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

Dispute highlights tough housing issue of balancing energy efficiency and affordability.

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.

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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.

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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.