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HomeMy WebLinkAboutStaff Report 2503-4451CITY OF PALO ALTO Climate Action and Sustainability Committee Friday, May 02, 2025   Agenda Item     2.Review and Discussion of 2026-2028 Reach Code Policy Development Approach; CEQA Status - Not a Project Late Packet Report, Staff Presentation Climate Action and Sustainability Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Public Works Meeting Date: May 2, 2025 Report #:2503-4451 TITLE Review and Discussion of 2026-2028 Reach Code Policy Development Approach; CEQA Status - Not a Project RECOMMENDATION This is a discussion item and no recommendation is requested. Staff is requesting feedback on staff’s planned approach to 2026-2028 Reach Code policy development. EXECUTIVE SUMMARY Every three years, the California Building Standards Commission publishes updates to the building standards codes; these include the building code, the fire code, the electrical code, the plumbing code, the energy code, and the green building standards code, among others. Local agencies are allowed to propose local amendments, or reach codes, that are more stringent than State codes if appropriate based on local conditions. The City has historically adopted reach codes, most recently for the Energy Code and the Green Building Standards Code. Staff is seeking Committee feedback on its approach to the 2026-2028 Reach Code. The City already has more stringent Green Building Standards Code requirements than the State’s, and staff is not expecting to propose significant changes to the Green Building Standards local amendments during the 2026-2028 Code Cycle. With respect to the Energy Code, the statewide reach code cost-effectiveness studies need to be completed so that local proposed Energy Code amendments for multi-family and non-residential buildings can be created. It is staff’s understanding that these studies are delayed, and staff will be unable to propose amendments until spring of 2026, with an estimated effective date of July 1, 2026. However, the studies for single-family homes are complete and there are potential policy options for local amendments to the Energy Code for single-family homes. Studies are showing cost-effectiveness for local amendments that would affect the replacement of water heaters and air conditioners as a standalone project, replacement of energy-using equipment during remodels, and the emissions and efficiency of new construction. BACKGROUND During the triennial building code adoption cycle there are two codes for which the City adopts local amendments for environmental purposes: the Green Building Standards and the Energy Codes. The Green Building Standards Code (CALGreen) includes provisions focused on storm water management, EV charging, water efficiency, construction material conservation and recycling, and indoor air quality. There are mandatory requirements (CALGreen Mandatory) that apply statewide to all project types. The State also publishes optional additional requirements that local agencies can adopt to apply only within their jurisdiction. These are the CALGreen Tier 1 requirements (typically applicable to remodels) and Tier 2 requirements (typically applicable to new construction). They provide flexible pathways to reducing environmental impacts in buildings further than would be achieved under the CALGreen Mandatory Code alone. The Energy Code governs the energy efficiency of buildings. It includes efficiency standards for installed equipment and insulation as well as standards that measure the energy use of the overall building design, including a metric (“source energy”) that takes into account the fossil fuels combusted due to modeled energy used by that design. The City currently has more stringent source energy requirements for new construction and substantial remodels than the State. Local amendments to the Green Building Standards or Energy Codes must be consistent with a federal law known as the Energy Policy and Conservation Act (EPCA). In general, EPCA preempts local regulations that ban a specific fuel, but allows local regulations on the overall energy consumption of a building. In 2024, the City repealed its all-electric reach code and adopted standards using Energy Code metrics focused on source energy. The City has implemented permit streamlining efforts that ease compliance with these codes, including streamlined online permits for heat pump water heaters and other mechanical, electrical, and plumbing requirements. The City also provides streamlined solar permitting. It is worth noting that there is a bill being considered by the California State Legislature, AB 306, that would suspend agencies’ ability to make local amendments to the residential Energy and Green Building Codes. Staff is proceeding with this effort in line with current law and will adjust course if this legislation passes. ANALYSIS The City is considering local amendments to the Green Building Standards and Energy Codes to propose for the 2026-2028 code cycle. In most years, local amendments to these codes for single-family, multi-family and non-residential building types are adopted at the same time, effective January 1 of the first year of the code cycle. The Energy Code amendments depend on the completion of cost-effectiveness studies. The City partners with a statewide working group and regional partners on cost-effectiveness studies. These are normally completed by June of the year prior to the code cycle – in this case June 2025 – to allow time for local agencies to develop local amendments that could be effective the following January. This year, however, the cost-effectiveness studies for multi-family and non-residential building types that would enable local amendments to the Energy Code are delayed and will not be completed until early 2026, likely Q1. The single-family cost-effectiveness studies are already nearly completed, however, and no cost-effectiveness studies are needed for Green Building Standards Code amendments. Staff proposes the following strategy: •Propose local amendments to the Green Building Code for all building types, including multi-family and non-residential, effective January 1, 2026. •Propose local amendments to the single-family Energy Code effective January 1, 2026 •Propose local amendments to the multi-family and non-residential Energy Code effective July 1, 2026, pending availability of cost-effectiveness studies analyzing potential local amendments. In addition, as described below, staff recommends that certain local amendments to the single- family Energy Code related to equipment replacement be effective later than January 1, 2026, to promote consistency and coordination with other jurisdictions in the Bay Area. Green Building Standards Code (CALGreen) Local Amendments The City has historically adopted the CALGreen optional Tier 1 and Tier 2 requirements, leading to healthier and less environmentally impactful buildings in Palo Alto. The applicability of these requirements is shown in Attachment A. In addition to adopting the Tier 1 and Tier 2 requirements (which are published by the State and are the same across all adopting agencies), the City adopted local amendments in the last code cycle. These are summarized below and listed in more detail in Attachment A: •Low-carbon concrete •Deconstruction and construction materials management and waste reduction •Natural environment protection (storm water, invasive species) •Indoor air quality •Recycled water use and cooling tower water use •Water and energy building efficiency ratings •Electric readiness •Enhanced EV charging infrastructure requirements Staff intends to propose adopting the Tier 1 and Tier 2 requirements again for the next code cycle and to continue the existing local amendments. For multi-family and non-residential buildings staff is recommending consideration of the following additional local amendments: •Use Leadership in Energy and Environmental Design (LEED) certification as an alternative pathway for Tier 1 and Tier 2 compliance (note – this could also be applicable to single-family home Tier 1 and Tier 2 compliance) •Consider lowering square footage threshold for applicability of embodied carbon requirements in new construction •Other administrative modifications to make existing local amendments clearer In addition, staff is reaching out to other jurisdictions, most of which are not as far along in their process for identifying local amendments, to find opportunities for collaboration and alignment between efforts. Single-Family Energy Code Local Amendments Potential Energy Code local amendments require cost-effectiveness studies before they can be adopted. They must be more stringent than the California Energy Code, generally using the metrics established by that code (such as source energy). The studies to establish which regulations are cost-effective are generally performed via a statewide working group that the City partners with. That working group and other regional partners have identified three potentially cost-effective regulations for local agencies to adopt: •Time of replacement requirements for water heaters and air conditioners that would require either energy efficiency measures or installation of heat pumps when these two types of equipment are replaced. •Time of remodel requirements that would require a combination of electric readiness, energy efficiency, or electrification when water or space heating equipment is replaced as part of a remodel. •Requiring new construction to meet higher source energy requirements than is required by the statewide energy code, which is the approach the City used when it adopted a replacement for its all-electric Reach Code in June 2024. Staff plans to propose local amendments effective January 1, 2026, requiring higher source energy standards for new construction and substantial remodels, as the City’s local amendments currently do. Staff also plans to propose some requirements related to remodels based on the cost-effectiveness studies. Time of replacement regulations require more consideration. These requirements could be put in place starting January 1, 2026, or they could be made effective in alignment with upcoming Bay Area Air District Zero NOx regulations, or implementation of these regulations could be done in coordination with other agencies. In general, staff recommends an approach for time of replacement mandates that focuses on regional coordination to avoid making it harder to do equipment replacements in Palo Alto, which could increase the percentage of equipment replacement projects done without permits. There are two potential cost-effective time of replacement mandates: 1) requiring efficiency measures or installation of a heat pump water heater when replacing a gas water heater, and 2) efficiency measures or installation of a heat pump when replacing an air conditioner. It would be simplest for homeowners and contractors to align adoption of a water heater time of replacement standard with the 2027 effective date of Air District regulations prohibiting sale of gas water heaters in the Bay Area. Air District regulations for furnace replacements do not take effect until 2029, however. Staff would only recommend considering a time of replacement standard for air conditioning before 2029 if it can be done in conjunction with other building divisions in the area, with joint outreach to contractors. Staff will reach out to other building divisions in the area to see what they are considering on this front. Staff will also investigate the possibility of using incentives and financing to improve the cost- effectiveness calculations for other equipment replacements, possibly enabling time of replacement standards to be adopted for other technologies. This would require finding scalable incentive and financing strategies that could cover all anticipated annual replacements. FISCAL/RESOURCE IMPACT Development and implementation of local amendments to the 2026-2028 State Energy and Green Building Standards Codes is being absorbed within existing budgets for Planning and Development Services and Utilities. Resource needs include about 0.5 FTE in staff time and $248,000 in professional services costs spread across FY 2025 and FY 2026. STAKEHOLDER ENGAGEMENT Staff is developing a final staff proposal for local Green Building Standards Code amendments and single-family local Energy Code amendments. The proposal is tentatively planned to be completed by the end of June 2025. After that, the City will do outreach over the summer to contractors, architects, advocates, and the general public. Staff is currently developing an outreach plan it will share with the Committee when finalized. Adoption of local amendments to the Green Building Codes for all buildings and to the Energy Code for single-family homes would likely take place in October 2025, with outreach to raise awareness of the new codes taking place at the end of 2025 prior to the January 1 effective date, continuing into early 2026 after the codes take effect. In early 2026, as staff develops its proposal for local amendments to the multi-family and non- residential Energy Codes, a similar outreach schedule would be developed based around a July 1, 2026 effective date for these code amendments. ENVIRONMENTAL REVIEW The Committee’s discussion of this approach to developing proposals for local amendments to the State’s Energy and Green Building Codes is not a project as defined by CEQA because it does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378. ATTACHMENTS Attachment A: Green Building Code applicability and existing local amendments APPROVED BY: Brad Eggleston, Director Public Works/City Engineer 7 7 8 9 Green Building Code Applicability Requirements and Existing Local Amendments Single Family CalGreen Code Applicability Scope of Work Current requirements ADU conversions, alterations, additions CalGreen Mandatory Alterations / Additions that Increase conditioned area and do not trigger Tier 1 requirements CalGreen Mandatory Additions / Alterations1 >1000 sf CalGreen Mandatory + Tier 1 New construction or substantial remodel CalGreen Mandatory + Tier 2 Multi-Family CalGreen Code Applicability Scope of Work Current requirements Alterations / Additions that Increase conditioned area and do not trigger Tier 1 requirements CalGreen Mandatory Additions / Alterations1 >1000 sf CalGreen Mandatory + Tier 1 New construction or substantial remodel CalGreen Mandatory + Tier 2 Non-Residential CalGreen Code Applicability Scope of Work Current requirements Tenant Improvements (Tis), Renovations, Alterations w/ $200,000 permit valuation and do not trigger Tier 1 or Tier 2 requirements CalGreen Mandatory TIs, Renovations, Alterations > 5,000 SF w/ replacement of two systems: HVAC system, building envelope, hot water system, lighting system CalGreen Mandatory + Tier 1 Additions > 1,000 SF CalGreen Mandatory + Tier 2 New construction CalGreen Mandatory + Tier 2 1 Alterations include raising the plate height, historic restoration, changes or rearrangements of the structural parts or elements, and changes or rearrangement of bearing walls and full height partitions. Normal maintenance, reroofing, painting or wall papering, floor finishes, replacement-in-kind of mechanical, plumbing and electrical systems, or replacing or adding new kitchen counter and similar furniture, plumbing fixture to the building are excluded for the purposes of establishing scope of Tier 1 projects (PAMC 16.14.080). Attachment A 7 7 8 9 Existing Local Amendments to the Green Building Code Applies To: Single Family Multi Family Non Res Third-party Green Building Special Inspector required for all projects (PAMC 16.14.080)X X X Low-carbon concrete requirements for Tier 1 and Tier 2 projects (PAMC 16.14.080, PAMC 16.14.240)X X X Deconstruction and construction materials management (PAMC 16.14.150, PAMC 5.24)X X X Cement and concrete made with recycled products (PAMC 16.14.420)X Enhanced construction waste reduction of 80% X X X Local storm water pollution prevention for new construction and additions (PAMC 16.14.290)X Invasive species prohibited (PAMC 16.14.330)X Indoor Air Quality Management Plan (PAMC 16.14.390)X X Recycled water infrastructure for irrigation X X Cooling tower water use X X Swimming pool and spa covers – vapor retardant cover required (PAMC 16.14.100)X X Non-residential enhanced water budget (PAMC 16.14.340)X Energy STAR portfolio manager profile for energy and water use, energy and water performance reviews (PAMC 16.14.360, 370, 380)X Full electrification of outdoor grills, stoves, and barbeques (PAMC 16.14.090)X X X Electric readiness requirements (PAMC 16.14.190/410, PAMC 16.17)X X X Enhanced EV Charging requirements (PAMC 16.14.160, PAMC 16.14.400)X X X 7 7 8 9 Summary of Enhanced EV Charging Requirements in the Green Building Code For clarity, the table below summarizes the EV charging requirements in the Green Building Code at a high level and are accurate for most projects. For precise requirements see PAMC 16.14.160 and 16.14.400. Single Family Multi-family Hotels/Motels Nonresidential New Construction of Any Size (including substantial remodel for residential) Install 1 EV Ready Space OR Install 1 Level 2 EV Charger Exception: Accessory Dwelling Unit (ADU) Resident Parking: For each residential unit, install one Level 2 EV Charger OR Install one Level 2 EV Ready Space for each residential unit AND Guest Parking: 25% EV Capable, EV Ready, EV Chargers AND 10% EV Chargers Installed 40% EV Ready AND 10% Level 2 EV Chargers Installed 10 to 20 parking spaces: 20% EV Capable or EV Ready Space AND 20% Level 2 EV Chargers Installed OR Over 20 parking spaces: 15% EV Capable or EV Ready Space AND 15% EV Chargers Installed Agenda Item 2: 2026-2028 Reach Code Policy Development Climate Action and Sustainability Committee May 2, 2025 Acting Now for a Resilient Future Context and Prior Council Direction cityofpaloalto.org/ClimateAction Topic: 2026-2028 Reach Code •Relevant 2025 City Council Priorities and Objectives •Present an ordinance to Council enacting the 2026 California Building Standards Code update, including the California Green Building Standards Code; submit to the California Building Standards Commission for approval •Relevant S/CAP Key Actions •E7. Use Codes and Ordinances to Facilitate Electrification •Applicable Regulatory Efforts •If AB 306 passes, would limit City ability to adopt Reach Codes •Reach Codes must be consistent with Ninth Circuit decision 2 Background and Timeline cityofpaloalto.org/ClimateAction Energy codes: addresses building energy use •Local amendments must show cost-effectiveness Green building: non-energy environmental impact •Need to be justified by local climatic, geological, topographic or environmental conditions Statewide cost effectiveness studies delayed to early 2026 for multi-family and nonresidential Proposed adoption strategy: •Green building reach codes effective Jan 1, 2026 •Single-family energy reach codes Jan 1, 2026 •Multi-family and nonresidential energy reach codes effective Jul 1, 2026 3 Green Building Code Local Amendments cityofpaloalto.org/ClimateAction In addition to adopting the Tier 1 and Tier 2 requirements, the City adopted local amendments in the last code cycle covering: •Water Conservation, Material Conservation, Environmental Quality, EV Infrastructure Staff intends to propose carrying forward all previous amendments Staff is also considering new amendments: •Use LEED certification as an alternative pathway for compliance •Lower square footage threshold for embodied carbon requirements 4 Energy Code Local Amendments cityofpaloalto.org/ClimateAction 5 Existing Buildings Time of Replacement Time of Renovation Requires property owners to either: •install heat pump equipment •implement energy saving measures when replacing their equipment, whether due to an upgrade or burnout Alternative measures: •Insulation•Air Sealing Alternative measures: •Gas WH with solar thermal Applies to property owners who are already pulling a permit for renovation work FlexPath Requires applicants that are already pulling a permit to abide by a flexible menu of: 1.Energy efficiency measures 2.Electrification measures 3.Electric readiness requirements Electric Readiness Requires installing the necessary wiring, outlets, and electrical capacity to support potential future electric appliances New Construction/Substantial Remodels Energy Performance Approach Buildings must achieve a higher Source Energy compliance margin, meaning they need to be more energy-efficient than the state’s baseline requirements Goals: 1.Encourage energy-efficient choices 2.Provide flexibility in equipment used while encouraging the use of cleaner energy sources 3.Make it easier and more cost-effective to switch to electric systems in the future Gas WH HPWH Energy Code Strategy cityofpaloalto.org/ClimateAction 6 •New construction: continue “Hourly Source Energy” standard adopted in 2024 – update using 2025 cost-effectiveness studies •Investigate “time of remodel” standard based on new 2025 cost- effectiveness studies •Consider “time of replacement” standards (e.g. for air conditioner and gas water heater replacements) as follows: •Adoption should be coordinated with broader regional action (e.g. Air District regulations, action by neighboring agencies) for ease of contractor compliance •Consider the use of incentives to ease impacts of mandates Next Steps cityofpaloalto.org/ClimateAction 7 Jun: Finalize staff proposals Jul – Sep: Outreach to contractors, advocates, public Aug – CASC recommendation Oct: Code adoption Jan: Code effective date Green Building Code + SF Energy Code Nov-Jan: Finalize staff proposals Feb – March: Outreach to contractors, advocates, public Apr: Code adoption Jul: Code effective date MF & Nonres Energy Code (tentative) 2025 2026