"Our human destiny is inextricably linked to the actions of all other living things. Respecting this principle is the fundamental challenge in changing the nature of business."
- Paul Hawken, The Ecology of Commerce


- = Sustainable Economy Initiatives = -

San Francisco’s Residential Energy Conservation Ordinance (RECO)

Since 1982, the city of San Francisco has utilized a very progressive approach to upgrade the energy efficiency of the city’s buildings, producing an overall 15% increase in efficiency, while stimulating the city’s economy.


As the world’s awareness grows about the dangers involved with global climate change, the need to increase energy efficiency – and decrease energy consumption - is becoming a vital component of the struggle to reduce greenhouse gas emissions. Back in 1982, the San Francisco Department of Building Inspection adopted a remarkably simple energy conservation ordinance (by-law) that has been very effective. As a local economic development tool, initiatives that stimulate investments in more energy efficient buildings reduce the overall size of fuel bills, putting more disposable income into the hands of tenants and owners. As a rule of thumb, an investment in energy efficiency will yield twice as many local and regional jobs as an equivalent investment in new energy generation, since the work is very labour-intensive. The US Council on Economic Priorities has estimated that investments in energy-efficient technologies produce four times as many jobs as the equivalent investment in new power generation.

The goal of increased efficiency, however, has been remarkably difficult to deliver, which is why San Francisco’s successful RECO is such a useful model.

Aims and Objectives

San Francisco’s goal was to reduce the amount of energy and water being consumed in the city, protect citizens from rising energy costs, create jobs, and prevent pollution, while incurring the minimum costs. There are many programs and initiatives around North America that use rebates and incentives to persuade people to invest in energy efficiency home upgrades, but they all cost money and require administration.


The City’s chosen method was to pass a Residential Energy Conservation Ordinance (by-law) in September 1982, that requires all residential property owners to provide certain energy and water conservation measures for their buildings : attic insulation; weather-stripping all doors leading from heated to unheated areas; insulating hot water heaters and insulating hot water pipes; installing low-flow showerheads; caulking and sealing any openings or cracks in the building’s exterior; insulating accessible heating and cooling ducts; installing low-flow water-tap aerators; and installing or retrofitting toilets to make them low-flush (3.5 gallons per flush or less). Apartment buildings and hotels are also required to insulate steam and hot water pipes and tanks, clean and tune their boilers, repair boiler leaks, and install a time-clock on the burner.

A normal city or state energy code requires that all new housing must comply with the code. San Francisco’s innovation has been to require both new and existing property-owners to comply with the code, by making the code mandatory on a one-time basis whenever a house, apartment or hotel is sold, which occurs on average every five years. Over a period of time, this means that every building in the city gets upgraded to the higher standard. The RECO also kicks in whenever an owner undertakes a major improvement on a single or two-family dwelling in excess of $20,000 US, in excess of $6,000 for buildings with three or more apartments; and in excess of $1,300 per unit for residential hotels.


The way RECO works, an owner of a residential property who wishes to sell must obtain a valid energy inspection, install the necessary energy and water conservation materials, and obtain a certificate of compliance, prior to the transfer of title. The initial inspection occurs 1-2 days after the owner calls, and once the work has been done (either by the owner or by a contractor), the certificate of compliance is filed with the Housing Inspection Services Division, and recorded with the San Francisco County Recorder’s office. If an owner cannot undertake the upgrading before sale, the task can be transferred to the buyer, provided that buyer agrees to comply within 180 days of the purchase, and that a sum of money equal to 1% of the purchase price is placed in an escrow account to cover the cost of the upgrade. For single or two-family dwellings, this need not exceed $1,300. To back the RECO, an Order of Abatement can be used to prevent the transfer of a property unless the owner has complied with the RECO.


The cost to San Francisco’s city budget has been nil, and the cost of enforcement through the city’s Housing Inspection Services Division has been very inexpensive. For single family dwelling property owners, the average cost of the inspection and upgrade is around $1,300 US (£ 900), which is taken on by the new owner. Because it is easily absorbed into the purchase price and mortgage, it is not a noticeable expense for the purchaser.


When the RECO was introduced in 1982, there was stiff opposition from the real estate community (local estate agents). The city countered this with extensive publicity, by providing training workshops for city and private inspectors, and by involving the private sector – architects, designers, builders and engineers. As a result of these measures, RECO is now accepted as a routine part of buying and selling property in San Francisco. Since 1982, while they have not conducted a detailed study, city staff estimate that RECO has reduced average home energy-use by 15%. With a city population around 750,000, and the average house using 10,000 kWh of electricity a year before the upgrade, the cumulative annual savings when every house complies comes to 1,500 kWh per house, totaling 1125 Gigawatt hours. (1 million kWh = 1 GWh). At a cost of 8 cents per kWh, the approximate annual savings to residents compared to 1982 comes to $90 million, which is available for other economic activities.


In 1996, the city developed a Sustainability Plan for San Francisco, which called among other things for a further 50% reduction in residential and commercial/industrial energy use. In 1999, the city enacted a Resource Efficient Building Ordinance, which requires standards of resource-efficiency in all city buildings, and calls for up to seven pilot projects to demonstrate state-of-the-art green building technology. The response was so positive that there are now ten projects in the design or construction phase. By 1999, these green building techniques and energy saving measures were saving the city government more than $6 million a year, and reducing the city’s annual greenhouse gas emissions by nearly 80,000 tons. The RECO approach to energy conservation has also been adopted by the city of Berkeley, California, but so far, by no other cities.

Where this kind of pro-active, mandatory legislation does not exist, it is easy for property owners to ignore the various energy inefficiencies of their buildings, wasting enormous quantities of energy. With current available technologies, every appliance, vehicle, home and industrial device could be at least twice as efficient as it is today. As a tool which combines indirect economic development with direct greenhouse gas reductions, RECO is powerful, simple and effective.

Useful Resources:

Alliance to Save Energy (US):
American Council for an Energy-Efficient Economy:
Building Research Establishment:
Energy Saving Trust:
World Energy Efficiency Association:

For further information contact :

City and County of San Francisco,
Housing Inspection Services Division,
1660 Mission St, San Francisco,
CA 94103-2414

Tel: (415) 558-6220 Fax: (415) 558-6249

Written by Guy Dauncey for The Planning Exchange, Glasgow, Scotland.