The True Cost of Passive House: Making a business case for multifamily affordable Passive House
There exists a highly compelling case for promoting Passive House building standards for the affordable multifamily sector in New York City. In addition to deep energy and carbon reductions that align with the goals of New York City’s Climate Mobilization Act, increased occupant comfort and climate resiliency will greatly benefit some of New York City’s most vulnerable populations. There is great interest in Passive House on both the supply side (designers and developers) and the demand side (customers, HPD), but there is a lack of available data to support the underwriting of reduced building operating costs and an inability to recognize non-financial benefits. Interest in, and a willingness to share this data has been expressed by many entities that are working in this sector, including energy consultants, Passive House Designers, and other agencies. This study will attempt to quantify the true costs and savings of Passive House in the multifamily sector with the hope that the information can help increase the viability of Passive House for this sector.
From June-November of 2019, the New York City Department of Housing Preservation, and Development (HPD), the Community Preservation Corporation (CPC), Bright Power, and Steven Winters embarked on a study to assess the full costs and savings of constructing and operating a Passive House multifamily affordable housing development as compared to a conventional multifamily affordable housing development, in order to allow lenders to comfortably underwrite to Passive House energy savings.
These initial findings already show important trends in Passive House energy performance and useful anecdotes on recent projects. However, further work will be required to support a wider adoption of Passive House and particularly to enable underwriters to more confidently support such projects. To build on the work in Phase I, the project team is now seeking assistance to complete a second phase of this study aimed at designing and implementing new Passive House underwriting practices with lenders. To do this, we need to (1) build out the dataset for the 22 properties identified in Phase 1, (2) expand the dataset to include 10-20 additional projects with at least one year of operational data throughout Climate Zones 4A and 5A, which have climates similar to those in New York City, (3) quantify non-energy-related benefits of passive house that might further justify the economics of these projects (including carbon penalties, avoided health care costs, etc.) and (4) work with lenders to identify and address the remaining questions around underwriting practices. Ultimately, this effort aims to provide an accurate picture of the full life-cycle costs and savings for multifamily affordable passive house building that can be used to inform lending and underwriting practices for passive house projects moving forward.
Suggested Approaches and Outcomes:
1. Expand database of project costs, savings, energy performance, and lessons learned for Passive House projects in Climate Zones 4A and 5A following the approach established in Phase 1 (e.g. phone interviews, research, and analyzing energy benchmarking data).
- a. Complete data collection and case study creations for existing properties identified in Phase 1
- b. Add 10-20 new properties to study
2. Consider how to quantify energy and non-energy costs/benefits associated with Passive House building design, including:
- a. Energy savings
- b. Cost savings resulting from reduced energy use
- c. Avoided costs related to potential GHG penalties (per NYC’s Local Law 97)
- d. Equipment durability and replacement cost analysis
- e. Resiliency benefits related passive survivability
- f. Avoided health costs & implications related to air quality, noise mitigation, etc.
3. Outline a framework for a comps database for lenders to view similar projects and inform underwriting that could be used for voluntary ongoing project performance tracking of Passive House projects for lenders.