As state and local governments launch and grow energy conservation initiatives, better building energy performance is increasingly a key element in the plans. Building codes play a central role in these efforts, and many legislative proposals have sought to boost the stringency of energy codes by 30 to 50 percent. Although these proposals have repeatedly failed, they’ve left their mark on code development. Notably, the newest edition of the national model energy code, the 2012 International Energy Conservation Code (IECC), achieved a historic 30 percent increase in efficiency over the 2006 edition.

But stricter building energy codes are hardly a simple means to a more energy-efficient end. New research commissioned by the National Multi Housing Council (NMHC) and the National Apartment Association (NAA) finds that more-stringent energy code requirements force property owners to focus on expensive upgrades that could add thousands of dollars to the cost of each new apartment unit, undermining the affordability of multifamily housing while offering only incremental energy savings.

Using the 2006 IECC as the baseline, the study, “Impact of the 2009 and 2012 International Energy Conservation Code in Multifamily Buildings,” details the economic and technical consequences of the two most recent energy code editions. Completed by the architectural firm Niles Bolton Associates, the report compares the new compliance requirements for a typical low- and high-rise apartment building in each of the eight U.S. climate zones. The bottom line: The 2009 and 2012 code editions create new challenges for apartment firms in terms of both dollars and design.

Getting Down to Dollars

There is a well-recognized split-incentive problem whereby the up-front costs of energy-­efficiency measures are paid by apartment building owners, but the savings accrue to residents paying individual utility bills. Apartment owners must then try to recoup some of these costs through rent increases, public- and private-sector incentives, or enhanced building valuation; none of these measures, however, currently can assure apartment firms of a consistent, workable offset to the added costs.

What’s more, code compliance costs vary widely based on the type and location of the building, and these cost differentials are inconsistent across the various code editions.

Flawed Design Assumptions

Energy codes are also limited in the ways they can promote higher building energy efficiency. A number of major sources of energy use in apartments fall outside the scope of building codes. Heating and cooling equipment and residential appliances, for example, are regulated by federal efficiency standards, while other plug loads—such as TVs, coffee makers, hair dryers, and the like—remain uncontrolled.

Consequently, the new codes rely on strengthening the requirements for the building envelope and increasing building insulation values. However, higher insulation performance levels offer a diminishing ROI. In fact, some new insulation products can force changes to a building’s structural and façade systems.

Under the updated code requirements, apartment developers will also face a number of new obligations, including the first-ever lighting-efficiency requirements for apartment units. New air-leakage and air-sealing testing requirements begin with visual inspections and end with $300- to $350-per-unit mandatory blower-door testing in low-rise buildings. Other notable updates in the 2009 and 2012 codes include higher window and door performance requirements and mechanical systems upgrades.

Most jurisdictions will have no choice but to adopt the 2009 IECC. States that accepted funding under the American Recovery and Reinvestment Act of 2009 (ARRA) are required to adopt an energy code that meets or exceeds it. Some localities are already vetting the 2012 edition. However, several states have taken steps to reject the 2012 code based on anticipated costs and other technical concerns.

The next two generations of building energy codes will affect apartment construction in a profound way, from the kinds of building materials sourced to the assumptions used to underwrite a new development. Given the challenges ahead, multifamily developers, builders, and owners need to educate themselves about the kinds of costs and construction considerations associated with the new codes. Get started by visiting www.nmhc.org/goto/IECC-Study.

Paula Cino is director of energy and environmental policy at the National Multi Housing Council, based in Washington, D.C.

2009 Energy Code Compliance Cost Premium per Unit
ZONE Low-Rise Property High-Rise Property
1 $311–$393 $95–$138
2 $311–$393 $95–$138
3 $311–$393 $95–$138
4 $231–$272 $938–$1,139
5 $231–$272 $938–$1,139
6 $231–$272 $2,201–$3,257
7 $231–$272 $2,203–$3,269
8 $231–$272 $2,501–$3,409
Note: Costs reflect the cost premium to comply with the new code versions relative to the 2006 IECC, not total code compliance costs. The dollar ranges for high-rise property totals reflect the varying compliance costs associated with lap siding versus brick construction.

Source: “Impact of the 2009 and 2012 International Energy Conservation Code in Multifamily Buildings,” Niles Bolton Associates and the National Multi Housing Council