A Bolt Out of the Blue: When Air Quality Rules Become Housing Policy

By Wayne Roland, East Bay Rental Housing Association

In the physics of everyday life, there's a not-often-encountered phenomenon in which a bolt of lightning from a thunderstorm travels sideways for such a great distance that it extends well beyond the storm clouds and into seemingly clear skies. It then travels downward and strikes the ground, or whatever else might be in its path, with pretty much the same force as any other bolt of lightning.

It's an unusual and obviously unsettling occurrence. The sky overhead is blue, the storm appears safely in the distance, and yet lightning strikes close by where no one expected it. This rare phenomenon gives us the familiar expression, “a bolt out of the blue.” In everyday life, it has come to describe something that arrives without warning. An event we did not anticipate, a development we did not see coming, something that catches us completely by surprise.

A bolt out of the blue is also the way many property owners are feeling, right about now, concerning rules proposed by the Bay Area Air Quality Management District which would require that all replacements of water heaters and furnaces be electric and not gas.

For many years, California property owners, trade associations and industry groups have monitored the legislative activities of local City Council members, County Supervisors, and the State Legislature to keep abreast of potential new laws that might affect housing. While they’ve not always liked what comes out of Sacramento or City Hall, at least they’ve known where to look…Or so they thought.

Enter the Bay Area Air Quality Management District

The Bay Area Air Quality Management District is an agency most property owners have probably never had occasion to follow. Fewer still would have expected it to play such a potentially consequential role in determining the future cost of owning and maintaining their buildings. Yet that is precisely what appears set to happen.

An agency whose primary mission is controlling air pollution now stands to determine what kind of equipment can replace a failed furnace or water heater, and in some cases, whether substantial building modifications will be necessary to accommodate it.

This is no small matter. What would ordinarily be a relatively simple appliance replacement can potentially escalate into an electrical upgrade and, from there, into a construction project carrying substantial costs the property owner neither anticipated nor budgeted for.

When an Appliance Replacement Becomes a Building Project

Suppose a water heater in a rental property fails. Yesterday there was hot water. Today there isn’t. Traditionally, the solution has been fairly straightforward. Call a plumber, remove the failed water heater, install the replacement, and get the hot water running again.

But what happens when the replacement appliance requires something the building cannot presently provide? Greater electrical capacity, for example, or more space? What begins as a routine replacement can become a costly renovation.

Suddenly the plumber is not the only person who needs to be called. An electrician may be needed to install a new circuit. The electrical panel may lack sufficient capacity and need to be upgraded. The electrical service to the property may be inadequate. The utility company might have to become involved. Permits may be required. Walls may have to be opened to run new wiring. And if the existing water heater occupies a small closet or other confined location, the new equipment may not fit there at all.

What began as a single broken water heaing appliance has become a building project. And building projects have a way of producing building project prices.

Worse at Scale

Apartment buildings introduce another level of complexity. Converting one water heater at one single-family home is one thing. Converting equipment serving several units, or eventually converting multiple appliances throughout an apartment property, can be quite another.

Electrical capacity for one conversion may not be adequate when the same requirement is multiplied across several units. Older apartment buildings may require upgrades to the main electrical service, wiring, or common utility areas, turning individual appliance replacements into a building-wide infrastructure project.

And the disruption is not limited to the property owner. Electrical and construction work can mean temporary interruptions in electrical service, and with it, internet access as well as interruptions in hot water and other services. Contractor access to apartment units, opened walls, noise, and dust can create additional inconveniences affecting residents in an occupied building. And all of this, the expense, the construction, and the disruption may be necessary to comply with a regulation that few property owners ever expected would come from an air quality agency.

Who Should be making a Decision This Big?

So, here’s the real concern. At what point does air quality regulation reach so deeply into the cost of owning, maintaining, and providing housing that it ceases to be merely an air-quality decision?

When a regulation requires substantial investment in electrical infrastructure, imposes significant unplanned expenses on homeowners, and materially alter the economics of owning and operating rental housing, its consequences extend well beyond the emissions from a furnace or water heater. At that point we’re talking about housing policy, and any such regulation should be evaluated accordingly.

The Bay Area Air Quality Management District has an important job to do, and clean air is unquestionably a legitimate public objective. But the Air Management District was not created to determine what level of capital investment a homeowner or rental property can economically support. Nor was it created to determine how additional costs interact with rent control, or how much additional financial pressure the region’s existing housing stock can absorb before property owners begin making different decisions about whether to continue providing that housing.

These are consequential economic and housing policy questions, and they extend well beyond the traditional expertise and mission of an air quality agency. There must be a point at which an administrative agency recognizes the limits of its lane.

If accomplishing an environmental objective requires a policy that may substantially alter the economics of housing throughout nine Bay Area counties, perhaps the decision belongs in a wider forum. One in which housing affordability, rental supply, construction realities, financial hardship and environmental benefits are all weighed together. And by policymakers directly accountable for the consequences.

The question isn’t whether the Air District should care about clean air. Of course it should. The question is how deeply an air quality agency should be permitted to reach into housing policy in pursuit of it.

Because if a regulation intended to improve air quality ultimately makes existing housing more expensive to own, more expensive to rent, or in some cases less likely to remain available at all, those consequences cannot simply be dismissed as incidental to the larger environmental objective.

Regulations and their consequences are themselves matters of public policy. And they deserve to be considered by the people and institutions charged with making housing policy, not merely as secondary consequences of air-quality regulation. And, ultimately, it comes down to this:

How deeply into the economics of housing should the Bay Area Air Quality Management District be permitted to reach before someone finally says: “This isn’t your lane”?

Wayne Rowland is the President of the East Bay Rental Housing Association (EBRHA). He has served on the EBRHA Board for nearly 20 years during which time he has played a significant role in many of EBRHA’s political campaigns and has taken the lead on the association’s legal actions. For more information, go to https://www.ebrha.com/.