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Tuesday June 25th 2019

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Smart Regs: A Conflicted Landlord’s Perspective


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I own two small buildings within the Mapleton Hill Historic District–both acquired over 30 years ago with the intention that the income from them would support me in my old age (having neither a husband nor a corporate  retirement plan). With that in mind, I have diligently worked at improving my properties and at having them debt free by the time I reached my mid-60s. I am nearly there on both counts!

At this stage in the “Smart Regs”  planning process, I remain perplexed as to how the new regulations will affect my long range plans for these properties. I set up a simple spreadsheet based on “point charts” developed by city staff available as “Attachment  I: Proposed Prescriptive Pathway.”  The spreadsheet provided a somewhat useful analysis for me.  Both properties have had energy audits through a student project offered by the University this past winter. Unfortunately, I  have not yet received the reports from the students on either property so can not yet incorporate that information into my analysis.

My buildings and my tenants

Both of my buildings were constructed in the very early  1900ʼs. One, originally owned by Edward Kohler (of Kohler Drive, Kohler Reservoir…) is individually landmarked. In 1993 an extensive remodel on that building was recognized by Historic Boulder for “Sensitivity to the historic structure”. There are 5 apartments in the big building and two in the other. My tenant turnover is very low with rents in the mid to upper range for the market. I have the best tenants in Boulder.

At the bigger building, I pay a portion of the Xcel bill and prorate the rest amongst the tenants– primarily for heat. The electrical and plumbing infrastructure is a mix of new and old–anything accessible has been upgraded (with the exception of “Ed”). The two unit building, where tenants pay heat and electricity, has a new, high efficiency furnace set up to accommodate air conditioning when Colorado becomes so hot that even “true Coloradans” will suffer without AC.

The “40 year roofs” on both buildings are about 20 years old and the buildings will need new paint in less than 10 years–expenses that will range from $35K to $50K and can not be deferred without compromising the structures. I still have three kitchens to upgrade at about $10K each. Two bathrooms are also old and will need work soon–another $5K or so each. The other kitchens and bathrooms, at 18 years , are no longer “new”. The total cost for home improvement projects comes to $75K up to $90K or more, which makes me wonder if there will be the need for yet another loan or if I can slowly work my way through the list on cash flow (before I need help caring for me!).

Having stated that I have the best tenants in Boulder, I must also make known that the only programmable thermostat installed in either building was not popular and was removed in about 2000 to be replaced with the simplest of models favored by the tenants. Through much of this past, cold winter the storm windows on at least one unit were left half up the whole heating season. Storm windows have been removed by occupants and not replaced–very discouraging when they go missing. One of the biggest sources of air infiltration found by the energy audit was a window air conditioner, belonging to a tenant, that was not removed for the heating season and was poorly sealed against the cold. (The next big source of infiltration was around two “new” exterior doors with failed weather stripping–also very discouraging.) Minor sources of infiltration around operable windows could have been sealed with inexpensive tape that gets peeled in the spring when it is time to open windows again. This business of being more energy efficient means everybody needs to participate. We are all frogs in the same pond.

Back to “Ed”–my biggest source of conflict! “Ed” is the hot water boiler for the furnace at the big building. My plumber estimates that “Ed” was installed around 1930 and that he is about 70% efficient. We expect that “Ed” is likely to run smoothly for another 20 or 30 years. Replacing “Ed” would cost around $10K to $15K at todayʼs pricing. I was raised in a poor family. We did not replace things that still worked. Rather, things got used up and replaced when they wore out.

Analysis: “Prescriptive Pathway” for both buildings

Construction of both buildings is two course brick with interior plaster walls. All are in good condition. I assumed that the R-value is approaching 3 and gave the buildings 15 points each. Adding any additional insulation is not practical nor feasible–a  major problem for “historic properties”. Additions on both properties are 2”x6” construction with fiberglass batts for an estimated R-value of 13. I did not include the additions in my wall calculations as they cover less than 25% of the outside wall area.

Windows are either original to the buildings or, in newer construction, are double pane. I assumed a .35 U-value for the units that either have storm windows or are newer. There have been  storms on lower level windows since I acquired both properties but not on upper level windows in an effort to “balance” the heat between floors as thermostats are shared. I included the cost/new points of adding (or replacing lost) storms to all windows for both buildings.

I assumed attic insulation at R-19 and assumed that it would be difficult to access any areas that may not have insulation so gave points for 50% only with no  additional possible at the big building. Adding additional insulation at the other is feasible.

I need more information to assign points for the foundation/slab and floors. No points were given either building. One has a walk out basement so a portion of the walls are below grade. There is no insulation under the slab on grade floor. I am clueless as to how to estimate any points here. At the other, it is possible to insulate the perimeter of the building where the floor meets the foundation at a reasonable cost.

Since the big building has hot water radiant heat, duct leakage does not apply but there are points for “no ducts”. I assumed that leakage was in the mid range for the duplex.

Heating. The furnace at the duplex was replaced recently with a high efficiency unit. (The tenants reported that there was no noticeable decrease in their utility bills.) I would hope that “Ed” at the big building is  allowed to continue operating until no longer able and I am not required to remove him before his time is over. (I would really like to see if this boiler can last 100 years–that would be some life cycle!)

Why are no points available for “natural cooling”? It seems that this option would get the most points possible in its category! Neither building gets any points even though both would use the least energy possible since we rely, for the most part, on fans and natural convection.  I do not know if it is feasible to install effective whole house fans and points available are very low–none awarded.

Lighting generally is not under the control of the landlord. I assigned no points and think that this category should not be included as the landlord’s responsibility. Hot water heaters fail every 20 years or so. Mine have probably been around for at least 10 and will be replaced with the most efficient available when needed. This may not happen during the time frame anticipated for meeting the “Smart Regs” requirements.  Nevertheless, points were assigned accordingly.

Refrigeration. See above comments.

Solar thermal is not an option at either property.  PV, photovoltaic, is probably not an option either. If there were a solar garden I could buy into, I would consider doing that (but would not consider buying
Carbon Offsets). There are no points for either building for either category. There are no points available for purchasing wind power from Xcel as I have done since it became available for the utility bills that I pay. (I would prefer to not have the landlord responsible for requiring tenants to make that choice.) Adding wind power as a category would be helpful at the big building.

Things that the occupant(s) might do are generally not under the control of the landlord. This category should be removed.  Please, I am not my tenantʼs parent.

Other. No comments except that I believe that purchasing Carbon Offsets is similar to buying “indulgences from the Pope” and think this option should be removed. Water Conservation could be removed from the analysis as it does not count towards points and is very easy to meet.

Conclusions and suggestions

Meeting the “Smart Regs Prescriptive Pathway” might be feasible for the duplex at a cost that is not too great for items that have an acceptable benefit relative to cost–primarily by adding insulation and installing storm  windows.  Meeting the regulations for the big building is problematic. My only options would be to replace high dollar items that, in the big picture, may not reduce energy usage by that much and I still come up short for points. For me, carbon offsets are not an option.

Before requiring that high dollar items such as furnaces, boilers, refrigerators and hot water heaters be replaced prior to the end of their “use full life,” there should be a detailed cost/benefit analysis that includes CO2 emissions and costs for disposal as a part of the equation. Residential natural gas is the source of only 6% of Boulderʼs greenhouse gases while electricity contributes 11% (Community Guide to Boulderʼs Climate Action Plan, 2007). The benefit to the community may be marginal relative to the cost to landlords and their tenants and thus warrants more investigation. Allow for replacement of high dollar items over a much longer time frame than 8 years when the reduction in energy usage is marginal per the big picture. Provide information for quantifying all costs relative to benefit.

Remove items such as “lighting” and “occupant” from the list. Landlords have very little control over the type of light bulb a tenant might choose or how well informed or concerned a tenant might be about energy usage.

Include points for “natural cooling.”

Include points for buying wind energy from Xcel.

Create a community solar garden that can be bought into for points. This could be a substitute for buying carbon offsets.

Remove the option to purchase carbon offsets.

Provide an option for “best compliance reasonable.”

(Spread sheets for this analysis are available on request.)

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One Response to “Smart Regs: A Conflicted Landlord’s Perspective”

  1. TomVolckhausen says:

    Since this article refers to historic buildings, the exemption process in Smart Regs is very relevant, and should have been mentioned. From the city website “The code official may allow for reasonable alterations and modifications in the award of prescriptive and performance points… upon a finding that …Strict application of the requirements requires an alteration to an individual landmark or contributing building in a historic district” (PDF would not cut and paste so I retyped).

    The fact is that about 50% of Boulder housing is rental properties most of which are not maintained to modern energy efficiency standard. So tenants are currently forced to waste energy because landlords are not responsible and do not update their units. The problems at one particular location should not be used as an excuse to allow landlords to continue with the thousands of uninsulated attics,etc., in Boulder that could be and should be insulated. Insulating a 1000 square foot attic in Boulder costs about $400 for cellulose and will save over $300 each heating season for gas heat and over $600 for electric heat. The amortized cost for the insulation over 20 years is $40 a year, and it will save 5X that each year, so even if the landlord increased rent to cover the insulation costs, tenants come out far ahead.
    Plan Boulder and all other Boulder environmental organizations should be strongly supporting this ordinance.

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