Green Building Mandates Will Increase the Cost of Housing in California


Despite the exorbitant cost of homes in California, Sacramento continues to chase policies that increase housing prices. Apparently, some pursuits, particularly the quest for a green future, are more important than others.

The California Energy Commission, whose five unelected members clearly understand what is expected of them politically, unanimously adopted on Aug. 11 the state’s 2022 energy code. It will require new commercial buildings, including multifamily housing, to be equipped with expensive solar panels as well as batteries, the size of which will be considerable enough to crowd out space that would otherwise be utilized by residential and commercial rent-paying tenants.

The regulations also demand that single-family homes must be “electric ready” for electric vehicle chargers and other appliances — to transition away from natural gas — and establishes the use of heat pumps as the energy efficiency baseline. Will Vicent, a manager at the CEC’s Building Standards Office, calls them the “star” of the new energy code. However, Bob Raymer of the California Building Industry Association, says installing heat pumps rather than gas appliances could increase developers’ costs.

The mandates will go into effect on Jan. 1, 2023, if they are approved by the Building Standards Commission in December. It’s almost unimaginable the commission will reject them. It’s a rubber stamp machine.

The standards follow rules which took effect in January 2020 that require all new single-family homes and multifamily housing from one to three stories have solar power. Meritage Homes, which builds in California and elsewhere, has estimated forcing contractors to outfit new single-family homes with rooftop solar panels could increase the cost of each unit by $14,000 to $16,000.

The state’s estimate was of course much less, $8,400 per unit. But the state does not build homes. Meritage does. It’s not hard to decide which figure is likely to be more accurate.

Whatever the figure, it’s everyday Californians who are harmed. The National Association of Home Builders estimates that for every $1,000 added to the cost of a home in this state, nearly 10,000 prospective homeowners are priced out of the market.

Don’t assume that renting provides protection from the financial burden of regulation. The California Apartment Association says the 2020 mandate added roughly $5,000 per unit to apartment construction costs. The additional outlays are passed on to tenants, just as homeowners who lease their properties forward their costs to the occupants.

But pay no attention to those costs and the new expenses arriving in 2023, say regulators. Think, instead of the dollars saved from cheaper power. The Energy Commission wants to distract Californians by pointing out the latest round of regulations will produce “$1.5 billion in consumer benefits over the next three decades.”

Which sounds substantial. But an estimate that goes out 30 years does nothing to aid those in more immediate need of housing who will be priced out of the market due to higher construction costs, or companies that plan to develop commercial spaces now.

The Energy Commission’s estimate also ignores not the possibility but the certainty that a portion of housing and commercial development will never be built due to the additional regulatory costs. Rule-makers in a state already losing companies weary of its toxic business environment need to at some point begin to weigh the damage their edicts will cause before they issue orders.

Furthermore, it’s never been clear, over the decades of market manipulation, why central planners have to mandate consumer savings. Don’t consumers have a stronger interest in keeping their costs down than bureaucrats?

Californians should be free to decide for themselves if they want solar panels on their homes and commercial buildings. Requiring solar arrays by regulation strips consumers of a choice that should be theirs to make. If solar power installation is such a fine idea, why do lawmakers have to mandate it now, especially after years of bribing homeowners with subsidies?

But that’s the point, isn’t it? Consumers and developers aren’t adopting “green” initiatives as hard and fast as Sacramento wants them to. So, the government apparatus goes to work and requires the behavior it seeks. Naturally, depriving Californians of choice — and their dollars — is of little concern to lawmakers, regulators, and activists, who are themselves largely unregulated, and reckless, in their pursuit of an elusive, if not impossible-to-achieve, net-zero carbon emissions environment. The only choices that matter to them are the ones they’re making for others.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Kerry Jackson | Columnist

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