Berkeley, California Residential Energy Conservation Ordinance (RECO)

Overview

The Compliance Guide for Berkeley's Residential Energy Conservation Ordinance

Under RECO, the residential sector includes all homes; residential areas of mixed-use buildings, tenants in common, condominiums, multi-family properties, live-work spaces, and boarding houses must comply.  All homes sold or substantially renovated must demonstrate compliance with these requirements, through inspection and proper documentation submitted to the City of Berkeley.  Substantial renovation is defined as any residential property that undergoes renovation with a minimum total construction cost of $50,000. In a real estate transaction, making the necessary improvements is the seller’s responsibility, but can be passed onto the buyer once in the sale of a property.  Escrow cannot close until forms are completed and filed.  Costs of meeting RECO requirements are capped at three-quarters of 1% of the home’s final purchase price.  In 1987 Berkeley launched the Residential Energy Conservation Ordinance (RECO), requiring Berkeley homes to become more energy efficient and reduce household environmental footprints.   Demand for RECO stemmed from increased consciousness of energy limitations, due to the oil embargoes of the 1970’s, and the need to insulate homeowners from high energy prices.  According to the California Air Resources Board, 70% of California’s single-family homes were built prior to 1978, before the presence of modern energy codes.  Moreover, 7% of Berkeley’s total annual community greenhouse gas emissions stem from electricity consumption in residential buildings, and 19% is attributable to natural gas consumption, which is responsible for emissions directly released in the city.  Berkeley recognized this as an opportunity to reduce energy consumption and greenhouse gas emissions.  RECO promotes efficient energy and water use in residences by prescribing ten compliance measures for every home or apartment building sold, transferred, or undergoing substantial renovations in Berkeley. These measures target reducing energy used for space heating, hot water, and lighting.  

Since the inception of RECO, the list of compliance measures and number of homes retrofitted continues to grow, resulting in significant water, electric, natural gas, and cost savings.  The overall success of RECO is evident by the continuing decline in energy consumption.  After experiencing electricity use increases in the 1990s, residential electricity consumption decreased 5.4% between 2000 and 2005, while population stayed essentially flat at between 101,000 and 103,000.   Natural gas consumption was substantially reduced during this same time period.

The Berkeley Energy Conservation Ordinance, Section 19.16.050 Residential Conservation Measures authorizes the Residential Energy Conservation Ordinance.  Section A states that “prior to the sale or exchange on any residential structure or unit, the seller must provide that residential structure or unit with ECM [energy or water conservation measures] that meet the standards of this section. ECMs (defined in Section B) shall be installed, if feasible, in a residential structure or unit each time it is exchanged or sold, or undergoes renovation, until all feasible ECMs are installed.”  A certification of compliance must be filed with the City of Berkeley before final approval for renovations or property sale.  Upon filing of the certificate of compliance, the residential structure or unit is considered in full compliance.

Management and Funding

Infrared images of common home energy problems in a Berkeley home, each of which can be addressed through the RECO. Top: Heat loss under an exterior door.  Middle: poorly insulated attic. Bottom: leaky forced air HVAC ducts.

Since adopted in 1987, RECO has expanded due to the availability and improvement of new energy and water conservation technologies.   Although administered by the City of Berkeley, RECO implementation and success has relied heavily on public support and participation.  Citizen, homeowners, contractors, Lawrence Berkeley National Laboratory, and realtors have been involved and provided program input.  The Community Energy Services Corporation (CESC) is a nonprofit licensed general contactor dedicated to revitalizing the East Bay and is the only authorized RECO auditor.  The fixed cost of the RECO audit is $100 for a single-family house. Multi-family housing fees are $100 for the first unit and $50 for each unit thereafter.  Inspection fees are set with City Council approval and are available on the City’s energy Web site.  Other local organizations provide green building information, performance diagnostic tests, and solar installations, as well as lead energy awareness campaigns and green workforce development programs.

Federal, state and local programs offer a variety of loan, rebate, and assistance programs to offset costs associated with RECO compliance.  These programs include California Alternative Rates for Energy, Berkeley Home Weatherization Program, REACH, Home Energy Assistance Program, Berkeley Home Safety Repair Program, and Berkeley Senior Home Loan Program.  Pacific Gas and Electric (PG&E) and East Bay Municipal Utility District (EBMUD) provide a host of rebate programs and energy and water saving information for Berkeley property owners.

Performance

Today, RECO requires ten relatively simple conservation measures, listed below.  These measures represent the low-hanging fruit, most of which can be completed by the homeowner and most of which target natural gas and water usage.  These prescriptive measures have helped to reduce winter heat loss and summer heat gains, and have helped save Berkeley residents’ energy and money, particularly as natural gas prices are unregulated.  Annual average energy savings varies by house size, number of occupants, and quality of installation of each measure, and assumes residents use their heating systems in the winter.   Of properties audited, 24% fail initial RECO audits.  Deficiencies can be comprehensive or discrete in one or more of the ten measures. Measures most often failed include attic insulation, followed by door weatherstripping and water pipe insulation.  Berkeley’s RECO inspection contractor, CESC, has been able to lower the initial failure rate by installing water conservation equipment (aerators, showerheads, and toilet “flappers”) at the time of the inspection, if all other measures are in place.  

For the average Berkeley residence, total annual potential cost savings is estimated at $698.76.  Total one-time potential materials cost of compliance, not including labor or attic insulation, is $800.  Based on these estimates, approximately 14 months are required to pay off RECO investments.  Where attic insulation is included, the payback period is extended. Because the Maximum Expenditure allowance requires that for every $100,000 of sale price, $750 must be set aside for energy and water efficiency improvements in the building, there is generally sufficient funding for the energy measures specified.  The average Berkeley home price is $650,000, meaning that the seller must spend up to $4,875 to bring the home into compliance.  If the typical savings is $698, this means the average payback is less than 7 years.  Frequently, though, the ECMs cost considerably less than the maximum spending limit.  Aggregated utility data from PG&E and EBMUD and Berkeley’s property compliance records provide insight into the success of RECO. The City maintains RECO compliance status and records for each residential property and is available to homeowners, title companies, realtors, and buyers by calling or emailing the City’s Building and Safety Department.  

Total program energy savings to date are estimated at 811,800 therms of natural gas and 1.32 MWh of electricity.  This is based on the assumption of approximately 300 home sales annually over the past 22 years, with half of them required to undergo RECO, 15% of which were multifamily buildings requiring the minimum of $0.50 per square foot of energy work installed.  132 million gallons of water are estimated to have been saved over the length of the policy, assuming an average household is four people.  According to Alice La Pierre, Energy Efficiency Coordinator for Berkeley, determining program-wide benefits is currently based on a number of assumptions.  For several reasons, the number of housing units having undergone RECO audits to date is unknown.  Ordinance compliance records were kept manually until 2003 and due to budget restraints, Berkeley has been unable to manually update these records into an electronic database, so only the audits completed since 2003 are recorded electronically.  The annual number of homes sold cannot be consistently estimated due to housing market fluctuations.   Additionally, because RECO allows the responsibility for the compliance of measures to be transferred to a buyer once, and because many buyers tend to ignore the ordinance until they sell the property, the energy- and water-saving measure are not always immediately installed.  Therefore, estimates for sales and installations of ECMs are reduced based on an assumption of limited compliance.

Staff time is the sole cost of operating and maintaining RECO.  This includes approximately 5% of the Energy Efficiency Coordinator’s time to oversee the program, which Berkeley considers non-recoverable.  Additionally, 10-15% of a Building and Safety staff person’s time is required for recording, filing, and responding to emails.  This cost is recouped by a $20 form filing fee.

Lessons Learned

The success of RECO is attributed to the involvement of an independent agency (CESC) as inspectors and the establishment of clear firewalls protecting Berkeley residents. By delegating the independent agency to perform RECO inspections and ensuring that the agency has no opportunity for financial gains beyond the cost of inspection, Berkeley has ensured compliance with RECO measures and protection of homeowners from sales pitches for unnecessary or unwanted equipment or additional services.  Inspection fees are determined with City Council approval and available on the City’s energy Web site, so there is no opportunity for inspectors to gouge residents on fees.  Additionally, working with realtors has enhanced program success and efficiency.  Realtors are assisting clients in identifying funding, such as rebate and energy tax credit opportunities, as well as informing them of when compliance is required.

Opportunities to strengthen RECO stem from its prescriptive nature, which emphasizes adoption of the same measures in every home.  Some homeowners would prefer to do more comprehensive, whole-house approach, such as that promoted by the Building Performance Institute (BPI), with a focus on the installation of the best energy savings measures as custom-identified for each home.  These could include additional measures not currently covered by RECO such as energy-efficient windows, wall insulation, floor insulation, etc.  A hybrid performance approach, combining prescriptive and comprehensive building measures, is being studied now.  If adopted it would be implemented in Berkeley and the neighboring cities of Oakland and San Francisco to offer greater consistency in the housing market.

The political will to put RECO in place was largely the result of the success of Berkeley’s Commercial Energy Conservation Ordinance (CECO) adopted in 1984.  CECO requires thirty-two energy conservation measures commercial buildings must comply with upon transfer of property ownership or when additions or renovations are made.  Over its history CECO has also successfully saved a considerable amount of energy in the commercial market.

Related Resources

Home Page for Berkeley RECO:

http://www.ci.berkeley.ca.us/ContentDisplay.aspx?id=16030

Berkeley’s RECO Compliance Guide [PDF]:

http://www.ci.berkeley.ca.us/uploadedFiles/Planning_and_Development/Level_3_-_Energy_and_Sustainable_Development/Residential%20Energy%20Conservation%20Ordinance%20Compliance%20Guide%202008.pdf

Berkeley’s “Track our Progress: Residential Utility Data and Targets”

http://berkeley.visiblestrategies.com/Default.aspx?ExecutePath=21494+21496+21507+21512

National Residential Efficiency Measures Database

http://www.nrel.gov/ap/retrofits/index.cfm

 “Consideration of a Residential Energy Conservation Ordinance (RECO) for Boulder, CO”, a report comparing RECO implementation in different cities across the U.S.

http://www.recaonline.com/docs/arc/arc2008/PointofSale_BoulderCO.pdf

Contact

AliceLa Pierre, Energy Efficiency Coordinator and Building Science Specialist, City of Berkeley, ALaPierre@ci.berkeley.ca.us, (510) 981-7435

Case study developed by Chelsea Haines (Monterey Institute of International Studies) and Eric Mackres (ACEEE).