UC Berkeley Report: Efficiency & Energy Code Compliance are Found Money for Local Governments


In this 2014 report from UC Berkeley’s Center for Resource Efficient Communities, Municipal Fiscal Impacts of Building Energy Efficiency in California: A Guidebook for Local Officials, report authors review the impact of the state’s natural gas-related efficiency standards, and share their findings. Excerpts from the Executive Summary are below: the report is available in full here.

Key findings include:

  • The budgets of local governments and special districts, over time, earn back about $3.79 for every dollar that municipalities spend to enforce Title 24, Part 6 building energy standards related to natural gas – in other words, almost a 4:1 fiscal benefit-cost ratio for local government as a whole.
  • Within this total, cities and counties earn back about $1.84 for every dollar that they spend to enforce Title 24, Part 6 building energy standards related to natural gas.
  • These benefits to local government arise mostly from increased property tax revenues, especially for commercial property, that result from property value increases stimulated by natural gas efficiency. Other documented sources of benefits to local government budgets are increased sales tax revenues from household energy savings redirected into purchases in the local economy and from job creation, and avoided health impacts and productivity losses among local government workers.
  • Other benefits not estimated in this report due to insufficient data include tax revenue enhancements from indirect job creation from redirected energy savings; tax revenue enhancements resulting from the sale of equipment and materials used in building energy efficiency improvements; avoided climate change impacts; and local governments’ own direct savings from reduced energy usage in their own building stock. Inclusion of these benefits would likely push the overall fiscal benefit-cost ratio well above 4:1. In addition, this estimate includes the costs to enforce building energy efficiency standards as a whole, not just the natural gas components, making the overall net fiscal benefit estimates for natural gas more conservative than they would otherwise be.
  • For any given building or set of buildings, the cost borne by local building departments for building code enforcement occurs once, but most of the benefits described above accumulate continually for decades. This is the main reason why fiscal benefits, over time, significantly outweigh fiscal costs.

There are substantial additional benefits to local property owners, the local economy, public health, and the global climate over and above these municipal fiscal benefits. But even if budgetary impacts were the only consideration, this report shows that vigorous enforcement of building energy standards is “found money” for local governments. Municipalities should re-double their enforcement efforts, and strive to remove existing barriers to higher compliance rates throughout the state, to take full advantage of these benefits.

Keep reading UC Berkeley CREC’s report here.

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