Homebuilders Going Green

April 25, 2005
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GRAND RAPIDS — Heartland Builders LLC President Rich Kogelschatz didn’t set out to become a green builder.

“I just felt it was the right thing to do and the right way to build,” he said. “It’s a quality edge from my standpoint.”

Heartland has been a partner in the EPA Energy Star program since 2002. It is one of only five builders in the state that has committed to build all of its homes to Energy Star guidelines — defined as 30 percent more efficient than homes built to the 1993 national Model Energy Code or 15 percent more efficient than the state energy code.

It is one of only two builders in the region to do so and the only custom homebuilder.

The other is residential giant Bosgraaf Homes. The Holland-based developer built 183 Energy Star homes last year and has completed 706 since 1999.

“It’s not cheap, but it is definitely a selling point,” said Bosgraaf Director of Sales and Marketing Matt Cawood. “The Bosgraaf family have tried to do the right thing by the environment in all its communities.”

Kogelschatz hopes to build 15 this year, which would easily place him in the top five — and possibly the top three — Energy Star partners in Michigan. After Bosgraaf, there are no large-scale homebuilders listed as Energy Star partners in the state.

Only three custom builders built more than 10 Energy Star homes in the past 12 months. In West Michigan, no builder raised more than four — Heartland, Lee Kitson Builders, Holwerda Builders and Dave Campbell Building reached that number.

“There aren’t a lot of builders interested in taking up this cause,” Kogelschatz said. “We’re a very small percentage of all the builders out there.”

Despite rising fuel costs and a building boom, only 222 Energy Star homes were built in the West Michigan area, including Kalamazoo and Traverse City. Bosgraaf built all but 39 of those. Statewide, 157 Energy Star homes were built by custom homebuilders.

Michigan represents just over 1 percent of the 100,000 new homes built in partnership with Energy Star. Indiana and Ohio have nearly 20,000 between them.

Kogelschatz has found the market receptive.

“We have people asking about it,” he said. “With energy prices and fuel prices going up, customers are interested.”

Besides customers interested in lower payments, he has found that real estate agents are more excited to sell the Energy Star homes and banks are offering preferable finance deals.

But he still has his reservations.

“I’ll be honest with you, I question whether or not I’ll get my money out of it that I put into it from a green-build standpoint,” he said. “I question whether the market will pay for the additional features that I put into it.”

This is sentiment that seems to be shared by the majority of Michigan builders.

“It’s a cost factor, bottom line,” Cawood said. “That’s exactly why most builders aren’t doing this.”

The state had meant to force the industry’s hand this past winter with an updated Michigan Uniform Energy Code homebuilders that was to go into effect in March.

But an 11thhour lawsuit by the Michigan Association of Home Builders (MAHB) has put the changes on hold.

Ingham County Circuit Court Judge Joyce Dragonchuck granted the MAHB’s request for a preliminary injunction against the State Department of Labor and Economic Growth on Feb. 24, blocking the adoption of Chapter 11 of the International Residential Code as the state’s new energy code.

“With the new code, builders are kind of scrambling to figure out what they should do,” Cawood said. “We were just sitting back. We’re already ahead of this.”

The new code is designed to make homes more energy-efficient by increasing the amount and sometimes the type of insulation used in attics, walls and basements, requiring that thicker lumber be used in framing and increasing the energy standards for windows, sealants, furnaces and water heaters.

At least 25 other states have adopted the national standard, said Henry Green, executive director of construction codes and fire safety for the Michigan Department of Labor & Economic Growth.

According to a U.S. Department of Energy study, the actual cost of energy improvements would range from $1,000 to $1,700, and would pay back to the consumer in less than 5 years in the form of lower energy bills.

The MAHB claimed that the changes violated state law by not following the process to amend the code as established in 1995 and, if enacted, would drastically impact future purchasers of homes and remodeling services.

“We now have the opportunity to prove in court that the regulations are too costly,” said MAHB CEO Lynn Egbert. “The state’s regulations would stop thousands of first-time homebuyers from achieving the American dream of owning their own home.”

The crux of the suit is MAHB’s objection to the new code’s seven-year cost analysis as performed by the state.

Four different home energy raters examined 10 different homes from around the state built within the specifications of the new code.

Seven-year projections for the Grand Rapids test examining both a prescriptive and a performance method of applying the changes showed an increased cost of $3,733 and $1,741, respectively, to the homeowner, and tax and utility savings of $2,923 and $2,878, respectively, equaling a loss of $810 for the prescriptive method and a savings of $1,137 for the performance method.

The $810 loss was one of two losses in the 20 tests.

The average savings to the homeowner was $1,046, according to the study.

Using this measure, the state determined that the new code could produce net savings of $3.7 billion in energy bills over the next 30 years.

Even if by baby steps, green building is becoming more popular in Michigan. Of the 74 Energy Star partners in Michigan, 31 joined in 2004 or 2005.    

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