing an entirely separate department within the UBC Campus, whose sole responsibility will be to do the necessary to successfully implement and promote this concept beyond the boundaries of the UBC Campus. Effective promotional strategies will need to be implemented to raise the awareness of this concept among the developers and their potential homebuyers. The dynamic analysis of the BC market uncovers several possible risks that REAP may encounter with time. However, based of secondary research the future prospects of promoting such a concept seems extremely intense.              -5-     -1-  This is not a business plan for a for-profit organization and hence does not address the issues of developing a sustainable competitive advantage or earning revenue in excess of normal returns. This Plan has been written to indicate that REAP is a viable concept which can be marketed to the developers and homebuyers, moving towards adopting sustainable developments7. 1. INTRODUCTION  REAP, the Residential Environmental Assessment Program, is a Green Building Rating System, which was developed for use at UBC for all types of residential buildings (low, mid and high-rise). It is a highly inexpensive rating system and provides a framework to measure sustainable building practices. One of the objectives for development of such a framework was to bring about higher quality residential constructions at UBC8. REAP guidelines aim to provide sustainable design, energy efficiency, waste management, healthy interiors and the use of local materials and high efficiency appliances and equipment that minimize water and energy waste. REAP is loosely based on the concept of LEED9. However, its implementation is much cheaper and more practical for the builders when compared with LEED. Currently the REAP framework is only implemented on the UBC Campus. 1.1. Vision REAP’s Vision is in alignment with UBC’s vision of putting Sustainable Development(UBC Policy # 5) into practice and modeling a responsible, engaged and sustainable community, dedicated to principles of inclusivity and global leadership and thus enhancing UBC’s reputation as a leader in sustainability10 11.  -2-  1.2. The Opportunity REAP is the perfect substitute for the green building rating systems available in the market and it overcomes their shortcomings. The continuously increasing demand of Green Buildings in the market gives UBC an opportunity to extend REAP beyond UBC campus through all types of Residential constructions from single-family houses to Multi-Storied Apartments. 1.3. Corporate Social Responsibility UBC is the first university in Canada to create a comprehensive sustainability strategy complete with 68 targets and actions. The Sustainability Office at UBC initiated and helped develop this strategy in response to the University’s Sustainable Development Policy, which was put in place in 1997. The policy calls for clearly targeted action plans in all departments with the objective of improving performance in key sustainability areas. The sustainability strategy will serve as a model for institutions around the world.12 Social Responsibility is hence of the highest priority. 2. BENEFITS 2.1. Existing Barriers for Promotion of REAP The principal barriers to understanding the advantages of green rated buildings, both for developers and customers include assumptions that it costs more to build such buildings, lack of understanding of green strategies, minimal awareness of the market, steep learning curves for both developers and customers and lack of experience of the construction companies 13. It is evident that lack of awareness and knowledge are the biggest impediments in promoting such concepts. This business plan is aims at increasing  -3-  the understanding of REAP by overcoming these barriers and creating demand for the product, thus achieving economies of scale. 2.2. Advantages of REAP Developer Advantages: With the rising surge in the demand for Green Buildings in the BC Market, developers who are early adopters of REAP can gain an early-mover advantage in meeting the growing market demands14 Also adopting REAP will help the developers in being perceived as a socially responsible developer involved in high quality projects, thus building their brand image15. The employment of REAP will reduce water and wind erosion along with the sedimentation of waterways during construction, thus minimizing the developers’ losses16. REAP’s mandatory requirement of installation of Energy Star Products benefit the developers as BC Hydro offers rebates on ENERGY STAR labeled windows17. Canada’s Commercial Building Incentive Program (CBIP) also provides incentives to developers of Green Building projects, depending on the level of implementation of the chosen framework. REAP is a simplified version of LEED which can be applied to all types of residential buildings. Assuming that the City of Vancouver will mandate LEED as their green baseline for buildings greater than four stories tall, adopting REAP as a framework for projects can give the developers much needed experience in the implementation of Green Building development projects. Customer Advantages: Though the costs of REAP certified apartments might be slightly higher; customers will benefit from the long-term advantages, which equate with healthy environments, improved performance of the building and multiple bottom line benefits. Customers will gain economic benefits since efficient energy and water saving strategies  -4-  will yield savings on operating costs. Indoor environmental quality strategies such as better thermal control, day lighting and better overall quality will minimize the chances of sick building syndrome and callbacks18. Such buildings will also permanently reduce watershed pollution and storm water runoff. Additionally, these buildings will place reduced demand on community infrastructure for power generation, sewage conveyance and potable water19 thus reducing the maintenance cost of the customers and giving them community benefits. 2.3. Energy Simulation Results EnerSys Analytics Inc. (EnerSys) conducted an Energy Performance Workshop session for a typical Multiunit Residential Building (MURB) on the UBC campus. A simulation of the application of a particular set of energy measures (based on REAP) on the typical MURB resulted in savings of $10382 (21.8%) on the annual energy bill20 (Refer Exhibit 2.3.1 and Exhibit 2.3.2 for Simulation Results and Economic Analysis). 2. REAP ORGANIZATION  Currently there is only a single part time employee who is working for REAP at the Sustainability Office. In order to promote this concept outside the UBC Campus, a team will have to be developed which will work towards achieving this goal. 3.1. Organizational Structure The organization will be structured according to three functional areas: sustainability, marketing and operations (Refer Exhibit 3.1.1). The Sustainability Green Building Specialist heading the Sustainability Division will plan, coordinate and direct the implementation of REAP; coordinate the required actions with the UBC Properties Trust  -5-  and UBC Sustainability Office; and approve the proposals of the Marketing Officer and the Operating Officer. The Sustainability Specialist will also periodically review the rating system; develop the Monitoring and Evaluation Plan; control projects’ performance (their progress, costs and quality); conduct impact analysis; and prepare technical reports. The Operations Officer heading the Operations Division will be responsible for the budget planning and oversee and conduct the financial analysis; plan, coordinate and carry out the activities related with the certification process; and coordinate and supervise the work of the University of British Columbia students in charge of the Management Information System design, implementation and upgrading. A Civil Engineer will also work in the Operations Division in coordination with the Sustainability Specialist and will be in charge of assessing the developers’ compliance with the requirements of the REAP system. The Communications Officer heading the Marketing Division will plan and implement the marketing and communication activities related to website, publications, expos, seminars and workshops21. 3.2. Culture The REAP Organization will bring together leaders from different sectors of the building industry to progress in its vision of modeling a responsible, engaged and sustainable community. The culture in the organization will be member-driven, transparent, committed to openness thus balancing every aspect of operations and organization22. The commitment of the team to its vision will provide the solid foundation on which the REAP culture will be based. The environment at the organization must develop a Communal Culture23, which is high on both solidarity and sociability.   -6-  4. OPERATIONS  4.1. Procedure for REAP certification Presently all REAP certifications for developments on the UBC Campus are carried out at the Sustainability Office using the REAP guidelines (Refer Exhibit 4.1.1). After the implementation of the suggested organizational structure, all REAP certifications will be facilitated through the REAP Office which will work closely with UBC Properties Trust. Developers will need to follow a set of procedures to acquire the REAP certification. Initially the developers will be required to submit a sustainability statement outlining the way in which they will adopt REAP in their construction. The Developer’s project architect will then have to submit a REAP checklist verifying their compliance with the program and identifying the initiatives they will undertake in their development, to the REAP Office. He will then have to design and discuss any changes if required with the Sustainability and Operating Division. The Developer will then finalize the design, material and systems to be used in the project and submit a letter of proof to the REAP Office. The REAP Office will then determine the Certification Level of the Project based on number of points granted to the project (Refer Exhibit 4.1.2). Also if the project undertaken is at UBC then the developer will have to submit a Construction Site and Safety Plan and a Truck Management Plan in accordance with the terms and conditions of UBC Property and Community, to the REAP office (Refer Exhibit 4.1.3). Once the project commences, the Civil Engineer at REAP Office will monitor the implementation of the proposed Project Plan.  Once the Project is completed as per the plan, the REAP Certification is issued to the Developer. For developments off the UBC Campus, a fixed Certification fee is charged to the developer by the REAP Office.  -7-  4.2. Management Information System for Monitoring and Evaluation REAP will set up a Monitoring and Evaluation System that will assess the progress of the activities of each building project with respect to REAP’s internal procedures and the stage of project execution. This assessment will then be utilized to measure the financial, economic and social benefits involved for each of these projects. This will be achieved by incorporating the various frameworks already available in the market into the system to assess these benefits.This component is key for the business from two perspectives. Firstly, it will effectively aid project management since it facilitates the operation of the building projects, contributes to improving the quality of their execution and helps to achieve the desired impact. Secondly, the system will provide an outlet for accountability to stakeholders in the REAP supply chain: the donors, developers, building consumers and society, who want to attain specific objectives with the implementation of the project. The Monitoring and Evaluation component requires a Management Information System whose development, implementation and upgrading will be coordinated by the operations officer who will be in charge of a team of six students from the University of British Columbia who specialize in the following areas: Sustainability (from the Sauder School of Business), Management and Information Systems (also from Sauder), and Computer Science. Each area will be given the respective project specifications and deadlines, and two meetings a month will be held for retro alimentation between areas. Even though this alternative requires more time for getting results than by appropriating any existing software, it is more flexible and specific for the organization’s needs and represents a very low cost since it is taking advantage of the skilled human resource that the university possesses. The process of design and implementation of the Management  -8-  Information System for Monitoring and Evaluation includes the following activities, which will be carried out in constant coordination and teamwork with the sustainability expert and the six students designated: 1) determine the information needs of the organization and their purpose; 2) determine the inputs and outputs of information and how it will be processed; 3) decide on equipment requirements; 4) carry out the installation of hardware; 5) develop the systems’ design based on the information and communication needs of the organization; 6) proceed with the programming of software applications; 7) test the system and make improvements needed; and 8) provide users with training on the system. In addition, the Management Information System will periodically receive maintenance and will be upgraded when necessary by students from the Computer Science program at UBC. The implementation of this system is estimated to take around 3 months. 5. MARKETING 5.1. External analysis – Porter’s 5 Forces Analysis Potential Entrants: A new entrant would be any new Green Building Rating System. The main barrier to entry in this industry is professionalism. Any potential entrant who wants to develop a new rating system would have a certain level of expertise in the green building construction industry. Substitutes: The available substitutes for the customers would be non-green (regular) buildings, which are prevailing in the market. The substitutes have adequate power since they are cheaper and also because the homebuyers are still not completely aware of the benefits of such Green Certified Buildings.  -9-  Customer’s Concern: Customers are more concerned with how early their investment will pay off. However there is also a growing desire among customers to minimize their footprint on the environment in whichever possible way. Developer’s Concern: The developers are skeptical about the development of such green projects, not knowing whether customers would be willing to pay the additional costs. Industry Competitors: Such a competition is termed “Standard Competition”. If REAP needs to make its presence felt in the BC market, the toughest competition it will face will be from LEED, which is currently the most reputed and popular standard being adopted in North America for development projects exceeding four floors (Refer Exhibit 5.1.1). Hence REAP will need to position itself as a simpler and cheaper version of LEED, specifically for residential projects that are four storied or lesser.  5.2. Secondary Research James Hogan and Associates, Inc. released a survey at Globe 2006 showing findings concerning people’s perception of sustainability. The results indicated that 92% of Canadians surveyed agree that Canada should phase in mandatory standards requiring all new buildings and appliances to deliver 50% more energy efficiency within 10 years; 89% approve of meeting 100% of Canada’s new electricity needs through conservation measures or renewable clean energy24. This rising concern for sustainability assures that the movement towards green development will gain momentum with time.  5.3. Segmentation The growing image of BC as the most livable place on the planet is subsequently booming its real estate prices. The developers charge an average price of CAD$700,000 for a 1200 sq. ft. non-green apartment in the Point Grey region. At such prices, the  -10-  majority of developers are targeting to sell their apartments to high end affluent customers who are both health and environment conscious and do not mind spending a little bit extra to acquire an apartment in a green certified building. Since the REAP framework has been successfully implemented than any other framework in BC on buildings that are four storied or less more, the REAP office will mainly concentrate on promoting REAP across this segment. REAP’s target segment would include both developers, who target such apartment buildings for affluent customers who are more concerned about the environmental and community benefits than the economical benefits, and also the customers who belong to this particular group, both groups being early adopters of the green development concept25.  5.4. Value Proposition For developers - “To provide a convenient economical green building framework that can be applied across all categories of residential units” For customers - “To provide the eco-friendly health conscious populace with a trusted evaluation system guaranteeing them environmentally responsible, low energy consuming and high quality living.”  5.5. Eco-labeling Eco-labeling is the practice of branding the environmental qualities of a product or system so that consumers can more easily make environmentally based decisions. Eco- labels in the construction industry will facilitate the customers with an assessment standard used for decision making. So REAP can be promoted such that it becomes a potential eco-label for Residential Buildings26.  -11-   5.6. Promotional Strategies An effective mix of marketing strategies will edify the target developers and homebuyers about the benefits of REAP. Push Strategy:  Professors at UBC and employees at the REAP office, having proficiency in REAP and sustainable development concepts, will be involved in delivering seminars to developers and educating them the benefits of implementing REAP. These seminars are expected to encourage developers to adopt REAP consequently pushing the developers to market this concept to their potential customers. Pull Strategy: The participation of REAP Office in various Public Relation Events will increase awareness of REAP in the market. With time the growing awareness of the benefits of the concept among the homebuyers will develop a growing demand for REAP Certified Apartments. Homebuyers interested in the concept will go to the developers and find out if they are using REAP, thus encouraging the developers to implement REAP and promoting the concept even further.  5.7. Expositions The REAP office will take part in Construct Canada Expo which takes place every November in Toronto. It is a three-day event and is Canada’s largest annual exposition of products, technologies and systems used in high-rises, residential and building commercials. This event will help REAP to network with the 23,000 attendees27. The Senior Sustainability Green Building Specialist and Communications Officer can coordinate with Construct Canada to conduct seminars and presentations to spread REAP awareness to high-end customers and high profile builders. In addition to educating and making people aware of green buildings, REAP office plans to set up a stall in a 300 sq.  -12-  ft. area at this Expo where detailed procedures to apply for REAP certification, its levels and charges to developers will be provided. The REAP office will also take part in the HomeBuilders & Renovator Expo which takes place every February in Vancouver. This focus at this event will be spreading awareness in the local market by delivering seminars28.  5.8. Website The REAP office will host a new website www.reap.ubc.ca (this URL is currently unregistered) exclusive to the website for the Sustainability Office. The development and maintenance of this website will be outsourced as a project to Computer Science Students at UBC. The website will contain every detail about the concept of REAP. It will also provide an Event Calendar, containing information of Expos, PR Events and Seminars chalked out for the year and an Online Registration System, providing developers and homebuyers the facility to register for various events conducted by the REAP Office. Secondary market research29 revealed that 59% of the developers believe that “Independent validation of costs and benefits of green buildings” and “ More case study descriptions of successful projects” can most effectively promote advantages of sustainability”. In accordance with these findings, the Communication Officer at REAP will upload the MIS generated costs and benefits reports for successful REAP projects on to the REAP website so that both developers and homebuyers can make any required analysis. 5.9. Publications Promotion of REAP is planned through advertisements in popular magazines targeted at elite customer base (Green Horizon30) and the developers targeting these customers  -13-  (Green Builder Magazine31) twice a year in May and December.  The advertisements in Green Horizon will concentrate on describing the economic, environmental and social benefits of dwelling in REAP certified buildings while the advertisements in Green Builder Magazine will concentrate on describing the benefits of REAP over the other Green Building Rating Systems. These advertisements will also provide links to the REAP website where people can go and validate the costs and benefits of various successful REAP projects. 5.10. The Marketing Calendar The Annual Marketing Planning will be conducted in January. The marketing activities will commence by providing the first seminar for developers which will include distribution of REAP brochures containing the Rating system details. By participating and delivering seminars at HomeBuilder & Renovator Expo in Vancouver, REAP will promote itself in the local market in the month of February. In March REAP office will deliver another seminar to developers to make them aware of the new trends in Construction Industry and ways to fetch benefits from REAP. Since June is the month for weddings, the REAP team will hold PR events two months in advance to educate the potential home buyers on the benefits of REAP certified buildings so that they might be able to take that into consideration while making their home buying decisions. In May, the REAP team will start advertising in both developer and homebuyer magazines to raise awareness of the concept. Another seminar, mainly concentrating on the Cost Benefit Analysis, would be held for developers in July. The interim planning will be conducted in July as well to confirm if the activities are being conducted as per the initial plan and also to incorporate changes if required. The REAP team will hold another PR  -14-  event in September since this is the time when college freshmen leave home. This is generally the time when parents might be thinking of finding new accommodations. The biggest activity for the year would be the Construct Canada Expo in Toronto, held in November 2007. This is the premium expo for green builders and experts to exchange ideas. At the end of the first year, in December, the REAP team will again advertise the concept in both developer and homebuyer magazines to strengthen the awareness that they have created (Refer Exhibit 5.10.1 for Marketing Calendar). 6. FINANCIAL PLAN  - REAP 2007-2010  6.1. Market And Sales Forecast Of Certifications Canada Green Building Council (CaGBC) forecasts an annual growth of 1.5% in residential green building constructions between 2005 and 2008.  Between 2000 and 2004 British Columbia LEED has been in charge of 64 out of 112 LEED projects in Canada. Since its implementation in 2000, LEED projects in Canada have increased by more than 50% every year32. Based on these figures and considering the potential impact of the promotion activities of this business plan, it is assumed that REAP will be able to get 3 projects during the last six months of the first year of its implementation.  For the subsequent three years REAP will get almost 4 projects each year.  There is also an expected tendency that customers tend to opt for higher rating categories than the previous year.  (Refer Exhibit 6.1.1 for Target Market Forecast) 6.1.1. Revenue Revenue will be generated from Certifications and Consultation.  -15-  Certification Charges: As REAP has been mandated at the UBC campus, the developers implementing it are not charged for certification, but construction outside the UBC campus will be charged. Charges for Platinum, Gold, Silver, Bronze and Basic Level Certification will be $30,000, $25,000, $20,000, $15,000 and $10,000 respectively. (Refer Exhibit 6.1.1.1 for Sales Forecast) Consultation Charges: REAP’s Communications Officer and Senior Sustainability Green Building Specialist will be involved in providing paid consultations to developers interested in learning about REAP, or to developers interested in implementing certain green building techniques without going for the entire certification. Consultation charges would be $120 per hour33. In the first three months consultation is expected to be 10 hours per month, an amount which is expected to grow by 5 hours every three months. 6.1.2. Expenses For the projected four years, it is assumed there will be no further expansion; hence the yearly fixed expenses will remain constant.  The rates of inflation are not considered for the estimations.  (Refer Exhibit 6.1.2.1 for Expenses Details) Personnel expenses: During the first six months of operations, only the sustainability expert and the marketing officer will be employed at the REAP office. The operations officer and the civil engineer will be contracted from the seventh month of 2007.  During the next three years REAP will maintain the same organizational structure. The personnel cost for part time employees at REAP includes salary and employee benefits. All the four Officers will each receive a package of $20,000 per annum34(20 hours/week). Marketing expenses: These expenses include the costs of publications, expos, seminars and costs of publishing brochures for PR events. Advertisement costs to publish in  -16-  customer and builder magazines are $1,98035 and $5,50036 respectively. The cost of printing 5,000 double folded brochures is $50037 and postage charges are assumed to be approximately $70 per month. There is no cost in delivering seminars at HomeBuilders & Renovators Expo since the event is held in Vancouver and there are no participation charges. The Expo organized by Construct Canada is in Toronto, where the exhibit fee is $27 per sq. ft38. REAP is expected to exhibit in a 300 sq. ft. block. The total expenditure for the Toronto trip will be approximately $10100 (Air Fare and 4 Night Stay39 = $1800, Traveling and Food Expenses = $200 and Exhibit Fee40 = $8100). The total expenditure on each seminar (approximately 4 hours) assuming an attendance of 10 is approximately $500 (Food and Snacks per Person41 = $10, Guest Speaker Charges per hour = $50 and Site Charges per hour = $50). REAP’s participation in the PR events will involve only distribution of REAP brochures and hence will not incur any expenses. Since the development and maintenance of both the Website and the MIS system will be outsourced as projects to UBC students, there will not be any associated charges. Supplies and Insurance: Based upon the figures for the centrally managed functions of the 2006-2007 budget summary book of the University of British Columbia, the supplies expenses and the property insurance expenses constitutes around 3% and 1% respectively of the personnel expenses. These percentages were considered for the estimations. 6.2. Financial Statements The following factors and assumptions are included in the financial statements. 6.2.1. Income Statement (Refer Exhibit 6.2.1.1.a and Exhibit 6.2.1.1.b for Projected Income Statements for years 2007-2010)  -17-  Revenues: As a non-profit organization of the Sustainability Office at UBC, REAP office relies on financial support from this department, complemented by revenues from certifications and consulting services. In addition to the revenues generated from certifications and consultations, a contribution of $20,000 (unrestricted fund) will be received from the Sustainability Office (through UBC Properties Trust42). This funding will be continued through the next year if the REAP Office is successful is in achieving its goal. Since there is no investment, there is no associated income. Expenses: The personnel, marketing, supplies and insurance expenses are recorded in accordance with the matching principle of GAAP. The depreciation expense has been calculated by using the straight-line method43. The estimated useful lives of the assets are: for furniture, 5 years; and for computer equipment 3 years44. Since UBC is a registered charity, all sub-organizations within UBC are exempt from taxes under section 149 of the Income Tax Act. Hence there will be no taxes associated with the projected finances of the REAP Office.45 6.2.2. Balance Sheet (Refer Exhibit 6.2.2.1.a and Exhibit 6.2.2.1.b for Projected Statements of Financial Position for the years 2007-2010. Also refer Exhibit 6.2.2.2.a and Exhibit 6.2.2.2.b for Projected Statements of Cash Flows for the years 2007-2010) Assets: There is no grants receivable from the Sustainability Office at UBC. The REAP office does not hold stocks or bonds or any other investment. Insurance is considered as a prepaid expense. At the beginning of 2007, REAP will purchase $5,000 worth of computer equipment and $3,000 worth of furniture.  There is no investment in buildings or additional furniture since the Sustainability Office at UBC will provide these to the  -18-  REAP office at no additional costs.  Accumulated depreciation calculations are based on the assumptions made in the section on depreciation expenses under the income statement. REAP does not posses any kind of collections. Liabilities: Parts of expenses and parts of cost of computer equipment and furniture that cannot be paid with the available cash are considered under accounts payable. There are no grants payable and deferred revenue due to third parties and long-term debt. For non- profit organizations net assets are the difference between revenues and expenses determined from the income statement. 6.2.3. Financial Performance – Breakeven and Sensitivity Analysis (Since the financials of this business plan can be assessed completely using the common- size statements, there is no need for calculating any specific financial ratio. Refer Exhibit 6.2.3.a and Exhibit 6.2.3.b for Common-Size Statements and Break-Even Point) There was no information available for similar green building agencies using which the REAP organization could be benchmarked. However, it is important that the REAP Office follows a sustainable business model for achieving its mission which does not emphasize on profit maximization. The analysis of the projected financial performance of the REAP Office indicates that their net assets will start increasing from the second half of the second year after the implementation of the activities outlined in this business plan. From the commencement of the third year, the REAP office will be able to cover its expenses without any external contribution even though it is not a requirement.  The break-even point is calculated to be the maximum in the years 2008 and 2009(years with higher estimated expenses) at $97,300.  This indicates that the REAP Office will be able  -19-  to cover its expenses even if the estimations on the number of certifications and consultations vary.  Hence it is safe to infer that most of the potential risks are covered. The green building certification charges are the most important source of revenue for the REAP Office. However it is important to note that the consulting services generate around one third the revenue generated by the certifications. Hence it is important to monitor this activity continuously since this source has the potential to generate greater future revenues.  Personnel expenses account for 80% of the total expenses, which is a common trend in these types of non-profit organizations.  However, it is worth noting that even though the human resources in this organization with their increasing expertise form highly valuable assets, it is not reflected on the financial statements. From the second half of the second year, the REAP Office will start generating cash from its activities and will not have anything under accounts payable and will also not have to rely on any debt. Hence, if the market behavior is in line with the projected estimations, the REAP office will be capable to expand further. The office will also be capable then to opt for acquiring any mode of leverage for its growth. 7. RISKS AND CONTINGENCY The LEED Threat: The City of Vancouver (COV) has almost decided on mandating LEED as their green baseline for buildings greater than four stories tall from 200746.LEED has already come out with a framework, which can be applied across residential buildings, which are smaller than four stories tall. If LEED is successful in promoting this framework more than REAP, there is a possibility that the COV might mandate LEED as their green baseline for buildings smaller than four stories tall in subsequent years. The occurrence of this event can completely cease REAP’s prospects.  -20-  Crash in the Real Estate Market: Though the BC real estate market is currently booming, a sudden crash in the market for a significant length of time might highly discourage the developers from adopting any practice that increases the construction costs. Growing cost sensitivity in the potential market: The cost of real estate is going up at a very rapid rate in BC. Hence assuming that this current trend continues for a subsequent period of time, there is a possibility that even the elite affluent customers (the current majority of REAP’s target segment) may become more cost sensitive and start avoiding any additional costs in the apartments they purchase. Technological Difficulties: The lack of funds will force the REAP office to outsource the development and maintenance of both the Website and the MIS system as projects to UBC students. Hence due to the lack of expertise, there is a high risk that both the MIS system and website might not live up to the required standards. This will prove to be detrimental in the efforts to promote REAP. 8. FUTURE PROSPECTS  COV is currently in the process of developing a Green Building Strategy that would ultimately set green baselines for all types of construction in Vancouver. Currently the focus is on mandating a rating system for buildings bigger than four stories tall and after that their focus will shift to buildings smaller than four stories tall and then single family houses. Hence they are currently in a lookout for a rating system that could be applied across all types of construction47. If REAP is able to gain the potential market share it is expected to gain, it can well and truly be in contention to be mandated as the green baseline for buildings smaller than four stories tall by COV.  -21-  APPENDIX Exhibit 2.3.1: Stimulation Results Customer Usage Natural Gas        $        Savings Electricity       $      Savings Total Costs       $         Savings Energy Savings     GJ        Savings Cooling - - - - - - - - Heating 6039 10.30% 9004 17.50% 15043 14.80% 985 14.70% Lights - - 8537 0.00% 8537 0 484 0.00% Equipment - - 5097 16.40% 5097 16.40% 279 17.60% Fans - - 1506 0.10% 1506 0.10% 65 0.20% Refrigerator - - - - - - - - External Lights - - 1320 29.30% 1320 29.30% 54 37.50% Elevator - - 1054 0.00% 1054 0.00% 39 0.00% DHW 4748 56.70% - - 4748 56.70% 370 57.40% Cooking - - - - - - - - TOTAL 10787 39.10% 26518 11.60% 37305 21.80% 2277 25.10% Total Savings ($) 6917 3466 10382 761.3 Fuel Savings 555GJ 57.3 MWh -  Exhibit 2.3.2: Economic Analysis Incremental Costs ($) Equipment & Labour $82,150 Annual Operations & Maintenance $100/Year Cooling System  $0/ton Heating System $0/kBtuh Fans and Pumps $0/hp Net Savings/Year $10,382 Net Capital Cost $82,150 Payback at 7% = 9.7 Years  Exhibit 3.1.1: Organizational Structure of REAP              REAP Office Marketing Division Operating Division Communication Officer Operating Officer Civil Engineer Sustainability Division Senior Sustainability Green Building Specialist  -22-  Exhibit 4.1.1: REAP Grading System48 REAP assesses the performance of each Developer on a number of points granted to his Project.             Exhibit 4.1.2: Residential Environmental Assessment Program49 Description 1. Categories: Sustainable Sites; Water Efficiency; Energy & Atmosphere; Materials and Resources; Indoor Environmental Quality; Construction; Innovation & Design Process. 2. Range of performance levels offered: Basic compliance(66 points) to Gold or Platinum. 3. Additional points can be earned in any of the performance categories, with no minimums or maximums. Energy & Atmosphere Required: Meet minimum wall (R-14), roof (R-28) and floor (R-14) insulation values; energy efficient windows (Energy Star or U-value of 0.35 or less); furnaces with 80% efficiency; domestic hot water boilers with 80% efficiency or electric heaters with energy factor of 0.90 or higher; low- flow showerheads max 8.5 L/min. Optional: Higher performance values for envelope assemblies, windows, air and water heating, showerheads, and lighting; occupancy sensors for parkades; gas submetering; heat recovery system; geoexchange hot water heating system. Water Efficiency Required: High efficiency irrigation technology or a temporary irrigation system; low-flow toilets (max 6L) and sink faucets (bathroom max 3.8L/min; kitchens 6.8L/min). Optional: Reduce by 50% or eliminate use of potable water for irrigation (100% reduction); dual or ultralow-flow toilets; water efficient appliances; additional point for installing all three of dual-flush toilets, dishwashers and clothes washers; provide hot and/or cold water metering in all units. Indoor Environmental Quality Required: Adhesives and sealants meet EcoLogo criteria for VOC limits or the State of California standard; paints with EcoLogo certification or Master Painter’s Institute Level 2; floor coverings meet Carpet and Rug Institute Green Label IAQ test program or EcoLogo criteriaOptional: Low VOC paints are Master Painter Institute Level 3; urea formaldehyde-free cabinetry; urea formaldehyde-free composite wood products. Materials and Resources Required: None Optional: Reused building materials (either 5% or 10% of total cost); 20% of the materials by cost are locally manufactured; of the locally manufactured materials, 50% are also locally harvested, extracted or salvaged; rapidly renewable flooring (i.e. bamboo) or FSC/CSA hardwood flooring. Sustainable Sites Required: Storm water management plan; drought tolerant and pest resistant planting; bicycle parking/storage; funding a community car-sharing vehicle or dedicating a parking stall for car- sharing; light pollution reduction meeting IESNA illuminance requirements. Optional: Recycling and composting systems; designated parking spaces and adequate power service for electric vehicle recharging; providing a new vehicle and a parking space to a car-sharing network. Construction Required: Staging and construction plan; vegetation safeguards and diverting debris from landfill; truck management plan; wheel wash; site sediment and erosion control plan; waste management plan. Optional: Indoor air quality management plan; preoccupancy flushout or conduct a baseline indoor air quality test. Innovation and Design Process Required: Goal setting workshop. Optional: Green building specialist; energy performance screening; energy modeling workshop; designing for safety, accessibility, security and crime prevention; educating sales staff and homeowners; research collaboration with UBC students and faculty. Certification Levels Points Required  Basic Compliance  66 – 79  Bronze Level  80 – 109  Silver Level  110 – 139  Gold Level  140 – 169  Platinum Level  170 – 200  -23-   Exhibit 4.1.3: UBC Terms and Conditions for Developers50 The Developers have to take care of the environment and the neighborhood while they construct at UBC sites. The list below shows the terms and conditions that need to be followed by the Developers, which not only take care of the UBC property and community but also keep a check on any harm caused to the environment: 1. Construction Site Safety Developers are completely responsible for ensuring that construction is carried out safely. They need to ensure that the construction is limited to their assigned plot and they do not interfere in other UBC operations. They also should enclose the site with temporary fencing to avoid causing any harm even to visually impaired people. 2. Construction site plan The Developer is responsible for submitting a pan for its site operations. They need to protect the trees at their site by fencing it and also provide first aid treatment immediately in case of injury by having a first aid station nearby. 3. Noise and Tree Offenses The Developer is responsible for taking care that there is no disturbance caused to the quiet, peace, or enjoyment of the rest of the public. To control this, construction is allowed from 7.00am to 7.00pm on any weekday and 9.00am to 5.00pm on Saturdays. On Sundays and statutory holidays construction is not permitted. All the trees need to be protected at UBC so any damage to a tree is an offense. The penalty for each contravention to noise or tree protection is $1,000 for the first offense and $2,000 for subsequent offences. 4. Truck Management Plan The UBC Properties Trust’s Project Management team includes a consultant with regards to construction traffic management. He is responsible for the day-to-day monitoring of trucks at construction sites through the Truck Management Plan. This will minimize the impact of truck traffic on campus. Truck traffic is dispersed over all designated routes, such as 4th Avenue, 10th Avenue, 41st Avenue and SW Marine Drive, and truck traffic is reduced near residential areas. Truck arrivals and departures are scheduled such that the truck traffic is distributed throughout the day. If these measures are not met, the truck operators are fined. Developers are also encouraged to reuse materials and stockpile excavated materials to reduce truck traffic. Such implementations have successfully reduced truck traffic by 44%. Failure to implement the Truck Traffic Management Plan is penalized by $1,000 for the first offence and is doubled for subsequent offences  Exhibit 5.1.1: Porter’s Five Forces                      Consumer’s Concern: Investment Payoff along with the desire to minimize footprint on environment Developer’s Concern: Uncertainty of Customer willingness to buy Green Apartments Potential Entrants: Requirement of Expertise in Green Building Construction Substitute: Non-Green Buildings prevailing in the market  Industry Competitors: Mainly LEED, which has developed a significant brand name in market  -24-  Exhibit 5.10.1: Marketing Calendar  Jan  Feb  Mar  Apr  May  Jun  Jul  Aug  Sep  Oct  Nov  Dec  Marketing Event  HomeBuilder & Renovator Expo   PR Event  PR Event  Construct Canada Expo   Marketing Activity   Seminar  Seminar  Advertising in magazines   Seminar  Advertising in magazines  Marketing Material  Brochures  Information on New Trends  Literature for would-be weds  Information of Cost Benefit Analysis   Literature for new home buyers   Plan   Annual Planning   Interim Planning   Exhibit 6.1.1: Financial Analysis – Target Market Forecast  Potential Customers Price Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Platinum 30,000 Gold 25,000                       1 Silver 20,000                   1 Bronze 15,000 Basic 10,000             1 Total (month) 0 0 0 0 0 0 1 0 0 1 0 1 Total (year) 3  Potential Customers Price Jan/Mar 08 Apr/Jun 08 Jul/Sep 08 Oct/Dec 08 Jan/Mar 09 Apr/Jun 09 Jul/Sep 09 Oct/Dec 09 Jan/Mar 10 Apr/Jun 10 Jul/Sep 10 Oct/Dec 10 Platinum 30,000               1 Gold 25,000       1     1         1 Silver 20,000     1     1       1 1 Bronze 15,000   1     1       1 Basic 10,000 1 Total (month) 1 1 1 1 1 1 1 1 1 1 1 1 Total (year) 4 4 4            -25-  Exhibit 6.1.1.1: Financial Analysis – Sales Forecast  Sales Jan/Mar 08 Apr/Jun 08 Jul/Sep 08 Oct/Dec 08 Jan/Mar 09 Apr/Jun 09 Jul/Sep 09 Oct/Dec 09 Jan/Mar 10 Apr/Jun 10 Jul/Sep 10 Oct/Dec 10 Platinum - - - - - - - 30000 - - - - Gold - - - 25000 - - 25000 - - - - 25000 Silver - - 20000 - - 20000 - - - 20000 20000 - Bronze - 15000 - - 15000             -   - - 15000 - - - Basic 10000 - - - - - - - - - - - Total (month) 10000 15000 20000 25000 15000 20000 25000 30000 15000 20000 20000 25000 Total (year) 70000 90000 80000  Exhibit 6.1.2.1 Financial Analysis – Expense Details Expenses Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Personnel 3333 3333 3333 3333 3333 3333 6667 6667 6667 6667 6667 6667 Marketing 500 10100 1000 - 5550 - 500 500 - - 10100 5550             Publications - - - - 5550 - - - - - - 5550                      Expos - 10100 - - - - - - - - 10100 -                  Seminars 500 - 500 - - - 500 - - - - -                PR Events - - 500 - - - - 500 - - - - Supplies 200 200 200 200 200 200 200 200 200 200 200 200 Insurance 67 67 67 67 67 67 67 67 67 67 67 67 Total (month) 4100 13700 4600 3600 9150 3600 7433 7433 6933 6933 17033 12483 Total (year) 97000  Expenses Jan/Mar 08 Apr/Jun 08 Jul/Sep 08 Oct/Dec 08 Jan/Mar 09 Apr/Jun 09 Jul/Sep 09 Oct/Dec 09 Jan/Mar 10 Apr/Jun 10 Jul/Sep 10 Oct/Dec 10 Personnel 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 Marketing 1500 5550 1500 5550 1500 5550 1500 5550 1500 5550 1500 5550       Publications - 5550 - 5550 - 5550 - 5550 - 5550 - 5550                Expos - - - - - - - - - - - -            Seminars 1000 - 1000 - 1000 - 1000 - 1000 - 1000 -          PR Events 500 - 500 - 500 - 500 - 500 - 500 - Supplies 600 600 600 600 600 600 600 600 600 600 600 600 Insurance 200 200 200 200 200 200 200 200 200 200 200 200 Total (month) 22300 26350 22300 26350 22300 26350 22300 26350 22300 26350 22300 26350 Total (year) 97300 97300 97300 Sales Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Platinum - - - - - - - - - - - - Gold - - - - - - - - - - - 25000 Silver - - - - - - - - - 20000 - - Bronze - - - - - - - - - - - - Basic - - - - - - 10000 - - - - - Total (month) - - - - - - 10000 - - 20000 - 25000 Total (year) 55000  -26-  Exhibit 6.2.1.1.a: Projected Income Statement  Residential Environmental Assessment Program Comparative Projected Income Statements For the Years Ended December 31, 2007  Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07  Revenues Contributions 1667 1667 1667 1667 1667 1667 1667 1667 1667 1667 1667 1667 Program Service Revenue - - - - - - 10000 - - 20000 - 25000 Other Revenues 1200 1200 1200 1800 1800 1800 2400 2400 2400 3000 3000 3000 Investment Income - - - - - - - - - - - - Net Revenues Released from Restrictions 2867 2867 2867 3467 3467 3467 14067 4067 4067 24667 4667 29667 Total Revenues 2867 2867 2867 3467 3467 3467 14067 4067 4067 24667 4667 29667 Expenses Personnel  3333 3333 3333 3333 3333 3333 6667 6667 6667 6667 6667 6667 Marketing 500 10100 1000 - 5550 - 500 500 - - 10100 5550 Supplies 200 200 200 200 200 200 200 200 200 200 200 200 Insurance 67 67 67 67 67 67 67 67 67 67 67 67 Depreciation 189 189 189 189 189 189 189 189 189 189 189 189 Total Expenses 4289 13889 4789 3789 9339 3789 7622 7622 7122 7122 17222 12672 Increase in Net Assets (1422) (11022) (1922) (322) (5872) (322) 6444 (3556) (3056) 17544 (12556) 16994 Net Assets at Beginning of Year - (1422) (12444) (14367) (14689) (20561) (20883) (14439) (17994) (21050) (3506) (16061) Net Assets at End of Year (1422) (12444) (14367) (14689) (20561) (20883) (14439) (17994) (21050) (3506) (16061) 933   -27-  Exhibit 6.2.1.1.b:  Projected Income Statement  Residential Environmental Assessment Program Comparative Projected Income Statements For the Years Ended December 31, 2008, 2009, 2010   Jan/Mar 08 Apr/Jun 08 Jul/Sep 08 Oct/Dec 08 Jan/Mar 09 Apr/Jun 09 Jul/Sep 09 Oct/Dec 09 Jan/Mar 10 Apr/Jun 10 Jul/Sep 10 Oct/Dec 10  Revenues Contributions 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 Program Service Revenue 10000 15000 20000 25000 15000 20000 25000 30000 15000 20000 20000 25000 Other Revenues 3600 5400 7200 9000 3600 5400 7200 9000 3600 5400 7200 9000 Investment Income - - - - - - - - - - - - Net Revenues Released from Restrictions 18600 25400 32200 39000 23600 30400 37200 44000 23600 30400 32200 39000 Total Revenues 18600 25400 32200 39000 23600 30400 37200 44000 23600 30400 32200 39000 Expenses Personnel  20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 Marketing 1500 5550 1500 5550 1500 5550 1500 5550 1500 5550 1500 5550 Supplies 600 600 600 600 600 600 600 600 600 600 600 600 Insurance 200 200 200 200 200 200 200 200 200 200 200 200 Depreciation 567 567 567 567 567 567 567 567 150 150 150 150 Total Expenses 22867 26917 22867 26917 22867 26917 22867 26917 22450 26500 22450 26500 Increase in Net Assets (4267) (1517) 9333 12083 733 3483 14333 17083 1150 3900 9750 12500 Net Assets at Beginning of Year 933 (3333) (4850) 4483 16567 17300 20783 35117 52200 53350 57250 67000 Net Assets at End of Year (3333) (4850) 4483 16567 17300 20783 35117 52200 53350 57250 67000 79500                        -28-  Exhibit 6.2.2.1.a:  Projected Statements of Financial Position  Residential Environmental Assessment Program Comparative Projected Statements of Financial Position For the Years Ended December 31, 2007    Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Assets Cash - - - - - - - - - - - - Grants Receivable (net) - - - - - - - - - - - - Investments - - - - - - - - - - - - Prepaid Expenses 733 667 600 533 467 400 333 267 200 133 67 - Property, Plant and Equipment. 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 Accumulated depreciation 189 378 567 756 944 1133 1322 1511 1700 1889 2078 2267 Collections - - - - - - - - - - - - Total Assets 8544 8289 8033 7778 7522 7267 7011 6756 6500 6244 5989 5733 Liabilities and Net Assets Liabilities                         Accounts Payable 9967 20733 22400 22467 28083 28150 21450 24750 27550 9750 22050 4800 Grants Payable - - - - - - - - - - - - Defered revenue - - - - - - - - - - - - Due to Third Parties - - - - - - - - - - - - Long Term Debt - - - - - - - - - - - - Total Liabilities 9967 20733 22400 22467 28083 28150 21450 24750 27550 9750 22050 4800 Net Assets Unrestricted (1422) (12444) (14367) (14689) (20561) (20883) (14439) (17994) (21050) (3506) (16061) 933 Temporarily Restricted - - - - - - - - - - - - Permanently Restricted - - - - - - - - - - - - Total Net Assets (1422) (12444) (14367) (14689) (20561) (20883) (14439) (17994) (21050) (3506) (16061) 933 Total Liabilities and Net Assets 8544 8289 8033 7778 7522 7267 7011 6756 6500 6244 5989 5733     -29-  Exhibit 6.2.2.1.b: Projected Statements of Financial Position  Residential Environmental Assessment Program Comparative Projected Statements of Financial Position For the Years Ended December 31, 2008, 2009 and 2010   Jan/Mar 08 Apr/Jun 08 Jul/Sep 08 Oct/Dec 08 Jan/Mar 09 Apr/Jun 09 Jul/Sep 09 Oct/Dec 09 Jan/Mar 10 Apr/Jun 10 Jul/Sep 10 Oct/Dec 10 Assets Cash - - 250 13100 13800 18050 33150 51000 51700 55950 66050 78900 Grants Receivable (net) - - - - - - - - - - - - Investments - - - - - - - - - - - - Prepaid Expenses 600 400 200 - 600 400 200 - 600 400 200 - Property, Plant and Equipment. 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000 Accumulated depreciation 2833 3400 3967 4533 5100 5667 6233 6800 6950 7100 7250 7400 Collections - - - - - - - - - - - - Total Assets 5767 5000 4483 16567 17300 20783 35117 52200 53350 57250 67000 79500 Liabilities and Net Assets Liabilities                         Accounts Payable 9100 9850 - - - - - - - - - - Grants Payable - - - - - - - - - - - - Defered revenue - - - - - - - - - - - - Due to Third Parties - - - - - - - - - - - - Long Term Debt - - - - - - - - - - - - Total Liabilities 9100 9850 - - - - - - - - - - Net Assets Unrestricted (3333) (4850) 4483 16567 17300 20783 35117 52200 53350 57250 67000 79500 Temporarily Restricted - - - - - - - - - - - - Permanently Restricted - - - - - - - - - - - - Total Net Assets (3333) (4850) 4483 16567 17300 20783 35117 52200 53350 57250 67000 79500 Total Liabilities and Net Assets 5767 5000 4483 16567 17300 20783 35117 52200 53350 57250 67000 79500               -30-  Exhibit 6.2.2.2.a: Projected Statements of Cash Flows  Residential Environmental Assessment Program Comparative Projected Statements of Cash Flows For the Years Ended December 31, 2007   Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Operations Increase in Net Assets (1422) (11022) (1922) (322) (5872) (322) 6444 (3556) (3056) 17544 (12556) 16994 (+) Depretiation expenses 189 189 189 189 189 189 189 189 189 189 189 189 (-) Change Current Assets 733 (67) (67) (67) (67) (67) (67) (67) (67) (67) (67) (67) (+) Change Current Liabilities * - - - - - - - - - - - - Cash (1967) (10767) (1667) (67) (5617) (67) 6700 (3300) (2800) 17800 (12300) 17250 Investment (-) Property, plant ans equipment 8000 - - - - - - - - - - - Cash 8000 - - - - - - - - - - - Financing (+) Change Liabilities 9967 10767 1667 67 5617 67 (6700) 3300 2800 (17800) 12300 (17250) Cash 9967 10767 1667 67 5617 67 (6700) 3300 2800 (17800) 12300 (17250) Change in Cash - - - - - - - - - - - - Cash - - - - - - - - - - - -   Exhibit 6.2.2.2.b: Projected Statements of Cash Flows  Residential Environmental Assessment Program Comparative Projected Statements of Cash Flows For the Years Ended December 31, 2008, 2009 and 2010   Jan/Mar 08 Apr/Jun 08 Jul/Sep 08 Oct/Dec 08 Jan/Mar 09 Apr/Jun 09 Jul/Sep 09 Oct/Dec 09 Jan/Mar 10 Apr/Jun 10 Jul/Sep 10 Oct/Dec 10 Operations Increase in Net Assets (4267) (1517) 9333 12083 733 3483 14333 17083 1150 3900 9750 12500 (+) Depretiation expenses 567 567 567 567 567 567 567 567 150 150 150 150 (-) Change Current Assets 600 (200) (200) (200) 600 (200) (200) (200) 600 (200) (200) (200) (+) Change Current Liabilities * - - - - - - - - - - - - Cash (4300) (750) 10100 12850 700 4250 15100 17850 700 4250 10100 12850 Investment (-) Property, plant ans equipment - - - - - - - - - - - - Cash - - - - - - - - - - - - Financing (+) Change Liabilities 4300 750 (9850) - - - - - - - - - Cash 4300 750 (9850) - - - - - - - - - Change in Cash - - 250 12850 700 4250 15100 17850 700 4250 10100 12850 Cash - - 250 13100 13800 18050 33150 51000 51700 55950 66050 78900  -31-  Exhibit 6.2.3.a: Common-Size Statements and Break-Even Point  Residential Environmental Assessment Program Common-Size Projected Income Statements For the Years Ended December 31, 2007, 2008, 2009 and 2010    2007 2008 2009 2010 2007 2008 2009 2010 Revenues         Contributions       20,000      20,000      20,000      20,000 20% 17% 15% 16%         Program Service Revenue       55,000      70,000      90,000      80,000 55% 61% 67% 64%         Other Revenues       25,200      25,200      25,200      25,200 25% 22% 19% 20%         Investment Income - - - - - - - - Net Revenues Released from Restrictions     100,200    115,200    135,200    125,200 100% 100% 100% 100% Total Revenues   100,200  115,200   135,200   125,200  100% 100% 100% 100% Expenses        Personnel        60,000      80,000      80,000      80,000 60% 69% 59% 64%        Marketing       33,800      14,100      14,100      14,100 34% 12% 10% 11%        Supplies         2,400        2,400        2,400        2,400 2% 2% 2% 2%        Insurance            800           800           800           800 1% 1% 1% 1%        D epreciation         2,267        2,267        2,267           600 2% 2% 2% 0% Total Expenses      99,267     99,567     99,567     97,900 99% 86% 74% 78% Increase in Net Assets           933     15,633     35,633     27,300 1% 14% 26% 22% Net Assets at Beginning of Year    -157,417       -2,767      89,767    229,800 -157% -2% 66% 184% Net Assets at End of Year  -156,483     12,867  125,400   257,100  -156% 11% 93% 205%   Break Even Point:  97,300      -32-  Exhibit 6.2.3.b: Common-Size Statements and Break-Even Point  Residential Environmental Assessment Program Common-Size Projected Statements of Financial Position For the Years Ended December 31, 2007, 2008, 2009 and 2010             2007 2008 2009 2010 2007 2008 2009 2010 Assets        Cash -         13,100        51,000        78,900 - 79% 98% 99%        Grants Receivable (net) - - - - - - - -        Investments - - - - - - - -        Prepaid Expenses - - - - - - - -        Property, Plant and        Equipment.        8,000            8,000          8,000          8,000 140% 48% 15% 10%        Accumulated        Depreciation        2,267            4,533          6,800          7,400 40% 27% 13% 9%        Collections - - - - - - - - Total Assets       5,733        16,567       52,200       79,500 100% 100% 100% 100% Liabilities and Net Assets Liabilities        Accounts Payable        4,800  - - - 84% - - -        Grants Payable - - - - - - - -        Deferred revenue - - - - - - - -        Due to Third Parties - - - - - - - -        Long Term Debt - - - - - - - - Total Liabilities       4,800  - - - 84% - - - Net Assets        Unrestricted           933          16,567        52,200        79,500 16% 100% 100% 100%        Temporarily Restricted - - - - - - - -        Permanently Restricted - - - - - - - - Total Net Assets          933        16,567       52,200       79,500 16% 100% 100% 100% Total Liabilities and Net Assets 5,733 16,567 52,200 79,500 100% 100% 100% 100%  -33-  REFERENCES  Jan Feb Mar Apr May Jun Marketing Event  HomeBuilder & Renovator Expo   PR Event Marketing Activity Seminar   Seminar   Advertising in magazines  Marketing Material Brochures   Information on New Trends Literature for would-be weds  Plan Annual Planning    1 Sustainability in Construction. 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Retrieved November 1, 2006 from  http://www.planning.ubc.ca/corebus/reap.html 7 Mitchell, M., Wong, P., Woodson, D., Zhang, M. Business Plan – Funding the Installation of Geothermal  heating on UBC Residential Developments. Retrieved November 1, 2006 from http://www.sustain.ubc.ca/pdfs/seedreport04/dec04/Energy%20Trust%20Final.pdf 8 Residential Environmental Assessment Program (REAP). Retrieved November 1, 2006 from http://www.planning.ubc.ca/corebus/pdfs/pdf-development/REAP_June_2006.pdf 9 UBC SEED—Project Registration Form For REAP. Retrieved November 1, 2006 from  http://www.planning.ubc.ca/corebus/reap.html 10 Trek 2010—The Global Vision. Retrieved November 1, 2006 from http://www.publicaffairs.ubc.ca/ubcreports/2005/05apr07/trek2010.html 11 UBC SEED—Project Registration Form For REAP. Retrieved November 1, 2006 from  http://www.planning.ubc.ca/corebus/reap.html 12 UBC Sustainability Office. (2006) 2005 Annual Report. Retrieved November 1, 2006 from  http://www.sustain.ubc.ca/pdfs/ar/2006sust_ar.pdf 13 GREEN VALUE – Green Buildings, growing assets – REPORT . Retrieved November 1, 2006 from http://www.gvrd.bc.ca/buildsmart/pdfs/greenvaluereport.pdf 14 Wade, P.J. 2006 Canada's Building Green: The Race is on for Platinum. Retrieved November 1, 2006  -34-    from  http://realtytimes.com/rtcpages/20060228_buildinggreen.htm 15 Wade, P.J. 2006 Canada's Building Green: The Race is on for Platinum. Retrieved November 1, 2006  from  http://realtytimes.com/rtcpages/20060228_buildinggreen.htm 16  The Cost of Green. Retrieved November 1, 2006 from  http://www.moea.state.mn.us/greenbuilding/cost.cfm 17 Qualifying For A Windows Rebate. Retrieved November 1, 2006 from http://www.bchydro.com/powersmart/reno/reno29665.html 18  The Cost of Green. Retrieved November 1, 2006 from  http://www.moea.state.mn.us/greenbuilding/cost.cfm 19  The Cost of Green. Retrieved November 1, 2006 from  http://www.moea.state.mn.us/greenbuilding/cost.cfm 20 Hepting, C. P. Eng, LEED UBC Archetype Multiunit Residential Building – Energy Performance Analysis Report 21 UBC Sauder School website www.sauder.ubc.ca 22 LEED Development Process. Retrieved November 1, 2006 from http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1502& 23 Robbins, S., Langton, N. 2005  Fundamentals of Organizational Behavior. Toronto, On. Pearson Education Canada, Inc. 24 Sustainability. 2006. Retrieved November 1, 2006 from  http://www.hoggan.com/sustainability.html 25 Meeting with the Marketing VP of a reputed Development company which has undertaken a couple of REAP projects. 26 Scheuer, C., Keoleian, G. Evaluation of LEED Using Life Cycle Assessment Methods. Retrieved November 1, 2006 from http://www.bfrl.nist.gov/oae/publications/gcrs/02836.pdf 27  Construct Canada Expo http://www.constructcanada.com/exhibitor/home.asp 28 The Construction Times http://www.theconstructiontimes.com/events.asp 29 Building Design and Construction – “White Paper on Sustainability” – A supplement to Building Design and Construction. 30  Green Horizon  http://greenhorizon.rec.org/home/ 31 Green Builder http://www.greenbuildermag.com/ 32 Canada Green Building Council. 2005. Green Building in Canada. Retrieved November 1, 2006 from http://www.cted.wa.gov/DesktopModules/CTEDPublications/CTEDPublicationsView.aspx?tabID=0&Item ID=1988&MId=877&wversion=Staging 33 Paradise Real Estate http://www.jamesparadise.com/consulting.html 34  Compensation Professionals. Retrieved November 1,2006 from http://www.salaryexpert.com/index.cfm 35  Green Horizon  http://greenhorizon.rec.org/home/ 36  Green Builder Magazine 2007 Ad Rates. Retrieved November 1, 2006 from http://www.greenbuildermag.com/pdf/GBM_adratecard.pdf 37 Brochure Place http://www.brochureplace.com/ 38 Construct Canada Expo http://www.constructcanada.com/exhibitor/home.asp 39 Canadian Hotel Guide http://www.canadianhotelguide.com/ 40 Construct Canada Expo http://www.constructcanada.com/exhibitor/home.asp 41 Meeting with Jane Zhu and Rebecca Pearson, President Net Impact 42 Meeting with Brenda Sawada, Sustainability Office. 43 Pratt, J. 2006. Financial Accounting in an Economic Context (Sixth Edition). Hoboken, NJ. John Wiley & Sons, Inc. 44 Based on: The Conference Board of Canada. Audited Consolidated Financial Statements. Canada. 2006. 45 UBC Consolidated Financial Statements March 31, 2006 46 Meeting with Alison Aloisio, Sustainability Office 47 Aloisio, A. MSc Candidate School of Community and Regional Planning, Green Building Strategy  Internship Final Report: A Review of Local Residential Green Building Initiatives and Rating Systems for  the City of Vancouver’s Green Building Strategy - University of British Columbia October 6, 2006 48 Residential Environmental Assessment Program (REAP). Retrieved November 1, 2006 from http://www.planning.ubc.ca/corebus/pdfs/pdf-development/REAP_June_2006.pdf  -35-   49 Aloisio, A. MSc Candidate School of Community and Regional Planning, Green Building Strategy  Internship Final Report: A Review of Local Residential Green Building Initiatives and Rating Systems for  the City of Vancouver’s Green Building Strategy - University of British Columbia October 6, 2006 50 UBC’s Unique Truck management Plan. 2003. Retrieved November 1, 2006 from  http://www.universitytown.ubc.ca/pdf/fact_sheets/FS_TruckMgmt_Oct2003.pdf

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