Bringing Green Mainstream

Cherokee Investment is backing the Mainstream GreenHome, a residential laboratory for green building practices they believe will protect the environment and provide solid returns to investors

by Nanette Byrnes

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Pull up to the house on a cul-de-sac in one of Raleigh (N.C.)'s dozens of subdivisions, and it's hard to see anything noteworthy about the red-brick farmhouse-style McMansion. Spacious—the house has five bedrooms—with a wide front porch and ample concrete driveway, it blends easily with its neighbors, just one more comfortable upper-middle-class home in a town full of the same.

Incognito is just how the house, and its financial backers, Raleigh investment firm Cherokee Investment Partners, like it. But the house, which Cherokee dubbed the "Mainstream GreenHome," requires 96% less energy to heat hot water than a comparable dwelling—and is predicted to save 80,000 gallons of water per year through smart conservation methods. It was built under the National Association of Home Builders' Model Green Home Building Guidelines and just last month won a Gold Award in the NAHB Research Center's 2008 EnergyValue Housing awards. It also got one of the best scores ever in the Environmental Protection Agency/Energy Dept.'s Energy Star home efficiency rating system. In short, Cherokee claims it's one of the most environmentally friendly homes in the country—and yet it's maybe the only one that looks 100% typical. Boring even. No grass grows on the roof. Good luck spotting a solar panel. All of this is intentional—the point of building the house was to show just how normal an environmentally sensitive home can look.

From Cleaning Up to Building Clean

The house isn't so typical for Cherokee and its CEO, Thomas Darden. In 1993, Darden and a partner launched a predecessor firm that invested in environmentally impaired assets remediating contaminated industrial sites—which then made money from developing that land into a mix of commercial and residential space. Cherokee raised its fourth private equity fund in 2006, pulling in $1.24 billion from investors such as public pension funds that like the firm's strong track record of returns. Typically, Cherokee invests on a much grander scale than a single family home in the North Carolina capitol. The firm has played a major role, for example, in rehabilitating a large swath of the New Jersey Meadowlands. It rarely looks at investments under $100 million.

But a couple of years ago, Darden says, he became convinced that cleaning up the land just wasn't enough. More of the environmental impact over the long term would come from what was built on that land than anything he could do to improve the quality of the soil itself. Back then, few builders wanted to touch the term "green."To them, it seemed like a fringe market.

Cherokee set out to show that green could mean profits as well as sound environmental practices. The house "is very different from what we've done historically," says Darden. "We focused on remediation and land planning. That may be responsible for 20% of Cherokee's carbon footprint. The rest is the buildings being built."

Every Green Amenity

Although the GreenHome isn't ostentatiously eco-friendly—and some might argue that its mere size precludes it from any claim to sustainability—a trained eye wouldn't have too much trouble finding many of the tricks that allow the house to rack up energy and water savings. Its newly planted garden is full of native and drought-resistant species, perfect for this recently rain-free region. Inside the house, the attic and crawl spaces are sealed rather than vented, a big help with the heating bill and air quality. A passive solar thermal hot water system sits beneath solar panels on the back side of the home's roof; the panels themselves are thin enough to be a dead ringer for standard roof tiles. Radiant flooring keeps the cork kitchen floor toasty, and a glass-doored, half-sized refrigerator in the median accommodates the kids' habit of standing with the door open to contemplate the best snack.