Mayor’s Office

Improving Energy Efficiency in Rental Housing

Policy Reform Goal

The goal of this reform is to strengthen the City’s response to the “split incentive paradigm” and increase energy efficiency in rental housing, which will in turn improve the quality and comfort of rental units, lower tenants’ utility costs, and help the city achieve its climate goals by reducing energy utilization and greenhouse gas emissions.

Proposed Reform

In order to achieve this goal, the following housing code reform is proposed:

  • Amend the City’s existing Time of Sale ordinance (ToS) to require weatherization improvements for rental housing units not only at the time a unit is sold, but as part of the minimum housing code that is enforced by the Department of Permitting & Inspections, which includes inspections of every property on a cycle that ranges from one to five years depending on the performance of the property.
  • Utilize the list of applicable weatherization improvements currently found in ToS to apply to rental units with an energy intensity rating of greater than 50,000 BTUs per square foot.
    • Applicable improvements focus on the most cost-effective modern weatherization practices: insulation in exterior walls, open attics, hatches, ceilings, roof cavities, and rooms over unheated basements/exterior spaces; repair of leaks and insulation of heating/cooling ducts and hot water pipes; storm windows, functional weather stripping on doors, and functional latches on all doors and windows; and sealing large gaps and holes where heated/cooled air easily escapes.
  • Modify the cap on the dollar amount of investment in weatherization to a level that, while not unreasonably financially burdensome, is designed to maximize expected energy savings and occupant comfort, be consistent with best practices from other cold climate jurisdictions, eliminate the “cost effectiveness limitation” in the current Time of Sale Ordinance in favor of a more straightforward cost cap  that reflects inflation and the real cost of these improvements, while also balancing the cost of required improvements with the amount of expected energy savings and a rational process to accommodate inspections and compliance.

Review More Info & Share your Thoughts

Use these quick links to review the proposed reform, find an upcoming meeting, and to share your input on this proposal. Make sure to review the additional information about this proposal below. 

Framing the Burlington Context

  • Improving the energy efficiency of existing buildings is considered to be one of the most impactful efforts to implement the City’s Net Zero Energy (NZE) goal.
  • Space and water heating are two of the biggest drivers of energy costs in our climate. Of rental units, 95% use natural gas for space heating and 85% do so for hot water. This means the most effective energy efficiency upgrades for existing units are weatherization (air sealing, insulation) and more efficient heating appliances.
  • The “split incentive paradigm” occurs when the property owner is responsible for building weatherization and replacing heating/cooling systems but sees no direct benefit for doing so, while the tenant is responsible for paying the utility bill but has no control over weatherization and efficiency improvements. This paradigm impacts approximately 85% of Burlington’s rental units. Combined with a chronic 1-2% vacancy rate, tenants have few alternative options for more efficient units.
  • While about 40% of the city’s rental housing units have undergone some weatherization using one of three available incentive programs, ToS only requires these improvements for approximately 90 of the city’s rental units each year. This is compared to approximately 1,000 rental units that are visited annually for minimum housing inspections.

FAQs about this Policy

Why doesn’t this proposal considering licensing, SmartRegs, or other impactful requirements for energy efficiency improvements?

  • We have heard a lot about the need to carefully balance the “carrot” and the “stick” in order to ensure this policy change does not lead to large costs passed on to tenants, or standards so onerous that they result in the loss of housing units (i.e., by revoking a rental license temporarily or long-term). This proposal seeks to find a balance between the significant acceleration/uptake of weatherization improvements in rental housing, and more robust enforcement of these requirements, with those potential unintended consequences.
  • Further, this reform leverages existing policies (ToS) and processes (minimum housing inspections), and does not require a massive investment of new resources to implement.
  • As the City continues to roll out policies and programs to implement the NZE Roadmap, new energy efficiency standards could build off this program.

 

How do you ensure that the costs of improvements aren’t just passed on to tenants?

  • Energy efficiency and weatherization are the wisest dollar spent in terms of impact, but are the hardest to sell from a return-on-investment (ROI) perspective. Yet, we estimate that increasing efficiency of units could result in $100-$400 in annual energy savings to tenants, which is particularly important to the 60% of renter households that are cost-burdened.
  • For this reason, the proposal will include a limit on the dollar amount of required improvements so that they may be spread out over time, and to ensure that there is a nexus between the investment and the energy savings to limit the potential cost impact that could be passed on to a tenant.
  • For tenants of permanently affordable units or those who use Section 8 vouchers, there are limits to the costs that tenants pay that would provide protection against rent increases related to energy efficiency improvements.