It’s not that Intermountain Health refuses to upgrade its Denver hospital and medical clinics so they produce less pollution.
It’s the fact that the health system’s buildings are of different ages and sizes, and one of them — Saint Joseph Hospital — is open 24 hours a day. It’s a facility where lights and room temperature can be a life-and-death matter for some people.
“As you can imagine, a lot of these buildings are really big and there’s multiple meters and they get their energy from multiple providers,” said Natan Simha, Intermountain Health’s senior energy engineer.
When Denver and then Colorado mandated that commercial buildings in the city and across the state reduce their carbon emissions, the health system tried to figure out how to comply.
It’s one thing to turn off lights and turn down the heat at night in an office building. It’s another to adjust the energy demands of a hospital, where operating rooms have specific ventilation and temperature requirements, and expensive medical equipment runs night and day.
“This is a working hospital and it’s not like an office building,” Simha said of Saint Joseph. “We can’t just go turn things off at night. We have to be careful about even making small changes.”
Complaints from multiple business sectors led Denver’s Office of Climate Action, Sustainability and Resiliency to redo the rules for its Energize Denver building performance policy — commonly referred to as green building rules. Those changes, announced earlier this month, give businesses more time to perform energy audits and develop a plan of action. They also lower fines for companies that fail to comply in time.
The city’s green building rules are not alone in being challenged by businesses.
Last year, four trade associations that represent large building owners sued the state over its policy, adopted in early 2024 by the Colorado Air Quality Control Commission three years after the state legislature mandated it. That case is pending in the U.S. District Court of Colorado, but its fate may hinge on a bill making its way through the state legislature.
The Colorado General Assembly is considering a bill that would bring changes to those green building rules after building owners across the state raised concerns.
House Bill 1269 proposes to create an enterprise board that would collect fees from large building owners and then provide technical assistance to help them comply with green building rules. It also would reset deadlines for building owners to meet goals, adjust penalties for those who fail and allow buildings in Denver that comply with the city’s rules to also be considered in compliance with state regulations.
The clock is ticking on the 2025 legislative session, which ends May 7, but the bill’s backers believe it will pass.
A judge ruled in March that the plaintiffs in the lawsuit did not present a strong enough case for it to move forward, but she gave them 21 days to file a new complaint. The judge since then has extended the deadline until after the legislative session to see how the proposed bill might impact the lawsuit.
While the city and state policies are not exactly in line with each other, they strive toward the same goal — reducing the amount of carbon emissions produced by large buildings. Both governments were early adopters of building performance standards across the United States.
Denver’s rules required buildings collectively to cut 30% of their emissions by 2030. The amount each building must cut is based on its size and purpose.
Colorado’s green building regulation requires buildings that are 50,000 square feet or larger to reduce carbon emissions by 6% by 2026 and by 20% by 2030. The rules affect about 8,000 buildings in Colorado. That regulation is being challenged by the lawsuit from four trade groups that represent building owners.
Conflict comes down to money
The conflict between building owners and those who want to reduce Colorado’s carbon emissions to improve air quality and public health comes down to money.
Businesses argue that forcing them to comply will be detrimental to their bottom lines and the state’s economy. They also have said the green building rules don’t gel with the ways businesses plan for capital expenditures.
City and state regulators said they are trying to accommodate building owners’ financial concerns in an uncertain economy while still reaching their goals to reduce carbon emissions.
But some environmentalists who are critical of the recent changes say the planet is in crisis and governments must do everything within their power to stop the pollution that is causing global warming and harming public health — even if it means businesses have to pay for it.
“I’m disappointed in both Denver and the state for wanting to slow down this transition that we desperately need,” said Ean Tafoya, vice president of state programs for GreenLatinos. “A lot of people are just being noncompliant, and now we have to shift the goal posts so people aren’t fined. This kind of environmental goal-shifting happens in a lot of spaces, not just in buildings.”
Buildings contribute carbon pollution through massive energy consumption for heating and cooling, and for powering lights and electronics. In Denver, the approximately 17,000 commercial and multi-family buildings pump out nearly 50% of the city’s greenhouse gas emissions.
Those fossil fuels trap heat in the air, which causes Earth’s temperatures to rise. The rising temperatures are causing more severe weather and wildfires.
The air pollution also makes people sick, causing heart and respiratory illnesses and cardiovascular disease. On Wednesday, the American Lung Association ranked the Denver-Aurora-Greeley metropolitan area as the sixth-worst city for ozone pollution in the nation.
To improve air quality and limit the state’s impact on climate change, Colorado has set an overall goal of reducing greenhouse gas emissions by 50% by 2030 and by 100% by 2050. Denver’s goal is to eliminate emissions within the city by 2040. Regulating buildings’ energy consumption is just one step the city and state are taking to get there.
‘You also need flexibility’
When the Denver City Council approved the city’s green buildings policy in 2021, the complaints rolled in.
The city decided the point of the program should be to help businesses comply rather than levy fines on those that don’t, said Elizabeth Babcock, executive director of the Office of Climate Action, Sustainability and Resiliency.
After collecting feedback from 2,000 building owners and businesses, the city made changes to recognize the broader economic factors that are impacting real estate, she said.
Denver was one of the first cities in the country to establish such a policy for reducing energy consumption in buildings, and it has been recognized nationally for its work.
“When you have ambition, you also need flexibility,” Babcock said.
The changes, announced in early April, extend the deadlines for compliance. Deadlines for interim compliance are now extended to 2028 from 2025 with final compliance deadlines moved to 2032 from 2030. Building owners may also apply for extensions beyond 2032.
City officials realized some buildings would need more time to comply because of tenant vacancies and financial distress, said Sharon Jaye, the building performance policy manager. Homeowners associations that manage townhomes and condominiums also were asking for more time so their volunteer boards can save money to pay for energy efficiency projects.
The city also cut in half the penalties, which were based on energy consumption, for those that fail to meet the benchmarks for reducing energy usage, Jaye said. Thus far, no one has been fined because the deadline to improve efficiency has been extended.
Size of fines ‘big and scary’
Stephen Shepard, executive vice president of the Denver Metro Building Owners and Managers Association, said the city’s timelines were too tight and the fines too heavy. His association did not join the lawsuit, allowing him and other representatives to continue talking to the city about reform because they weren’t hindered by legal proceedings.
“The buildings in compliance had started working on their energy reduction and were way on their way before Energize Denver was a thing,” Shepard said. “The fines were really, really big and scary to the industry. It was enough to hinder investment.”
Shepard said he knew of at least one deal on a retail center’s sale fell through because the potential buyers were spooked by the city’s green building requirements.
“In Colorado, the whole state was beginning to lose investment in commercial real estate,” he said.
Those making the rules need to be mindful that buildings have a big economic impact when they consider the amount of taxes paid and all the people employed to provide maintenance, security, janitorial services and all the other jobs needed to keep them open and in good shape, Shepard said.
And as the city and state continue to recover from the pandemic, too many building owners are in financial distress because of lower vacancy rates, he noted. When a building’s occupancy rate is low, its owners will not be able to secure the loans needed to finance big projects.
“They’ve got to tread lightly and be careful of the cost of the achievement because it’s just going to wreck the economy,” Shepard said.
For some buildings, the only way owners will be able to comply is to convert the entire structure to electrical power. But that puts more demands on Xcel Energy to power the downtown grid, Shepard said. That’s another piece of the puzzle that needs improvement.
“It’s all of those kinds of things playing into it. There’s groups with their hearts in the right place, but they don’t understand the reality in place,” he said. “It truly is a property-by-property thing. It’s a big lift and expensive even for consultants to do all the reports to tell you what you need to do.”
‘Being a good business leader’
At Intermountain Health, building engineers found an easy solution for one medical office building. It’s only open during regular business hours and medical procedures are not performed there, Simhai said.
Before the rules were enacted, the building’s lights and its heating and cooling system ran all the time. After talking to staff and patients, the health system decided that was not necessary. Simhai reprogrammed the computers that run those systems so the lights and HVAC system shut off when people go home in the evening and then turn back on before they arrive in the morning.
The changes also save money on utility bills because energy usage was reduced by 30%.
“It’s probably ahead of the curve for a lot of buildings in the city and a lot of our other buildings, to be honest,” he said.
Saint Joseph’s Hospital and another medical office building are not as simple, but Simhai said the city’s new rules are more flexible and give Intermountain Health more time to comply. Some upgrades to equipment will be expensive and will need to be a part of a long-term capital improvement plan.
Still, some businesses are complying out of a sense of environmental responsibility.
Traci Lounsbury, chief executive officer of Elements of Place, a workplace design store in RiNo, said she switched her 32,000-square-foot building’s lights to LEDs from fluorescent bulbs and installed giant fans to circulate air in the remodeled warehouse to help control the temperature. Skylights add more brightness and reduce the reliance on lightbulbs.
But the changes were not cheap and it can be difficult for a small business to spend money on a building when property taxes are so high, Lounsberry said.
“We care about sustainability. It’s part of being a good business leader and a good person,” she said. “I also believe we have to do the right thing for a sustainable future for our world. It’s got to start somewhere sometime.”
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