Editor’s note: A version of this roundup was originally published on Facilities Dive.
Many states in the U.S. are passing new building codes and energy codes, or updating existing codes, to advance climate goals and achieve net-zero targets. Concerns over prohibitive costs are driving pushback from builders, architects, facilities managers and property owners, however, resulting in delayed implementation.
City officials across states including Massachusetts, California and Arizona are trying to ease those concerns by asserting that slashing greenhouse gas emissions, turning away from fossil fuels and electrifying buildings will result in energy savings that will compensate for cost increases, but that’s a tough sell for facilities managers.
“You’ve got to have multiple conversations with facilities managers to sell energy efficiency as a revenue stream,” Dan Arant, a climate and sustainability expert at Brightly, told Facilities Dive. Brightly, a wholly owned subsidiary of Siemens, works with facilities managers to help them achieve more sustainable communities through strategic asset management solutions.
Arant explained that “in the public sector, you’ve got a very steady revolving door of decision-makers—council members, municipal boards, lifetime appointees, and the like. If you’ve got a panel of about five council members that drive decision-making for a municipality, they’re probably there for three to five years. Most of them don’t think forward in terms of long-term capital planning. So, our facilities managers don’t have thoughtful capital budgets. They live in a world of deferred maintenance, and that makes it hard to get funding for investments in energy efficiency.”
Elizabeth Beardsley, senior policy counsel at the U.S. Green Building Council, said there’s a fear of change among builders who have been navigating through building cost increases since the COVID-19 pandemic. “I think there’s a group that’s vocally opposing building code changes from legislators, governors and energy offices. [But] the whole idea is that you update energy codes every three years, so it’s gradual and the market can learn those practices as they go along. But, when there’s a delay, then it feels like a hit,” she said to Facilities Dive. She was speaking during a webinar on USGBC’s work to define a rating system leadership standard that aligns with LEED v4.1 targets.
Despite the pushback, Beardsley said these code changes are “important in terms of where we’re heading toward future climate. We’ll keep working on it with our allies,” she added.
North Carolina is among the states seeing pushback against code changes. Caving into pressures from a powerful builders’ association group, North Carolina’s Building Code Council delayed until December a vote on a proposed overhaul of building energy efficiency rules. The state’s Department of Insurance told Facilities Dive that the decision would give city staff time to prepare two reports detailing the costs involved in implementing the proposed changes in the building energy efficiency rules.
“It’s valid to consider the cost ramifications of mandates. If I were a contractor or building owner, especially in this new code environment, I would ask whether the juice is worth the squeeze, whether it’s going to cause headaches that will be difficult to pass on to tenants, occupants and property owners,” Brightly’s Arant said.
North Carolina has a strong political lobbying presence against sustainability, he noted, adding that it is important to consider whether the pushback against those changes is coming from “a thoughtful argument as to why this could be bad, or whether it’s just a knee-jerk reaction.”
Similarly, Vermont postponed the implementation of a proposed residential building energy standard to July 2024. The standards laid out in the state’s Residential Building Energy Standards document were last implemented in 2020 and had been due for an update in keeping with International Energy Conservation Code norms. The decision to hold off on the update stems from builders’ concerns that rushing to meet the new standards could compromise building oversight and provide insufficient time to train builders and contractors.
HR&A Advisors partner Jonathan Meyers, who advises public- and private-sector organizations on the financing and implementation of complex real estate projects, pointed out that the new code requirements feed into pressures that builders are facing to develop new residential units amid a housing shortage in the state. “In Burlington [Vermont], there’s a lack of housing supply. That creates an issue with affordability. And that creates complications for builders who are saying, ‘We’re already contending with a housing problem, but you’ve now made it more expensive for us to build new housing,’” he said in an interview.
California is also contending with a housing crisis. Against that backdrop, the state has voted to amend its existing building code to remove barriers to adaptive reuse projects, which are expected to save as much as 75% of embodied carbon emissions compared with new building construction. Building on legislation to simplify requirements for adaptive reuse, San Francisco is inviting responses from downtown office building owners looking to convert underused commercial space into residential or other newer uses about how the city can make that process easier through zoning or regulatory changes, financial incentives or other means.
Kate Collignon, who works on economic development, real estate and community development as a partner at HR&A Advisors, said that San Francisco’s request for interest does not yet translate to policy.
“It’s going to be interesting to see what kinds of responses they get. The economics of office-to-residential conversion projects in San Francisco don’t pencil correctly right now. We haven’t seen real corrections in the office market. We haven’t even seen dramatic reductions in rent as property managers took out loans before the pandemic. So, you’re not likely to see conversions unless you can accomplish direct incentives, such as tax increment financing,” she said in an interview.
More recently, developers across Massachusetts have voiced concern that new building energy efficiency codes will jack up costs. That dissent has culminated into a sense of ambivalence among Northampton officials about adopting the state’s pro-electrification Municipal Opt-in Specialized Stretch Energy Code.
“From the perspective of the developer, a shift from a known universe to a less well-known universe is the simplest answer to why we’re seeing pushback. You have to shift your business model and that, for any property owner or facilities manager, can be stressful,” Meyers of HR&A Advisors said. “In this instance, it is coupled with a shift to what might be, for some builders and facilities managers, newer technology,” he added, pointing to low levels of heat pump adoption in Massachusetts relative to states like Maine.
The Massachusetts Department of Energy Resources recommends implementing heat pumps to heat and cool buildings under the stretch code, stating that heating and cooling with heat pumps is less expensive than doing so with natural gas.
Meanwhile, Scottsdale, Arizona, has been grappling with regulations based on an outdated edition of the International Green Construction Code, or IgCC, which includes measures that are already replicated in other codes and standards. To remove this duplication of requirements, the city recently amended the regulation to align the IgCC with the IECC.
For more on building code and energy code updates as well as pushbacks against them, read Smart Cities Dive’s most recent coverage: