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HomeMy WebLinkAbout12/5/2023 Item 7a, Hermann and Read - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum City of San Luis Obispo Council Agenda Correspondence DATE: December 5, 2023 TO: Mayor and Council FROM: Greg Hermann, Deputy City Manager Prepared By: Chris Read, Sustainability Manager VIA: Derek Johnson, City Manager SUBJECT: ITEM 7a - STUDY SESSION ON EXISTING BUILDING ENERGY EFFICIENCY RETROFIT POLICY OPTIONS Staff received a series of question about the Item 7a Council Agenda Report. The questions, which staff combined from multiple commenters and edited for clarity, are provided below; staff’s response are shown in italics: 1) Why doesn’t the City include policy options for reducing emissions from gas fueled fireplaces, outdoor heaters, or decorative fire features? In 2022, Council adopted an energy policy for new buildings that functionally prohibited outdoor natural gas fireplaces and outdoor space heaters in new projects via Municipal Code Chapter 8.11(All-Electric New Buildings). Enforcement of this ordinance is currently on pause while an appeal to the Ninth Circuit Court of Appeals is being considered in the case of California Restaurant Association v. City of Berkeley.1 Given the City’s interpretation of the current ruling, the City is limited in what it can regulate in new and existing buildings. When the City adopted an interim energy policy for new buildings in 2023, it did so via amendments to the California Energy Code. This approach was identified as the best available path forward, but effectively precluded any regulation on indoor cooking appliances, clothes drying appliances, and other equipment not regulated by the California Energy Code (including gas fueled outdoor and decorative fixtures). These same restrictions apply to existing building energy retrofit policies and therefore are not presented as policy options for Council’s consideration in the Council Agenda Report. Electric equipment for outdoor space heating and decorative fireplaces exist and are becoming common in commercial uses ranging from delis to high-end hotels. Staff encourages local businesses to transition to these electric uses and will look for ways to support that transition. 1 The ruling and its implications for City policy are discussed in this Council Agenda Report from September 19, 2023: https://pub-slocity.escribemeetings.com/filestream.ashx?DocumentId=10293 Existing Building Energy Efficiency Retrofit Policy Options Page 2 2) How does the City account for lifecycle emissions in redevelopment; how does the City account for embodied emissions in materials like concrete? As discussed at the Climate Action Plan update adoption in December of 2022, the City’s uses standard national and international emissions inventory protocols. Given the ambitious goals it is working to achieve, the City’s climate work focuses narrowly and deeply on the protocol’s required emissions sectors, which includes emissions from on-road vehicles, landfilled organic waste, and energy (electricity and natural gas) used in buildings and facilities. While not the focus of the City’s climate work, other emission sectors are still important, and there are numerous regional and statewide initiatives focused on embodied emissions, lifecycle emissions, and emissions from other sectors.2 3) Why does the proposed additions and alterations policy name 250 square feet as the threshold for applicability? Does that trigger point apply equally to newly constructed space as it does to a conversion of an existing space? The purpose of the study session is to familiarize the community and Council with the available policy option, listen to the community and Council about the relative value and risks of each approach, and should Council direct staff to continue working on one or more policies, come away from the session understanding the most important questions to answer in the next phase of policy development. As a result of the outreach conducted and the feedback received after the Council Agenda Report was posted, staff already benefited from a wide range of considerations related to the policy options presented in the report. Staff has identified the Additions and Alterations policy as a potential near term option and as such, provided key considerations at a level of detail greater than the other policies presented in the report. Staff has identified initial considerations as critical for policy success and has narrowed the options in each based on research to date. The numbers provided in the Council Agenda report were provided as examples for illustrative purposes. As noted in the report, this includes the type of building the policy would apply to (applicability), what would trigger the policy (size), and what exemptions would be in place to ensure that the requirements are reasonable relative to the proposed addition or alteration. The Council Agenda Report presents each of these categories and asks questions based on research to date. For clarity, staff is rephrasing these questions as recommendations here: 2 For example, the standards were recently added to California Building Code for lower carbon requirements in concrete used for large buildings. For more information, see this explainer posted by the American Institute for Architects : https://aiacalifornia.org/news/calgreen-mandatory-measures-for-embodied-carbon- reduction/). Existing Building Energy Efficiency Retrofit Policy Options Page 3 a. Applicability – The policy should be applicable to single-family and multi- family residential major additions and alterations. The definition for additions is relatively straightforward. As noted in public agenda correspondence, the definition for an alteration is more complicated. An initial definition provided in the report notes that a major alteration is an alteration that has structural, plumbing, and/or electrical components. The City has reviewed example ordinances from other cities, which include definitions of minor alterations don’t trigger the policy (minor cosmetic alterations that cover a large surface area, like replacing the floor or roof, for example, would not be included). Should Council direct staff to continue developing an Additions and Alterations policy, the definition would be further refined. b. Size - The policy requirement should be triggered by a project’s square footage size and/or a percentage of the projects size relative to the existing building area. The specific numbers would be identified and refined during the policy development phase. c. Exemptions - Reasonable exemptions should be included to ensure that the required improvements are a reasonable part of the overall project costs, have a clear nexus to the project, and are feasible given unexpected site conditions. Exemptions would be further identified and refined during the policy development phase. These recommendations provide a starting place for policy development. Based on the considerable feedback provided to date and at the Study Session, the specific standards would be refined to develop policy that is clear, reasonable, and proportionate to the addition or alteration project. Additionally, as mentioned in the Council Agenda Report, should further exploration indicate that a policy is infeasible (e.g., further diligence indicates that there are not cost-effective energy retrofit measures for multi-family additions), staff would return to Council with that finding. 4) What does the staff mean by “cost effective”? A “cost effective” energy efficiency measure is one whose energy savings are equal to or greater than the cost of the measure. Should Council direct staff to move forward with developing an Additions and Alterations policy, this would be operationalized as the net cost of utility bills over a 20 year period relative to the labor and material costs to install the measure or measures. Cost effectiveness findings are typically made using conservative assumptions about costs and do not typically include rebates, incentives, or tax credits. These additional resources, along with new incentive resources for moderate income households set to be available in 2024, are expected to substantially enhance the cost effectiveness of most energy efficiency measures , especially heat pump hot water heaters. Existing Building Energy Efficiency Retrofit Policy Options Page 4 Additionally, staff has identified certain exemptions for Additions and Alteration policies that would limit the cost of complying with the policy to a certain percentage of total project cost, ensuring that, not only would the measure pay for itself over time, but that the initial up front cost is also only a small portion of the total project cost. Should Council direct staff to move forward with developing an Additions and Alterations policy, these costs and savings would be further analyzed and would be presented to Council for consideration as part of the adoption process. 5) Can staff describe the Time of Sale policy option in more detail and explain what staff’s recommendation would entail? As described in the Council Agenda Report, the sale of a building is a time when improvements are typically made. Staff are not proposing a particular policy, nor is adoption of a policy an action Council can take at the December 5, 2023 meeting. Rather, staff is presenting several options that can be pursued alone or together that range from a simple energy disclosure requirement on one end of the spectrum to mandatory retrofit requirements on the other end. Due to the range of options available, staff recommends taking a year to partner with key stakeholders and further explore the economic, regulatory, and technical feasibility of these options. 6) Will the policy approaches presented in this report enable the City to reduce emissions from existing buildings in half by 2030? The City’s ambitious goal to reduce emissions from existing buildings in half by the end of the decade will be challenging to achieve. The City and regional partners will continue to look for ways to rapidly increase uptake of energy efficient, low emissions projects. If the City can increase voluntary retrofits and can find ways to cost effectively increase policy performance over time, the framework as proposed lays the foundation and puts the City on a trajectory towards achieving its 2030 goals while also supporting the City’s other Major City Goals. Staff identified incorrect terminology in the Council Agenda Report. The phrase “point of sale” is used unintentionally several times in the report. Where this phrase is used, staff intended to write “time of sale.” The correct “time of sale” phrase wording will be used in staff’s presentation to Council.