ENERGY STAR Focuses on Multifamily High-Rises

Two years in to the U.S. EPA’s program, 186 multifamily high-rises have earned the ENERGY STAR label.

Until August 2011, residential high-rises didn’t really fit in when it came to the U.S. Environmental Protection Agency’s ENERGY STAR program.

“Multifamily high-rises lie at the intersection of commercial and residential,” explains Ted Leopkey, program manager for ENERGY STAR’s Multifamily High-Rise (MFHR) program. “In 2004, when EPA started investigating how to leverage the ENERGY STAR in the high-rise sector, we didn’t have a model of national whole building energy use in our commercial program to allow Portfolio Manager to compare a multifamily high-rise to other buildings like it. And our residential program requirements applied only to single-family homes and low-rise multifamily units.”

ENERGY STAR Portfolio Manager is EPA’s online energy measurement and tracking tool; it lets facilities professionals measure, track, and benchmark their buildings’ energy and water consumption; prioritize energy-efficiency investments; and verify results of improvement projects.

Why We Need an MFHR Program
Because no program addressed the unique requirements of multifamily high-rises, facilities professionals were missing out on ways to track and earn big energy savings.

America’s MFHRs have a median age of 36 years, according to the America’s Rental Housing: Meeting Challenges, Building on Opportunities report from Harvard University’s Joint Center for Housing Studies. The majority of multifamily rental properties were built before modern-day energy codes, so most of these buildings need energy-efficient updates.

Because the buildings don’t qualify as residential or commercial, utility incentives and rebate programs often overlook multifamily high-rises when distributing funds, according to a 2012 report from the American Council for an Energy-Efficient Economy and CNT Energy. This makes green investments even more expensive.

Data and studies show, however, that the untapped multifamily high-rise market provides ample opportunity for sustainability upgrades. Reducing energy use by 15 percent in a typical 250-unit building with master-metering can increase net operating income and enhance asset value by more than $1 million, says the U.S. Department of Energy. In an individually metered community, the savings could increase asset value by more than $200,000 each year.

Creating the Right Fit
To give multifamily high-rises a place to fit in, the ENERGY STAR Multifamily High-Rise program was born almost two years ago.

“When we created this program, we created something very similar to our residential program,” says Leopkey. “We brought multifamily high-rises under our new construction model, whereby we created a specification for builders or developers to meet in order to earn the ENERGY STAR label for their newly constructed multifamily buildings.”

Due to lack of data to benchmark against, existing multifamily high-rises don’t receive a 1-100 ENERGY STAR score (only about 20,000 of the 300,000+ properties that have been benchmarked using Portfolio Manager are multifamily facilities).

Typically, the ENERGY STAR program requires commercial buildings to earn a 75 or higher on EPA’s 1-100 energy performance scale (which means the facility performs better than 75 percent of similar U.S. buildings).

Only new or significantly remodeled multifamily high-rises qualify for ENERGY STAR certification. The buildings must meet strict EPA-established guidelines designed to make the buildings at least 15-percent more energy efficient than buildings built to ASHRAE Standard 90.1-2007.

Even though Portfolio Manager isn’t comparing MFHR data to generate ENERGY STAR rankings, the tool allows professionals to track many other energy performance metrics for comparison across building portfolios or against past performance:

• Weather-normalized energy use intensity (EUI), which shows energy use per square foot, controlling for climatic variables that could influence energy use

• Adjusted energy use, which shows a one-year energy performance period and compares it to the first year of data tracked for the building

• Energy costs

• Greenhouse gas emissions

• Water consumption

Certification Course of Action
To ensure that the building meets the EPA-established guidelines, the developer agrees to have projects verified by a licensed professional at the beginning and end of the process, as well as prove that guidelines and specifications were followed.

Once the initial application has been submitted by the developer, there are two ways to earn the ENERGY STAR label:

1. Follow a prescriptive path developed by the EPA
2. Pursue a building-specific, customized approach using energy modeling software

“With the prescriptive path, you don’t have to model,” says Leopkey. “We tell developers exactly what they have to put in their buildings in terms of energy conservation measures to meet ENERGY STAR requirements.” These plans outline measures specific to multifamily housing, such as compartmentalizing units, high-efficiency appliances, and tight construction and ducts.

Inspections and diagnostic tests are performed throughout construction to verify correct installation and energy performance. Once the final inspection is complete, the licensed professional completes a submittal regarding energy conservation measures. After the submittal is approved, the building earns its ENERGY STAR label, and the property owner/developer commits to benchmarking the building for a minimum of two years.

What ENERGY STAR Offers
Even though ENERGY STAR MFHR wasn’t available until 2011, the program couldn’t have come at a better time: Higher-density homes, like multifamily high-rises, will reach their peak in 2015 due to 78 million downsizing Baby Boomers and 78 million college graduates, according to the U.S. Census Bureau.

ENERGY STAR MFHR is already making an impact in the industry, and more benefits are on the horizon. Here are just a few of the improvements the program could bring in the future:

Improvement of overall health and well-being. A 2010 report from the National Safe and Healthy Housing Coalition found that energy-efficiency retrofits to existing homes resulted in self-reported health improvements, fewer sick days from work and school, and fewer visits to general health practitioners. Another report, completed last year by the National Center for Healthy Housing, found improved occupant comfort and health, less indoor moisture, and fewer air leaks following energy upgrades in multifamily housing.

More income for building owners. In an Apartments.com national survey, 25 percent of renters said they would pay a higher monthly rent to live in a green, energy-efficient building. Sixty percent said they pay attention to environmentally friendly amenities. A Rent.com survey offers similar information; 42 percent of renters surveyed in this study said they would pay a $100 monthly premium for green living.

Opportunity for incentives and rebates. Large utilities in California, Massachusetts, and other states are already using benchmarking data to target energy-efficiency incentives and rebates to certain customers. Some of these rebates and incentives could be geared toward the MFHR market once enough benchmarking data is gathered.

More affordable housing. Since 2000, energy costs for renters increased by more than 20 percent. This is particularly a struggle for low-income households; utility bills make up more than 25 percent of total housing costs for renters in the bottom 20 percent of income distribution. Utility costs also represent the single largest controllable cost in a multifamily high-rise, according to ENERGY STAR. If these costs could be reduced, more families would be able to afford housing.

Benchmarking data could inform future policy decisions. Policies in Austin, New York City, Seattle, and Washington, D.C., already require privately owned multifamily housing facilities to publicly disclose benchmarking data. As more and more cities adopt these policies, this data could be used to inform future policy requirements. Right now, according to the Institute of Market Transformation’s Energy Transparency in the Multifamily Housing Sector report, the lack of being able to tie an ENERGY STAR score to multifamily high-rises is negatively impacting the value of the disclosure. This could change in the future, when enough facilities participate to allow scores to be given. In the meantime, to replace this number, several jurisdictions are asking for energy use intensity data.

To date, 186 multifamily high-rises have earned the ENERGY STAR label. Another 150 are currently pursuing the label (the process can take years due to the construction/remodel process).

“Our goal is to penetrate this market and generate the success we’ve seen with our single-family residential program, where we’ve labeled more than 1.3 million homes,” says Leopkey.

Rating Programs Defined

This chart explains the differences between ENERGY STAR’s residential, commercial, and multifamily high-rise programs.

	Residential	MFHR	Commercial
New Construction	Yes	Yes	No
Existing Buildings	No	No	Yes
Extensive Rehabs	No	Yes	Yes
1-100 Energy Ranking	No	No	Yes
Benchmarking Data Available in Portfolio Manager	No	No	Yes
Benchmarking Required After Certification	No	Yes	Yes