A city edict has building owners fuming

https://www.bizjournals.com/stlouis/news/2026/02/27/mixed-use-development-metro-east-billion-star-bond.html

Transcript

SPEAKER_03 0:06

This is the Art City Report. Your weekly dive into the biggest stories from the St. Louis Business Journal about business and everything else in the whole of the Gateway Art. Sponsored by Merrivale University.

SPEAKER_02 0:29

I'm Jacob Kern. In 2020, the St. Louis Board of Alderman passed a bill making St. Louis just the fifth city in the U.S. and the first in the Midwest to enact an energy performance standard for buildings, part of its commitment to reduce greenhouse gas emissions 100% from 2005 levels by 2050. The measure was written to cover municipal, commercial, institutional, and residential buildings of 50,000 square feet and larger. A year after its passage, the city set energy usage standards for several building types and gave building owners that don't meet those standards until May 2025 to find a way to reduce energy use. Now building owners are hearing from the city on this, and several are finding that the path toward compliance is not only expensive but cumbersome. And in the minds of some, an unnecessary burden that adds an obstacle to investment in the city. I'm joined now by one of those building managers. Danny Wolk manages Bianco Properties, which owns two large central west end apartment buildings. It's the 83 unit president and 61 unit Park Royal. And those received a notice from non-compliance from the city. Danny, welcome.

SPEAKER_01 1:48

Good morning, Jacob.

SPEAKER_02 1:50

So let's first just set the scene for people on where those buildings are and what they are. They've been there a long time.

SPEAKER_01 1:58

Yes. And we call them in our office the Grand Old Dames of the Central West End. That they were built. One of them, the president, was built back in 1929. And a year later, the Park Royal was built in 1930. And they're just historic and grand buildings. They were and they still are.

SPEAKER_02 2:19

Yeah, they have uh I went into them. They have incredible architectural detail. You've feel like you've maintained them in a significant way. You've owned these buildings for a long time. What is that process like in terms of maintaining buildings like this?

SPEAKER_01 2:36

We've we've owned the president for over 50 years and the park royal for over 30 years. And we've done what we can to maintain the historic ambiance and feel of those buildings with the crown molding, as you mentioned, the parquet floors. We've been in other buildings that have been built around this time. And in certain instances, drop-down ceilings, like you would see in an office to maybe accommodate ventilation systems or updated air conditioning systems. But we retain the ceiling heights, we retain the charm of these buildings, and we're very proud of that. And I think it's important, I think the city of St. Louis wants that uniqueness to be maintained.

SPEAKER_02 3:18

Yeah, they have all kinds of historic districts and legal mechanisms where you would think that's an asset that they like in the city. But since 2017, you have actually been reporting energy usage to the city under an older, different set of rules. And so how did that work? And what was that first?

SPEAKER_01 3:40

We have one person in our office who's dedicated to submitting energy usage as part of, I believe it's part of this program, and it goes through this energy star system with a portal online. Um, and that is somewhat complex itself, just the reporting mechanism. But we've done it, even though these laws, and I guess we'll get to that, but were passed in 2020, they were retroactive as far as reporting the utility usage back to believe 2017 or 2018. So we've been in good faith in compliance with reporting those utility usages. And that's what was surprising to me when we received threats of$500 violations.

SPEAKER_02 4:21

Yeah, when did you hear from the city and what did they tell you? Of course, this is after having done this reporting.

SPEAKER_01 4:28

So we reported for seven, eight years, and we received in late December of 2025, so a few months ago, or about four months ago now, we received a heavy-handed letter from the City of St. Louis, I guess it's the BEPS, the Building Energy Performance Standards Maybe Department, but it was threatening$500 daily fines and the withholding of reoccupancy or occupancy permits if we did not comply with the data verification component of these laws. And what is that? Help people understand. Well, even though we did our best and and reported the utilities routinely for the past seven, eight years, the city, uh, as part of these laws or ordinances mandates that you get, I believe it's like the most recent or the most previous year or most recent year, to get it verified. And then you have to use, in order to get it verified, you have to go outside, you have to pay a company to confirm that the last set of data points that you provided were accurate. And I guess that gets the city comfortable that you're not budging numbers or perhaps even mistaking numbers, not intentionally. So on top of everything, now the city is requiring you to use a third party to come into your building to verify information, including square footage of the buildings that they have nothing about, know nothing about. And it just I can it just did not make sense to me. Did they give you a list of people that you could go to for that part of it? They did. It's on their 59-page handbook, which is quite complicated and is really surprising that the city would think that private property owners have the enough time to review a 59-page handbook that is complex and confusing to not only a layperson but people in real estate. To bring in we would be forced to bring in a third party, pay them to come in to try to do calculate GLA, which is a size of the building, grossly school area, and uh the data points, the utility usage.

SPEAKER_02 6:36

Yeah, and but just to have people understand, that's for the verification of what you have been reporting to the city in terms of the energy usage. There's an entire another mandate with the buildings potentially being out of compliance with energy reduction standards that the city has set. And how could you know how much energy you have to reduce and how by investments? Because I think people might think, how far are you from the city's standard that they have come up with?

SPEAKER_01 7:10

Yeah, so let me take you back a little bit if I can. After receiving the threats of viol of fines and withholding of permits, I reached out to Michael Browning, our alder person, to make him aware and ask questions and about the program. I was trying to be honest, get up to speed with it, to understand. And the alder person, he got back to me, he was responsive. He suggested that I, after talking to the department, after he talked to the department, he suggested that I go into the department with an alter alternative compliance pathway. And that's a that's a hardship case, or it's an it's a way to move through this process if you anticipate that you're not going to be in compliance. And I know I'm jumping around here a little bit, but what that triggered is, and I submitted a letter to the city, they rejected the letter. They said in order for us to consider your c your buildings for an alternate compliance, then you would have to um get a I think it's called a second-level auditing report. And they made it seem like a simple process. But we received a bid from a company that specializes specializes in this, and the bid was uh$25,000 per building for each of these reports. And so that that is separate from the initial verification costs and time and effort to get that done. And this is where the the process becomes the punishment. There's so much that even leads up to understanding what and if these buildings could be in compliance at some future point. These costs are, I don't see how they're justifiable from the city standpoint.

SPEAKER_02 8:48

Yeah, we'll get into that. But what do you all plan to do now? I know that the city has not yet started finding. We don't exactly know when that might occur. What's your plan right now?

SPEAKER_01 8:59

It's unfortunate. We received, I said heavy-handed, we received two more, our staff did receive two more phone calls, TERS phone calls from the city just last week, threatening that if we did not come in compliance with this verification piece of the data by the end of this month, then we would be subject to thousands of dollars of fines. I've reached out to the St. Louis Apartment Association. I put some calls into some of the senators. I'm reaching out for help because I feel like the vintage and the buildings that we own, which are over 75 years old, the residential, which I believe is important to this meeting compliance points that the St. Louis's city is arbitrarily setting to get help in supporting our efforts in letting us manage our properties, which we've done for over a combined 80 years, and not having St. Louis City and this department mandate conditions to try to regulate us. We'll be right back.

SPEAKER_00 10:26

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SPEAKER_02 11:08

It is a fairly complicated process. Just taking a step back, do you have an issue with the mission of the law, or is it the process that has hit you here? How do you think about that?

SPEAKER_01 11:20

It's a I appreciate the question. It's a great question. And I believe the city has good intentions. And we and our company realizes the importance of energy efficiency. We've made upgrades in our apartments over the years from window replacements to appliances in apartment units to big components within our systems being energy compliance. We've changed thousands of lights to LED within both of our buildings, which we do throughout the properties we own. So we recognize the importance of doing that, but it needs to be a business decision. When it comes down from the city, who, as I said, knows nothing about our properties and our buildings and doesn't understand what it takes to maintain them, then that becomes, I don't know if you want to call it a tax or or what, but it is a burden. It's not only a time uh burden, it is a significant financial burden to our buildings. I took you, Jacob, through one of our units, showed you some photos. Every time we have to get behind these apartment unit walls to fix a water leak and then restore the everything in that bathroom, it's a$12,000 job. And it gets very expensive very quickly.

SPEAKER_02 12:42

Yeah, and one of the things that stuck out to me too is you can see for yourself that your property tax bill has doubled since 2022.

SPEAKER_01 12:49

It's more than doubled, but I yes, it it has significantly increased. It's more than doubled since over the past three years.

SPEAKER_02 12:56

So one of the things I want to just end with is one of the things we talked about. Actually, the reason that you reached out to me in the first place was that you had read an article that we had done about how the city has$250 million plus in critical infrastructure needs. The city defines critical as being a failure point. So whether that be in a building, bridge, that means this infrastructure could imminently fail. And they only have$48 million a year to even begin tackling that. And meanwhile, more of their infrastructure will become critical. So the point that you were making really was they can't take care of their own buildings. Why are they putting on extra mandates on the private sector here? Meanwhile, they also have issues with population and large vacancies downtown, of course. So this idea.

SPEAKER_01 13:52

Yeah. So when I put a call into the office, this building department office that runs this program to find out more about it and tell them our concerns, including these apartment buildings that are over 75 years old, are very difficult and very expensive to maintain. And we take pride in maintaining them. There it was almost like a canned response in that their immediate reaction is was that we did it at City Hall. Our City Hall, we brought that into compliance for$1.4 million. But that just doesn't ring true, especially when reading your article. The fact that they made a decision to put money towards this energy efficiency compliance program when in fact the physical building itself is not being maintained from the roofs to tuck pointing, the exterior of the buildings. That's just a city hall. We can get onto the courts building with ventilation issues. There's hundreds of millions of dollars that the city, instead of funneling this money into addressing those physical issues, what good is providing the building to fall into energy compliance if the building is physically not structurally sound, is falling apart, in fact. So it's it's concerning. On top of that, and the information that I have in front of me is that millions of dollars that it's taken to fund this program over the years comes out of the public safety department budget. If that's the case, I'm that that money could be spent. And I'm not telling the city what to do, but it seems like there's other priorities the city could spend that on, whether it's protecting the vacant buildings that they have downtown, the railroad exchange, the AT2 building, millions of square foot of buildings are not generating any energy down there in power, ironically, but or providing additional security. There's just it's interesting that it comes out of the public safety department when it could be addressing some other priorities that the city may have. So there's a lot there, but but that's that's how I see that point. Thank you so much, Danny. We'll be right back.

unknown 16:14

St.

SPEAKER_03 16:14

Louis has big regionwide challenges, and that means we need big ideas and bold leaders. I'm Eric Seamers, editor of the St. Louis Business Journal, and I'm inviting you to join me at our next Advanced STL event on Thursday, April 30th from 8 to 10 a.m. at the St. Louis County Library Clark Family Branch for an engaging morning of real talk and real solutions. We'll hear from Dara Eskridge of InvestSTL, Chris Krameyer of Beyond Housing, and Eric Scroggins of the Opportunity Trust, three leaders already driving change in housing, education, and equitable growth across our region. Head to Bizjournals.com slash St. Louis slash event to reserve your seat today. I hope to see you there.

SPEAKER_02 17:06

Welcome back. I am now joined by my colleague Eric Seamers.

SPEAKER_03 17:10

Jacob, I'm going to turn the tables on you today and start asking you some questions. You've been reporting on this story now for a while, and we just heard from, of course, Danny Wolk, who was the subject of a story you published last week on this topic. You've heard from some other affected parties regarding the building energy standard. What is it that you're hearing from others?

SPEAKER_02 17:30

We've heard from other building owners. For example, Christy Schlafley. I'm preparing to talk to her later, but she did already send notes where she says this has been a major headache. She is there at 2204 North Broadway, Ford Hotel surprise. And much like Danny, she's going through the bureaucracy just trying to figure out what she needs to do. One difference, though, it seems, is that she's asking for what companies, third-party contractors, can I get to help me? And she's sending me all these notes showing that the city hasn't been able to help her. And she just says here, this is just a nightmare. And she said it's exactly what your other person said. We are hearing from other people. The city does appear to be really getting in contact with these many hundreds of buildings that that will be mandated to reduce energy by these certain standards.

SPEAKER_03 18:31

Has anybody from the city responded to your inquiries? Have we heard from the city at all in relation to these concerns?

SPEAKER_02 18:38

The city has given me nothing so far. I asked when they plan to start finding people and when they might have new energy performance standards. They're supposed to come up with by the law. They're supposed to come up with new standards May 1st. But I did hear from somebody who used to, who was setting up this program with the city, who was giving me some more information about what the current standards are that were set in 2021 by this metric called EUI. And so there is a there is a list here by the 2021 standards where you can see, for example, the city wants hotels to be at 89 EUI. And that's a kind of a complicated formula for like an energy metric. So, you know, you can see that if you're able to calculate your EUI, what the city wants you to be at. That guy also acknowledged that the website for this and the sort of information and the way it's laid out for people, the sequence of it, could probably be improved. I think he he understood why there is frustration and why there is confusion. And as and what Danny said is correct. There is a 59-page handbook in terms of compliance. And you can see in our story that there are these different pathways to become compliant, fairly complicated, four different ones.

SPEAKER_03 20:07

This feels to me that what we're seeing here is the implementation of a policy done with good intentions, in which the communication and implementation has turned out to be a lot more complicated than probably originally envisioned. You could look at this story um with a critical eye and say they launched this in 2020. They set up standards a year later. These buildings have had a long time to get this in in order. And now it's 2025 and the bill or 2026 and the bills are coming due. Why do they weren't they working on this before? But we're finding out from the details from folks like Danny, it sounds like that the details involved as the notice they've been given from the city all feels very sudden for a bill that was entered that was passed six years ago. Do you get that same sense? Is that what really what's happening here?

SPEAKER_02 20:54

I did. And the former city official I talked to did mention, you know, what they what people like to mention with stuff like this a lot of times is that there were town halls, there were these different things over the years. People are very busy, as Danny mentioned. And so they're not necessarily following what the board passes or the town halls before or after. And if you're not literally going to be sending mail to people or knocking on their door, I'm not sure that the expectation would be that people would have any idea until you start doing that.

SPEAKER_03 21:29

It's also true that the general political climate in a city government, what you're prioritizing, can very much be the issue at hand right now rather than an issue that was important five years ago. So in in 2019, 2020, being a progressive city that came in compliance with greenhouse gas emissions, it was very much probably an in vogue moment in time important thing to do. Six years later, with the city struggling with infrastructure issues, battling a state takeover of its police department, public safety issues, and a population in downtown that continued to diminish, this would seem like uh not a really important thing, which is what Danny was suggesting. But cities in their defense, there's no practical way to implement a c a complicated pro problem like this, and it's over time. And realistically, a five-year run of preparation before it becomes implemented would seem reasonable. Now they're just victim to the turning tides of more pressing things becoming a priority.

SPEAKER_02 22:40

The federal government has turned against this, of course, under under President Trump. But we've seen commentary since the article has published that is interesting in a sense that even in 2019 or 2020, you what really would be very different? The city's population is in collapse. It has been for decades. Downtown was still struggling, you had these massive buildings, there's always perennial budget problems. And even for that time, there is this criticism. Why would you be doing this? Why would you be trying to make it harder to do business in the city of St. Louis when people are not exactly knocking down your door?

SPEAKER_03 23:21

Looked at it a different way, you would see you could argue, and I think someone did on social media in one of your uh comment with this story, suggests that policies like this are the luxury of cities that are growing. Perhaps more of a vanity for cities that aren't.

SPEAKER_02 23:39

Yeah, and one thing though, in defense of the city, they in their language, and it is in the article, that they say that ultimately if you make these improvements, whether it be very high efficiency HVAC or whatever it is, that you could over the lifespan of the infrastructure end up saving money. So that is the claim that that they have made. And so I think that's important. One thing maybe just to close out on is that the city may be staring down its next nullification issue with Republicans in Jefferson City. Danny mentioned the apartment association executive there in St. Louis, and she said very openly this was the quote we are collaborating on possible legislative language that could be considered at the state level to address some of these concerns. That sounds like nullification to me.

SPEAKER_03 24:35

And they're taking it up the next level.

SPEAKER_02 24:37

Yeah. And St. Louis, of course, has dealt with this over and over. That they took the police department was taken away, the earnings tax, they mandated a vote on the state did. There's been any number of issues where the state has intervened in city affairs. This really could be the next one. That's it for this week's episode. Thank you to our guests, Danny Wolk and Eric Seymours. To read our coverage of this issue, see the links included in the show notes or go to St. Louis Business Journal.com. As always, thank you to our supporting sponsor, Meryville University. We'll be back with you again next week.

SPEAKER_03 25:17

Learn more about these stories and what we discussed in this episode at the St. Louis Business Journal online, which is Bizjournals.com slash St. Louis. Thank you for listening to this episode of the Art City Report Podcast series. New episodes released every week. Subscribe wherever you get new podcasts. If you like this episode, leave us a rating and review on Apple Podcasts, Spotify, or Google Podcasts.