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7.A. - Page 3 of 285 Affordable Housing: How will Reach Codes impact affordable housing developers? Have we spoken with any of those developers? There are two costs to consider regarding Reach Codes and affordable housing projects - construction/capital costs and operational costs. Construction Costs • Affordable housing projects are subject to a maximum allowable cost per unit depending on the applicable fund or tax credit. Due to the current cost of construction in the Bay Area, many affordable housing projects are close to those thresholds. Certain Reach Code requirements could make projects infeasible. For example, there can be additional costs associated with upsizing electrical transformers as would be required by Pacific Gas & Electric (PG&E) due to the additional electrical load. In another example, the number of units could be affected if space is needed for an upsized transformer or for water storage related to centralized water heating systems. • There are some examples of recently constructed all -electric affordable multifamily buildings in California. These buildings are typically less than 70 units, since there can be constructability issues for larger residential buildings as will be discussed below under Exception 7. For example, MidPen Housing recently constructed a 66 -unit all -electric building in Sunnyvale. MidPen was awarded a grant for this project which eliminated many of the added design and construction costs for going all -electric. Nonetheless depending on project type, PCE has indicated that they will provide technical assistance for optimal design and cost-effectiveness in constructing all - electric buildings. • For EV Charging, PCE will provide incentives for EV infrastructure for affordable housing new construction and, in addition, the model code includes an exception for affordable housing that reduces the amount of Level 2 EV Ready required and associated electrical infrastructure costs. A Level 2 outlet is a 240V outlet similar to that used for a clothes dryer or oven. The Menlo Park model allows for exceptions on a case by case basis if technically infeasible due to site constraints, or if a project consists of 100% Below Market Rate housing. PCE's EV infrastructure incentive program is set to launch in 2020. Operating Costs • Operationally, property managers for affordable and market -rate multi -family buildings have noted they anticipate increased costs for maintenance of all -electric water and space conditioning systems, and increased electric utility costs due to PG&E's pricing model. It should be noted, that cost effectiveness studies supporting the adoption of Reach Codes only consider construction and capital costs, not ongoing operational costs. How these costs are distributed to tenants is not yet certain. PCE has indicated that operational costs could be reduced with increasing the photovoltaic panel square footage requirement. However, this could potentially affect the design of buildings should there be interest in active rooftop spaces for tenants. Accessory Dwelling Units: How would Accessory Dwelling Units (ADU) be affected by the implementation of the Reach Codes? • Under some circumstances panel or service upgrades may be required for all -electric ADUs, increasing costs and inhibiting housing development. Staff and the Board of Building Review recommend that homeowners and developers choose whether to install all -electric or non - Page 3 of 12 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 255