A state agency this week heard testimony favoring and opposing a proposal to mandate more than $2.55 billion in energy efficiency upgrades for some 8,000 large buildings under consideration.

The potential costs to upgrade large buildings having more than 50,000 square feet of floor space is causing consternation among building owners, including owners of large, older apartment buildings. Proponents, meanwhile, said the new regulations will improve air quality, upgrade the quality of buildings in Colorado, and must be done all at once to make any substantial effect. 

In a three-day meeting, the Colorado Air Quality Control Commission tackled the proposal from the Colorado Air Pollution Control Division called Regulation 28, which seeks to mandate 7% building energy use reductions by 2026 and 20% by 2030. The proposal first came before the commission on May 16.

Strident objections from building owners and apartment industry representatives persuaded the air quality commission in April to continue the proceedings until August.

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Apartment developers argued it may well be unaffordable, if not impossible, to meet the new standards and result in loss of low-income housing stocks if buildings have to be closed – or the cost of new, low-emission upgrades will be passed to renters.

The commission is determined to push the regulation through by Friday to meet a statutory mandate that it does so by Sept. 1. 

Environmental attorney Paul Seby told The Denver Gazette that the revised regulation is worse than the original one in that it’s more stringent and less flexible.

Tim Walsh, CEO of The Confluence Companies, which builds multifamily housing up and down the Front Range, said electrification of older apartment buildings that use central hot water for heating and washing could cost as much as $80,000 per apartment.

“We’re going to be disproportionately hurting the hardest working Coloradans and the lowest wage earners by implementing this rule,” Walsh said in a prior interview. “Everybody wants to talk about affordable housing. And affordable housing is also about affordable utility bills in your home, as well, not just the cost of rent or own.”

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Dennis Supple, a spokesperson for International Facility Managers Association, told the commissioners Wednesday that supply chain issues and up to 18-month delays for delivering new, low-emission equipment are likely to make it impossible to obtain the necessary equipment before the 2026 reduction sets in.

On the other hand, Cliff Majersik, senior advisor for policy and programs at the Institute for Market Transformation, told the commission the building energy standards are necessary and workable.

“The requirements on building owners in the proposed Rule 28 are absolutely doable for building owners and they will create benefits beyond just energy and climate savings,” Majersik said. “They will create buildings that are healthier and more comfortable for the occupants. They’ll create jobs for Colorado workers, they will add property value.”

“And it’s hard though to move individually. So, collective action is needed to move the whole industry and a building performance standard is great for driving that collective action, overcoming the first-mover disadvantage, and helping Colorado to create more valuable buildings, more profitable buildings, more jobs for its residents,” Majersik added.

In addition to Colorado, three other states have adopted building performance standards: Washington state, Maryland and Oregon.

Tricia Canonico from Fort Collins City Council, a member of Colorado Communities for Climate Action, said the group’s members comprising 42 municipalities and counties all share a “deep concern about the existential threat of the climate crisis.” The coalition, he said, represents a broad cross section of diverse communities that make up over a quarter of the Colorado population.

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In response to complaints against the proposed rule, the Colorado Energy Office said that the regulation is mandated by statutes enacted by House Bill 21-1286, and it is only doing what the law requires. Any defects lie in the law itself, said the office, and neither the energy agency nor the air quality commission can change that. Until the underlying statute is challenged and overturned, the energy office said agencies have a legal duty to forge ahead.

Gov. Polis signed the enabling legislation in June 2021. The commission announced the proposed rule 18 month later -on Jan. 20, 2023.

Seventeen of the approximately 75 people who attended the on-line Zoom public comment session on Tuesday spoke to the commission. Another 75 people signed up for the Wednesday formal hearing, where the Air Pollution Control Division gave its presentation on the new regulation and parties to the proceeding gave their testimony.

Late Thursday afternoon, commissioners voted 6-1 to pass the regulation with Commissioner Randy Ahrens voting against the proposal and Commissioner Gary Arnold absent.