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V.2. Proposed Adoption of a Hopkins Sustainable Building Policy 1 P&Z Report 2025-04 To: Planning and Zoning Commission Members From: Kurt Howard, Planner Date: March 25, 2025 Subject: Proposed Adoption of a Hopkins Sustainable Building Policy _____________________________________________________________________ REQUEST Staff proposes for adoption a Hopkins Sustainable Building Policy. RECOMMENDATION The Planning and Zoning Commission is asked to: 1. Hold a Public Hearing on the proposed Hopkins Sustainable Building Policy for comment on the regulations. 2. Consider comments by the public, stakeholders, and Staff. 3. By motion approve a Resolution recommending the City Council adopt the proposed Hopkins Sustainable Building Policy. ANALYSIS Background Sustainable building policies are tools used by local jurisdictions to increase the degree to which new development contributes to improvements in public health, environmental justice, and environmental and economic sustainability. This is accomplished by requiring, incentivizing, or encouraging development to occur in ways that reduce carbon emissions, reduce waste, protect natural areas, mitigate stormwater runoff, and contribute to other sustainability goals. A sustainable building policy holds potential to advance the following documented goals for the City of Hopkins: • The Cultivate Hopkins 2040 Comprehensive Plan encourages sustainable practices in locating, designing, constructing, and maintaining development in the city, with an associated strategy of exploring implementation of heightened development review through sustainable building regulations. • Adopted in May of 2024, the Hopkins Energy Action Plan identifies sustainable development as one of four focus areas for achieving Hopkins’ desired energy future, with an associated strategy of developing a Hopkins Sustainable Building Policy Planning & Development CITY OF HOPKINS 2 • The City Council’s formally adopted Goals and Strategic Action Plan for 2024 identifies an action step of exploring a sustainable building development policy. At the end of 2023, the City Council directed staff to develop a Hopkins Sustainable Building Policy. With the support of funding from Hennepin County and subject matter expertise from staff at the Center for Energy and Environment, staff developed the policy that is now proposed for adoption and detailed below. Overview of Proposed Policy The key components of the draft Hopkins Sustainable Building Policy involve: • Policy Triggers: these control which types of development are subject to the policy. • Third-party rating systems: developments subject to the policy are required to achieve certification from at least one approved third-party sustainable building rating system. • Hopkins universal requirements: must be met by all developments subject to the policy regardless of which third-party certification is achieved. Policy Triggers Policy triggers enable to cities to determine what scales and types of development a sustainable building policy should apply. This helps strike an effective balance between the sustainability goals of the policy and the financial feasibility of new development. The Hopkins Sustainable Building Policy is proposed to apply to a development if it meets all the following: • It is new construction, AND • It is at least 15,000 square feet or has 20 or more residential units, AND • It meets at least one of the following criteria: o It is publicly owned, OR o It is requesting discretionary land use approvals, including Planned Unit Development (PUD), Rezoning, or Comprehensive Plan amendment, OR o It is requesting over $300,000 in City financial assistance, such as Tax Increment Financing, land write-downs, grant dollars from other organizations that pass through the City, etc. Third-Party Rating Systems Incorporating existing third-party rating systems into the policy helps establish a level of standardization across the policies of different cities in Minnesota, reduces the administrative costs of implementing the policy, and covers many of the fundamental bases of sustainable building design, including energy efficiency, greenhouse gas reduction, use of renewable energy, stormwater mitigation, and electric vehicle (EV) infrastructure. The list of eligible third-party rating systems for developers to select from include: • U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) • Minnesota Sustainable Building Guidelines (B3) 3 • Enterprise Green Communities • Green Communities - MN Overlay • Other rating systems as approved by staff Universal Requirements The city-specific universal requirements component of a sustainable building policy gives cities the ability customize their policy to reflect the unique sustainability goals of the community, helps fill any gaps not covered by the third-party rating systems, and also ensures that certain priorities are advanced with every project to which the policy applies. The universal requirements currently proposed for a Hopkins Sustainable Building Policy include: • Reporting Predicted Greenhouse Gas Emissions • Evaluating feasibility of o Installing a cool or green roof OR o Sourcing 2% of energy with on-site renewable energy. Install if cost- effective according to B3 guidance • Install or make EV-ready 5-10% of parking spots based on land use type. • Evaluate feasibility of activities from low-salt design checklist. Community Input and Engagement: Beginning in October 2024, staff undertook a stakeholder engagement process to seek input and feedback regarding the policy. The feedback received through stakeholder engagement includes: • It is critical to ensure that the hard and soft costs of complying with the policy be proportional to the financial and/or land use incentives received. • Concerns about raising project costs and the ability for developers to predict cost impacts. • Interest in adding certification programs, including the U.S. Department of Energy’s Zero Energy Ready Home program and Phius Core. • Commentary on pros and cons of proposed certification programs. • Positive reinforcement for pursuing a sustainable building policy. Engagement Activities: • In-person community engagement at the Fire Station Open House on October 12, 2024 • Discussion at the Hopkins Planning and Zoning Commission meeting on October 22, 2024 • Discussion at the Hopkins Park Board meeting on October 28, 2024 • Direct outreach to development community. • Published notice of this public hearing in the City’s official paper. • The Planning and Zoning Commission’s public hearing. Alternatives: The Planning and Zoning Commission could consider the following alternatives: o Recommend approval of the proposal. • Recommend modifications the proposal. • Recommend denial of the proposal. 4 NEXT STEPS The City Council will consider the Planning and Zoning Commission’s recommendation at their April 1st meeting. The Council may vote to approve a first reading of the Ordinance. A second reading of the Ordinance is required to make it official. CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA PLANNING & ZONING COMMISSION RESOLUTION 2025-03 RESOLUTION RECOMMENDING THE CITY COUNCIL APPROVE A THE HOPKINS SUSTAINABLE BUILDING POLICY WHEREAS, the Cultivate Hopkins 2040 Comprehensive Plan encourages sustainable practices in locating, designing, constructing, and maintaining development in the city, with an associated strategy of exploring implementation of heightened development review through sustainable building regulations.; and WHEREAS, the Hopkins Energy Action Plan identifies sustainable development as one of four focus areas for achieving Hopkins’ desired energy future, with an associated strategy of developing a Hopkins Sustainable Building Policy; and WHEREAS, the Hopkins City Council’s formally adopted Goals and Strategic Action Plan for 2024 identifies an action step of exploring a sustainable building development policy.; and WHEREAS, the written comments and analysis of City staff were considered. NOW THEREFORE BE IT RESOLVED, that the Planning & Zoning Commission of the City of Hopkins hereby recommends the City Council of the City of Hopkins approve an ordinance adopting a Hopkins Sustainable Building Policy. Adopted this 25th day of March, 2025. ___________________________ Whitney Terrill, Chair CITY OF HOPKINS HENNEPIN COUNTY, MINNESOTA ORIDNANCE 2025-1224 AN ORDINANCE AMENDING PART 2, CHAPTER 8 OF THE HOPKINS CITY CODE TO ADOPT A HOPKINS SUSTAINABLE BUILDING POLICY THE CITY COUNCIL OF THE CITY OF HOPKINS HEREBY ORDAINS AS FOLLOWS: SECTION 1. Hopkins City Code, Part II, Chapter 8 is hereby amended to add Article VIII, to read with the double-underlined language after as follows: Article VIII. - Hopkins Sustainable Building Policy Sec. 8-321. – Applicability. The Hopkins Sustainable Building Policy applies to a development if it meets all the following: (a) It is new construction, AND (b) It is at least 15,000 square feet or has 20 or more residential units, whichever is greater, AND (c) It meets at least one of the following criteria: i. It is publicly owned, OR ii. It is requesting discretionary land use approvals, including Planned Unit Development, Rezoning, or Comprehensive Plan amendment, OR iii. It is requesting over $300,000 in financial assistance from Tax Increment Financing, City land write-downs, the Housing Redevelopment Authority, Local Affordable Housing Aid, Hennepin County grants, Minnesota Department of Employment and Economic Development grants, or property tax abatements. Sec. 8-322. – Sustainable Building Rating System. All applicable projects must certify the project under the current version of one of the following rating systems and levels: (a) LEED Building Design and Construction or LEED Residential BD+C Multifamily Certified Silver, Gold or Platinum (b) State of Minnesota B3 Guidelines Certified Compliant (c) Enterprise Green Communities Certification or Certification Plus (d) Equivalent rating systems with prior staff approval Sec. 8-323. - Hopkins Universal Requirements. All applicable projects must comply with the following Hopkins Universal Requirements: (a) Calculate predicted greenhouse gas emissions and report to City staff (b) Evaluate feasibility of sourcing 2% of energy with on-site renewable energy and install if cost-effective by B3 guidance OR evaluate feasibility of installing a cool or green roof through a similarly developed cost effectiveness assessment as used for the B3 renewables guidance. (c) For 5-10% of parking spots, install electric vehicle charging equipment or make EV-ready. Exact requirement is based on land use type. (d) Evaluate feasibility of activities from the City of Hopkins’ low-salt design checklist. Secs. 8-324 – 8-340 – Reserved. SECTION 2. The effective date of this ordinance shall be April 24, 2025. First Reading: April 1, 2025 Second Reading: April 15, 2025 Date of Publication: April 24, 2025 Date Ordinance Takes Effect: April 24, 2025 By:___________________________ Patrick Hanlon, Mayor ATTEST: _______________________________ Amy Domeier, City Clerk Achieving Sustainability in the Built Environment Cities throughout Minnesota seek to improve public health, environmental justice, and environmental and economic sustainability. Many cities are taking advantage of building-related strategies to reduce carbon emissions and waste, protect natural resources, and mitigate stormwater runoff. With a sustainable building standard, cities can use public financing and their authority over land use to make meaningful progress toward achieving their sustainability goals. Leveraging financial and land use incentives, a sustainable building policy establishes minimum sustainability criteria that go beyond existing state code for new construction and redevelopment. Included sustainability criteria typically target reducing pollution and conserving resources. This policy would be voluntary for developments not seeking those incentives. What are the Benefits? • Supports Hopkins’s Energy Action Plan goal of cutting an extra 40% of energy-related greenhouse gas emissions by 2028, saving the community $1.9 million and reducing an additional 2,008 metric tons of carbon dioxide equivalent compared to business as usual. • Ensures high value of housing and building stock • Provides greater access for high quality, environmentally-friendly housing • Promotes energy independence To support our climate action plan goals and building investment, the City of Hopkins is proposing a sustainable building policy. Hopkins Sustainable Building Policy Proposed Policy Framework The proposed sustainable building policy would apply to projects that have received special land use approval or receive eligible public funding. Compliance with the policy would be based on the amount of funding received and size of the project. The policy would be structured to give developers the power to choose their preferred third-party rating system based on building type, as well as their expertise and experience. Joining Sustainability Leaders Hopkins will be joining the cities of Duluth, Maplewood, Minneapolis, Saint Paul, Saint Louis Park, Northfield, Eden Prairie, Edina and Rochester who all have a formal sustainable building policy. The cities of Saint Paul and Saint Louis Park have been implementing their policies for more than 10 years, providing multiple local examples of successful policy implementation. Proposed Policy Details Policy Triggers New construction and redevelopment projects that receive special land use approvals - OR - receive more than $300,000 in funding from the following funding sources will trigger the policy: • Tax Increment Financing (TIF) • City land write-downs • Housing Redevelopment Authority • Local affordable housing aid • Hennepin County grants • DEED grants • Property tax abatements Sustainability Rating Systems Developers can select from the following third-party rating systems to adhere to the policy: • LEED • B3 Guidelines • Green Communities • Other rating systems as approved Universal Requirements In addition to building to a sustainability rating system, projects will be asked to: • Report predicted greenhouse gas emissions. • Evaluate feasibility of: o Installing a cool or green roof OR o Sourcing 2% of energy with on-site renewable energy. Install if cost-effective by B3 guidance. • Meet EV standard – install or make EV-ready 5-10% of parking spots based on land use type. • Evaluate feasibility of activities from low-salt design checklist. For questions, contact City Planner Kurt Howard at khoward@hopkinsmn.com This Message Is From an Untrusted Sender You have not previously corresponded with this sender. From:Jim Kumon To:Kurt Howard Subject:Re: Proposed Hopkins Sustainable Building Policy Date:Thursday, March 6, 2025 10:49:42 PM Hi Kurt, Nice to meet you. While I don't have a lot of context for the tradeoffs for putting this policy in place, the number one goal of any such policy on a development project is that it does not incur more hard cost or soft costs to comply with than the revenue provided that triggered the need for compliance. While there are a couple of items here that are pretty direct and easy to predict cost impacts, there are many which have significant cost implications for the reporting or compliance that would probably put a dent in the budget where the incentive is trying to probably be used to offset other costs (depending on the order of magnitude of the incentive $3,000 or $300,000 would be a big swing in expectations). In general, adding these kinds of compliance mechanisms which are not directly tied to the actual costs of greening the project itself run the risk of just increasing costs. The Minneapolis Green Cost share program is a good model because the building gets better directly through measures that help pay for that first cost improvement. Calculating energy savings or emissions is often then able to be calculated by third party agencies like Franklin Energy who are running the Utility programs that the city relies upon (and does not create secondary compliance burden) for ensuring compliance. I would suggest that if you want green outcomes, you'd have to apply some of the resources being provided to get those green outcomes, whether hard or soft costs, not a trade off for something unrelated. Or work with other partners already providing some services such that they are able to complete reporting and compliance for the project free of charge. Tacking on green elements to a project that is fundamentally not on that path will likely result in uneven and inefficient outcomes. In short, unless the developer can clearly see the dollars, the compliance pathway and the timeline that is associated with an incentive, along with those items being right sized and curated toward that product type (residential vs commercial for instance), it would be hard to judge whether the help of the incentive is worth the harm of the strings attached. The policy as written gives me no real parameters for a sample deal or what rules apply to which types or sizes of projects. Having sample pathways for a multifamily residential, vs a warehouse vs a small commercial building along with the typical programs that are already associated with those projects (rating systems or other energy rebates), would make it much clearer. At this juncture it's too broad and too hard to evaluate the best way to comply to provide good feedback. If you can provide a list of the types and sizes of projects that would be the most likely to be subject to these policies, plus the incentives amount range that would go with, a group of developers could probably suggest the best pathway across these types to provide the city guidance for choosing the rating system and the reporting required for each. Hopefully this general feedback is helpful to providing a loop where then more information is also the relevant information in determining these factors. Best Jim On Thu, Mar 6, 2025 at 3:02 PM Kurt Howard <khoward@hopkinsmn.com> wrote: Greetings, The City of Hopkins is considering adopting a Sustainable Building Policy and welcomes your input to help inform a decision. The details of the proposed policy are outlined in the attached handout. You are invited to review the policy and provide any feedback by Tuesday, March 18th. Please feel free to let me know if you have questions or if it would be helpful to discuss. Thank you, Kurt Kurt Howard (he/him) | Planner | City of Hopkins 1010 1st Street S | Hopkins, MN 55343 | 952-548-6339 www.hopkinsmn.com -- Jim Kumon Principal | Electric Housing Minneapolis, MN 612-875-1196 Miles & Associates Inc. Construction Management / Architects 1121 Jackson Street NE Suite 127 Minneapolis, MN 55413 612 328 1981 cell 612 378 4870 office miles@milescm.com www.milescm.com Memorandum To: Kurt Howard From: James Miles Date: March 7, 2025 CC: Re: Hopkins Sustainability Policy I commend Hopkins for considering this policy, I especially am pleased that you are allowing ONE path to be followed, unlike St. Paul which requires multi paths. I’ve worked on many sustainable multifamily projects and here are my comments. • LEED This is a robust but very expensive option and few if any developers will pick this path due to the excessive costs and administrative burden. • B3 Guidelines Again, not a bad option, but in my experience, this pushes projects to all electrification, at the expense of in example exterior insulation. My opinion is that mechanical systems last 15-20 years, but the building envelope is for the life of the building. Weather all electrification is the way of the future can be debated, but no doubt the most energy efficient multifamily building TODAY is gas fired magic paks, out of the question using B3 guidelines. • Green Communities. Requires Energy Star Certification. In Minnesota this dictates the insulation of underground parking garages, a VERY expensive option and the benefit is marginal, with no options, you must do it. This adds 10,000 dollars per unit construction costs with a pay back of 30-50 years. Makes no sense in our climate. This program is also heavy on paperwork. • DOE Net Zero (ZERH) Program Building needs to be wired for FUTURE electric mechanical system Garage does not need to be insulated (1 unit needs to meet Energy Star Certification Standards), common spaces need to meet 2021 IECC Standards. This program gives developers some flexibility with provisions being made for future changes, as economics may dictate. It is low cost (No fees), and a Rater does most of the paperwork. I am hopeful that you will put the ZERH program on your list, if nothing else, it will expose developers to this most important program. Thank you for your consideration.