We Built This City on Efficiency
Contractors discuss the regulatory and economic conditions of the cities they represent
Since Congress has only passed one stand-alone energy bill since 2007, many local municipalities are taking energy-efficiency matters into their own hands. And, while a number of these measures are designed to benefit the community as a whole, they’ve had mixed results on HVAC contracting companies.
The report includes comprehensive information on energy-efficiency policies currently implemented at the state and local levels and policy activity across multiple sectors, including government, utilities, transportation, buildings, combined heat and power, and appliance standards.
The NEWS recently presented this information to the guys with their boots on the ground and asked them to interpret the economic climate of the communities they represent. Here are the results.
Bean Town ranked No. 1 on ACEEE’s Local City Scorecard.
Boston’s Climate Action Plan Update 2014 and Energy Reduction Plan detail the city’s energy and climate strategies for its internal government operations. This, and other various strategies, aims to reduce energy use and greenhouse gas (GHG)emissions from municipal buildings, streetlights, transportation, and procurement.
The 2014 plan (updated from 2011) modifies existing goals and adds new strategies to meet or exceed the already established goal of reducing Boston’s greenhouse gas emissions 25 percent by 2020. In achieving this, Boston will set sector-specific GHG and program participation targets to meet the goal of 25 percent reduction.
“There’s a lot of excitement surrounding the city’s energy initiatives, and, from the contractor’s perspective, there appears to be plenty of growth potential,” said Bill Fleming, operations manager, service group, J.C. Cannistraro LLC, Watertown, Massachusetts. “Boston is an old city with a large number of existing buildings. With that in mind, the city has launched the Greenovate Boston movement to prepare the city for the potential impacts of climate change. Those efforts, combined with recent ordinances requiring commercial buildings to report yearly energy consumption, have created a renewed interest in energy for both businesses and the community.”
For Cannistraro, this means an increased opportunity for performing energy benchmarking and HVAC retrofits.
“As building owners and property managers look for experts who understand where energy savings opportunities can be found, Cannistraro has the tools, technicians, and experts to set customer concerns at ease,” Fleming said.
Miami ranked No. 36 on ACEEE’s Local City Scorecard.
The state of Florida has mandatory building energy codes for both residential and commercial construction that are as stringent as 2012 IECC and ASHRAE 90.1-2010 standards. Cities are not permitted to adopt codes more stringent than the state codes.
Gregg D’Attile, CEO and owner, Art Plumbing AC & Electric in Coral Springs, Florida, said the economic climate in Miami has been challenging.
“The last five years have been quite volatile; however, we’re beginning to see signs of a recovery from the recessionary dip,” he said. “Construction is heating up. Construction contractors are getting back to what they do best and leaving the service industry to what we do best.”
MiPlan, the city’s climate action plan that was published in 2008, details several transportation and employee behavior initiatives, but Miami’s primary focus is on increasing energy efficiency in municipal buildings. The Office of Sustainable Initiatives is largely responsible for coordinating city departmental efforts toward the government operations goal.
While there are some benefits to this approach, D’Attile said the surrounding cities and their desire to operate under their own rules and regulations has caused confusion for contractors.
“Each of the 80-plus municipalities within the Miami and Fort Lauderdale markets have their own unique permitting processes, which presents tremendous time and manpower challenges,” he said. “Uniform permitting processes would be of great benefit to all.”
Minneapolis ranked No. 7 on the ACEEE Local City Scorecard.
The State of Minnesota requires its local jurisdictions to follow state-mandated building energy codes for residential and commercial buildings.
The 2015 Minnesota Residential Energy Code, based on IECC 2012, was published in the State Register on Sept. 22, 2014, and took effect January 2015. Minneapolis does not have the authority to set building energy codes but is actively lobbying the state Department of Commerce to increase the stringency of the building energy codes.
“In Minneapolis, business is growing,” said Brett Grendahl, CEO of Grendahl Mechanical LLC in Edina, Minnesota. “New construction project volume has been growing steadily, and our service business is expanding. Tenant improvement construction and significant remodeling projects have been very strong as 2015 has brought a stronger mix of new, ground-up projects, too.”
Grendahl calls the city’s future robust. “Projects are plentiful,” he said. “New contracting companies are coming into existence based on demand, especially in the mechanical trades. When you drive around the Twin Cities, you see lots and lots of cranes working. We believe there are not enough contractors to handle the work.”
NEW YORK CITY
The Big Apple ranked No. 2 in the ACEEE Local City Scorecard.
In 2013, according to New York State Energy Research and Development Authority (NYSERDA) and Consolidated Edison Inc. (ConEd), just under $157 million was spent on electric efficiency programs in ConEd’s New York service territory, representing 1.93 percent of ConEd’s annual revenue. Due to these programs, NYSERDA and ConEd reported a net incremental electricity savings of 265,596 MWh in ConEd’s New York service territory, representing 0.47 percent of its retail sales of electricity. The programs run within ConEd’s service territory account for 38 percent of NYSERDA’s realized savings.
In the same year, National Grid and NYSERDA reported spending $28 million on gas efficiency programs in National Grid’s service territory. The expenditures normalize to $12.84 per residential customer. Due to these programs, National Grid and NYSERDA reported a net incremental savings of 7.84 MMTherms, representing 0.23 percent of its retail sales.
Mike Agugliaro, owner of Gold Medal Service in Brunswick, New Jersey, said the New York City economy is booming — at least for him.
“The last five years have been incredible for us,” he said. “Rather than focusing on some of the doom-and-gloom sentiment of the time, our company focused on delivering the most amazing service and developing new ways to serve our customers, which resulted in at least an extra $1 million each of those years. Our success seems to defy other people’s perceptions of the market at that time.”
New York reported a $96 million budget for the building code department in 2013, which equates to $54 per $1,000 of residential construction spending for the city.
“This area is work-code crazy and among the worst in the country in terms of regulations and permitting,” he said. “To give you an idea, we have five full-time people working in our permitting department just to manage the process. Incentives help to some degree, but they’re usually short-lived.”
The future of NYC is amazing, said Agugliaro. He encourages contractors to continue to represent the trade proudly and loudly.
“While people are conditioned to go to the doctor for checkups or the dentist to get their teeth cleaned, people don’t think of getting their homes checked every year. It’s important to remember your home is alive and needs maintenance and checkups to stay healthy, too,” he said. “The future will always be incredible as long as you’re actively part of the bigger picture and solution.”
Seattle ranked No. 5 on the ACEEE Local City Scorecard.
In 2011, Seattle City Council Resolution 31312 formally adopted a goal to reduce GHG emissions from city operations 30 percent below 2008 levels by 2020. The city also has a goal to achieve a 20 percent energy savings in municipal buildings by 2020 from a 2008 baseline.
In 2013, according to Seattle City Light, the city spent $39 million on electric-efficiency programs, representing 5.6 percent of its annual revenue.
Neil Bavins, president of PSR Mechanical in Seattle, said construction is finally returning to his community, though he feels Amazon and multifamily dwellings have soaked up a lot of that work.
“We’re lucky, as Seattle’s been one of the stronger markets in the country,” he said. “Boeing never slowed down; it’s doing great, which fuels a lot of spin-off activity. And, while we don’t do a lot of business directly with Boeing, we do business with its vendors and suppliers, and that’s true with many of the industry leaders here.
“We’ve been fortunate that many of the local drivers are companies that recovered quickly, such as Starbucks, Amazon, Boeing, Microsoft, and a lot of other tech businesses. PSR Mechanical is very service-focused, so we tend to weather the storm better but recover slower. I’m hopeful we’ll experience more growth in the mid-size commercial market soon.”
While the economy may be on the incline, Bavins said those doing business in Seattle know they have to leave exceptionally early to arrive on time.
“We have some of the worst traffic and transportation systems in the country, and nobody seems to be in a hurry to fix it. We have a thriving economy that needs better infrastructure; we need to invest more in our future and stop acting so short term.”
St. Louis ranked 33rd on ACEEE’s Local City Scorecard.
The community’s stated goals are to reduce community-wide greenhouse gas emissions 25 percent below 2005 levels by 2020 and 80 percent below 2005 levels by 2050. According to data in St Louis’s 2005 and 2010 Greenhouse Gas Emissions Inventory Report, the city reduced its community-wide greenhouse gas emissions by 5.6 percent between 2005 and 2010.
Despite its lofty goals, data reveal the city is not currently on track to meet its community-wide GHG goal for 2020.
Much like its GHG progress, Butch Welsch, owner of Welsch Heating and Cooling Co. in St. Louis, said business growth has been slow.
“Over the last five years, business has generally been steady, increasing slightly in volume, but with a concentration on increasing profitability,” he said. “Much company net worth was lost in 2008-2009, and we are now recovering.”
To help overcome the damage caused by the Great Recession, Welsch expanded his company in two areas and reduced its presence in one.
“We limited the amount of new residential tract [subdivision] building we were doing, mainly due to the presence of an extremely low-priced, low-quality union contractor that’s essentially ruined the market,” he said. “In order to maintain volume, we’ve put more emphasis on two types of business. One is the architectural sheet metal market. A major player in the field went out of business five or six years ago, and since we have the skilled labor to perform that type of work, we’ve expanded significantly in that area. There are very few, if any, non-union shops capable of performing this type of highly skilled work, and those union contractors who are in that market realize they have a rare commodity in the skilled labor they have so they do not give their work away.”
St. Louis reported a budget of $3.68 million for its building code department in 2013. This level of spending normalizes to $174 per $1,000 of residential construction spending for the city.
“From a regulation/code standpoint, our biggest challenge is that we have 96 different municipalities, many with their own code-enforcement officials. Naturally, these officials do not always interpret the codes in the same way,” said Welsch. “Sometimes, it’s difficult to determine the municipality in which a home is located and then which codes apply to that area.
“We have a great deal to offer in the way of central location, skilled workforce, major league teams, etc.,” continued Welsch. “However, we need the various political entities to put aside their egos and go after the jobs, regardless where in the area the company chooses to locate.”
SIDEBAR: Technician Shortage — A National Epidemic
Nearly every contractor interviewed for this article identified a lack of qualified workers is one of their most pressing concerns.
“The strong technical schools are graduating good candidates for careers in the industry; however, they cannot meet the demand,” said Brett Grendahl, CEO of Grendahl Mechanical LLC in Edina, Minnesota. “One local instructor, an old-timer, told me he tells students this is the best time ever to get into this industry, and I share that opinion.”
There is an acute shortage of trained, skilled workers in the available talent pool, said Gregg D’Attile, CEO and owner of Art Plumbing AC & Electric in Coral Springs, Florida. “Baby boomers are retiring, resulting in huge gaps in the skilled trades of plumbers, electricians, and HVAC technicians. The young people coming into the trade do not have the patience to wait four years to be trained. We need to develop a faster training system to move the young people forward at a faster pace — say 18 months to two years.”
Neil Bavins, president of PSR Mechanical in Seattle, said he’s always hearing stories about how the latest generation lacks work ethic, and he feels those claims are highly exaggerated.
“I think there are more good young people out there than most contractors realize, but you do have to help them find their way, and you may have to be more patient than you were in the past,” he said. “There are so many choices for young people these days that they get overwhelmed, and it’s difficult to move forward at times. Back in the day, you did what your dad did, which simplified things. Now, you can be whatever you want to be.”
Bavins said he can typically find the right people, but once they’re trained, they head off and someone else reaps the benefit of his training investment. “It’s tough making staffing commitments when you’re dealing with the roller coaster ride of construction,” he said. “Luckily, the steady growth of our service business is making these decisions easier.”
Mike Agugliaro, owner of Gold Medal Service in Brunswick, New Jersey, said he’s having the direct opposite experience, as he deems the talent pool “amazing.”
“I don’t believe it when people tell me they can’t find qualified HVAC employees,” he said. “We know how to identify and find the perfect employees we want and need — that’s an area where other companies struggle. We don’t look for a diamond; we look for a diamond in the rough. That’s someone who has a lot of skill and a great personality. With a little bit of training, coaching, and managing, I can turn them into Olympians.”
For more information on the ACEEE Local City Scorecard, visit http://database.aceee.org.
Publication date: 11/16/2015