Up to code

LAPORTE, Minn.-On a biting December morning, a flatbed stacked with logs chugged up County Road 39 in Laporte, Minn., past standing Norway and white pines freshly plastered with snow. Between the pines a driveway dead-ended in a cluster of log homes. They were built by Northwoods Log Homes, the oldest log home manufacturer in the state, according to 44-year-old company president Bryan Kerby.

One house had three floors and a bonus "bunk room" above the garage. Inside was all wood-from the log rafters to the paneled walls to the Australian cypress floor. Beams upheld a vaulted ceiling, framing large windows that overlooked frozen Kabekona Lake. Selling price: $650,000 for 6,000 square feet.

Minnesotans have a nostalgic attraction to log home living, but the construction style could be eliminated or drastically altered if northern states adopt new building codes meant to conserve energy. In exchange for billions in federal stimulus dollars, all 50 states pledged in 2009 to adopt energy efficiency codes in spite of the risk to the construction industry and small businesses like Northwoods.

Back in his office, Kerby showed me cross-sections of his company's product: Walls are built with 8-inch-diameter logs, stacked and compression bolted together, while roof and gable cavities are filled with insulating foam board and sprayed-in foam. If Minnesota adopts the newest codes recommended by the International Code Council (ICC), a nonprofit association of building code officials from throughout the United States, the log walls have to double in thickness. In order to meet the ICC code's wall insulation "R-value" for northern Minnesota, where Northwoods is located, the logs would have to be at least 14 inches wide. Northwoods, like many log home manufacturers, uses milling equipment designed to handle 6- to 8-inch logs. The larger trees are scarcer and more expensive to purchase.

"This is the kind of material that is typically available in Minnesota," said Kerby, standing over his 8-inch-log display. "I don't know that I can stay in business with a 14- to 16-inch log."

States write their own building codes but take guidance from model codes developed by region by organizations like the ICC. Not every group makes it a priority to reduce carbon emissions and fossil fuel use, but some local and federal officials do: Every three years the ICC publishes the "International Energy Conservation Code," and the U.S. Department of Energy (DOE) asks the states to either adopt it or explain why they cannot. In practice, a handful of states have avoided updating their energy codes, while another handful zealously meet or surpass the latest model versions.

When the ICC voted in October to approve its newest energy code-the 2012 edition-DOE and a nonprofit advocacy group called the Alliance to Save Energy pushed hard for code changes to increase efficiency requirements. For the most part, they got them: The 2012 code is 30 percent more efficient than the edition published for 2006. DOE's goal is to raise that number to 50 percent by 2015.

Jeremy Bertrand, a national sales manager for Log Homes of America, said a recession is an odd time to be ramping up energy regulations. The 2012 ICC code calls for insulation improvements to ceilings, walls, and foundations; reduced heat loss from windows, ductwork, and hot water pipes; and blower-door testing to ensure homes are completely airtight. Those requirements will broadly impact a depressed construction industry, not just log home builders. Bertrand thinks efficiency is great, but buyers will find that in exchange for those improvements, "houses are flat out going to be increasing in cost," he said.

Monica Schneider, who works to help states adopt efficiency codes through the Alliance's Building Codes Assistance Project, said buyers would willingly pay a little more up front if they knew what they could save in energy bills later. According to a study of the 2009 ICC energy code by Schneider's organization, new homes that integrate the code would add just over $800 on average to construction costs and save the owners $243 annually. The building industry, though, claims the costs of compliance will be much higher.

Kerby and the Log Homes Council, an industry group that Northwoods is part of, have lobbied the states in hopes their code writers will recognize the unique constraints of log construction. They've had mixed success: Minnesota, for instance, agreed to allow Northwoods to continue building 7-inch log walls if it upgraded efficiency elsewhere in the building, say, by installing better windows. That allowance could disappear if Minnesota incorporates the 2012 code.

Some states have refused to consider such tradeoffs for fear of losing federal money. The American Recovery and Reinvestment Act of 2009, commonly referred to as the stimulus bill, required states to adopt the 2009 ICC energy code in order to get a slice of $3.1 billion in State Energy Program funds to make efficiency improvements in public buildings. In exchange for the federal money, all 50 states have agreed to meet stringent codes by 2017. But as the costs of compliance become more apparent, whether all will follow through is another matter.

That could make the next six years even tougher for builders, who are crawling out of a construction collapse. Housing starts rose slightly by year-end, but residential investments (made up of construction, remodeling, and commissions on real estate) composed only 2.23 percent of the U.S. economy in the third quarter of 2010-according to Bloomberg, the lowest amount since records began in 1946.

Minnesota housing starts were only a quarter of their pre-recession levels last year. As various states incorporate the 2009 code, Kerby believes the upgrade requirements will be like a "boot on your neck" for builders trying to sell: "Nobody's buying homes, so how can we fully understand the impacts of these additional costs?"

Log builders are uniquely impacted because "we can't just go throw a few more inches of insulation in the wall." Kerby said he is "still fighting for traditional log construction," but in the meantime Northwoods is developing a hybrid log wall that uses insulating foam to increase R-value. If energy code writers continue to tighten requirements, Kerby won't be the only one adapting to a nontraditional approach.