It took four tries, but Evanston’s contentious Healthy Buildings Ordinance finally prevailed on March 10.
City Council’s 7-1 vote to approve the sweeping restrictions on emissions marked the culmination of a long-brewing effort by its proponents, who argued the ordinance would make Evanston more sustainable. However, the approval came at the chagrin of its critics, who had mobilized a spirited campaign against it.
The dissidents predict that the new rules will raise rent prices and diminish property values in affected buildings in Evanston — particularly in older, steam-heated buildings.
The ordinance requires buildings in Evanston that are over 20,000 square feet to eliminate on-site emissions, become energy efficient and solely use renewable energy by 2050. The ordinance includes municipal buildings exceeding 10,000 square feet.
“We have made pretty good progress reducing our community’s carbon footprint since the first Evanston Climate Action Plan was passed in 2008,” Ald. Jonathan Nieuwsma (4th) said. “But we have not made any progress in reducing emissions from buildings related to the use of natural gas, and we are not going to meet our target of carbon neutrality by 2050 until we reduce natural gas usage in existing buildings.”
The measure aligns with the goals set in the 2018 Climate Action and Resilience Plan for the city to be carbon-neutral by 2050.
The ‘enabling ordinance’
The ordinance does not outline legislation for buildings to cut emissions but instead delegates the implementation to two committees: one group focused on technical aspects and one focused on community impact, Nieuswma said.
“The HBO (is) an enabling ordinance. The ordinance kicks off the process of rulemaking,” he said. “We don’t have detailed rules baked into this ordinance because we can’t make those detailed rules without engaging the impacted stakeholders.”
Nieuwsma said these committees will include experts and stakeholders bringing knowledge about building systems, apartment affordability and other skills that would help the city write rules for the ordinance.
For former mayor Steve Hagerty, this implementation seems backward. Hagerty said details and rules of ordinances are normally determined before the legislation is passed.
“If you want to create a task force or a panel in Evanston, the mayor has the ability to do that instantly, without any of this,” Hagerty said. “If you want to have council support, you pass a resolution.”
Due to the HBO’s lack of specifics and absence of stakeholder collaboration, Hagerty does not support the ordinance. There are too many unknowns, he said.
Hagerty highlighted the potential decline of property values and rent increases as some of the major consequences of the HBO.
“We could see real estate diminution in Evanston among buildings 20,000 square feet or larger. That’s bad for Evanston because when these buildings sell, we get a transfer tax,” Hagerty said. “That transfer tax can be millions and millions of dollars. It’s significant, and I would predict that you will see less real estate transactions of larger buildings here in Evanston.”
However, Nieuwsma said the committees exist to ensure businesses and tenants are not forced out of Evanston.
During the ordinance’s initial stages, the committees will create the rules for performance metrics and alternative compliance under the ordinance. Beginning in 2030, every five years, there will be interim standards that buildings will need to meet until they fully comply in 2050.
For buildings deemed unable to comply, owners can apply for an Alternative Compliance Pathway Plan. These plans are decided on a case-by-case basis and include timeline adjustments and exceptions from interim performance standards.
“If there’s a building, for example, on Northwestern’s campus that needs to use natural gas to feed into some laboratory process, … and they can make a compelling case that they have to use natural gas, fine,” Nieuwsma said. “Then let’s work something out with the alternative compliance.”
Concerns with the ordinance
For many landlords, the measure brings worries about higher rent prices and lower property values.
Daniel Schermerhorn, the president of property management firm Schermerhorn & Co., said he does not support the ordinance because, at least for old steam-heated buildings, it simply can’t be executed without rewiring the entire building.
“It will cost buildings, conservatively, $50,000 per unit to retrofit individual heating systems, and that will require us to raise rents anywhere from $100 to $400 a month, depending upon how much time you want to take to recoup your investment,” Schermerhorn said.
His company owns 12 buildings affected by the ordinance, and Schermerhorn estimates $12 million in renovations of individual unit heating systems and building rewiring will be required to comply.
Schermerhorn said he estimates that every commercial property over 20,000 square feet could lose between 20% and 25% of its value.
“If these properties have their values reduced by 20 to 25%, that means that the real estate tax revenue to the municipality, to the city, to the school, etc., will go down by that same percentage,” Schermerhorn said. “If the school districts are going to meet the requirements of this ordinance themselves, how will they be able to do so when their tax revenue is going down at a time when the school districts are already almost bankrupt?”
Landlord Aron Bornstein echoed Schermerhorn’s concerns, claiming that rent could potentially increase by $500 a month for 10 years to allow landlords to break even with the extra costs.
Though Bornstein said none of his properties are directly affected under the ordinance, he highlighted issues NU may have when implementing it, such as shutting down dorms and raising costs for students to pay the cost of compliance.
“To make a building owner spend this kind of money, it’s going to get included in the rent,” Bornstein said. “Either when you buy the building, you sell the building, the fact that you have to take on the massive project at some point in the near future is going to get factored into the purchase price it’s paid — and is ultimately going to work its way down to the tenant or the student.”
A delayed council run
City Council unanimously introduced the measure on Jan. 13. But as a final vote loomed on Jan. 27, many stakeholders raised concerns about the ordinance.
University President Michael Schill, Evanston Township High School District 202 Superintendent Marcus Campbell, Hagerty and others signed a letter calling for the City Council to delay the vote.
The dissidents wrote that the ordinance would require expensive building retrofits to replace natural gas-fueled appliances and heating systems, which could have significant financial strain for landlords, businesses, schools and hospitals.
Meanwhile, Mayor Daniel Biss gave his approval of the measure during a news conference ahead of the City Council vote.
The council ultimately voted to delay the vote. On Feb. 10, a similar scene unfolded.
After some proposed revisions to the ordinance, the Evanston/Skokie School District 65 and District 202 shifted their stances to support the ordinance. NU remained dubious.
While some NU and ETHS students spoke in favor of the ordinance, realtors and landlords again raised financial qualms about having to update buildings.
“One of the many problems with this ordinance is we don’t know what the rules are,” Bornstein said. “When we don’t know what the rules are, then we have to assume that it’s the worst case scenario.”
Ultimately, the council unanimously voted to table the ordinance until the next meeting to give councilmembers more time to discuss the proposed amendments.
The City Council meeting on Feb. 24 returned similar results, as the council once again postponed the vote on the HBO. The discussion dove into the ordinance’s minutiae, including whether large nonprofits, like NU, should be excluded from the ordinance and if business leaders should be given seats on the ordinance’s committees.
On March 10, City Council green-lit the contentious ordinance 7-1 with some amendments, including offering spots on the committees to local business stakeholders.
Schermerhorn expressed disappointment with the ordinance’s passage but said he was glad that there were guaranteed seats on the committees for stakeholders like him.
Meanwhile, Nieuwsma said he was extremely pleased that the ordinance passed and was excited that its passage showed Evanston takes its push for sustainability seriously.
“I am also very mindful that the work that we’ve done up to this point really only gets us to the starting line, and now the work is going to get even more difficult as we go into the rulemaking process over the next year,” Nieuwsma said.
Email: n.kanieskikoso@dailynorthwestern.com
X: @ninethkk
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— Healthy Buildings Ordinance hits another brick wall at City Council
