Design Cost Data ™ A DESIGN COST DATA COMPANY Designing for Today March-April 2023 $20.00 Sustainable and Energy Efficient - The Net Zero Home Evolving Estimating Challenges in the Post-Pandemic Era Construction Forecasters Remain Cautiously Optimistic About This Year 2023 Trends: Back to the Future with Adaptive ReuseGet wall-like R-values — with the aesthetic and daylighting benefits of glass. With VacuMax™ vacuum insulating glass (VIG) by Vitro Architectural Glass, it’s possible to achieve R-values as high as R16 in a nominal 1-inch insulating glass unit. VacuMax™ VIG —the ultimate thermal insulation in a window. Learn more at VacuMaxVIG.com R16R16 These R the sameVolume 67 - Number 2 March-April 2023 CONTENTS COST CASE STUDIES 41 44 Decarbonization for the Health Care Sector 45 Top 10 States for Green Building SUSTAINABLE CONSTRUCTION COVER STORY 19 CIVIC 11 Miami Township Fire House 30 Crozet Western Albemarle Library 37 Palmetto Branch Library EDUCATIONAL 33 Jack Williamson Liberal Arts Center 41 Bowling Green State Univ. Rec. Center 46 CSU Stanislaus Student Center INDUSTRIAL 19 Mountain Ridge Metals MEDICAL 25 North Caddo Medical Center 49 Peachtree Orthopedic Clinic 54 Stormont Vail Health 1411 ECONOMIC OUTLOOK 28 Construction Forecasters Cautiously Optimistic 36 AGC Construction Economy 36 AGC Data Digest 47 Dodge Momentum Index 62 Regional Wage Rates 63 BNi Construction Material Costs 2023 DESIGNING FOR TODAY 10 Spaces Coworking Concept 14 Net Zero Home — Sustainable & Energy Efficient 22 2023 Trends: Back to the Future with Adaptive Reuse 39 Cottage ADU Impact Report 48 Residential Renovations 53 Metal Roof Panels 57 Design Trends INDUSTRY NEWS 7 Western Governors on the Importance of Housing 29 Thompson Thrift 32 Historic Quartermaster Campus Conversion 40 Vitro Continuing Education 47 Diamond Age 3-D Printed Homes 52 88% of Construction Workers not in Unions 58 Las Vegas Sands 59 Motorsports Gateway Howell 60 Florida & Arizona — The Best States for Construction ESTIMATING 51 Evolving Estimating Challenges 57 53 59 39 4 /March-April 2023Hands-Free Performance doesn’t have to cost you an arm and a leg FlexSlide ™ Series 2022 If affordability is a concern when specifying sliding door entrance systems, the FlexSlide ™ Series 2022 from FLEX ™ by Horton gives you the dependable performance you desire at a price point you demand. The EPD compliant FlexSlide Series 2022 automatic sliding door provides quality hands-free, contactless pedestrian access for everyday use. The attractive, economically priced sliding door is an ideal solution for a variety of commercial, educational and institutional applications. SPECIFY www.flexbyhorton.comCOVER Photo Courtesy: Oliver Frazier, Suntuity Solar Publisher BARB CASTELLI (barb@dcd.com) Editor-in-Chief JOAN HAMILTON (joan@dcd.com) Editor BILL MAHONEY Estimating Consultant RORY WOOLSEY rw@rorywoolsey.com Art Director ROBERT WRIGHT (robert@dcd.com) Advisory Board JOHN L. JONES JR. VICE PRESIDENT ESTIMATING, SMOOT CONSTRUCTION HEADQUARTERS: Mailing Address: Advertising, editorial, administration, circulation, and production 990 Park Center Dr., Suite E Vista, CA 92081-8352 Tel: 800-533-5680 Advertising: 800-533-5680 STAFF From the Editor This issue of Design Cost Data — focusing on Designing for Today — addresses the hot topics of sustainability, energy efficiency, and eco sensitivity. Two new articles on these subjects include 2023 Trends: Back to the Future with Adaptive Reuse (page 22), and Decarbonization for the Health Care Sector, found on page 44. Evolving Estimating Challenges in the Post-Pandemic Era, on page 51, points out ways that estimators can successfully deal with the sheer volume of work out there. ADUs are gaining in popularity for several reasons, such as a source of additional income, a way of providing as much living space as many apartments and condos, and the flexibility to share independent living areas with family members and others, allowing seniors to age in place as they require more care. Cottage ADU Impact Report: California Demand for ADUs Outpaces Build Completion Rate informs about the lag between built ADUs and the demand for them (page 39), and Design Trends for Today, on page 57, discusses what people want for their home renovations in 2023. Our featured article, Sustainable and Energy Efficient — The Net Zero Home, on page 14, is about how this sprawling nearly 6,000-square-foot, state-of-the-art home was built solely with sustainability, energy efficiency, and comfort in mind. We’re also including our tried-and-true square-foot cost studies of new buildings and renovation projects submitted by your peers. Some other projects covered include: • Mountain Ridge Metals (page 19), and how, with a 16-month lead time, they had a new facility built that included space for new equipment, a new office headquarters, improved amenities for their employees, and room for future growth; • Miami Township Fire Department Station No. 69, on page 11, is a new 17,000-square-foot facility that includes three apparatus bays, two mezzanines, six bunk rooms, a large training room, hose tower, and training facilities; • Palmetto Branch Library (page 37) not only improves the current library facilities, it also provides solutions to reach areas without easy access to low-cost media/publication sources. Thank you for choosing this issue of Design Cost Data. Please give us a call or email us if you have any questions, comments, or suggestions. We’d love to hear from you! 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All unsolicited material should be accompanied by SASE. 6 /March-April 2023T he Western Governors’ Association (WGA), a bipartisan organization that represents the governors of 22 of the westernmost states and territories, has issued an official policy resolution stating that, “Housing is foundational to the success of the West.” “As a long-standing partner and supporter of WGA, NAHB commends the WGA for making housing and home ownership an important national priority,” said NAHB Chairman Jerry Konter, a builder with over 40 years of experience in residential construction, based in Savannah, Georgia. “We look forward to continuing to work with WGA to provide attainable, affordable housing for all Americans.” Declaring that “housing is foundational to economic development and community vitality,” the WGA’s resolution recommends actions to improve federal housing programs and resources, particularly the Low- Income Housing Tax Credit (LIHTC), so that they function more effectively for western states and territories. The West has undergone extraordinary growth in recent years. According to the 2020 U.S. Census, the region has experienced population growth of 9.2 percent from 2010 to 2020 — the second highest rate nationally — with more than 78 million new residents. The three fastest growing states by percentage, Utah, Idaho, and Colorado, are all western states. In addition, towns with less than 5,000 people in the Rocky Mountain and coastal areas of the West have experienced the highest nationwide population growth rates at 13.3 percent. The COVID-19 pandemic accelerated and spurred several noteworthy trends. Over the past 10 years, moves to large and expensive cities have reached a plateau in favor of smaller cities and suburbs. The U.S. Census reports that while overall moving rates continued to decline, starting in 2021, the West began to see a dramatic increase in net migration to the region. This growth in the West has led to housing shortages in communities large and small. Shortages have been exacerbated by the Great Recession, development delays and stops, and a lack of workforce, which has resulted in a housing slump leaving communities across the West struggling to keep up with demand and a near-record rise in the number of American homeowners. As the market began to recover, the spread of COVID-19 hit builders with similar issues, including supply chain delays and a workforce deficit. According to the Federal Reserve, while home sales have boomed, the number of active housing listings in January 2022 dropped to its lowest in at least five years — 60 percent below the number on the market just two The Western Governors’ Association on the Importance of Housing years previously —causing home sale prices to skyrocket. Nationally, prices have increased by nearly 20 percent, with the West seeing some of the greatest increases. The West’s natural beauty brings people from across the nation and globe. While western states welcome the growth in remote workers and visitors to tourism and outdoor recreation-based economies such as resort towns and gateway communities, unmanaged growth has caused “big city” issues for some areas. Rural communities face unique challenges when addressing housing issues. Construction costs in rural areas are often higher than in urban areas and are further compounded by a lack of critical infrastructure. There are limited numbers of investors and contractors who are willing to mobilize or invest in small communities, making the cost of new or improved /March-April 2023 78 /March-April 2023 housing too high for middle-income residents. Rural areas can also lack access to lenders and credit, which reduces funding for the production of new units and the maintenance of existing housing stock. As a result, a disproportionate amount of the nation’s occupied substandard housing is in rural communities. According to the U.S. Department of Agriculture (USDA), approximately 500,000 of its multifamily housing properties will need a total of $5.6 billion in investments to maintain suitable living conditions for residents. Despite a recognized need for more housing and housing of different types, existing homeowners often oppose increasing the housing supply in their communities, especially the construction of denser housing. This opposition and the signal it sends to city leaders, zoning boards, and planning commissions, represents a significant impediment to addressing the housing shortage and can lead to restrictive local land use regulations. Some western communities are addressing these challenges in part through the development of communities that combine housing of different types and sizes with commercial properties in ways that promote affordability, walkability, diver-sity of homeowner type, and a higher quality of life. In downtown submarkets and dense neighborhoods, apartment absorption rates show that landlords are quickly leasing vacant apartment units, driving strong rent costs. From October 2020 to October 2021, rental costs increased 15.9 percent, with the median cost of advertised rentals rising to above $2,000 for the first time. Rental occupancy, new lease signings, and lease renewal rates show strong growth, indicating an increase in rental demand across the market. The West plays a strong role in this growth, with half of the top twenty predicted strongest markets in 2022. All available data suggests that homelessness, including among families with children, has risen during the current housing crisis, likely attributed to surging rents, which compound personal and societal causes of homelessness. Housing is foundational to economic development and community vitality. In the long run, it is more cost effective for public systems to house those in need with wrap-around service. Models like permanent supportive housing or transitional housing with supportive services keep residents off the streets and provide upstream interventions that lessen costs for justice and health systems. The need for a greater diversity of housing options goes beyond the obligation to treat people with dignity, as it is also cost effective for governments. The HOME Investment Partnerships Program (HOME) and the Housing Trust Fund are federal housing programs administered by the Department of Housing and Urban Development (HUD). HOME is the largest federal block grant to state and local governments for affordable housing. It provides formula grants for building, buying, and rehabilitating affordable housing or direct rental assistance to low-income households. The Housing Trust Fund provides grants to states to develop and preserve affordable housing for extremely low- income households. Although both programs are administered by the same agency, they have separate environmental review requirements. Some projects utilize both programs, resulting in a taxing process that can yield conflicting results. Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) requires recipients of HUD funding to direct employment, training, and contracting opportunities to low-income individuals and the businesses that employ these persons. Davis-Bacon and related acts require federal government construction contractors on covered public buildings and public works to pay the prevailing wage to laborers. Applying Section 3 or Davis-Bacon to multifamily projects significantly increases the administrative burden of projects. In tight construction markets in the West, affordable multifamily projects often struggle to find contractors willing to accept the regulatory burden. These projects receive far fewer bids than non-federal projects and frequently face higher construction costs. An Oregon affordable housing cost driver study found that prevailing wage determinations, some related to Davis- Bacon, increased costs by nine percent when controlling for other factors. The Federal Housing Administration (FHA) insures mortgages on single family homes, multifamily properties, residential care facilities, and hospitals and is critical to sustaining and financing affordable housing across the nation. However, it has become increasingly arduous to work with FHA and its third-party contractor. A significant amount of time and effort is expended on delinquency reporting, filing claims, and the foreclosures process due to a lack of guidance, staffing shortages, and antiquated technology. Applicants must navigate multiple systems for delinquency reporting and filing claims and interpret handbooks if they have questions, as FHA no longer has state staff to consult and is frequently unresponsive to requests for guidance. FHA determines lending limits annually based on median house prices, a percentage of the national conforming limit, and the county in which the property is located. In rural areas and non-disclosure states, there may not be current sales data or information may not be public, which generally means loan limits are not raised in spite of the fact that prices have increased. Private Activity Bonds (PAB) are used to develop affordable housing and provide mortgages to low- and moderate- income homebuyers, allocated from the federal government with Congressionally-set caps. Many states in the West have hit their PAB cap, meaning their ability to advance housing solutions and leverage state and local funds is limited. Additionally, the PAB cap restricts the use of the four percent Low Income Housing Tax Credit (LIHTC) because 50 percent of these developments must be funded with PAB. States that invest state and local resources in housing development are unable to fully leverage federal funds, creating the perverse disincentive of limiting how much state and local partners invest in housing. The Community Development Block Grant (CDBG) Program, administered by HUD, provides flexible resources to states and localities to fund housing and economic development opportunities for low- and moderate-income communities. For single-family residential projects, HUD requires states and localities to identify all properties for funding upfront, and these communities struggle with getting contractors and finding the workforce to do everything at once. The burden of administration is also extremely high and there is a tremendous amount of risk involved with the cost of compliance for CDBG. Audits may occur years after funding has been disbursed and projects have begun, and states and localities must bear the costs if projects are not compliant. Federal formulas for funding do not always function effectively for states. While costs for projects have grown significantly and federal funds are often crucially important to offsetting these extreme per unit costs for affordable units, minimum allocations have stayed relatively constant. In addition, some programs utilize formulas that have been designed for other programs. For example, the traditional Emergency Solutions Grants (ESG) Program uses the CDBG formula despite the vast differences between their program goals. Although the traditional ESG formula is effective at making allocations quickly, it does not adequately serve places with homelessness needs because it is designed to address more general community development needs. The ESG formula used for the second wave of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding was more aligned with program goals and led to more targeted investments to drive improved outcomes. Rural states often receive the minimum allocation of federal grant funds. Consequently, they receive a much smaller administrative allocation (even though every project must follow the same steps and require the same administrative responsibilities as more populous states). Insufficient administrative funding makes it difficult for these states to leverage federal housing programs. CDBG-Disaster Recovery (CDBG-DR) funds require Congressional allocation, which delays implementation of recovery activities. In addition, the program is not well suited to support the immediate needs of wildfire recovery. Homes are a total loss in wildfires, unlike floods or hurricanes, and infrastructure needs are beyond what CDBG-DR can support. Manufactured and modular homes could help address the housing shortage in the West. These prefabricated structures are partially or fully constructed in off-site factories which makes them affordable housing options because they are significantly less expensive and faster to build. Manufactured homes are built to HUD standards and are moveable, while modular homes are held to local, state, and regional building codes for on-site homes. While there is a huge opportunity for growth in this industry, regulatory barriers threaten to dampen or halt their expansion. A recent Department of Labor (DOL) proposal to expand the “site of work” definition for Davis-Bacon could drive up costs for manufactured and modular housing, making it harder for Americans to access affordable housing. Affordable and quality housing is essential for an effective military and the recruitment and retention of military personnel and civilians. On military bases, the government provides single and unaccompanied military installation housing rent- free. There are also houses on bases, which are commonly privately-owned. The federal government provides military personnel with a Basic Allowance for Housing (BAH) to offset the costs of renting these houses or renting or buying off-base housing. Civilians do not receive a BAH, but they are allowed to utilize base housing if it is available. BAH rates are set by surveying the cost of rental properties in each geographic location. However, the Government Accountability Office (GAO) has noted that these rates do not always accurately reflect the cost of suitable housing for service members. Furthermore, GAO has reported that remote military bases typically lack critical services and amenities, prompting personnel and civilians to search for housing in communities that are farther away or to commute long distances to access them. Western Governors’ Policy Statements • The Western Governors’ Association urges Congress to pass legislation lowering the threshold of PAB financing from 50 percent to 25 percent to infuse equity into local economies, which would result in an immediate increase in affordable housing opportunities and hundreds of thousands of additional homes being built or preserved. • Inflation, increased material costs, and labor shortages are already constraining affordable housing development. Western Governors urge the federal government to reduce the administrative burden associated with federal housing programs to better facilitate and expedite affordable housing development, using the U.S. Department of the Treasury’s (USDT) administration of the Emergency Rental Assistance (ERA) Program as a model. Reducing administrative burdens would enable affordable housing to compete on a more even field. Specifically, Western Governors support subsidy layering review and efforts to streamline the National Environmental Policy Act or use other environmental reviews in its place and urge HUD to streamline environmental review requirements for the HOME and Housing Trust Fund Programs so that projects utilizing both programs only have to complete one review. The Governors also encourage DOL to consider providing Davis-Bacon waivers for multifamily projects in small and rural communities, which often have a limited pool of contractors. • Western Governors request that HUD change provisions of 24 CFR 92.241(b) requiring property rehabilitation to adhere to strict minimum property standards for the HOME Program. Flexibility and discretion for rehabilitation funding would allow states to make critical improvements to the housing stock without projects dying due to the identification of other, less critical problems during HOME assessments. • Western Governors urge Congress to appropriate funding to FHA to upgrade their technology and processing systems. We recommend that FHA streamline its cumbersome claim filing process by creating one efficient, centralized, and modern claim system. • In addition, FHA should provide ongoing and up-to- date guidance to state and local housing authorities or authorize and train its third-party contractor to provide guidance to state and local housing authorities to avoid costly consequences that hinder housing improvements in states. Western Governors also encourage FHA to consider having designated state staff — again to improve communication and coordination between states and the federal government. • Western Governors request that the federal government support state housing finance and public housing agencies and explore ways to improve the services and resources provided to them. • Western Governors encourage HUD to review and allow for alternative processes in nondisclosure states to address the increasing price of housing and adjust loan limits accordingly. • The federal government should enable the LIHTC Program to work more effectively for underserved communities, including rural, tribal, high-poverty, and high-cost communities, as well as extremely low-income and formerly homeless tenants. Western Governors encourage the USDT and HUD to ensure that they better preserve the nation’s existing affordable housing inventory by simplifying and aligning program rules. In addition, they recommend that the federal government reauthorize the expansion of nine percent low-income housing tax credits that expired at the end of the 2021, and move forward by increasing Housing Credit allocations by 50 percent to help meet the need for affordable housing. • The federal government should review and adjust the formulas that determine minimum allocations granted to states for housing programs — including the Housing Trust Fund, the LIHTC Program, and the HOME Program — to account for the high administrative and regulatory costs associated with these programs. Increased allocations would allow the states to produce more impactful projects. In addition, federal formulas should include data elements that directly relate to program goals, especially for the ESG Program, to ensure federal funding serves those who need it most. • Western Governors call for HUD to add a flat administrative fee for minimum allocation states in addition to the percentage amount for administration that is granted to them. Although projects in these states tend to be smaller, /March-April 2023 9Next >