A few months ago, Boulder resident David Resnick had an epiphany. Actually, his real estate broker, Thorne Davis, barraged him with emails, research and news stories about clean energy construction. Then the report arrived.
The Rocky Mountain Institute, a nonprofit dedicated to a clean energy and low-carbon future, concluded that building net-zero energy houses — or homes with no monthly electricity bill — didn’t cost much more than building an ordinary house. Estimates were 1 to 8 percent higher. That intrigued Resnick, who then met with the organization.
“What it felt like to me was the whole process of developing an all-electric, net-zero community had been happening, and I wasn’t aware of it. It had gone so much further into the mainstream,” said Resnick, a long-time land developer with projects in California and Arizona. “And then I understood how to build a net-zero community.”
That’s how the 61-year-old owner of Jevin Investments, who rarely takes chances on real estate trends, decided to take a big chance. He carved 750 houses out of an existing 4,850-unit residential project and committed them to being net-zero ready homes. The other gamble? He’s doing this in Pueblo and wants to keep prices in the low $200,000s to mid $300,000s.
“What would really be the smart thing for me to do is build the least expensive homes I can,” said Resnick, whose North Vista Highlands project is just north of Colorado State University-Pueblo. “But what is going to bring people to Pueblo? It’s got to be something more than just the lower end of the housing spectrum.”
These net-zero or zero-ready homes produce more than enough energy from solar or wind power so they can feed extra power back into the local energy grid to compensate for night use. But the number of such homes is tiny, less than 0.1 percent nationwide (the Net Zero Energy Coalition counted up 13,906 units in the U.S. and Canada last year). And some decade-old projects in Colorado have languished for years due to lack of financing after the housing crash.
But a change in motivation is underway as reports of sizeable net-zero ready projects are popping up across Colorado.
Besides the Pueblo project, which lined up Sprout Tiny Homes to build 162 non-tiny homes, a Texas developer is working on a 4,500 net-zero ready development in Fort Collins called Montava. Thrive Home Builders has another 500 zero-energy homes proposed in Fort Collins. The reason to go green isn’t just to save the Earth, said Sprout Tiny Homes CEO Rod Stambaugh.
“I applaud David for stepping outside his comfort zone,” said Stambaugh, whose company built the chemical-free homes on wheels in Aspen and plans larger homes for Pueblo. “Here’s the real message: The evolution of housing is changing and the traditional way of doing site-built, stick-built homes is broken. And the reason it’s broken is there is a huge diminishing skilled labor pool. … Labor costs are going up and combined with the increase in material costs because of natural disasters like fires, hurricanes and floods, those factors don’t bode well for traditional builders.”
Zero-energy homes in the U.S.
To officially be a zero-energy ready home (ZERH), it must be certified by the U.S. Department of Energy. Some items on the ZERH checklist include the house being ready for solar panels, have air-tight construction and insulation and an efficient water system. The number of certifications is still small but growing. According to the Dept. of Energy:
• The number of ZERH certifications have doubled every year for the past three years straight (2016-2018)
• 400+ builders have partnered with ZERH
• 12,000+ Zero Residential Units in U.S and Canada
Net-zero homes start with being very energy efficient. Some tweaks are no brainers: insulate well, use energy-efficient appliances, and seal windows, ducts and doors to prevent leaks.
But key to keeping construction costs low is technology, according to Jacob Corvidae, principal at the Rocky Mountain Institute, who worked on “The Economics of Zero-Energy Homes” report.
There are heat pump water heaters that heat and cool so builders don’t spend money on separate heating and cooling systems. Structurally insulated panels and insulated concrete forms may cost more during construction, but they can reduce the project’s costs because they require fewer tools, enable higher quality (and thus fewer defects) and faster construction times.
“The other simple fact is that newer housing gets held to a higher standard than 10 or 20 years ago. We’re already building houses better, and not everyone realizes that,” Corvidae said. “When you add all those things up, it allows you to keep costs lower. This is the classic idea at RMI and other places of integrated design. The fact that a super-efficient home has to be really expensive is true — if you do it wrong.”
Rocky Mountain Institute looked at other factors as well, from the cost to construct the home to the benefit of low electricity bills and resale value. The result put the average cost for a zero-energy home with solar panels between 6.7 to 8.1 percent higher than a regular home. For a zero-energy ready home, which means the homeowner would later add on solar panels or lease them, the cost goes up 0.9 to 2.5 percent compared to a similar traditional home.
The report looked only at homes that relied completely on electricity. The net-zero homes that connect to the local power company’s electric grid for night-time needs are often charged a low monthly connection fee regardless if the home supplies more energy to the grid during the day.
Savings varied in the regional markets studied. The most expensive market was Chicago, where the cost to build a home is $346,848. To construct a net-zero house, builders would have to pay 8.9 percent more.
However, in Atlanta, where homes cost about $100,000 less, a net-zero house would cost 10.4 percent more to build. That’s because certain material costs are consistent nationwide. With tax incentives, however, both cities saw construction costs no more than 10 percent higher, with Chicago’s incremental cost at 6.7 percent and Atlanta’s at 8.1 percent.
As builders see evidence that the cost of net zero is less than they thought, that should attract larger companies, like the Pueblo developer, Corvidae said.
“One of the things I love about David (Resnick) is that he’s not coming at this from a, ‘Hey, we’ve got to figure out how to pursue a zero-carbon community’ or ‘This is an energy crisis and we’ve got to solve it,’” Corvidae said. “It’s ‘I’m a developer and need to appeal to people who want a good place to live.’ This often gets politicized. … But the point is these types of homes have many benefits that appeal to many people. Our report is helping people who don’t realize how feasible this is.”
How builders plan to get to zero
The Geos Neighborhood in Arvada has long promoted a home design that uses 75 percent less energy than similar sized homes. But the project, approved by the city in 2009, stalled as the housing market crashed and developers were unable to find financing until recently, Geos’ master developer Norbert Klebl said.
Buyers moved into the first homes two years ago and 10 more will be ready early in 2019. Klebl now feels confident about pursuing 100 more.
“When the overall market was down and the number of homes built between 2009 to 2011 dropped 50 percent, even in those times I had 30 to 40 potential home buyers on my waiting list,” Klebl said.
Starting at $400,000 for a townhouse and up to $600,000 for a single-family home, the Geos homes are priced about 10 percent more than other new homes in Arvada, he said. According to Zillow, Arvada’s median price of listed homes is $439,850.
“My homes use 75 percent less energy than a standard-built home,” he said, and that translates into fewer solar panels. Solar energy systems also cost about one-fourth what they did 10 years ago, so there’s additional savings there.
But net-zero homes are not yet mainstream, he said. That won’t come until more builders are forced to build zero-energy homes, as they are in California, which requires all new residential construction to be zero-net energy by 2020.
“When national builders get forced into higher performing homes in one state, they’ll be able to offer the product in other states. California will move the rest of the country mainstream in these homes,” he said. “Builders will not go voluntarily in that direction, only if they are pushed.”
Denver-based Thrive Home Builders has already built hundreds of net-zero homes in the Front Range. It’s been picking up U.S. Dept. of Energy awards annually for innovation on zero-energy homes. Its two Fort Collins projects will be the largest.
“We definitely do cost more,” said Nathan Kahre, a healthy-home manager at Thrive. “To go from a (traditional) home to a net-zero home is about $35,000, so it’s a premium. But buyers have responded to that. What Thrive is working on as a company is how do we reduce the cost. That’s a big goal with our Fort Collins project.”
In the Front Range, labor costs more, but Thrive holds training sessions for contractors.
“We recognize our subcontractors need to know how to do it better. Rather than penalize them for it, we take it upon ourselves to train them and help them gain the skills,” Kahre said. “I’ve done a couple dozen trainings with insulation crews, framing contractors and several different areas. In 2018, we’ve probably hosted over 30 trainings.”
And then there’s Pueblo
Pueblo has seen an uptick in new residents moving in from the Front Range looking for a home that’s “a little less expensive,” said Scott Hobson, an assistant city manager in the city’s planning department. According to the Colorado Association of Realtors, the median sales price in Pueblo County was $185,000 in October.
Pueblo home sales have slowed since August but that’s “because our inventory has been very low. Without the inventory, we don’t have the buyers,” said David Anderson, southeast spokesman for the state Realtors Association. But he’s not sure buyers will come.
“In 1994 in Pueblo West, there were only 5,000 people living there. After 25 years, there are 33,000. It takes a long time and again, you have to have jobs,” he said. “Granted, you may get retired people to move here, but for something this big, you’re going to need jobs.”
The city of Pueblo worked with Resnick and his North Vista Highlands project to revise the annexation agreement for the property, which now allows for 4,850 homes to be built over 30 years. The city also raised the number of homes to 1,500 from 1,000 before developers must build more infrastructure. The land, annexed in 2008, was never developed, Hobson said.
“They’re not off the hook to do their public infrastructure and improvements, but it’s more spread out,” Hobson said. “It made it a little more affordable (for developers). I think otherwise, they would not have been able to secure the financing for the development to be affordable for both the developer and the consumer.”
Sprout Tiny Homes is the lead home builder for the zero-energy ready portion in Pueblo. The development is near the company’s headquarters and 45,000-square foot manufacturing facility, also in Pueblo. It plans to build the new homes at its factory to keep costs down and quality high, said Stambaugh, adding that he’ll probably call the new line Sprout Eco Homes.
“We’ve done that to date for homes on wheels, and now we’re making the transition to what we believe will lead an evolution in housing in the country,” he said. “Affordable housing has essentially evaporated in America. Traditional site-built, stick-built housing is broken. It doesn’t work anymore. What does work is what we’re doing in Pueblo and beyond. Smaller footprints, high quality and net zero.”
The plan is to build high-quality, smaller houses with health, safety and energy-efficiency features that appeal to an aging population that doesn’t want to deal with Denver traffic and high home prices. Homes are expected to be between 1,100 to 1,800 square feet, with single level and open floor plans, high-end appliances and non-toxic materials.
“Let’s face it. Colorado’s population has aged and having a floorplan favorable to that demographic is what we’re focused on,” he said. “… We think Pueblo is the next growth area in Colorado. Denver has already gone through a huge increase in housing prices, both north and south. Fort Collins home prices have escalated big time there. The whole wave is heading south. We want to be in front of that curve.”
Update on Dec. 1, 2018: This story was updated to clarify that net-zero homes connected to the local power company’s electric grid may still have to pay a monthly service fee.
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