The grim news in late March that the Earth is on target to heat up by another 2.7 degrees in the next decade is adding to the challenges of a seemingly separate crisis: housing and homelessness.
Updates to Washington’s energy code, a subset of the state’s building code regulating design and construction, will require heat pumps in new residential and commercial buildings, including large multifamily apartments, starting July 1. The code, which the State Building Code Council updates every three years, aims to steer buildings away from natural gas and toward electric systems.
The updates make Washington among the cleanest and most affordable — and highly regulated — states in the nation when it comes to energy use, according to nonprofit organization Climate Solutions.
Renters and homeowners will benefit from reduced energy costs, improved air quality and reduced heat-related health concerns in Washington’s warming climate. The residential changes alone are estimated to cut more than 12 million metric tons of carbon dioxide pollution and save residents $982 million in energy costs over 30 years, state-hired analyst Pacific Northwest National Laboratory found.
Local developers say efforts to combat climate change are valuable, but the new rules are costly, threatening their ability to help resolve the region’s housing shortage.
By the numbers
- Regulations imposed by the government at all levels make up 40.6 percent of the final project cost for multifamily structures.
- Changes to Washington building codes have added $39,876 to the cost of building a new home since 2009. Most of that cost increase comes from the energy code.
When new Washington building code updates take effect on July 1:
- Residential energy code updates will add $9,200 per new home built.
- Electric vehicle charging requirements will add $650 per new home built.
- Heat pump water and space heating mandates will increase the average sales price for a new home by a minimum of $5,000.
Source: Building Industry Association of Washington
“Sometimes, we won’t even move forward on a project because it’s unaffordable to do so,” said Ryan Hurley, president of Hurley Development, a Vancouver-based developer whose latest project is The Adera, a new, 186-unit waterfront development encompassing the block between Washington and Columbia streets and West Fourth and Fifth streets.
The updates, along with other environmentally geared code changes, will add $14,150 to the price of each new home built in Washington, according to Building Industry Association of Washington data. For low-income apartments, nonprofit affordable housing developer Mercy Housing Northwest calculated the code changes will mean another $24,500 per unit in development costs.
These costs typically get passed down to renters and homeowners. For low-income developers who can’t pass on the costs, the added costs often mean fewer buildings on the ground.
In February, Washington’s Building Industry Association and other entities filed a lawsuit against the State Building Code Council, alleging the council overstepped its authority in updating the code to make buildings more climate friendly.
“The rules will have the effect of increasing the cost of constructing and maintaining commercial buildings, which include multifamily complexes,” the plaintiffs argue in the petition.
The lawsuit sheds light on the larger tension between climate change and housing.
Washington needs 1.1 million more homes over the next 20 years to keep pace with needs, according to state Department of Commerce projections. Clark County will need 103,475 additional units, more than half of which must be affordable to low-income residents.
“We are concerned not only about the environment, but also about making affordable product and making it in a timely manner,” said Noelle Lovern, Clark County Building Industry Association’s government affairs director. “We can’t have affordable housing if we can’t build affordably.”
Costs of affordable housing
While Hurley, a prolific Vancouver developer, strives to profit in the face of increasing regulations, Mercy Housing Northwest struggles with a different task. With nearly 60 properties throughout Washington and Idaho, the nonprofit organization works to keep rents affordable to low-income residents.
Washington’s energy code updates will increase Mercy Housing’s total development costs about 4 percent, according to President Joe Thompson.
The heat pump requirement will add about $10,000 per unit to Mercy Housing’s costs; moving to balanced ventilation will add another $7,500; electric water heating will add up to $4,000; and window insulation will add up to $3,000 per unit.
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Thompson said Mercy Housing supports the changes, but he doesn’t know how it will cover the costs.
He has to trust that public and philanthropic funding sources will recognize the burden and supply more money. Vancouver’s Affordable Housing Fund, sustained by a property tax levy renewed by voters in February, has been crucial for Mercy Housing’s development in the area, he said.
Sometimes, however, higher costs simply result in fewer affordable units.
The Vancouver Housing Authority, a major provider of the city’s low-income housing, sometimes has to cut down on units to stay within its budget, according to Construction Project Manager Scott Davidson.
Insulation requirements, for example, have jacked up the amount of lumber in a wall’s frame. “That’s doubled the cost of what we were doing two or three years ago,” Davidson said.
For the housing authority, the price tag is worth helping the state shift away from natural gas. The authority’s Fourth Plain Community Commons development, currently under construction, has an electric centralized boiler as well as triple-glazed windows and thicker walls for insulation.
Increased development costs
For Mercy Housing Northwest’s low-income multifamily apartments, new environmental building code regulations are estimated to increase development costs by about:
$10,000 per unit for heat pump heating and cooling systems.
$7,500 per unit for balanced ventilation with heat recovery.
Up to $4,000 per unit for electric water heating.
Up to $3,000 per unit for triple-glazed or other high-performance windows.
Source: Mercy Housing Northwest
“For our community, building a more sustainable, better-insulated product benefits the tenant long-term financially,” Davidson said. “It pushes the burden a little bit more on ourselves, but that’s not a problem because I think we’ve got the resources and the ability to manage that.”
Finding a win-win
Hurley remains skeptical that the state is meeting its climate goals in the best way, noting that statewide mandates don’t always mesh with community needs. He described the energy code as too “narrow,” telling developers not only what goals to meet but how to meet them.
“Consequently, it creates fights and battles,” he said. “Instead of, ‘Wait, step back. What’s the war? What are we really trying to solve here?’ ”
He thinks greater collaboration between private and public developers, policymakers and special interest groups would broaden the code’s scope, giving developers more leeway to meet climate goals in innovative ways.
Thompson of Mercy Housing agrees the energy code is unnecessarily restrictive for developers who are genuinely trying to comply. But he understands why the state approaches it this way.
“It’s probably restrictive and prescriptive because there are a lot of developers who would not operate in good faith, and try to sort of circumvent the intent of the code changes,” Thompson said.
Thompson thinks costs can be lowered through other avenues, like zoning. “Our zoning right now is an impediment to development.” Changing zoning laws to allow for higher-density developments could be a “win-win” for developers, renters and climate activists, he said.
Davidson of the housing authority thinks more incentives on the manufacturing side could also go a long way by lowering costs for developers and making sustainable products more broadly available.
“A lot of doors and windows are being done in the Pacific Northwest,” Davidson said. “To me, it feels like there’s an opportunity where we could incentivize them to build a better-insulated unit.”
This story was made possible by Community Funded Journalism, a project from The Columbian and the Local Media Foundation. Top donors include the Ed and Dollie Lynch Fund, Patricia, David and Jacob Nierenberg, Connie and Lee Kearney, Steve and Jan Oliva, The Cowlitz Tribal Foundation and the Mason E. Nolan Charitable Fund. The Columbian controls all content. For more information, visit columbian.com/cfj.