Use Building Code Delay to Assess the Impact

The Puget Sound Business Journal published this op-ed on July 16, 2010.

For the moment, homeowners and prospective homebuyers appear to have dodged major cost increases from new energy code regulations being imposed by the State Building Code Council, which is responsible for establishing minimum building standards in our state.

The new energy regulations, which were scheduled to take effect on July 1, are part of the state’s climate action agenda. Last year Governor Gregoire directed the Building Council to amend the existing energy code to improve energy efficiency by as much as thirty percent.

In an eleventh-hour plea, however, the Governor suddenly asked the Council to delay the implementation of the new regulations. Why? The Governor is now worried about the financial impacts these expensive rules will have on the economy, and the added costs they would create for current and future homeowners.

In her June 8 letter to the Building Council the Governor notes:

“…it is clear that the recovery of the construction industry is central to the recovery of our state’s economy. While construction numbers are starting to level off….there are serious questions regarding whether conditions will get better or worse.”

The Governor is not alone in her concern about the impacts of the new rules. A review by the Joint Administrative Rules Review Committee (JARRC), a bi-partisan panel of state lawmakers, found the Building Council’s cost-benefit analysis was unreliable and did not meet statutory requirements.

In late 2009, prior to the adoption of the energy code updates, the JARRC Committee wrote that the economic analysis “failed to comply with all requirements of law.” The Committee asked the Building Council to “provide additional economic impact information, including an estimate of the number of jobs that would be created or lost as a result of compliance with all the proposed rules, as required by RCW 19.85.040 (2)(d).” Despite these objections, the Building Council simply ignored calls to improve the cost-benefit analysis, choosing instead to move forward and adopt the new rules without any additional analysis.

The Governor’s request to delay implementation draws much needed attention to the economic impact of these types of regulations. The Council estimated that compliance with the regulations would add about $1.00 per square foot to new construction, so the buyer of a new 2,200 square foot home would pay an additional $2,200, a number that construction experts say is much too low.

In addition, the new regulations extend beyond new construction, adding additional costs for current homeowners.

For example, one rule that illustrates how these new regulations will cost homeowners is a requirement that heating, ventilating, and air conditioning (HVAC) systems meet stringent efficiency standards, even for an existing system. According to the new regulations, if a homeowner’s HVAC system is altered or replaced, a licensed contractor must conduct a costly duct test to ensure that the existing system meets the new standards. A trained professional must seal leaks in the HVAC system to enhance its overall efficiency. In some cases this might require intrusive testing that includes providing full access to a residence while filling the home’s system with smoke to detect leaks.

Experts say that there is no way to know what steps will be required, or how much it will cost, until they are on site. Such unknowns will certainly lead to higher costs for homeowners, and will act as a strong deterrent to taking even small steps to improve energy efficiency.

Due to the high costs of the regulations some contractors already report planning layoffs due to a decline in demand for energy efficiency projects. Homeowners, faced with an all-or-nothing choice between high costs to fix everything or continuing to live with an outdated system will likely choose the latter, costing jobs in the hard-hit construction sector.

Based on the questions raised by the Joint Administrative Rules Review Committee about the insufficient cost-benefit analysis that was provided by the Building Council, the Governor is right to ask for the delay in implementing these costly new regulations. Hopefully the Building Code Council will use the delay to re-evaluate the cost-benefit analysis and better understand how these regulations will impact homeowners.