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Minnesota builders warn energy-code changes would raise price of homes

Energy efficient windows
Lawrence Berkeley National Laboratory
Construction groups are fighting new building codes that would require, among other changes, more energy-efficient windows.

Possible changes in the state building and energy codes could add $8,000 to $12,000 to the cost of a typical home and open the door to building practices that have caused problems in the past, an industry group warned this week.

Leaders of the Builders Association of Minnesota,  a trade organization representing 3,500 home builders and remodelers, held a public meeting in St. Paul to encourage careful scrutiny of the changes now under consideration.

“Builders want to see energy efficiency gains,” said Pam Pierri, executive vice president of the group. But she said the state also must consider costs and durability when promulgating new building codes.

The Minnesota Department of Labor and Industry (DLI) is in the process of updating the state building and energy codes,  drawing upon recommendations contained in the 2012 International Energy Conservation Code as well as input from the builders, energy conservation advocates and others. The new codes would require, among other changes, more energy-efficient windows and more insulation in attics and basements.

James Honerman, communications director for DLI, said the department is “midway in the process” and is still receiving input from stakeholders about the proposed changes. He said the builders’ estimates of the changes are speculative at best.

Pierri responded that the builders tried to make changes in the model code during meetings of the DLI’s technical advisory committee and were unsuccessful.  Department officials “are holding their cards pretty close to their vest,” she said. “We don’t know what they are going to do.”

Two-edged sword

The building and energy codes are something of a two-edged sword for state policymakers. While they could promote greater energy efficiency and independence, they also could add to the already daunting challenge of providing affordable housing.

At the builders’ meeting this week, Pierri said the state “must be realistic” about the cost of mandated energy conservation measures and whether the return is sufficient for home buyers to justify the investment.

Cary Becker, a homebuilder and remodeler, said he priced the proposed changes on a three-bedroom home he recently completed and put on the market in northeast Minneapolis. Becker said he replaced a deteriorating home built in 1900 with one containing 1,688 square feet of space above grade, plus a finished basement recreation room with another 844 feet of space.

Becker said the proposed changes would add $7,307 to the cost of the home – not including the increased mortgage interest and property taxes – and produce yearly energy savings of just $167.

“According to our calculations, it would take 43 years to get the payback on that,” he said. “When you talk about first-time homebuyers in a tough economic environment, that is a big number.”

The estimates by the Builders Association of the proposed code changes differ sharply with those made by the Building Codes Assistance Project (BCAP), an initiative of the Alliance to Save Energy, a nonprofit organization that promotes energy efficiency.

BCAP estimates that the proposed code changes would add $2,682 to $3,959 to the cost of a typical home in Minnesota and produce energy savings of between $848 and $925 per year.

Analysis challenged

The builders association has challenged this analysis and asked BCAP to provide the modeling assumptions that were used. Pierri said BCAP underestimated the cost of the energy improvements and “grossly overestimated the energy savings.”

Steve Kismohr of the Chicago-based Midwest Energy Efficiency Alliance attended the builders meeting here and he, in turn, questioned the builders’ numbers. “From what I’ve seen, their cost estimates are high.”

Karen Linner, of the builders association, said the group wants to be fully transparent and provide the best possible estimates of the code changes on home costs. She said the group will post all of the details on its website for public scrutiny.

Linner said the builders’ group also is concerned that the proposed changes are “a step backwards” when it comes to using certain building practices in Minnesota’s climate.

She said the code would permit building practices that, in the past, have caused moisture and mold problems in attics, basement walls and other areas, and “create housing durability concerns for Minnesota homeowners and contractors.”

“We build houses in Minnesota to be energy efficient in the winter,” she said. “The problem is that moisture problems usually occur in the summer.”

Honerman said the Department of Labor and Industry may “carry forward some of our current code provisions that address durability and moisture prevention. Minnesota has no intention of adopting provisions that would contribute to mold and moisture problems.”

He also indicated that the department will not rush into any decisions and that approval of the updated codes is unlikely before sometime next year.

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Comments (6)

Most builders want to build fast and cheap

There is little finacial incentive for builders to take the extra steps and training time to build homes that are energy efficent, longer lasting and more sustainable. That's too bad, because we know how to do this, and the long-term benefits would be huge for homeowners, utility companies (conservation is cheaper than building new power plants) and to the environment.

That's why we have to do it through the building codes. As usual, the change-resistant builders lobby will fight against it, just as they fought against common-sense steps to protect homeowners against fire, radon and carbon monoxide poisoning.

This is short-sighted

To consider only the savings in energy costs in dollars is only one side of the equation. Yes, it matters directly in terms of the house's affordability in the short term. But since what we pay for energy has almost no relation to its actual value due to the fact that energy costs don't factor in externalities (from wars to control the price of oil, to oil company subsidies, to the almost unestimatable costs of global warming), using such a cost analysis is a poor way to make decisions about the necessity of efficiency increases.

Conservation=Saving $$$?

Some of energy conservation involves picking the low hanging fruit. Replacing a 30 year old furnace on it's last legs with a 92% efficient model will have a payback of a few years, owing to it's marginally higher cost relative to replacing with an 85% model . But after that it isn't always so simple.

I just finished an apartment building in Saint Paul with high efficiency lighting, much of which consisted of 12 watt LED fixtures. Motion sensors control some of these. But when a motion sensor controls three 12 watt fixtures the payback on that lighting control (labor, parts) has a lot longer payback than when it controls far less efficient lighting.

Similarly, better insulation has a longer payback with a more efficient heating plant.

The dirty secret is that if we greatly increase the efficiency of our electrical use, the total cost won't go down. The cost of maintaining power plants, transmission lines, etc. are hard cost that are not effected by overall demand for kilowatt hours.

I'm not saying energy efficiency is a boondoggle; I installed a high efficiency furnace 17 years ago and Xcel Energy tells me my household (of 8) is more efficient than 92% of my neighbors.
I am saying we need to be smart about it. A payback of 43 years (IF correct) is not even 2% per year.

What are the new code requirements

How about some more specific info on exactly what is proposed in the new codes?

Many variables

There are many price variables involved in building--for example in recent years the cost of materials has gone up, while the cost of labor has gone down--so this set of proposed changes is not substantively different than other market/cost changes. If new stardards are placed into the building code, it protects a builders' competitiveness by requiring these changes for all builders across the board. It also responds to consumer demand for more energy efficient homes.

Fix the Existing First

Many areas in out state Minnesota do not have any building codes or building inspectors and therefore many unlicensed builders are currently not meeting the existing codes nor are they honoring the required warranties. Before adding additional code requirements in any areas, the State of Minnesota should mandate each county and city to adopt and enforce the existing codes. Affordability is key in out state areas and adding as much as one thousand dollars to building costs will leave many Minnesota families unable to join the American Dream of owning their own home. This will also leave many out state builders looking for new careers outside the building industry and making it even harder for affordability to enter the picture with less competition. Also, if all these new rules are "so" important, then they should apply to all homes within so many years or when they are sold or change hands, not just new home buyers.