Could be big!

I think these guys should come to the Clean Energy Showcase on 10/11 in Davis!

Recycled building material maker to lease 70,000 feet in Sacramento

Sacramento Business Journal - by Melanie Turner Staff writer

Dennis McCoy | Sacramento business journal

Richard Rios, chief executive of Verde Development, peers through his recycled building blocks.

A Sacramento startup is gearing up to become the Northern California distributor for a company that makes "green" building blocks.

Verde Development Inc. expects to close in mid-October on $3 million in private equity funds. The company would use the money to lease around 70,000 square feet for a plant to manufacture the blocks for Apex Construction Systems Inc., which specializes in green construction materials.

Verde is looking at buildings in Natomas and West Sacramento.

The four-employee company is at the McClellan Technology Incubator. Plans call for 50 workers next year, once the company sets up its factory, Verde president and chief executive officer Richard Rios said.

The building blocks are made of 89 percent recycled polystyrene -- the white packing material used to pack televisions and other products, said Robert Budihas, vice president of sales and marketing for Apex in Portland, Ore.

"There's no avenue to recycle it besides putting it in landfills," Rios said of the lightweight material. "We shred it and make a building product out of it."

In the manufacturing process, polystyrene is mixed with concrete and bonding agents. The company claims the resulting blocks, which form the interior walls of custom homes and other buildings, are better insulators than wood and resistant to mold, insects and fire.

East heads West

The blocks are based on technology Apex licensed from entrepreneur Gabor Boronkay, owner of Dura Thermolith Ltd. in Budapest, Hungary. Apex holds the rights to the product worldwide, outside Hungary, Budihas said.

The 4-foot-long interlocking blocks have channels to accommodate Rebar and concrete to give walls more strength.

Apex Construction Systems was founded in 2003 and has raised $12.6 million in venture capital and angel money. DFJ Element LP of Philadelphia and Menlo Park led the funding.

Apex is not disclosing revenue or whether it's profitable.

In May, Apex opened its first full-scale factory in Phoenix. The company also just finalized an agreement to open its second U.S. manufacturing plant near San Bernardino. The California plant is expected to open as early as July, Budihas said.

A Sacramento-area plant would be the company's third.

Homes and other buildings have been constructed using Apex blocks in Oregon, New Mexico, Arizona, Utah and Colorado, Budihas said.

Only builders in jurisdictions where International Code Council approval is not necessary have been able to use the material, he said. The ICC is a membership association that develops codes used to construct buildings. Most U.S. cities, counties and states use codes developed by ICC.

Plans to expand Apex and Verde essentially are at a standstill until the product can get an ICC number and other state approvals. Apex expects to get its ICC certification in the next 30 days.

In Sacramento, Rios has received product from Apex's Phoenix plant, but without the proper approvals he can't distribute it to customers.

Outside the mainstream green

While consumers and green builders embrace these types of new building techniques, companies face hurdles getting projects approved by local building departments, said Scott Blunk, president of GreenBuilt Construction Inc. in Sacramento.

"It's not mainstream," he said. "You can build 50 houses, but every inspector's not going to see it. It's just going to be new to everyone."

Steve Kendrick, a principal at LPA Inc. in Roseville, said his architecture firm would consider using the blocks if Verde gets its approvals, as well as a nod by the Division of the State Architect.

"We move a little cautiously when it comes to a new product like that, whether it's Verde's or anybody's," Kendrick said. "Typically, new products like that do have trouble getting traction in the market."

A similar technology has been used to build homes in eastern Europe for decades. The early origins of Apex and its more established competitor Rastra Corp. of Scottsdale, Ariz., both are linked to eastern Europe. Other competitors include Perform Wall LLC of El Paso, Texas, and Amazon Forms One Inc. of San Antonio.

Jerry Kachlic, owner of Pyramid Installations LLC in Phoenix, has been using blended insulated concrete forms, similar to the Apex product, for about nine years. He plans to switch to building with Apex blocks exclusively.

"Their manufacturing facility is brand new, and their technology is far superior," he said, adding that the blocks are easier to install.

Rios said the cost of the block runs about 3 percent to 5 percent more than a wood-frame building, but a block-based structure has added benefits, such as fire and mold resistance.

"Based on the feedback I've received from trade shows and personal contacts in the area, this region could be a trendsetter for the rest of the state," he said.

melanieturner@bizjournals.com | 916-558-7859