CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 41 Section Name: {{section.name}} Account Number: 10-1311 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: City Manager's Office
MEETING DATE: June 16, 2025
SUBJECT:
Electrify San Mateo: Sustainable Building Strategy — Policy Feedback RECOMMENDATION:
Receive an informational report on the "Electrify San Mateo: Sustainable Building Strategy" project and provide direction on the policy pathways for inclusion in the final Sustainable Building Strategy.
BACKGROUND:
Building energy use represents 38 percent of communitywide greenhouse gas emissions in San Mateo. Building electrification refers to the transition from gas equipment to electric equipment for space and water heating, clothes drying, cooking, and more. While natural gas is a fossil fuel, Peninsula Clean Energy (PCE) provides carbon-free electricity communitywide. Electrifying existing buildings is critical to reducing communitywide greenhouse gas emissions and is a key strategy in attaining the objectives contained in City’s adopted Climate Action Plan. To continue to advance existing building electrification beyond reach codes and to meet the City Council decarbonization priority, City staff began working with Rincon Consultants to develop the Electrify San Mateo: Sustainability Building Strategy. This project aims to create an actionable roadmap with steps for the City of San Mateo to electrify buildings based on effectiveness and equity criteria, cost-effectiveness, best available science and data, and community feedback. The project team completed a building inventory and market segmentation analysis that was presented at the September 13, 2023, Sustainability and Infrastructure Commission meeting. After completing Phase I of community engagement, the project culminated in the identification of five policy pathways that were presented at the January 16, 2024, City Council meeting. City Council directed the project team to conduct community engagement on all five policy pathways to determine overall feasibility and support from the community. This report provides an overview of the project, analysis of the five policy pathways that will be considered by City Council and a summary of project community engagement.
Building Electrification Background
Electrification benefits include the added health benefit of reducing gas use in the home. Commonly used appliances that burn gas, including stoves, heating systems, and water heaters, emit hazardous air pollutants inside a home when improperly ventilated, or when leaks occur. These can include benzene, nitrogen oxides, sulfur oxides, carbon monoxide, formaldehyde, particulate matter and other harmful pollutants that increase the risk of respiratory disease such as asthma. Additionally, gas infrastructure carries an inherent safety risk due to the volatile nature of gas, including risk of methane leakage, damage during earthquakes, accidental explosions, or fires.
Building electrification is also an essential approach to driving the state of California toward its ambitious climate goal of carbon neutrality by 2045. Additionally, at the regional level the Bay Area Air District (BAAD) adopted zero nitrogen oxides (NOx) standards that will prohibit the sale and installation of gas water heaters starting in 2027 and gas furnaces in 2029 in the nine-county Bay Area. These standards are the most ambitious in the country and outpace the state’s goal of banning the sale of new gas furnaces and water heaters throughout the state starting in 2030.
CITY OF SAN MATEO
As part of the FY 2022-2023 goal setting session, the City Council directed staff to present to them policy options to decarbonize and electrify existing buildings and eliminate natural gas use by 2030. The City’s Climate Action Plan also identifies electrifying existing buildings as a key strategy to reduce communitywide greenhouse gas emissions. The City has shown great leadership in advancing building electrification through the adoption of local amendments to the state building code also known as reach codes. In 2020, the City Council adopted a reach code requiring all new residential and office buildings be all-electric starting on January 1, 2021. In 2022, the City Council adopted a reach code that expanded the all- electric requirement to all new buildings and requiring electric-readiness and electric appliances for specific home remodels that started on January 1, 2023. In 2024, due to a federal court decision, the City suspended the enforcement of its reach codes that prohibit the installation of new gas infrastructure. The Ninth Circuit Court of Appeals in California Restaurant Association v. City of Berkeley determined that a local ordinance that generally prohibited the installation of natural gas infrastructure was preempted by federal law, namely the Energy Policy and Conservation Act (EPCA). In January 2025, the San Mateo City Council adopted an Energy Performance Reach Code for new construction that requires energy compliance margins for new buildings and repealed the unenforceable all-electric requirement.
Policy Pathways
The project team gathered feedback on five existing building electrification policy pathways. These policy pathways are meant to be considered as a menu of options to achieve the City’s climate goals, while considering implementation and cost challenges for property owners across the City. Most local governments considering a building decarbonization strategy combine multiple strategies together to produce the most comprehensive, and equitable policy result. The following provides a high-level summary of the policy pathways. The Policy Pathways Analysis attachment provides detailed discussion of each policy pathway including advantages and challenges of policy implementation, greenhouse gas emission reduction impact, cost effectiveness and equity considerations.
1.Business as usual: The City could continue with adopting reach codes for new construction and focus on outreach and incentives. In the past, the City adopted local building code amendments to require more sustainable new construction than the State code. This approach has a limited impact because new construction accounts for a fraction of San Mateo’s development, however, this approach is already in place and thus received community support to date. There are no policy-related additional costs to building owners unless they voluntarily decide to electrify. A Zero NOx new construction approach would save an estimated 1,770 MT CO2e per year by 2030 while a performance approach would save 20 MT CO2e per year by 2030.
2.Reach codes for renovations: This approach would include the evaluation of additional reach codes to encourage and/or require electrification during renovations. New reach codes would vary depending on the updated State codes. One example of a reach code during renovations is requiring the installation of a heat pump when an air conditioner is installed. Reach codes during renovations help encourage electrification at an opportune time when a property owner is already considering home improvements. The upfront costs of electrification improvements can vary depending on the project and unique circumstances of your home. Cost- effectiveness studies must be completed to validate any adopted reach codes. Past studies have shown on-bill savings over time make electric equipment upgrades cost-effective compared to gas equipment replacements.
Two-Way AC reach code would reduce emissions by 2,200 MT CO2e per year by 2030, while a Flex Path reach code would reduce emissions by approximately 730 MT CO2e per year by 2030.
3.Require electric equipment upon replacement ahead of BAAD Zero NOx requirements: The Bay Area Air District (BAAD) adopted zero nitrogen oxides (NOx) standards that will prohibit the sale and installation of gas water heaters starting in 2027 and gas furnaces in 2029 in the nine-county Bay Area. A local ordinance ahead of these milestones would require the replacement of gas appliances with zero NOx versions when they fail or are voluntarily upgraded. This policy would have the most significant greenhouse gas emission reductions of the five policy pathways with an estimated 9,700 MTCO2e per year by 2030.
CITY OF SAN MATEO
4.Commercial Building Performance Standards: This pathway would establish a new set of policy standards for commercial buildings aimed at increasing energy efficiency, and eventually, electrifying commercial buildings as a phased approach. This is a well-established policy mechanism that has been adopted by many local governments across the country. This approach can be customizable and lead to incremental reductions in energy use but not necessarily electrification. The development of such a local program would necessitate new staff time. Emissions reductions will likely not occur before 2030 due to the phased nature of the program.
Commercial buildings account for 16 percent of communitywide emissions (83,660 MTCO2e) and thus represent an important opportunity for GHG reduction.
5.Municipal Electric First Policy: This policy establishes a mechanism for local government renovations to go electric first. The policy ensures financial, and feasibility data is being collected for municipal facilities that will allow the City to compare costs to electrify versus replacing with gas equipment. This policy has a limited reach as it only applies to municipal buildings. It demonstrates City leadership on hard-to-electrify existing buildings that mirror the commercial sector. This policy is estimated to reduce emissions 146 MT CO2e by 2030.
Community Engagement
The project team conducted two phases of project outreach. The first phase of community engagement focused on educating the community about the costs and benefits of building electrification and about the project’s general goals.
Outreach also focused on gathering feedback on the equity and effectiveness criteria the project team would use to evaluate policy pathways. The top concerns were costs, power outages and grid resilience, and the growth of the grid to accommodate future electric buildings. The top values were how the climate crisis is a priority issue, the need for the City to act now, and the availability of electric equipment incentives and rebates.
The second phase of community engagement aimed to get specific feedback on the five policy pathways as directed by City Council in January 2024. The project team conducted presentations at a variety of in-person and virtual community meetings, City Commission meetings, engaged with commercial property owners and developers, and conducted an online survey. Throughout both phases of engagement, the project team heard from individuals with strong opinions on building electrification policy. While many community members continue to be highly supportive of local action, others are firmly opposed to additional local policy. Throughout the second phase of community engagement, the project team provided 9 presentations and reached over 150 people through in-person and virtual events. In addition, over 200 people responded to the online feedback survey and staff maintains a list of over 200 emails of community members and stakeholders interested in this project.
At the May 14, 2025, Sustainability and Infrastructure Commission meeting, the project team presented the five policy pathways, along with community feedback obtained up until that point in time, and commissioners provided feedback.
Commissioners supported policy pathways 1, 2, 4 and 5 to advance existing building decarbonization and meet climate goals. Commissioners noted the importance of funding to help homeowners with the transition, suggested the City help provide funding and emphasized the importance of PCE’s Loan program. Commissioners also recommended the incorporation of a hardship exemption into potential ordinance language to address cases that are hard-to-electrify. Two commissioners expressed interest in Option 3 Zero NOx standards ahead of the Bay Area Air District but noted that both the timeline for this policy and enforcement would be very challenging.
The project team also gathered feedback from the Senior Advisory Commission on May 12, 2025, and the Community Relations Commission on May 21, 2025, which is charged with providing the City’s DEI lens. The Senior Advisory Commissioners voiced concerns about the upfront costs of electrification but there was some consensus and support over the intent of building decarbonization and of Options 4 and 5. The Community Relations Commission discussed various ways to improve marketing to various community groups and emphasized the importance of equitable transition in existing building decarbonization. The Community Relations Commission unanimously supported all five policy pathways.
In summary, the project team found:
CITY OF SAN MATEO
Option 1 Reach Codes for New Construction (Business as Usual), Option 4 Commercial Building Performance Standards and Option 5 Municipal Electric First Policy received the most community support. Option 3 Zero NOx Standards ahead of the Bay Area Air District, received the least amount of community support. Option 2 Reach Codes for Renovations received a mix of support and opposition.
Detailed community feedback and survey results for each project phase are provided in the Community Engagement Summary attachment. Detailed community feedback as related to each policy pathway is provided in the Policy Pathways Analysis attachment.
Next Steps
Staff seeks City Council direction on which of the five policy pathways to include in the final “Electrify San Mateo:
Sustainable Building Strategy.” Specifically, does the Council recommend inclusion of:
Option 1 Reach Codes for New Construction (Business as Usual) —most strongly supported, Option 2 Reach Codes for Renovations—mix of support and opposition, Option 3 Zero NOx Standards ahead of the Bay Area Air District—not well supported, Option 4 Commercial Building Performance Standards—most strongly supported, or Option 5 Municipal Electric First Policy—most strongly supported.
The City Council can recommend inclusion of a subset of policy pathways or recommend inclusion of all policy pathways in the Sustainable Building Strategy. After City Council provides direction, the project team will compile the policy pathways into a final document that will incorporate the project work completed to date including building and market segmentation analysis and electrification cost analysis. The project team aims to bring the final document for adoption at an upcoming City Council meeting, which could be July 28, 2025, depending on the options selected.
BUDGET IMPACT:
The development of the "Electrify San Mateo: Sustainable Building Strategy" was funded by an appropriation from the available fund balance in the Advance Planning Fund (Fund 225) and had no impact on the City's General Fund.
The different policy pathways presented in this report have varying budget impacts for implementation. The implementation of reach codes (Options 1 and 2) is integrated within existing City processes for planning application, plan check and building permit review. The enforcement of Option 3 would also be integrated within City’s permit issuance process. The implementation of Option 4 would be the most resource-intensive of the five policy pathways and would require staff time for the development of an ordinance and to staff the new program moving forward. The cost impacts of Option 5 would vary depending on the facility equipment replacement needs; technical assistance programs, grants and rebates are available to support municipal electrification.
ENVIRONMENTAL DETERMINATION:
This informational report is not a project subject to CEQA, because it can be seen with certainty that it will not cause a physical change in the environment. (Public Resources Code Section 21065.)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Public Comment
Att 2 – Policy Pathways Analysis
Att 3 – Community Engagement Summary
STAFF CONTACT
Andrea Chow, Sustainability Analyst
[email protected]
(650) 522-7007