BAM Letter to the Members of the Climate and Energy Finance and Policy Committee

The following is a letter drafted to Representative Kraft, Chair Acomb, and Members of the Climate and Energy Finance and Policy Committee,

April 2, 2024

Dear Representative Kraft,

The Builders Association of Minnesota is writing to express our concerns about the proposed legislation that mandates a 70% reduction in energy consumption for new home construction HF 4242. While we strongly support energy efficiency initiatives, we believe the current 70% target may be unrealistic and counterproductive.

Balancing Cost and Savings:

Achieving a 70% reduction with cost-effective construction methods is highly challenging. While current code-compliant homes average $500 annual heating bills and under $100 for cooling, a 70% reduction might only save homeowners around $400. This raises the question: How much will construction costs increase to achieve this reduction?

Impact on Affordability:

The significant cost increase associated with such a drastic energy reduction standard would have a dramatic impact on our ability to build affordable housing. This could potentially price out many potential homebuyers, particularly those in the lower income brackets. A 7% cost increase could result in $25,000 or more for even modest new home builds, and we think this is underestimated.

Focusing on Existing Housing:

Many existing homes, especially older ones, contribute significantly to overall energy usage. Targeting these homes through retrofitting programs or even incentivizing replacement with new, energy-efficient units might yield greater energy savings compared to focusing solely on new construction. Enforcing the current state building code in all our communities is the most straightforward means to achieving more energy efficiency in our homes. 

Recommendation:

We encourage you to consider incorporating the following elements into the bill:

• Cost-Benefit Analysis: A provision requiring an analysis of the cost increase associated with achieving the 70% reduction and establishing an acceptable payback period for homeowners.
• Focus on Existing Housing: Exploring programs geared towards retrofitting and potentially replacing highly inefficient existing homes.

Thank you for considering our concerns. I believe a more balanced approach that promotes long-term sustainability and energy savings without jeopardizing affordability is critical. I am available to discuss this matter further and would appreciate the opportunity to collaborate on finding an effective solution.

Sincerely,

Grace Keliher

Executive Vice President of the Builders Association of Minnesota