When it does come to market, the rating agencies will step in to play their traditional role in evaluating the paper. And with that piece in place, Ostema says, lenders may finally begin to give developers building LEED-certified buildings a break on construction financing.Right now, he reports, the opposite is true. "Banks are finding that they need to price loans at a risk premium because these technologies are new and unproven."Besides that, another problem is that banks cannot sell loans on the secondary market because no pools have yet to be credit-rated, he says. Bottom line, according to Ostema: "S&P and Moody's need to put a stamp of approval on that green paper so banks will want to hold it."

Ostema's view of the high cost of green building may come as a surprise – and indeed, not all developers would agree. Intuitively, it would make sense that a building built to standards that would lead to lower operating costs and other benefits for tenants would be of greater value and thus worthy of prime financing. According to Ostema, though, the triple whammy of unproven technology, lack of a secondary market and unrated paper trumps common sense – for the moment, at least."I can tell you that the goal for a lot of banks is to offer a green lending program in the neighborhood of 20 to 30 basis points better than traditional debt—when market conditions are right. That is not a huge interest-rate cut, but on a $100 million loan, it is significant," Ostema says.

Jim McDonald, a principal with the Group 100 in Calabasas, CA agrees that this space is a nascent one – and that lenders are hesitant to embrace the 'intuitive' case for building green."There are very few buildings being designed with LEED certification standards in mind from the get-go, so we haven't yet had the experience of folding any extra costs resulting from a LEED standard into construction financing," he tells GlobeSt.com. "In fact, whereas some promoters of LEED certification claim that the certification is cost-neutral, this calculation involves a time factor, such as five or 10 years of operating savings which may result from building to LEED standards."In other words, he says, there is relatively little hard evidence about the true costs of LEED standards, and there is almost certainly some up-front cost for which increased loan amounts will be sought. "I don't believe that there are good data on this as yet."I would like to think that enlightened lenders will come to believe that buildings built to LEED standards will have greater retained and/or increased value over time, with resulting benefits to the lender. However, I don't think that there is actual hard evidence for this as yet."