A DC Cooperative's Journey to Decarbonization

Introduction

Building performance is more important than ever given how much of our lives are affected by the comfort, health, and energy consumption of our homes. Multifamily buildings in particular have an opportunity to improve both resident comfort and energy efficiency through targeted upgrades, increasingly required by climate-related legislation. In Washington, DC, the Building Energy Performance Standards (BEPS) will eventually cover all buildings over 10,000 sq. ft. by 2033, so it is crucial that owners get started on compliance measures immediately, if they haven’t done so already. As a point of reference, a multifamily building with more than 10 units is likely larger than 10,000 sq. ft. Condominiums and cooperatives in particular can face unique challenges with meeting BEPS and implementing decarbonization measures due to several factors like: 

• ownership structure and engagement,
• varied expertise among decision makers, and 
• different funding options. 

A co-op located in Northwest DC is one such building in the midst of figuring out how to move forward with building performance improvements. 

This Building Innovation Hub case study provides a roadmap for owner-residents and their building management staff to understand: how the process works, what stakeholders need to be involved, and key considerations for a multifamily building as they meet their BEPS targets, lower energy use, upgrade resident’s homes, and ultimately eliminate greenhouse gas emissions.

Any identifying information about the cooperative has been changed to respect the privacy of residents. Images are only representative, and do not depict the actual building.

This resource is available courtesy of DCSEU.

Cooperative’s Process

Decarbonization wasn’t the original goal

In 2018, management raised the temperatures that the building was cooled or heated to throughout the day, known as “set points.” The goal was to conserve energy, i.e., lower their bills. Unfortunately this measure coincided with record humidity levels in the DC area, and the co-op started experiencing humidity issues. It was an all-too-common unintended consequence of pursuing energy conservation without a holistic approach. When the board evaluated options to mitigate the situation, they were interested in replacing the existing air handler equipment, in part due to the aging infrastructure of the 1967 building. While this solution may have addressed the immediate dehumidification needs, it would have also increased energy usage by 30% in the long-term.

One of the co-op’s residents, who is an employee of the DC Sustainable Energy Utility (DCSEU), was aware that BEPS would be enacted soon and that the potential increased energy usage would be detrimental to the building’s compliance. He joined the co-op board in 2019 and encouraged them to rethink the business-as-usual strategy for larger equipment replacement. With BEPS driving building performance improvements across the city, and increased need to reduce utility costs amidst annual rate increases, the Board of Directors shifted their focus to conducting an in-depth building assessment and outlining their long-term strategy for improvements that would bring them into compliance.

Coming into compliance

As a starting point, the co-op conducted an ASHRAE Level II Energy Audit and building envelope assessment. During the energy audit process, they discovered errors in benchmarking data dragging their score down. With more accurate data, the ENERGY STAR score of the building improved from 54 to 91 for the baseline year and the co-op came into BEPS compliance with the revised score. (Multifamily buildings need to have an ENERGY STAR score of 66 or higher to be in compliance in the first cycle, 2021-26.) 

The co-op met the District’s standards without any additional measures—this speaks to the necessity of good metrics! And while your building could have a good ENERGY STAR score and meet BEPS, those frameworks don’t necessarily take resident experience or the intersectional effects of climate change into consideration. The co-op opted to stand by their holistic approach and not view compliance with this current cycle as the end of the project. 

While developing the long-term strategy, they have also taken incremental steps to implement efficiency improvements.

For example, the co-op has installed new LED lighting, taking advantage of DCSEU point of purchase rebates under their mid-stream lighting program. This is actually an upgrade to a prior LED lighting project from 2013, now replacing 8W bulbs with 3W bulbs in the hallways and installing bi-level dimming sensors in the stairwells. They are also replacing any remaining fluorescent bulbs in units with LED lighting under this program. There has not been an analysis yet of how much these lighting measures will affect overall energy usage. 

The co-op has also implemented energy management protocols and been recognized under the Department of Energy (DOE) 50001 Ready program, which partnered with DCSEU for the first cohort. This free DOE guide helps owners set up processes to manage building energy usage, which for many condos and co-ops in particular does not exist. 50001 Ready is especially useful for a building portfolio, but single buildings could benefit, especially as you can pick and choose components that match your needs. If you are going through an energy audit, your auditor might already be collecting the relevant information for 50001 Ready. While it’s hard to parse out what savings are owed to 50001 Ready, the energy audit and occupant education efforts, the co-op reduced their overall energy use by 6% during their 2022-2023 participation in the DOE program.

Long-term planning

It’s 2024 and the co-op is getting ahead of future BEPS cycles, anticipating the necessary shift away from fossil fuel combustion. They are now in the process of a Level III Energy Audit and evaluating options for equipment replacement to achieve the long-term goal they believe necessary: full decarbonization by 2035 to comply with pending city regulations. BEPS standards will likely become more stringent and shift to targets based on reducing greenhouse gas emissions and site energy use intensity (EUI). It’s unlikely that the co-op would be able to comply in future cycles due to the use of gas for the building’s heating, ventilation, and air conditioning (HVAC) systems. Traditional mechanical equipment for space heating, cooking, and hot water operate by burning gas which emits carbon into the atmosphere. In anticipation of the inevitable change, the co-op is figuring out how to make the building more efficient and cost effective while fuel-switching to a fully electric HVAC system.

 

In the interim, the co-op will make the existing equipment more efficient for the next few years while they can upgrade high-voltage electric service from the utility. They will also consider new mechanical, electrical, and plumbing (MEP) systems like:

• retrocommissioning the main plant, which involves assessing existing conditions, adjusting operations, and developing owner manuals and maintenance plans which are common in commercial real estate, but less common for condos and co-ops; expected savings are ~3%;
• instituting advanced boiler controls, while they still have boilers, which could result in 5-7% energy savings;
• modernizing the building management system (BMS) could save 5-10%; and 
• building envelope improvements including window and door replacements to reduce energy usage and improve resident comfort by ensuring that the building is not leaking conditioned air, which might save up to 5% annually.

When their Level III Energy Audit is complete, they are planning to strategically address systems replacement and likely bring forth an option to shareholders to start the process of fully electrifying the building. The building currently has a two-pipe fan coil system which is typical for a building this size constructed in the 1960s. It provides either heating or cooling, but not both, and does not provide dehumidification. Typically, in accordance with local laws, buildings will switch to heat or AC on a specific day, usually in May and October. But with climate change, we are witnessing more “uncharacteristically” or “unseasonably” warm or cold days. On January 26, 2024 the high was 79° in the Washington, DC area. The residents of the co-op, alongside many other multifamily buildings constructed in that time period, didn’t have AC. 

The co-op is considering replacing the two-pipe system in-kind with a water source heat pump, or abandoning the piping system and replacing it with an air source heat pump. In order to evaluate these options, the decision makers are taking into account costs and financing, resident impact and comfort, energy savings, and BEPS compliance.

Stakeholders and Decisionmakers

As a cooperative multifamily property, residents own shares in the building and are referred to as shareholders. Typically, the owners have a common interest and ability to perform building improvements and long-term planning. With BEPS compliance in particular, long-term planning is crucial to ensure that the building meets its targets throughout both expected changes like owner sales and board member turnover, and unexpected events like damage from extreme weather and economic instability.

When it comes to pursuing these substantial shifts in building operation and management, the co-ops decision-making process starts with recommendations from the infrastructure committee, which is composed of co-op board members, shareholders, the general manager, and chief building engineer. The committee worked with a project management firm and District CBE to bring on board an energy auditor. The project management firm developed the necessary RFPs, reviewed bids, and used a weighted scoring process similar to government contracting evaluation. 

Once the energy auditor was selected, the project manager continued to help the infrastructure committee review reports and present recommendations to the board. As of this writing, the infrastructure committee recommended that the board take the next step in the ASHRAE Level III Energy Audit process to prepare an energy model for two potential scenarios: business as usual and abandoning existing piping for unitized air source heat pump solution. When they receive the results, this will take the co-op one step closer to determining how to move forward with their long-term plans.

Top Considerations for a Co-Op

As part of the decision-making process, and long before getting to the shareholder vote, there are a number of key considerations and priorities to balance that the infrastructure committee and board have to take into account.

Resident experience

The co-op is home to over one thousand residents with a broad mix and age range, from families to retirees. Decisions made about the building affect how the residents live their lives, and so resident comfort and daily impact of major projects factor into the decision making process. 

Improving indoor air quality is a priority, and fuel switching from gas burning to an electric system would remove harmful emissions from the building. Introducing dehumidification would also improve indoor air quality and resident comfort, though not all of the retrofit options they are considering include dehumidification. Another consideration is whether to keep the two-pipe system which would continue to provide only heating or only cooling at designated times, rather than install a system that would provide options for heating or cooling depending on resident preference and temperature swings over a short time that can occur in DC. The invasiveness of the work itself is also a factor; whether contractors would need to enter a resident’s units, and for how long, to install a new system.

Financing

How will the co-op pay for these upgrades? Spending decisions are important to all residents whether they are families or retirees. The board’s finance committee will make recommendations for the board to consider how to finance these improvements. As part of their Level III Energy Audit, the co-op is obtaining vendor pricing and estimated operational savings for each of the retrofit improvement options. These projected savings factor into payback periods and can be used in accounting for how to finance the overall project. 

Co-ops and condos typically have replacement reserves built up over time, and the co-op is currently using the reserves to pay for the energy audit studies and near-term improvements. However, there may not be enough reserves to pay for the full systems replacement on top of funding other maintenance projects. Additional financing will likely be needed and the finance committee will make recommendations as to whether or not to take on additional debt for the building. 

Some of the options available to multifamily properties are included below:

• A commercial property-assessed clean energy (C-PACE) loan would allow the building to borrow money for energy efficiency projects and make repayments via an assessment on their property tax bill. This could be a good option for a co-op looking to defray project costs. 
• The co-op may also consult with DC Green Bank, but for a market rate building, the typical products available may not align with what they need. (DC Green Bank is the DC C-PACE administrator, but not a C-PACE lender.)
• DCSEU has numerous rebate and incentive options that are typically applied at the time equipment is replaced. The co-op is working with DCSEU for rebates on lighting replacements, and depending on what is available when the equipment is replaced, they will also obtain rebates from DCSEU.

Education of the board and shareholders

For a co-op where shareholders may not be familiar with building operations and climate change solutions, it is not enough to simply put the recommendation forward, there is a widespread education component needed to ensure shareholders understand what they are voting on and how it impacts their building and their lives.

Unlike a privately held commercial real estate company where decisions are made by a small group of people who are professionals in the field, a co-op has to obtain buy-in from a large number of people on the board. In the case of significant projects like retrofitting, a majority vote from shareholders may be needed to proceed. Each shareholder brings their own experiences and interests to the process, necessitating a comprehensive engagement strategy with multiple touch points to educate shareholders about the complex options in front of them. 

For the co-op, the infrastructure committee and staff report at monthly meetings to keep the board current on the energy audit process and multiple ongoing infrastructure projects. Once the energy audit results are complete, the Board will likely host a town hall for the shareholders to present findings and begin the process of gathering feedback. The Board also holds open office hours every month where residents can submit questions about any of the ongoing projects. These engagement measures are necessary to inform and educate the shareholders about the project ahead of a future vote.

The chair of the infrastructure committee has found that messaging about the projects is important, and should take into account the varied viewpoints and residents’ motivations. Some shareholders in the co-op are concerned about the costs of electrification, while others are excited for energy savings and contributing to a healthier climate. Improving indoor air quality and resident comfort, and preventing mold growth are positive, compelling messages. In general, the chair has found over the years that there is a growing awareness of the benefits of energy efficiency and climate change solutions. However, the long-term project of fuel switching and equipment replacement to meet their decarbonization goals is a major, cost-intensive undertaking—some shareholders are likely to be resistant.

Available Resources

Throughout the planning process, the co-op has used tools available through local organizations to help them understand requirements, available incentives, technical recommendations, and best practices. 

• The Building Innovation Hub’s energy audit scope of work helped them with hiring an energy auditor, and the Hub’s forthcoming condo/co-op toolkit is also expected to help. 
• The DCSEU not only provides incentives, but also helps with energy audit reviews and makes referrals. 
• Public meetings such as the BEPS Task Force and Green Building Advisory Committee meetings to stay informed on requirements and compliance.
• DOEE hosts a BEPS Condo/Co-op task force, which is composed of members from DCSEU, DC Green Bank, and the Hub, to help condo and co-op buildings with compliance. To learn more about these meetings, email DOEE at building.performance@dc.gov.

Key Takeaways

For multifamily buildings considering or in the midst of building performance improvement projects, the Building Innovation Hub recommends:

1. Working with the right advisors and consultants if possible. The co-op has benefited from working with a project manager, and they have found the additional cost is worth it to have an owner’s representative acting as a go-between with contractors, reviewing proposals and reports, and making recommendations. Many buildings with third party property management offer that service. For buildings that might struggle with funding for a third party advisor, there are free resources available including DCSEU and the Hub, and while the services provided might not be the same as a paid consultant, the resources available will help buildings navigate the process. 
2. Engaging with DOEE. DC’s Department of Energy and Environment is willing to work with buildings to better understand requirements and how they might comply. While DOEE is serious about potential fines, there may be more flexibility with alternate compliance pathways than anticipated as ultimately DOEE’s goal is to help buildings to succeed.
3. Starting your building improvement and decarbonization projects now to lock in energy savings. Even though the co-op is compliant with BEPS this cycle, they are looking ahead knowing that they will need to make improvements in the future, and the sooner they act the sooner they can take advantage of the payback period. Planning building performance improvements, especially for co-ops with a large number of stakeholders, can take a long time and buildings need to move forward with thoughtful planning now in order to decarbonize in the future.