Stricter Energy-Efficiency Mandates for Multifamily Will Result in Rising Construction Costs

By Anuradha Kher, Online News EditorWashington, D.C.–In ongoing efforts to combat climate change, lawmakers at all levels are increasingly looking to apartment owners and developers to further improve the energy-efficiency of their buildings. “But if policymakers impose unrealistic energy-efficiency mandates on the sector, the cost to develop properties will spiral, exacerbating the affordable housing shortage,” according to a new report by the National Multi Housing Council (NMHC) and the National Apartment Association (NAA), titled “Strategies and Costs to Exceed ASHRAE 90.1-2004 Requirements in a Multifamily Apartment Building.”“In the past year, numerous proposals at federal, local and state levels, have been introduced that would require apartment properties to exceed existing energy-efficiency requirements (as contained in the ASHRAE 90.1 building standard) by anywhere from 15 percent to 50 percent,” Paula Cino, NMHC director of energy and environment, tells MHN. “If any such legislation were to pass, we believe there will be a disconnect between upfront cost and the long-term payback as far as multifamily development goes.”Newport Partners LLC, an independent consulting firm with expertise in building science- and energy-efficiency technology, conducted the research. The firm performed extensive energy modeling of a typical apartment property in three U.S. climates to determine what products and practices would be required to exceed existing requirements by 15 percent, 30 percent and 50 percent as well as the payback for those investments.“This is one of the few comprehensive studies examining the costs and feasibility of large increases in energy efficiency for apartments,” notes Eileen Lee, NMHC/NAA vice president of Environment. “As such, not only will it help apartment firms select the most appropriate energy-efficiency investments for their properties, it is also a valuable advocacy tool we can use to help educate policymakers about what is technically feasible and cost effective.” Lee adds that that the report finds that it will not be possible for most buildings to achieve a 50-percent increase over the ASHRAE 90.1 standard with today’s technology.” According to Lee, policymakers considering energy-efficiency mandates need to understand the true costs of meeting those mandates and how the economics of the apartment sector makes it difficult for owners to recoup those costs.According to the Newport Partners research, even meeting the 15-percent goal in some cases will require the use of extraordinary technology and practices. For example, it would cost as much as $8,000 per apartment unit for a property in Atlanta and would require a 16- to 25-year payback.  “Most owners would not be able to recoup these costs through higher rents. Apartment owners cannot recoup these costs through lower operating costs because most savings in new buildings accrue to renters who pay their utilities directly,” says Lee.Cino notes that the way people live in their homes and use appliances etc. can achieve more energy efficiency than what building design can do.“Policymakers need to remember that apartments are already the most efficient and sustainable form of housing that can be developed,” says Lee. “They are higher density, use less material per housing unit and have inherently lower utility costs per housing unit. They are also critical in meeting our nation’s affordable housing needs.”