2500 R Street

Homebuyers are making claims of false advertising over “Net Zero LEED certified” houses in midtown Sacramento – that may be neither.

The website for the architect on the project, today still says, “2500 R Street located on a two acre site along the R Street light rail corridor in Midtown Sacramento, this new single-family home community is designed to be rated LEED Silver for Homes and LEED Silver for Neighborhood Development.”

The application to the Sacramento City Council in 2010 for 34 sewer connection fee credits by Pacific Housing, Inc. (which request was granted) included as its justification, “the project will bring 34, anticipated LEED Platinum rating, infill housing units to the Midtown neighborhood creating a sustainable and livable community.”

Advertising that dates to August 2013 and is still online for “the new 34 unit development of 2500 R Midtown” said, “Home offers 2 master suites, 2 1/2 bathrooms and a 3rd floor loft that is private and perfect for flexible use. Home is a Net Zero LEED certified home that includes solar with electrical storage, smart meter and more.”

A 2012 paper authored by representatives of California’s three investor-owned utilities, including the Sacramento Municipal Utility District (SMUD) stated,

SMUD’s 2500 R Street project is the first net zero energy community in Sacramento’s midtown district. In this project, net zero energy means that over the course of a year, each unit will generate as much energy as it consumes. The combined effort of community partners – Pacific Housing, Sunverge and SMUD – has produced a major achievement in modern, efficient housing. The homes at 2500 R Street are net zero energy, zero carbon, zero emissions, LEED®- certified residences.

But are they?

According to print media accounts, 17 of the 34 homebuyers filed a statement of claim on September 30, 2016 commencing an arbitration proceeding against Pacific Housing, Inc., 2500 R Group LLC, and Pach Sustainable, LLC for falsely advertising that the houses were net zero energy and LEED certified. Counsel for the parties did not reply to a request for information in response to that filing. This blog post is based upon publicly available information.

The easier of the two to address may be the claim that the houses are not LEED certified. They apparently are not. None of the 34 houses were registered with GBCI as pursuing LEED certification. Accordingly none of the houses are LEED certified. The architect also claims this “community is designed to be .. LEED Silver for Neighborhood Development” and it may well have been so ‘designed’ but it was also never registered nor pursued LEED ND. All of that observed, it is key what homebuyers were told?

The other claim of falsely advertising that the houses are net zero energy appears spurious but also requires facts to prove or disprove about how much energy each house generates and consumes each year. Project advertising said, each of the houses comes with a 2-kW solar photovoltaic system on the roof and each house also is fitted with a battery that can store solar energy during the day for use in the early evening. In addition to electricity, “each of the homes has gas cooktops, gas-powered water heaters and gas-fired heat pumps.” Depending upon individual family electricity consumption, a house might be net zero electricity, but not next zero ‘energy’ given the natural gas consumption?

Again, the 17 homeowners, who receive monthly utility bills are claiming in this action that the houses are not net zero energy (which allegation appears buttressed by the data released by SMUD in December 2014 showing that not one of the houses was net zero electricity in 2014). That 2014 release of data included a reference to the fact that homebuyers were presented with a document that explained they would be participating in a research project. Information not publicly available, including what else each homebuyer was told, is required to evaluate this claim.

Watch this blog for information about this arbitration as it moves forward. The process is private and not public, so information may be limited.

Given that most consumer protection laws across the country set a low threshold for what is false advertising to a consumer, these claims arising in Sacramento should be instructive to all marketing the environmental attributes of green homes.

And the disputes and differences about what is net zero energy should be of great interest to many.