Zack Semke: Would you like to lead things off, Beverly, talking about why this is an important session for the NESEA [Northeast Sustainable Energy Association] Boston event?
Beverly Craig: Sure. Why don’t I backup and explain why we’re even involved. So, in 2017, the Distillery, which was the first multifamily Passive House building [in Massachusetts], got finished in South Boston—28 units. Fantastic project and really exciting. We were starting to hear a lot at MassCEC about Passive House in general, and we were a little concerned that Pennsylvania and Connecticut and all these other people were doing great things in affordable housing, but we weren’t seeing it here. Of course, we knew the Pennsylvania background with Tim McDonald basically getting the ten points for Passive House into the QAP [ie. the scoring criteria for the awarding of Low Income Housing Tax Credits (LIHTCs)], and how that generated so much interest in so many Passive House projects. We had been trying to do that here in Massachusetts, but they [the Department of housing and Community Development who administered LIHTCs] were just really concerned about costs, and the Boston market. Even though they didn’t see a lot of additional costs in the tax credit program in Pennsylvania, there was the concern that maybe that wouldn’t be true here.
[Read more about Pennsylvania’s LIHTC Passive House policy here.]
There’s always this tension in affordable housing that, if it’s more expensive to build it, you have less units; and so it’s hard for them to think about maybe a 10% premium or something. It just sounded scary. So we said, okay, we’re not going to be able to get it in the QAP right away. Why don’t we create a market of people who understand what they’re doing, demonstrate that the costs are really not as scary as they think, and we can have this conversation later?
So MassCEC put together a budget of $1.8 million and put out the Passive House Design Challenge (https://www.masscec.com/emerging-initiatives/passive-house) for people planning to apply for tax credit new construction, and we offered a $4,000 per unit incentive. We got a lot of great responses, ended up funding eight, and the two on the panel here are part of five that are breaking ground this spring. One is about complete in Cambridge—that’s the Finch Cambridge Project—and then the other ones are either waiting for tax credits or may have just gotten them, but the financing is at a later timeframe.
So that’s the history. I think we’ve kicked things off in the state, honestly. MASS Save 11 months later came up with their Passive House incentive for both affordable and multifamily. It’s not quite as generous—it’s $3,000 per unit—but very generous with the upfront feasibility study and WUFI modeling or PHPP modeling. I think 37 buildings have applied, at least. It started out as just four stories or higher, and now it’s anything that’s five units or more that is eligible for the $3,000 per unit incentive.
At the same time, DOER [Department of Energy Resources] has been pushing through larger projects that are proposed in the state that have to go through an environmental impact statement process, and through that negotiation of the environmental impact statement has secured quite a few commitments to Passive House. If the projects get their local approval, then they get their special permits and can actually get built. So between those three there’s overlap. And then the last thing is we succeeded in getting DHCD [Department of Housing and Community Development] to add some additional points for Passive above LEED in this past round.
So we did succeed. Yay! We didn’t get everything we wanted, but it does create a differential and a higher probability that you’ll get funding if you come in with a Passive project.
Julie Klump: Zack, are you familiar with how the low-income tax credits are distributed?
Zack: Yes. I’ve been advocating with Washington State Finance Commission, which administers LIHTCs here, to replicate the Pennsylvania model, and we ran up against exactly the same issues that you described in terms of fear. We made no progress. So we’ve been working on a pilot project called the 20 by 2020 Building Challenge to help show proof of concept that Passive House makes economic sense for larger multifamily buildings. The Housing Development Consortium—which is a local coalition of affordable housing developers—has created a closely-related pilot initiative called the Exemplary Buildings Program, and they’ve worked with Seattle City Light to create a $4,000 per unit incentive to do Passive House for affordable housing, so it’s very similar pathway. We’re at least a couple years behind you guys, and I think that you’re making more progress than we are, but it’s a very similar trajectory, which is great.
Beverly: The last round of applications was due just recently, right? When was it?
Julie: Last Friday.
Beverly: But I’m very curious to see between the incentive that’s out there—the $3,000 per unit and the extra points for Passive—what percentage of the new construction projects came in with a Passive proposal. I don’t know that yet, and I don’t want to bug them yet, but I bet in the next couple of weeks we’re going to find that out.
Zack: Very cool.
Beverly: Just to give you a perspective, the total number of units that are considering Passive House, and they may not actually all certify and they may not always get built, but it’s 5,400 units. That is about a third of all new construction in 2019.
Zack: Wow.
Beverly: So we went from one building to this. It’s unbelievable, really.
Zack: That’s fantastic. That’s just so fantastic. Thank you. We need more of that!
Beverly: Well, I do worry. It’s easy to study and model, and then not do it. But I think it will lead to better buildings. What will really matter is how many actually certify.
Zack: And the learning. The transformation. The practice.
Beverly: We had a PHIUS builders training two weeks ago. Standing room only. 30 people. Total max.
Zack: Nice. That’s heartening for sure. Should we dive into these two projects?
Beverly: Yes, yes.
Zack: Okay. Why don’t we start with a high-level overview of the two projects. Julie, would you like to start?
Julie: Sure. Our project is called Mattapan Station. It’s 135 units. It was not designed initially as Passive House. We got the land through an RFP with the MBTA [Massachusetts Bay Transit Authority]. It was a parking lot that we’re now developing. Because of the Mass Save incentive of $4,000 per unit [for Passive House], we decided we wanted to do a feasibility study.
We [at Preservation of Affordable Housing, Inc.] have a basis of design, a higher level of efficiency that we require in our new construction and our rehabs. This project is the perfect transit-oriented development. There’s a bus route that goes around it; across the street is a train station; there’s access to a bike path that goes downtown; and the commercial center is a block away. We’re actually designing it with very little parking, and the parking that’s on the lot is really dedicated for the commuters that the MBTA wanted accommodated. There’s public community space that’s part of it, too.
The thing that we knew would happen, and did happen, is that when we started to price it, there were some concerns about the cost of the mechanical and getting the building airtight. So we did see some jumps in the numbers. However, our plan was to bring in consultants who we like to work with—one of them is an enclosure expert; one is a mechanical engineer expert—so the GC was very on board.
They have done all kinds of trainings. They’ve done presentations with us. They also have high level subs that they do initial estimating with and typically use in their projects. So we did a two-hour training with those guys on mechanicals, and then another group of framing and sheet rock subs with the enclosure consultant. And we just walked through the details that may look expensive or system layouts that they may not have seen, and anecdotally they told us the mechanical number. They told us it would go up $2 million, and it actually went down $2 million.
Zack: Wow. That’s really dramatic.
Julie: The big thing that we continued to push with anybody we met and was going to touch this project was that we’re not going to throw these drawings over the fence and expect you to hit the Passive House target. We will invest in diagnostic testing; we will have extra meetings to review upcoming details; we will have consultants out here; we will have reps of products you haven’t used. We’re not going to leave you in the dark in trying to achieve this goal.
Zack: Can you summarize what went into that initial assumption of the big cost increase, and what happened in actual reality to achieve the big reduction?
Julie: You know, it was really interesting because it seems like sort of a simple change. We did have one-to-one heat pumps and we changed it to a VRF [variable refrigerant flow] system. We always had vertical fan coils in each unit with minimal ductwork there, so that didn’t change. The ERV [energy recovery ventilator] was a rooftop ERV with vertical shafts and horizontal runs, and what we changed was we went to two ERVs per floor with the similar horizontal ductwork, but not those shafts. So the GC, if you asked him that question, they would immediately say it’s the cost of building those shafts. But then the ductwork also horizontally becomes smaller because the units are closer, and then if you bring the ductwork into the units, if they’re small enough, there’s no fire damper. So it literally was like, “Oh, we’re not building those shafts; the units are smaller.” And I think, honestly, that’s what it was.
Zack: Yeah. Simpler and smaller.
Julie: It sounds like a lot—$2 million worth of shafts—but I think that had a lot to do with it. The domestic hot water is frustrating, it’s heartbreaking to me, because I have to bring fossil fuel to this building for domestic hot water. We initially had semi-central heat pump hot water heaters, but the cost of electricity is so high in Boston compared to gas that the engineer told us that it’s like 240% more you’re going to spend to heat hot water than if you use gas. When the grid changes and the cost changes, we’ll be able to convert it over to heat pump hot water, but, at this time, we can’t really make those numbers work.
