The True Cost of Building Better Homes with Tim McDonald

Kelly: (00:06)
Welcome to buildings and beyond

Robb: (00:09)
The podcast that explores how we can create a more sustainable built environment

Kelly: (00:14)
By focusing on efficiency, accessibility and health.

Robb: (00:18)
I’m Robb Aldrich.

Kelly: (00:19)
And I’m Kelly Westby.

Kelly: (00:24)
We are so excited to bring you season two of Buildings and Beyond. To start out this season, I will be speaking with Timothy McDonald. In 1997 Tim and his brother founded Onion Flats, a Philadelphia based real estate design, development, and build firm. Tim and Onion Flats have been on a bit of a sustainability journey over the past two decades and his experience is invaluable to anyone who considers themselves in the design, construction or sustainability industries. Tim takes a design thinking approach to development. Each new project is building on the lessons learned from the previous project and taking us a step or two closer to net positive impact. I started out by asking Tim what he thinks are the top three things developers, designers and builders should think about when trying to design quality, efficient, affordable housing. Tim does an excellent job of describing his perspective, so let’s just dive right in.

Tim: (01:25)
Well, I guess the first one is related to who we are as a company. And I think that’s pretty important, because we’re a vertically integrated company. We’re developers, architects and builders, which means ultimately that we control the process from beginning to end. And I think that that’s how quality really happens. I think that being a vertically integrated company allows us to build more cost effectively because there just aren’t as many layers that need liability to slow us down or to cost us more money. And I think we’re more agile and nimble as a company. If we run into problems, we turn them into opportunitiesrather than change orders, which costs more money, we actually make a problem costs less money. So I think that that’s the first thing. The first thing is that to be a vertically integrated company is just really helpful in doing any kind of architecture. I think the second one is that you really just have to be committed to a particular definition of what sustainability is. You just have to want it and you have to be committed to it. And for us over the past 10 years, sustainability is no longer a kind of generalized sense. It’s really focused primarily on climate change, because it is the existential threat that we all face. And it is the focus of all of our work. And because of that, we’ve been looking for the right tool to allow us to design and build buildings that are cost effective, that don’t contribute carbon to the environment. And for us, that’s passive house. So to me it’s about, when you find the right tool, you work with that, which doesn’t mean that our sense of sustainability doesn’t also include issues around water and transportation and indoor air quality and so forth. But, I would say if you want to know what we are about, that is the focus, until we’re gone that’s the focus of our work. And I guess the third one might be that we just really believe that there are two ways to get the word out about the significance of this issue of climate change and how buildings contribute to it. And that is either: you demonstrate it through your own work and then you go share that as much as you possibly can, or you legislate it. You get it changed, you get building codes changed. You work with affordable housing agencies, which is this initiative that we started about four or five years ago, to get not so much legislation, but the way that affordable housing gets funded, we worked really hard on that. So I guess what I’m trying to say is that there are two parts of what we do. One is that we’re advocates of this kind of work and we go around the country to try and talk about it as much as possible, and then we demonstrate it with our own work.

Kelly: (05:06)
Right. And thanks by the way for sharing this to all of our listeners. Advocating and getting the word out that way. So how did you come to the passive house standards specifically? Were there other standards that you looked at or tried and what were your thoughts around that?

Tim: (05:26)
So the first project where we took on any notion of sustainability was in 2001 or 2 I believe. And we weren’t really educated in sustainability as a kind of guiding practice. And then we built this project called Rag Flats, which, you know, for us, sustainability was doing our first PV system. It was about collecting rainwater. It was about a kind of urban planning approach to a community, which talked about social sustainability. After that we discovered LEED. And in about 2004, we built the first LEED gold project in the city. After that we built the first LEED platinum projects some of the first in the country. And I think that was really important for us because what we loved at the time about LEED was the structure of accountability, and it allowed us to address the multifaceted dimensions of sustainability that you wouldn’t necessarily be able to holistically put together on your own. So it made us better architects. It made us better builders and made us more aware of what was important. And then we began to realize after we did that for a while, that pretty much all of what LEED was about was just naturally built into our work. So we would never not buy a dual flush toilet again, you know, you’d never not use sealants or paints that had VOCs in them because they were readily available. So there wasn’t a lot of work that we discovered except around the area of energy. And this is when we came to discover passive house about 10 years ago. It was also the time when we started to become more aware of climate change and architecture’s contribution to that. So, it’s really been an organic process of learning about sustainability and what’s important and passive house is just the, I mean, we’re at a crisis and so, you know, I’m much more interested in radically reducing energy consumption. I will always also try to manage storm water, but if I’m not required and there’s a line, and I have to choose where my money goes, it’s always gonna go towards energy conservation because of the impacts on the environment.

Kelly: (08:41)
Right. And that kind of circles back to, I think it was your second point about having a focus that this is what you’re going after. So anytime you have to weigh those two options, you know where you’re going. That’s great. And I know you talk a lot or at least I’ve given some presentations about the cost of building these really efficient buildings and maybe it doesn’t have to be more expensive to build a more efficient building. Can you talk a little bit about what you mean by that?

Tim: (09:12)
Yeah, I mean, the way I like to put it is, forget about passive house for a second. If you went out and just got bids on a code built multifamily building, you’d have a wide range of prices, right? So it’s very difficult to say it doesn’t cost more, or it does cost more. What I like to say is that it can cost more and it doesn’t have to cost more. And the first way to make sure that you hone in and control the costs of a project, have to do with how you’re structured as a company. And if it’s built in a ‘buildings are designed and built in this classic design bid build’ approach, I think it’s extremely problematic, because all that ends up happening is you design a project, you put it out to bid, it comes back too expensive.

Tim: (10:20)
And they do this wonderful thing called value engineering, which essentially strips everything out of the project. We work exactly the opposite. We have the builder (us) in the room the exact day before any drawings are done. We set goals for what we’re trying to achieve. We develop strategies for mechanical systems before drawings are done before we even start drawings. So it’s all about building the strategies around construction, around insulation, around air ceiling, around larger issues of design, like urban issues, issues about community, establishing them first, having all the players, engineers, architects, subcontractorsGC not so much the bank, but the owner, in the room at the same time. And then going from there, because I can’t tell you how many times we’ve worked in the other structure with your kind of the typical arrangement where you’ve got an owner that hires the architect, the architect designs the building, then gives the building to the engineer, then the engineer designs mechanical system that is not integrated with the architecture. And then there’s redoing of that. And then there are contractors that haven’t done that kind of work. So when it gets to the bidding process, their numbers are jacked up because it’s because it’s a new process. And so when we say it doesn’t have to cost more money, the main way we achieve that is by having an integrated team.

Kelly: (12:09)
Great. And it’s interesting you’re talking about that. I think the industry talks about an integrated process a lot, but we don’t necessarily get there. LEED requires an integrated process meeting, and so we have the meeting, and thats it. So that’s interesting that youre so fully integrated across the three entities there, that you can really be doing this on a continuous basis. It’s not an integrated design meeting, It’s really an integrated design process.

Tim: (12:44)
Absolutely. And again, this issue of value engineering is a perfect example of the failure of the design bid build process. Because we have a similar thing that happens as we’re going through the process all the way through the construction process, but I really mean it when I say we hit those roadblocks and we’re able to step back and come up with an alternative solution that is very often, if not always less expensive, that we couldn’t have foreseen in the process. Now, that doesn’t happen when somebody has got a contract to do the mechanical system and they say, well, you know, this was missing in the drawings, so it’s just gonna cost more to do what you’re doing because I have to re tool. And that just doesn’t happen with us.

Kelly: (13:36)
Right. And what we see a lot with my role in building commissioning is that there’ll be sort of side deals between the mechanical contractor and the GC or between the mechanical contractor and the owner, that the owner doesn’t even really fully understand what’s missing through this value engineering, all they see is that dollar figure. So you really have a better understanding of all of the different systems so you can make an educated decision when someone comes to you with that.

Tim: (14:06)
And I’m sure you’ve experienced the more insidious structures, where maybe the GC isn’t all that interested ultimately in the kind of energy efficiency that you are. And so he or she is doing everything they can to kind of undermine whether the project goes in that direction or not, sometimes very subtle ways and sometimes really obvious ways to the point where the owner gets scared and says, and the GC says, you know what, I’m much more used to working with these mechanical systems, I’ve got a real problem with this new system that these people are talking about, scares the owner, and then all of a sudden the team starts to fragment. So that’s why it’s not just got to be an integrated team, but everybody’s got to be committed to the same goal.

Kelly: (14:59)
Right. That’s a really interesting point. And I think something that I didn’t understand when I first started in the industry, how even when we say, oh, the GC and the owner, maybe they’re the same team, sometimes you really have them operating as two separate entities within the company. And definitely within different companies you might have. So how do we orient everybody towards the same goal? So how do you do that with subcontractors and other vendors and things like that? How do you really kind of show them your vision and orient them towards your same goal?

Tim: (15:31)
In some ways you have to choose. So for instance, it’s not that hard when it comes to drywall. Right? I don’t need to tell my drywall guy the vision for the project. In other ways, it’s really just about really good project management. So for instance, when you hire an insulation contractor and you say it’s a blown cellulose, right? Dense Pack cellulose or even mineral roll in the walls, there are ways to put insulation in that don’t take any more time or any more money. And then there are ways to put it in where there are gaps. And so it’s all about having the right people watching the project very careful and just keeping people honest and doing the work that they’re supposed to do. I’ve found that the more you don’t talk, and this is going to sound very strange, but the more you don’t talk about how unique this building is, the better. The more cost effective your construction budgets are gonna be, and the better work you get. And I know that sounds strange, but if I were to tell my framer that this is a passive house project and it’s one of the most energy efficient buildings in the world and it’s extremely unique, all of a sudden that subcontractor starts getting scared and maybe he doesn’t understand what is going into it. Maybe he’s missed something in the drawing, so all of a sudden he puts a little extra in his budget. So I try to, this is gonna sound weird too, but I try not to sit down and in those meetings try to describe how unique this is. I just sit down and I say, okay, this is our air barrier and this is how we handle the air barrier. Every time you puncture this air barrier, this is what you do. Got It? Yes. Okay. Move on. Just really straightforward stuff. It’s just here’s the process of putting this building together, here are the joints that need to be dealt with, here are the things that really matter when it comes to the energy efficiency of the building, and here are the things that dont. The kitchen and floor finishing people anf the tile people, they don’t have to be a part of the vision. You really have to identify the critical subs that need to know and only on a need to know basis do they need to know.

Kelly: (18:17)
Right, right. That’s really interesting and actually it brings up an interesting question in my mind of performance based SPEC versus prescriptive SPEC. You kind of talked a little bit about that. Do you have some thoughts? It looks like you maybe do.

Tim: (18:33)
Well I just think it’s silly that it’s not performance based. I mean, why the hell can’t we just give a miles per gallon approach to a building in the same way that we do to cars and forget about energy codes? Just say this is how much energy your building needs to consume, it can’t consume any more. What are you going to do? You can do anything you want to make this happen. I don’t need to tell you what your r-values are for your walls, you’re gonna figure that out. I don’t need to tell you what your minimum this or minimum that is. You’re going to figure it out very quickly because you’re going to have to do an energy model and you’re going to have to make these numbers work. So I believe in design performance based rather than prescriptive. And then, the other performance side of things is how it actually happens. Like what actually happens? What happens when people move in? I like to say that your job is only half done when you build the building. The other half is about educating the tenants or the owners of your buildings, following up with them, understanding how their behavior has changed or not changed and how that’s affecting the performance of their building.So I mean, those are my thoughts.

Kelly: (19:53)
Yeah. Great. And it’s interesting in contrast a little bit to how you were talking about how you’re presenting things to your subcontractors. You’re not necessarily saying to them, this is the performance Spec for your whole building air barrier, you’re giving them sort of a prescriptive approach. But from the design side, you’re taking more of a.. Is that accurate?

Tim: (20:14)
Yeah I mean I’m making a couple of assumptions. So when it comes to critical subs, the framers are a critical sub, but I’ve already taken a lot of the questions out of the equation for the sub because I will never not work with a prefabricated wall system anymore. So I work with a panelized system that has the air barrier built in, that has the exterior insulation already on, that has the WRB already on and that has the windows and doors already installed.

Kelly: (21:08)
So all they need is to see all those pieces together?

Tim: (21:12)
Yes. So, I think that that the kind of broader context of that is about understanding how we need to change the way we build buildings in general because we’re still building buildings one stick at a time, the way we’ve been doing for a hundred years and we need to find ways to become more industrialized around how we do it. So I’m a fan of the idea of modular building, the idea of panelization, the idea of eliminating all of these typical areas where we’re failures can occur and they shouldn’t have to. So that’s the other part of this is, is that you have to rethink how you build, if you’re going to do it cost effective. That also relates to being cost effective, right? Because not only do I not want to trust guys to install windows on my site and have them airtight, I don’t want them to take the time to do that. So it takes less time to build these buildings if you think through these processes in a more effective way and it costs less money.

Kelly: (22:22)
Right. So it’s actually interesting how you brought that up, because I think you’re almost saying, well if you were to build a passive house by just doing exactly what you’ve been doing and adding a couple inches of installation, that’s going to cost more. And it’s going to be more difficult. Maybe you take up more floor space, but if you take a step back and re-imagine the whole thing, now we can get to a better place.

Tim: (22:45)
Yup. Mechanical systems are another perfect example.

Kelly: (22:48)
Yeah, let’s get into that.

Tim: (22:49)
So I can’t tell you how many engineers that I’ve worked with where they run their duct works in a passive house building. They run their ducts all the way to the exterior wall. Their heating and cooling or ventilation ducks. And I say, you don’t have to do that. You just pop it into the building, pop it into the room. You can save 12 or 15 feet of ductwork. They say they cant do that. Well, why can’t they do that? Because they’re used to having cold walls. And so they’ve got a wash those cold walls with heat and in the winter time. And so there’s this thinking that you have to break through when it comes to mechanical systems, engineers would say, oh my God, this is going to cost so much more money because I’ve got to have this dedicated air system. There’s an ERV/HRV that’s separate from the heating cooling? My God. And there are ways to design it that are cost effective and ways to design it where it’s twice as much. And so I spend a lot of time and I do a lot of research on how I can cost effectively do three things, heating and cooling, ventilation, and hot water, because those can be twice as much if you do them in the wrong way, right? So there are systems now, that are just becoming available where you’ve got, especially for apartments, small apartments where you’ve got heating, cooling and ventilation all built into one unit with no condenser to the roof, the condensers built into the unit, just imagine all those copper line sets that you would run for a mini split to an apartment, which everybody thinks is the cheapest way to go, isn’t anymore.

Kelly: (24:43)
Great. And you have worked with these packaged unit?

Tim: (24:47)
Right now I’m working with them. I’m installing 28 of them.

Kelly: (24:51)
Great. And how did you get to that? Did you ever think about using central systems and did you try that and have some tiers?

Tim: (25:04)
Yup, exactly. We just built and it’s literally about 200 feet away from where we’re sitting. A centralized Geo therman heating, cooling and hot water system for a 25 unit apartment building. And it’s great in theory, but ultimately what’s pushed me away from that is the complexity of it all. Without going into detail about it, the idea of having one unit in an apartment that does all things, if it breaks down, just go and fix it. If my geothermal pump stops, 25 apartments go down. If my VRF system loses pressure in the line sets in th refrigerant lines, the whole thing goes down. So it was a great experiment. And every single project we’ve ever done for the past 22 years has been an experiment. And I hope we keep making mistakes but they keep getting smaller. And so it’s ironic that I thought three years ago that this centralized approach to multifamily housing, especially when you’re building passive houses, including the electric, why have individual meters when you’ve got utility bills that are like 20 bucks a month? Like what? And if you’ve got PV to cover that, why would you have a separate room for just the individual meters? So centralize electrical meters, centralized systems. I thought this was the bee’s knees. This is what I’d be repeating for the next 20 years. Well, I’m not, now I’m going decentralized and probably in a couple more years I’ll have more evidence about the value of one versus another and they’ll all continue to work. But that’s what keeps me excited.

Kelly: (27:14)
Yeah. There’s always something new to learn. Yeah, that’s actually really interesting because we’ve also been looking real data basically. I think in the existing building world, people have gotten on board with, okay, how’s this building performing after we make an upgrade? But in the new construction world, we’re really not holding our GCS, owners, and development teams accountable for the actual performance of the building. Kind of like what you said, your job really isn’t done. And that’s music to my ears as a commissioning person because turnover is sort of our big timeframe, right? So if we look at actual performance, how are these buildings that are so efficient, really working in the real world? And one thing that we found that I think is so interesting and just want to put out there to the industry, is that we’ve been seeing in New York City, we love Ptac. For some reason architects hate them, a lot of developers love them. And we’ve been saying these are giant holes in the walls. How are we going to account for that? Are these really performing well? Rated efficiencies are pretty low. But based on some buildings that we’ve started to look at data for, comparing the gas p tax, so it said 80% efficient gas furnace, clients are anecdotally telling us and we’re looking at some data now that indicates that actually maybe they’re performing better than your giant central VRF system in some cases. And so this sort of decentralized, you turn it on only when you need it, you pay for it kind of system,that doesn’t have distribution losses, and doesn’t have the opportunity to leak- by the way refrigerants are a greenhouse gas in and of themselves. Then, you know, actually maybe that’s the way.

Tim: (29:14)
Well I’m putting this out there. It’s an idea and my dad used to say ideas are like noses. Everybody’s got one. It’s all about what you do with it. But my next kind of project that I’m going to take on, is I’m going to create the next level- we don’t even have a magic box yet in the US, and a magic for those of you who don’t know is a, it’s about the size of a refrigerator, it’s in some countries in Europe, but it’s for small houses and apartments, but it’s about the size of a refrigerator, it’s got a heat pump in it. It does heating, it does cooling, it does ventilation, and it does hot water. Now what that tells me is why wouldn’t we have a system that eliminates all the heat pumps in our apartments? Because there are more. I’ve got a refrigerator that has a heat pump, I’ve got a dryer that has a heat pump. I’ve got potentially a stove, not so much a stove that’s a heat pump, but there are at least two more heat pumps in an apartment. So I have this idea for an invention that essentially takes a magic box and then sends refrigerant to another box, which is called a refrigerator, sends a refrigerant to another box, which is called a dryer. So we’ve got to start thinking much more integrally and in a small way about the spaces that we live in and about the amount of mechanical equipment that we have. And I don’t think passive house is there yet because they’re still dealing with separate ventilation systems from heating and cooling systems, separate, separate heat pumps all over the place. So I think there’s a lot of room for invention when it comes to the mechanical systems. But I’m not surprised that a ptac works. Do you know that our first passive house project, we took a ptac because we couldn’t find anything cost effective to work with in an affordable housing three town homes. We took a ptac and instead of putting it through the wall, we put it on the third floor and we insulate, we ducted the supply to the building and ducted the supply from the outside, ducted and super insulated the ducts. And then we tied that into an erv. So we made this kind of Frankenstein mechanical system out of a ptac and it’s been working beautifully.

Kelly: (32:01)
Oh, that’s really interesting. When you get creative, what you can do.

Tim: (32:05)
Yeah. No, I wouldn’t do that again.

Kelly: (32:07)
Yeah. We have some other solutions now. That’s great. And so we kind of got to this point, but when we have you back on the podcast in five years what are we going to be talking about then?

Tim: (32:24)
Well that’s a good question. My kids going to college.

Kelly: (32:33)
They’ll invent the magic box.

Tim: (32:35)
So our company is in a real push over the next five years to develop property that we’ve owned for awhile and we’ve got plans on all of them and there’s, at the moment, about another 200 units that we’re going to be developing over the next three years actually. And so in five years, not only will they be built, but we’ll be able to really talk about performance and where we got things right, where we got things wrong. We’ve also just broken into the kind of client realm that is interested in this stuff at a very large scale, which I can’t really talk about, but within five years, this very large scale building in Philadelphia, I hope is going to be here, and I hope it’s going to be a passive house and I hope it’s going to be a net zero energy building. And I hope it’s then when the industry itself is going to say, hey, this isn’t an option anymore, and we’ve demonstrated there been plenty of people demonstrating that this is not only possible, but it’s intelligent and so it won’t be a crisis. You know,.

New Speaker: (34:02)
I’m hoping that what we’re talking about here is standard practice. That’s what I hope.

Kelly: (34:09)
That’s awesome and a really good and hopeful note to end on. Thank you so much for coming in and being part of the podcast.

Speaker 4: (34:21)
Thank you for listening to buildings and beyond. For more information about the topics discussed today, visit www.swinter.com/Podcast and check out the episode show notes. Buildings and beyond is brought to you by Steven Winter Associates. We provide energy, green building and accessibility consulting services to improve the built environment. Our professionals have led the way since 1972 in the development of best practices to achieve high performance buildings. Our production team for today’s episode includes Dylan Martello, Alex Mirabile, and myself. Heather Breslin, thank you for listening and we’ll see you next week.