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The Rose, a 90-unit housing development in Minneapolis that serves residents with a mix of incomes, under construction.

Buildings’ energy use is a major contributor to climate-changing greenhouse gas emissions. The inefficiencies that contribute to those emissions have a financial cost. Experts at ULI’s recent Housing Opportunity 2015 conference in Minneapolis, however, say that today’s buildings are moving ever closer to net zero becoming a practical reality.

The U.S. Department of Housing and Urban Development alone spends some $8 billion per year on utility bills, while the U.S. Department of Health and Human Services spends another $4 billion each year to help low-income families pay their utility bills. That is $12 billion that could be better spent creating new housing or improving existing housing or many other things rather than throwing it out the window on heating and cooling inefficient homes, says Sarene Marshall, executive director of ULI’s Center for Sustainability.

Buildings effectively account for 45 percent of all greenhouse gases in the United States. “That is pretty important to understanding the role that buildings and the built environment have on the environment,” says Timothy McDonald, associate professor of practice in architecture, Temple University, and president of Onion Flats LLC in Philadelphia. Combine that with projections that 900 billion square feet (83.6 billion sq m) of new space will be built globally by 2030, and it becomes clear to see why developers are motivated to find new solutions to affordable and scalable net-zero-energy solutions.

Related: ULI Case Study: The Rose—Minneapolis

McDonald is such a proponent of the need to reduce energy consumption and create more building efficiency that he went to the Pennsylvania Public Housing Financing Authority (PHFA) with a proposal to set a goal to make all affordable housing in the state net-zero-energy capable by 2030. He proposed using the “Passive House” standard as the tool to do so.

Unlike Leadership in Energy and Environmental Design (LEED), which has a more holistic approach to sustainability, Passive House has a laser focus on energy efficiency. A building constructed to Passive House standards meets certain energy efficiency criteria related to its insulation that create a nearly airtight structure that minimizes heating and cooling needs. The design standard, which originated in Germany, is increasingly being used in structures from New York to Oregon.

McDonald worked with the PHFA to introduce language that incentivizes the use of the Passive House standard in the agency’s qualified allocation plans. Specifically, up to ten points may be awarded to those developments that meet Passive House certification standards for energy efficiency. Given the extremely competitive environment for tax credits, that has been a powerful incentive, noted McDonald. Since it was introduced in October, seven of the 39 projects that were awarded are going to be Passive House–certified projects.

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Rendering of the Rose, a 90-unit housing development in Minneapolis that serves residents with a mix of incomes.

Near-Net-Zero Case Study: The Rose—Minneapolis

One of the latest examples of near-net-zero properties is the Rose, a 90-unit housing development in Minneapolis that serves residents with a mix of incomes. It comprises market-rate units as well as units for homeless people and low-income and moderate-income people. Developed by Minneapolis-based Aeon, the property is located in a severe climate that experiences extreme temperature swings of more than 130 degrees between the hottest summer days and the coldest subzero winter days.

One of the key metrics used to measure energy use in buildings is energy use intensity (EUI). EUI is somewhat similar to measuring miles per gallon in a car. A low EUI is desirable because it means lower energy use and higher efficiency. As designed, the Rose achieves a 31 EUI, which is 74 percent below the 119 baseline standard for the region. Essentially, that means that the Rose is a highly energy-efficient building and is ready to take the next step to talk about renewables such as community solar gardens, which will help the building get closer to the net-zero goal, says Gina Ciganik, Aeon’s vice president of housing development. Combining that extreme efficiency with on- and off-site renewable energy also allows the Rose to get close to the net-zero energy standard of the Living Building Challenge, which guided its design.

Aeon has learned a number of lessons related to net-zero building with the Rose, among other housing projects. It is important to have a culture that accepts and pushes thinking and is okay with taking some risks. Another key step is developing networks and partnerships with groups that can provide the technical expertise, Ciganik says. For example, one of Aeon’s major partners is the Center for Sustainable Building Research at the University of Minnesota.

It also is critical to develop practical, replicable solutions. “If we are doing one-offs, if we are doing super-untested risky things, we are not going to get there. We have to be able to replicate this and it has to be available to the masses,” says Ciganik.

The Power of Solar

Harnessing solar power has been key to developers such as Austin-based Foundation Communities. The nonprofit affordable housing developer has 17 properties in the Austin metro area, with four under construction. Foundation Communities was one of the first developers to take advantage of the city’s solar rebate program in 2004 and is the largest private owner of solar in the city of Austin.

Currently, all of the solar that Foundation Communities owns goes to paying the nonprofit’s utility bills for its leasing offices, learning centers, and community centers or for the utility bills it pays at its supportive housing. However, the firm’s next project—the 140-unit Homestead Oaks—will be the first rental property in Austin with solar that will directly serve its residents.

Previously, solar rebates were allocated per site. The city has since modified that requirement to allow for solar rebates on a per-meter basis. In the case of Homestead Oaks, that opened up the opportunity to apply for 140 individual rebates. In addition, Foundation Communities has worked with the state on utility allowance adjustments as it is a tax credit property. The company is also having conversations with the local utility that may allow for “virtual metering” on future projects, which would allow for the same benefits to residents without the added cost of physically installing individual meters for each unit.

Case Study: Second Street Studios

First Community Housing is a nonprofit developer in San Jose, California, that has built some 1,400 units over the course of its history, with its 20th building set to open in November. Despite being situated in the heart of Silicon Valley, San Jose is home to the largest unsheltered, chronically homeless population in the United States on any given night.

First Community was an early adopter of LEED standards and in more recent years has established a baseline standard of LEED Platinum for all new developments. “We know that we have to look further, and we have to look towards regenerative design,” says Hillary Noll, an Enterprise Rose Architectural Fellow at First Community Housing. One of the test cases to that point has been designs for Second Street Studios, which is a 135-unit property in the planning stage that features studio units with modular construction.

The project is designed to an estimated EUI of 18. Getting to that number involved overcoming a number of technical, financial, regulatory, and social obstacles. For example, the building load would be nearly 500,000 KWs. That equates to about 30,000 square feet (2,800 sq m) of roof space necessary to support solar thermal, while the initial roof space available was limited to about 4,800 square feet (446 sq m). One of the solutions to that was to design a floating photovoltaic roof as a secondary structure.

“We should really design from the roof, down. When we are looking at these densities, we need to really think about that roof as precious real estate—what can go there and how to coordinate that,” Noll says.

A common net-zero hurdle for properties is overcoming the social challenges. One of the big impacts on energy efficiency in properties is the behavior of their occupants. “You can build a building as tight and [as] energy efficient as you want, but there is still an opportunity for waste or not reaching net zero because of the human side,” says Sunshine Mathon, director of design and development at Foundation Communities.

One of the challenges for First Community is that its units tend to have increased occupant density (i.e., multigenerational families living in one apartment) as well as a resident population that tends to spend more time at home in their units. Some solutions to address those challenges have been to emphasize continuing education programs for residents, particularly children. Other solutions include taking measures in rental agreements to regulate visitors.