Point/Counterpoint on Requiring Upgrades When  Buildings Undergo Major Renovation

In an earlier post (Part One) I described the broad outlines of the new City of Seattle Energy Code that is under development.  The new Seattle Energy Code seeks to go significantly beyond the newly approved 2012 Washington State Energy Code  – which itself is light years beyond the energy codes of a decade ago.  Seattle has set the goal of zero net carbon use by 2050, and aggressive implementation of the range of new building technologies that reduce energy usage is an essential piece of meeting that objective.

The entire code reflects the fact that there is no progress without some hard choices.  It will increase the initial cost of buildings in Seattle.  That means that certain kinds of buildings will be built elsewhere in the region.  But that’s ok.  It will dictate how comfortable buildings are.  But that too is ok.  You shouldn’t need to wear a sweater in the summer when you go into an office building, and it’s ok if you need to wear a sweater in the winter.  Although real estate markets don’t yet pay as much attention to on-going utility costs as they pay to initial costs, eventually the added initial cost will be repaid with lower operating costs.  And we will be just fine with summers seeming warmer than winters where we work.

The one area where I believe the Seattle code is a mistake, however, is with its provision that when a building undergoes a major renovation, or when it is reoccupied after it has been vacant, it has to be brought up to within 20% of the energy efficiency of a new building of the same size.  (The current proposal applies only to buildings of 10,000 square feet or more.  But once the concept is embedded in the code, it is hard to imagine that the 10,000 square foot limitation won’t fall in the next energy code revision.)  I believe it is a mistake based on a couple of experiences in my career in getting an older building re-occupied with a new use.  The reality is that the easiest thing to do with an old building is to wait until someone wants to tear it down and build two or three times as much on the lot.  That is what “pencils.”  Reusing an old building is much harder, and much harder to make pencil.  And still, in the situations I have been involved in, reusing an old building can have enormous benefits for the community.  Indeed, reusing existing building stock has energy savings over hauling all the materials in the existing building off, some to be recycled  and the rest to a landfill.

I expressed my concerns in an email to Duane Jonlin, the Department of Planning and Development staff person responsible for the new energy code, and he responded to my concerns in a detailed email.  If you are wonky enough to have read this far, then you may want to read what I said, and what he said – and then I get the last word.  Because this is my blog.

I wrote:

I applaud the City’s effort to adopt an energy code that will make a significant contribution to achieving the City’s goals of zero net carbon use by 2050.  Some of the code provisions are arguably onerous – but the goal of zero net carbon is not easy, and will require some cost.

That said, I think the City – both DPD and the Council – in adopting the new energy code needs to recognize that minimizing energy use in buildings is not the only important thing to be considered.  With respect to the retrofit provisions, I believe the City is applying a tunnel vision approach that will potentially result in some energy savings, but at a disproportionate cost to other important values.

In my experience, low-scale, outmoded buildings follow one of three paths.

  • They receive less and less investment, until the business occupying them folds and they become vacant.  At that point they may remain vacant for many years.  Vacant buildings are almost uniformly a blight on their neighborhood, as well as providing minimal tax revenue and no jobs.
  • They are converted to a new use.  I have been involved in several such conversions over the years, where non-profits have managed to put a building that was otherwise vacant to a completely different use.  Sometimes those included minor expansions of the building.  I am also aware of several conversions to retail uses.  This Sunday’s Pacific supplement in the Seattle Times had an article about several.  Those conversions were virtually always only possible because the space, after the conversion, is still cheap.  Whether it is a retail use or some little non-profit arts group or a housing group that manages to convert a vacant building into something entirely different, they can achieve a use that would never go into a new building for the simple reason that the price can be made right.  Those conversions offer many benefits to the community, including maintaining a sense of scale in the neighborhood,  creating spaces for important businesses and organizations that create the “fabric” of the community, and adding life to a neighborhood instead of blight.
  • The building is bought by a developer to tear it down and build to the zoning maximum  – either for condo or office development.

The first and third paths are by far the most common, and the easiest to make happen.  The third would, of course, also bring the property up to current energy code standards. 

The second path is hard.  The second path is also often extraordinarily valuable to the neighborhood and to a range of things we value.  I do not believe the City should prejudice the ability for properties to take the second path except for compelling reasons.

Over the last 15 years the City has adopted a number of codes that increase the cost of retro-fitting old buildings, and thus make it increasingly difficult to take the second path. These include the City’s seismic retrofit rules, and its handicapped accessibility rules, in particular.   I represented the owner of a one-time automobile garage when she converted it to a dance studio on Capital Hill.  Had she fully understood the costs of the seismic retrofitting she would be required to do, that project would never have happened.  On the other hand, that dance studio maintains the scale of the neighborhood, while it is surrounded by condos built to the maximum allowed by code, and it adds to the fabric and urban vitality of the neighborhood.  The City would be poorer if the owner had waited an extra 2 years, and sold the property to one of the current round of condo developers. 

We can probably all agree that the trade-off between losing a potentially nice project versus having increased occupancy of a seismically risky building probably weighs in favor of the seismic upgrading.  The same is true of handicapped accessibility.  As a society we can make a decision that we will risk losing a project rather than have it inaccessible.  But I am not convinced that the energy code is in the same category.  At the very least, the City needs to recognize that it is making a choice – that requiring major energy efficiency upgrades if an older building is significantly upgraded will result in more buildings not receiving new investment, and more buildings becoming vacant and staying vacant longer, and will lead to the ultimate outcome of those buildings being razed and turned into the current generic condos and offices more often. 

Again, I applaud the City’s motives.  But there are other potential avenues to achieve the objective – at least sometimes – of improving the energy efficiency of older buildings.  The City has received federal grants to upgrade its housing stock in older neighborhoods.  It could potentially seek grants to allow the City to finance energy upgrades when older buildings are being converted to a new use.  It might be able to do that with loans paid off over time that the new user could afford, and might well be delighted to take out.  But I don’t believe the requirements of the current draft are appropriate.  Energy efficiency is important; it is not the only civic value that is important.

The following week, Duane wrote back:

I certainly don’t maintain that energy use is our only value.  Maintaining our current building stock and neighborhood character is a significant policy for my department and for the City in general.  I have been working extensively with the Preservation Green Lab staff to develop rules that encourage long-term retention of our historic fabric, and our mutual belief is that old buildings will have improved resilience and long-term survival prospects if they are high performers.

Please note that during the state rulemaking process and in my proposed Seattle amendments I have softened the impact of energy code rules for non-residential to residential conversions, for unheated to conditioned space conversions, and for conversions of lower to higher energy use occupancies.  Those are now required to bring buildings most of the way to compliance with current code, rather than all of the way to code as has been the case with current codes.

Note that the draft proposal has a threshold of 10,000 SF, so that most of the building reuse projects featured in the Sunday Times article would have been exempt from these rules.

Note that the proposed rules, unlike almost all other regulations, do pay for themselves over time with reduced energy costs, and are certainly more comfortable for occupants.  The dance studio you mention, which must be kept comfortable and warm for the students but is built in an old uninsulated building, is a great example of an appropriate application of this rule.

Note also that all of the new systems (HVAC, lighting, water heating, windows, etc) in a renovated building must already meet current code.  Uninsulated roofs are required to be insulated during re-roofing projects. This leaves the remaining building envelope components to be upgraded under my proposed substantial alterations rule, and only to the extent that the whole building achieves about 80% of the performance level required of new buildings.  This would typically mean that some windows would need to be replaced, or walls insulated, or floors over unheated spaces insulated.

Over the long haul, we must make substantial energy use improvements to our existing building stock.  Mandating upgrades to occupied buildings would be expensive and disruptive, so I have instead selected the point of substantial alterations to be the least disruptive and most cost-effective time for these improvements.  However, I would certainly welcome any ideas you may have that would accomplish these goals more effectively.

I’m sorry to say that while I appreciate his response, it seems to me to typify how Seattle, with its liberal and well-intentioned goals, can be completely tone deaf to anything other than the objective of the moment.  I really do not believe Mr. Jonlin has ever tried to make a pro forma work.  Nor is anyone suggesting that a previously unheated building should remain unheated once it is occupied.  The issue is whether when older buildings are repurposed, they must be brought up to the standards that make them livable and workable for the new user, or whether they must go beyond that, to meet the rather extraordinary standards that the City has chosen to apply to new construction.  Almost by definition, if the costs of coming up to code made economic sense to the owner and the new user, they would be doing it without the code requiring it.  So these are costs that don’t make sense on their own, by any economic measure that matters at the time someone is trying to reuse the building.  The pay-back period for many of the improvements is longer than the commercial market will tolerate.  But more important when the objective is to reuse an existing building, the sort of non-profits and small commercial users who tend to engage in this reuse often cannot trade long-term operating costs off against initial capital costs.  The financing of these projects is not like that.  They must complete the construction within the funds available, and the fact that there would be a long-term reward from spending more money up front is simply irrelevant.  The upshot will be that what start as marginal projects will not happen.  How often that will occur, only time will tell.