September 2011
BuilderNews Magazine
Feature: Project Profile

The Net Zero Tract Home

A Final Frontier in Sustainable Housing

In 2005, Meritage Homes, a large-scale, production homebuilder headquartered in Scottsdale, Arizona, saw one of its most productive years to date. That year, Meritage Homes built close to 15,000 single-family houses, making it one of the top ten production homebuilders in the county. “We just put our heads down and built homes,” says C.R. Herro, Meritage’s VP President of Environmental Affairs. “The emphasis was on doing what we did well,” and that is what Meritage did. The company was founded in 1985, and in just 20 years it became a master at building a broad range of production homes with as most speed and efficiency as possible. Even today, Meritage offers some of its clients a “99 Days. Your Home. Your Way.” guarantee, with prices that can dip below $80 a square foot.

Meritage’s success, like the success of its competitors, had reached a zenith in 2005. The company operates in seven states: Arizona, California, Colorado, Florida, Nevada, North Carolina and Texas. Those same states saw a surge in population over the preceding decade, spurring the largest housing boom in US history. Housing starts in the US, that year, topped a record-breaking 2 million homes, with the vast majority of that development taking place in these classically warm-weather states. By the close of 2006, however, most of that had begun to change. Meritage was still on top, still ranked among the industry giants, only the competition had begun to diminish. 2006 was the beginning of the end for the housing boom. Housing starts slumped, and by 2009, they had hit their lowest level in more than 70 years, with just 580,000 new homes built across the whole of the country. The housing boom was over, and Meritage Homes, like nearly every builder in the nation, was about to face its leanest years in decades. The question Meritage had to ask, as did all others, was simply: How would the company survive?

When faced with a market like this, says Herro, a production builder has one of two choices to make. “The market gives you a square-foot price that the market will bear,” he explains, “and you can either strip down and cheapen up to compete with bank re-sales, or you can come to the market with something that has a different value and creates its own opportunity, and the latter is what we consciously choose to do.”

It was Herro’s job, hired by Meritage in August 2009, to create that opportunity. “I was hired specifically to do innovation for the company,” he says, “so they created a role I don’t think exists anywhere else in the homebuilding industry. They hired a wacky environmental engineer and let me loose.” Herro actually holds two master’s degrees, one in environmental engineering and the other in environmental biology, and he is, in his own words, “the in-house nerd,” at Meritage. “To his credit,” Herro says of company founder and CEO, Steve Hilton, “he said, ‘Hey, we are going to hire someone whose job is to just focus on where the winds are blowing us and what is the best thing that we can do — the highest value for the least dollar — that lets us build something special.’”

That something special, to Herro, was evident from the start. Herro is “a nerd.” He is an engineer. And he knew where the winds were blowing. Herro has worked in the construction industry for more than 20 years, and during all that time he has kept a keen eye on the advancing green-built market. “The building industry,” he observes, “has had very little innovation for the last 40 years, while a tremendous amount of innovation was going on around it.” To Herro, the industry was stilted, caught in the single-minded pursuit of efficiency at the expense of other advancements. Green building in the US, he notes, had remained mostly on the periphery of the overall housing market. A few, generalized innovations had filtered through. Appliances became more efficient. Insulation was beefed-up and then altogether changed. Windows were upgraded. But when it came to a wholesale re-imagining of the single-family home, that was left primarily to high-cost, custom homes and show homes never intended for resale. “All the pieces of the puzzle have existed for 20 years,” Herro says. “We just went through the trouble of putting it all together. All I did was stand on some really broad shoulders, take the best of the best from around the world, and that is our program.”

Meritage’s new program, under the direction of Herro and officially launched in September 2010, was to design, build and sell the US’s first net-zero energy tract home, at a price competitive with the production home market. The company now builds its net-zero homes in two communities and offers a similar option on all other homes it builds. “The first thing we did,” says Herro, “was to look at the building shell: the windows, the insulation, the framing, the conditioned attic, the lighting system and the appliances, all of which works to cut the energy demand for the footprint of that house in half.” From there, Meritage moved on to energy production, part two of the net-zero equation. The company joined forces with EchoFirst, Inc, manufacturers of the EchoFirst Solar System, an innovative dual solar PV and thermal array, with an integrated air management system. Standard on nearly every Meritage Home is now a 2.15 kWh EchoFirst Solar system, and for roughly $10,000 more, clients can upgrade to a 5.64 kWh system that would make the house a net-zero energy home.

The EchoFirst system, itself, represents an impressive advancement in efficiency, increasing the energy output over a similarly sized PV system by upwards of 100 percent. Meritage’s partnership with EchoFirst, Inc. shows why the production homebuilder belongs in the sustainable market. As Herro notes, though many builders offer similar amenities, most are offered as add-ons and built on a house by house basis. Meritage made these amenities standard, and by doing so, it was able to leverage its economy of scale, both in terms of material costs and installation. “A big piece of this is our trade partners,” Herro says, “because all the things we do on these homes, we’ll do 3,500 times. We spent a year designing, and we spent six months with our trade partners (framers, plumbers, etc.) getting their heads around it.”

Oriana Schooley is a sales associate for Meritage in the master-planned community of Verrado, just outside Phoenix, Arizona. Arizona, Phoenix and the surrounding Maricopa County was, and still is, one the hardest hit regions for foreclosures in the US. Roughly 15 percent of Arizona households received a foreclosure notice in 2009. The market is tougher than it has ever been, says Schooley, and yet she remains decidedly optimistic. “This has been great for us,” she says of Meritage’s new net-zero program. DMB Associates, Inc, out of Scottsdale, AZ, is the developer at Verrado, and five builders, including Meritage, are vying for the buyer’s attention.

Meritage, to help both educate and attract those buyers, has built a partially deconstructed model home, which the company’s uses to emphasize its new “extreme energy efficiency” approaches. Some clients are sold on the spot, Schooley says, while others need as much educating as they do selling. The sales pitch takes longer and it is far more complex, but the results are impressive. The Meritage sales team, in the Verrado community, has managed to outsell its leading competitor by more than three to one, and this, Schooley notes, with homes that can carry a premium of $20,000 or more.

“I think it is the cake and the icing, too,” she says. “Here, there is no compromise. I am the largest lots, the most square-footage, the most efficient, the most technologically advanced, and I am the most expensive. So, when it comes down to it, there is no real explanation for why it is going as well as it is, but my understanding is that we’ve taken a two-year project and we are down to the end of it (after) only ten months.” And this, she adds, in the worst housing market in US history.

“Is there a lot of potential coming?” says Herro, “Yes. Have we extracted all that value? No. But, we are extracting some, and in this market, that’s just fine with us. These homes, with this kind of incorporated extreme energy efficiency, have demonstrated to be more profitable for us than conventional construction.”

October 2011
BuilderNews Magazine
Feature: Project Profile

A Texas Whole House Remodel

Keeping In-line With the Joneses

The Rosedale neighborhood of Austin, Texas, just north of the city’s downtown, is a quiet, residential neighborhood of winding, tree-lined streets and modest, single-family houses. Most of the homes in Rosedale were built in the 1930s and 40s and much of this original housing remains. Low-slung, single-story cottages and ranch homes sit on large, oversized lots that often top a quarter acre or more. Broad, manicured lawns, side yards and hedgerows separate one house from the next. It is the type of neighborhood where young couples move to start a family and where older folks have remained long after their children have grown. It is also the type of neighborhood, especially in Austin, that has recently attracted considerable attention.

To the city of Austin, Rosedale and neighborhoods like it are an important part of the city’s history, demarcating its progression from a small, southwestern capital into one of the most vibrant and acclaimed cities in the country. Rosedale, once having defined the outer limits of Austin, is now part Central Austin—a collection of some 40-plus neighborhoods that make up the city center. And the city, itself, is booming. Forbes rated Austin the “Best City for Jobs in 2011,” and over the past decade the population has jumped by nearly 40 percent. But, as often happens, with such a sudden and rapid rate of expansion there also comes problems, and Austin has seen its share.

Mark Lind is a Senior Project Designer with CG&S Design-Build, an Austin-based firm that recently completed the whole-house remodel of a typical, single-story Rosedale cottage. It was a squat, nondescript house, longer than it was wide, dark grey with a faded brown asphalt roof and a tiny one-car garage tacked onto the end. Two bedrooms and one bath sat on 1,100 square feet, the interior chopped up into your standard, mid-century dining room, living room and kitchen. The owners, a young professional couple, collect mid-century modern furniture and they wanted the remodel to fit that style. Lind was thrilled. “The original house wasn’t very distinct,” he says. “It was sort of like a cabin, and quite often remodeling clients want the addition to look like the original house. So it was quite refreshing to have people say, ‘No, we want to completely change the appearance.’”

CG&S first met with the clients in the fall of 2008, and Lind says that straight away things went well. A  CG&S crew visited the site, took measurements and Lind drew up some preliminary designs — just to get the ideas rolling. When, at their first official meeting and before Lind shared his ideas, the clients conveyed more of what they were looking for, Lind knew he had hit the mark. “It was as if they had already seen the drawings,” Lind says — that’s how close he’d come. Unfortunately for Lind, CG&S and the clients that was where the ease of the project ended and the worst of their troubles began.

CG&S named the project the Silver Agave house, for the three-foot, spiked desert plant that stands at the end of the drive. The Shoal Creek, a tributary of the nearby Colorado River, runs through the center of Rosedale and skirts the far back corner of the roughly 9,000-sqaure-foot lot. This, unfortunately, put the Agave house in the Shoal Creek floodplain, which attracted the attention of FEMA, the Federal Emergency Management Agency. FEMA, since 1968, provides low-cost, federal flood insurance for houses in high-risk areas. The insurance is cheap, cheaper than it would be otherwise, but as a consequence, FEMA also gets a say in what can and can’t be built. The FEMA approval alone took six months, set strict restrictions and vastly hindered the design. “Basically, [FEMA] told us: ‘Limit yourself to the existing footprint, you can’t spread out,’” Lind says, “and so we changed from pushing out to deciding we had to go up.”

But to go up, as Lind notes, would present its own list of challenges and concerns, the most important of which involved the existing Rosedale residents. Rosedale, like most of Central Austin, has recently attracted a new, younger buyer, looking for homes close to the city center. As a result, the neighborhood is being redeveloped, and in several instances this has led to some of the smaller, historic homes being torn down and replaced with much larger, two and three-story homes often out of character with the existing neighborhood. Many of the residents objected, and the city reacted. In 2006, the Austin City Council passed the “Residential Design and Compatibility Standards,” dubbed the McMansion ordinance for its far–reaching and contentious efforts to limit the size and shape of homes built in Central Austin. The list of McMansion limitations is numerous and includes, among others, a restriction on the home’s floor space to no more that 40 percent of the lot size and frontline setbacks based entirely on the average setback of the surrounding homes.

While Lind’s design of the Silver Agave fit well within the McMansion parameters, not even coming close to such expansive dimensions, Lind says that nonetheless the ordinance has had a major impact on his work as a designer.“You have to put this into the context of this really rancorous debate over what is or is not a McMansion,” he explains. “What no one wants now is to be accused of building a McMansion.”

The owners wanted to reinvent the house, to add more space, and the budget allowed for a near doubling of the existing home. The challenge for Lind, however, was to do all this, on the existing footprint, while creating a look that remained “compatible” with the surrounding single-story houses.

The first to go was the garage. Originally a one-car garage built on a shoddy concrete slab, Lind transformed this into a two-story addition and nearly 500-sqaure-feet of added living space. Immediately, Lind saw the impact this could have on the home’s appearance and sought to reduce it. ”I didn’t want to have a tower sticking onto the front of this one-story cottage,” Lind explains. The first floor siding is cement stucco, intended to give weight and presence at the end of the driveway. Above that, a slender bank of horizontal windows rims the entire structure, dividing the lower and upper floors. Vertical, fiber-cement siding with cedar battens on the second floor help further this division. The near-flat roof, no attic and broad overhangs then cap the tower, stopping the eye and condensing the visual height of the structure. The continuation of the standing-seam roof down one side of “the tower” further draws the eye downward, as would the flow of water over a waterfall.

Lind then continued this diminishing approach to the design for the second-floor addition on the main house. A master bedroom and bath attaches to the second floor loft and stairwell that, along with a first floor dining area, replaced the old garage. The result is an 800-sqaure-foot master suite that includes a utility room and second-floor living area. Again working to reduce the home’s visual impact, Lind slid the addition to the rear the house and recreated the original low-pitched roof at the front. The attic was once more eliminated and the second floor ceiling follows the pitch of the roof — from 8’ 6” at the peak to 7’ 6” at the outside wall. Another long row of windows faces the street. “The second floor does not have any wall at all, just a bank of windows,” Lind explains, “so that the apparent massing of the house still reads like a one-story house.”

The ground floor of the main house was left much like it was. The same roof line. The same front windows. And the recently installed Ipe (a Brazilian wood) covered porch and banister were left intact. “You don’t put Ipe up and paint it,” Lind explains. “It’s just too expensive.”

Inside the house, the interior is a stripped-down, box-like design that coordinates with the home’s exterior. The existing bedrooms were repainted and the ground-floor bath updated with new fixtures and a low-cost ceramic tile. The main living area was then opened up to include the added dining area, the sparse, open staircase and a compact horseshoe kitchen that faces the living room. The inclusion of the beefy, custom-built shelving above the kitchen counter accentuates the mid-century modern motif and melds well with the owners’ tastes in furniture.

At a finished 2,100 square feet, it is fair to say that the Silver Agave house achieved most, if not all, of what Lind, the clients, FEMA and the Rosedale community had hope it would. It is new. Modern. Different. And yet, in the vernacular of the existing neighborhood, it fits and fits well, ready to blend into the historic fabric of Rosedale, rather than standout as an obvious (and oversized) addendum to it.