Duluth nonprofit brings zero-energy homes to Northland

DULUTH — Northlanders know how to dress for the winter. A heavy coat, stocking cap and boots are all essentials.

But when it comes to buildings, you won't find much difference in the construction of those that endure our polar vortex conditions and those in more tropical locations that never see a day below freezing.

That's never made much sense to Duluth designer and licensed Wisconsin architect Rachel Wagner.

"Our houses need to be in layers," she said. "We're still building our houses with the equivalent of a sweatshirt on. They really need the Patagonia down parka with the hard shell on the outside."

Wagner is co-founder and interim executive director of Green New Deal Housing, a Duluth-based nonprofit. The organization's mission is two-fold: build durable, sustainable houses in the region and ease the burden on middle-class families who are struggling to find affordable homes.

Founded in 2019, the nonprofit is in the process of constructing its first house, a pilot project in the Harbor Highlands development of Duluth. It is scheduled to be completed by early next year, and, if all goes well, as many as five others could break ground in 2023.

Green New Deal aims to operate with a model similar to that of One Roof Community Housing — selling houses at a discounted price to buyers who otherwise couldn't compete in a tough real estate market.

The houses, however, will cater to those with a slightly higher income level. And they're all brand-new, fully electric and specially designed to result in "net zero" energy usage over the course of a year.

"I would say all houses should be built this way," Wagner said, "because I think nothing less is needed in the face of climate change and in the face of the lack of housing stability."

Duluth attorney and former city councilor Greg Gilbert first approached Wagner several years ago about the prospect of starting an affordable housing program.

Wagner admits she was reluctant to take on the challenge, a long-running issue in the city. But that quickly changed after she attended a 2019 Green New Deal Action Summit keynoted by activist Winona LaDuke in Duluth.

Feeling that Duluth could lead the way to a more sustainable future, Wagner agreed to start the nonprofit with Gilbert — provided it was specifically designed to tackle climate change while putting more people in long-term homes.

"It really struck me as a great idea," Gilbert said. "It's a state, federal, international problem. There’s nothing to say that part of the solution can start right here in Duluth."

The house plans drawn up by Green New Deal incorporate some unique features, including large solar panels on the roof, twice as much insulation as required by code and triple-pane windows. Each will be oriented to maximize sun exposure on living areas and have air-tight sealing around doors.

The houses will not include any gas lines. Rather, they'll use air-source pumps for year-round temperature control, along with heat pump water heaters.

Wagner, who has previously designed similar houses in the region, said the result is that the homes will create more energy than they consume over the course of a year. Homeowners will see an electric bill in the cold, dark winter months, but in the summer they'll actually receive a credit as excess energy generated by the panels is transmitted back to the utility company.

"For most people, the volatility in their monthly housing costs come from their energy use," Wagner said. "It doesn't come from their mortgage — that's a fixed fee. The water and sewer bill doesn't change much. It really comes from their energy use. So if we can have a house with very predictable and regular energy costs — in fact, one that essentially zeroes out — now we have created a different measure of affordability, without that vulnerability and fear."

It has been a difficult time to launch a housing organization, leaders acknowledged — first through a pandemic and now amid soaring building material costs.

But the organization was able to break ground last month on the pilot project, 108 E. 11th St. The foundation is now in place on the three-bedroom, two-bathroom, 1,500-square foot home, with construction slated to wrap up around year's end.

Wagner said "net zero" homes aren't as expensive to build as one might think. The first house is expected to come in roughly 11% higher than it would cost to build to code. But it will come with substantial long-term energy savings, and Wagner expects the houses should still be functional a century from now.

Green New Deal homes will be sold to buyers within 115% of the area median income — a slightly higher tier than the 80% or less required by One Roof.

Wagner said final construction costs and an anticipated sales price for the pilot are not yet known, but the nonprofit has been cobbling together grants and private donations and will seek out government subsidies to ensure that buyers spend no more than 30% of their income on monthly housing expenses.

"When we talk about affordable housing, it doesn't necessarily mean low-income," said Stacie Renne, engagement coordinator and board vice president. "There's this huge gap with people working 40 hours a week — and there might be two people working in the household — and they still can't save enough money to get a decent house because they're spending so much on rent and other expenses."

Gilbert, the board chair, agreed.

"Homeownership allows many families to start accumulating wealth," he said. "That breaks the cycle many of them have been living in for a long time."

The pilot project is being built on the site of an old house that was recently torn down in Harbor Highlands area. The Duluth Housing and Redevelopment Authority sold the plot as a discounted price: $29,700, according to county property records, which list an estimated market value of $71,400.

The HRA also has provided a low-interest construction loan for the majority of the project, Executive Director Jill Keppers confirmed. She said One Roof, Center City Housing and the HRA are already doing affordable housing development in Duluth, but there is a need for more, and Green New Deal can fill a "niche" population.

"We love when new developers come in with creative ideas," Keppers said. "We're a long and skinny city that's fairly built up, and we need to utilize these infill lots. It's great for the community that they're willing to do that."

Next on the horizon for Green New Deal are plans to build on three sites in Superior as part of the city's Vacant to Value program, which offers free vacant land to developers for housing construction. Application materials there indicate construction costs of roughly $460,000 per house, with subsidies allowing for purchase by households making roughly $60,000 to $80,000 annually.

The nonprofit also is looking to clean up and build one or two homes on a long-contaminated site on 59th Avenue West in Duluth's Irving neighborhood.

"People are falling through the cracks enormously because they earn too much to be to buy a house through One Roof and they don't earn enough to do it on their own," Wagner said. "They're stuck."

Having been run by a half-dozen professionals working for free or greatly reduced prices, Green New Deal is looking to hire a full-time executive director and, eventually, some part-time support staff. But if the organization is going to achieve its ambitious goals, leaders acknowledged they will need to establish stable, ongoing sources of funding that don't require lengthy campaigns.

The nonprofit also is offering "green-collar" workforce training programs across the region — a push to instill resilient, energy-efficient construction techniques in the next generation of home builders.

"Zero-net energy homes are not just achievable in theory," Wagner said. "They've been achieved in practice in this region, and colder, for more than a decade. ... If we don't have the workforce that knows how to do this, let's train them. And, by doing so, let's hope we are helping to stimulate and accelerate the move to build houses this way."

This story was updated at 4:08p.m. Aug. 23 to reflect that Wagner holds her architecture license in Wisconsin, and that Green New Deal Housing does not yet have a permanent location. It was originally posted it 12 p.m. Aug. 23.