Incentives for Installing Residential Sprinklers

Fire officials have long used incentives to get sprinklers installed. There are two types of incentives. The first is economic, such as low-interest loans. The second is design alternatives like reduced compartmentation requirements or longer distances to exits. Design alternatives are also called tradeoffs.

Some design alternatives are in the building codes and some are not. For example, the model building codes already allow longer distance to exits in certain occupancies when the building will be sprinklered. They also allow lower fire resistance of certain separations if sprinklers are present. But the building codes also limit these allowances, so fire officials need to look at what is already allowed and what they will need to amend or preempt in order to give the desired incentives.

Just because a design alternative is already in the building code does not mean that it should not be offered. The fact is that many architects and builders are not aware of these alternatives. Informing them could mean the difference in getting sprinklers installed.

The purpose of incentives is to reduce the net cost of installing sprinklers. Most of the incentives do not reduce the direct cost of sprinkler installation, that is, the price charged by the sprinkler installer for the work. But any cost that is reduced or avoided because sprinklers are installed will reduce the total cost of the project - thus the term "net cost" reduction.

The justifications for giving incentives are solid. For one, fires in sprinklered buildings require about one half the number of firefighters and apparatus. This lowers the demand on fire department resources and allows more liberal response times for backup companies. For another, if fewer fire stations are needed or new stations can be delayed, the avoidance of additional taxes or fire service fees reduces the economic impact on citizens. For a more detailed discussion of the impact of sprinklers on fire department resources, see Answers to home builders objections.

The table of incentives below shows that the benefits can go individually to the developer, the builder, installer or owner, or they can go to more than one. It should be kept in mind that the direct benefit to one individual will result in a net cost reduction if the cost savings are passed on. For example, if the developer saves money because he or she was allowed to install smaller water mains and fewer hydrants, the savings can be passed on to the builder and ultimately the owner through lower property costs. However, if the developer elects to increase profits rather than pass along the savings, the incentive has not had its maximum impact on reducing the costs of sprinklers. The same goes for incentives that accrue to the builder and installer. To have the intended impact, they should elect to pass along the savings through lower costs of the building or installation.

The incentives listed below are not in any particular order. For a description and discussion of each incentive, clicking on the incentive will link you to the explanatory text that begins below the table.

Incentives	Who benefits
Incentives	Developer	Builder	Installer	Owner
Reduced impact fees	X	X
Low-cost loans	X	X		X
Increased density	X
Reduced fire flow	X
Hydrant spacing	X
Longer access road distance	X
Longer distance from fire stations	X			X
Reduced access to building sides	X
Narrower streets	X
Fewer parking restrictions	X
Longer cul-de-sacs	X
Reduced turnaround radius	X
Reduced permit fees		X	X
Reduced or exempted plan review fees		X	X
Reduced or exempted fees for field inspections		X	X
Reduced fire resistance ratings, no parapet walls		X	X
Increased distance to exits		X
Single water line for domestic and sprinkler systems			X
No separate meter for sprinkler system			X
No fee increase for larger meter			X	X
No special connection charge			X
No water standby fee				X
Check valves instead of low-pressure-principle backflow preventer			X
No backflow prevention (13D)		X	X	X
Combined plumbing and sprinklers (13D)		X	X	X
Lower insurance premiums				X
Lower ISO rating				X
Reduction in annual fire service assessment				X
Property tax reductions				X

Reduced Impact Fees

An impact fee is a charge a community makes to a developer to pay for improvements that are needed because of a new development. Examples are roads, sewer, water mains, water storage, parks and fire stations. Impact fees are not universal. Some communities require that the developers pay for roads, water and sewer that the development requires.

To the extent that smaller water mains, narrower roads and longer distances form fire stations are given as incentives, it is possible to deduct the proportional cost of these items from the impact fee. When considering the lower cost of water, include the lower storage costs as well as water mains and hydrants. (top)

Low-cost Loans

Communities have come up with a variety of ways to provide low-cost loans to building owners for installing sprinklers. This is one way to reduce the net cost of retrofitting systems in existing buildings. One state added retrofit sprinkler systems to its list of public improvements, making them eligible for low-cost, long-term loans just like sewer improvements or street lights. Many communities in the state have retrofit requirements, and building owners who increase the size of a building over a certain area threshold are required to retrofit the entire building with sprinklers.

The loan is arranged through the individual community, which floats a general obligation bond which the builder pays off over 10-20 years at a favorable interest rate. This method of financing a retrofit has a big advantage for owner who have long-term leases with tenants. The monthly payments to pay off the bond issue are considered taxes, and the state's lease laws allow tax increases to be passed along to lessees immediately. Thus, the owner can recoup the installation costs without waiting until a lease expires to negotiate a higher payment. (top)

Increased Density

Communities control the density of structures by controlling the distance between buildings and building height. There are two objectives for doing this. The first is to reduce the likelihood of a fire conflagration. The second is to control crowding and have an aesthetically pleasing environment. Both objectives are reached by setting distance requirements from the street (front yard setbacks) and from adjacent property (side yard setbacks). (top)

Reduced Fire Flow

The codes allow as little as 750 GPM fire flow for average sized 1-family detached homes. Since fire flow is the major factor in water main size, lower fire flows nearly always mean smaller mains. Lower fire flow also means smaller storage tanks and less pump capacity. All of these reductions can add up to a significant cost savings. For example, when Scottsdale, Arizona adopted a residential sprinkler ordinance, the estimated savings in water costs was 7 million dollars. (top)

Hydrant Spacing

Many fire officials allow longer distances between hydrants when all of the property is protected with sprinklers. Demand for water is greatly reduced when sprinklers are present, and the time needed for connecting to a water supply can be relaxed. Also, most fire departments now carry large-diameter hose, which greatly reduces the friction loss in longer hose lays.

When looked at on a per property basis, this cost savings can be significant. In a 1-family home development, for example each hydrant may protect between 4-8 homes, depending upon the density. When hydrants cost $2,000.00 to install, a 50 percent increase in spacing equates to a sizable cost reduction per home. (top)

Longer Access Road Distance

This incentive is related to hydrant spacing. The building and fire codes require hydrants on the property when the buildings are beyond a certain distance form a public roadway and public hydrants. Just as the spacing of public hydrants can be increased, the distance to the building can also be increased in order to delete the private hydrant requirement. (top)

Longer Distance from Fire Stations

As new development expands the limits of a jurisdiction or is too far from existing fire stations, the issue of new stations and firefighters to staff them comes up. Because sprinklered buildings and homes need about one half or less the number of firefighters and apparatus, distances between stations can be increased. The limit in sprinklered areas is usually set at the maximum desired travel time for EMS calls. This is much farther than desired for unsprinklered areas, so the savings can be significant. One city recently projected 7 stations for a new development if sprinklers are not required, but only 3 if everything is protected with sprinklers. At an average cost of 1 million dollars per year to staff a station with just three firefighters around the clock, the sprinkler requirement will save the city 4 million dollars a year. For a more detailed discussion of the relationship between sprinklers and fire department staffing, see the Section on staffing in Answers to Home Builders. (top)

Reduced Access to Building Sides

When a building is protected with sprinklers, the need for access to all sides for manual suppression and aerial rescue is greatly diminished. This gives the architect a lot more freedom for siting yards, parking and other uses that would not be possible if the fire department needed access. (top)

Narrower Streets

Typically, streets are sized wide enough to allow two apparatus traveling in opposite directions to pass each other. Many jurisdictions allow narrower streets that leaves room for just one apparatus, the logic being that fire incidents will be for controlled incidents where the fire is often already out. Narrower streets give developers more sellable land. (top)

Fewer Parking Restrictions

This design freedom is related to street width and building access. Fire officials typically require "Fire Lanes," or access on the private access roads and parking lots fight up to the building. One alternative to narrower roads is to allow on-street parking that cuts the access width to one apparatus instead of two. Of course, deleting the need for complete access to all sides of a building will provide more sellable space or space that can be used for parking or other purposes. (top)

Longer Cul-de-sacs

Cul-de-sacs in 1-family neighborhoods are the darling of developers and city planners because the restricted access discourages through-traffic and slows vehicles. These are seen as advantages for child safety and aesthetics. Fire officials limit the length of cul-de-sacs because of the obvious disadvantages for emergency vehicles. Since sprinklered homes reduce the demand on the number of firefighters and apparatus, many fire officials allow longer dead-end streets when sprinklers are installed. (top)

Reduced Turnaround Radius

When cul-de-sacs are allowed, fire officials normally require wider turn-arounds when the length exceeds a specific threshold (e. g., 150 feet in the Uniform Fire Code). The wider turn-arounds, called hammerheads because of their shape, take more room, and this reduces the amount of sellable land. (top)

Reduced Permit Fees

Some cities agree to reduce permit fees when sprinklers are installed. Scottsdale, Arizona dropped the fire-related permit fees altogether for sprinklered buildings. The logic is that the department will absorb the cost of plan reviewers and inspectors as its contribution to lowering the net cost of sprinklers. In many cases, the increased workload will be very little for plan reviewers, who are already on hand to review the structural plans. The plumbing inspectors can be trained to handle sprinkler inspections, and fire firefighters can also be trained to do this work. (top)

Reduced or Exempted Plan Review Fees

This is often part of the building permit fee, but we kept it separate since some fire departments levy a plan review fee in addition to the building permit fee. The logic for reducing it or deleting the entire fee is the same as stated above for permit fees. (top)

Reduced or Exempted Fees for Field Inspections

This can be related to permit fees, but like plan review fees, some fire departments levy this separately. Some even charge for annual inspections. All of these charges are eligible for becoming incentives. (top)

Reduced Fire Resistance Ratings, no Parapet Walls

This can yield a significant cost savings. For residential occupancies, most of it is limited to multi-family dwellings, although the garage separation in 1-family homes is a candidate. There are three types of separations: area, occupancy and vertical. In theory, area separation walls are designed to limit the spread of fires. They are usually a minimum of 2-hour fire resistance and in some occupancies are required to extend above the roof (parapet walls). Experience has shown, however, that this often does not hold, so fire officials have been willing to accept sprinklers in lieu of them. You will also find that fire officials will amend their building code to drop the language that allows area separation walls to reduce building area below the threshold for sprinklers. Occupancy separations walls, like area separation walls, are supposed to limit fire spread between different occupancies. An example is the separation between a restaurant and dwelling units. The problem of theory v. experience holds here, also. Vertical separations are not usually considered for reduction in fire resistance, and certainly not for exemption. (top)

Increases Distance to Exits

This design alternative is already in the building codes, although fire officials could decide to make the distance even more liberal in some cases. The logic of the distance-to-exit requirements is that people should be able to exit to fresh air quickly in the event of a fire. With sprinkler present, the logic is that the fire will be kept small or completely extinguished, thereby reducing the need for quicker egress. (top)

Single Water Line for Domestic and Sprinkler Systems

Some water authorities have required that sprinkler systems be supplied by a separate water line from the public main. Why? Not for any reasons that we have seen as valid. The sprinkler and plumbing standards both allow a single pipe to supply both needs as long as they are large enough, so it is not difficult to show that this design alternative is acceptable. (top)

No Separate Meter for Sprinkler System

Even where water authorities accept a single water line, some will require a meter on the sprinkler line where is splits from the domestic supply. Their logic is that they need to monitor for leaks, but it is obvious that any sprinkler leaks will be immediately noticed. (top)

No Fee Increase for Larger Meter

You will note that we show this as a benefit to the installer and owner. The reason is that some jurisdictions levy a one-time fee for the meter, while others will add a monthly fee. The owner would be stuck with the monthly fee, so any reduction here may benefit the owner as well as the installer.

A larger meter is usually needed when sprinklers are installed. Water authorities have some curious notions when it comes to residential fire sprinklers and water meters. When a larger meter is requested, they automatically think that more water will be used and therefore the owner should pay more. The reverse is actually true; When sprinklers are installed, the water used in a fire will be one tenth the amount used by firefighters, so sprinklers significantly reduce demand on the water system.

But unless water authorities are educated about this very simple fact, they will continue to think "larger means more water." One way to get more money is to charge so-called "commercial" rates for the larger meter. One would think that a slightly larger meter would have a slightly higher cost. In fact, the cost can more than double, and this tells us that water purveyors are using this simply as a way to increase revenues.

A typical 1-family home will have a 3/4" supply line from the water main, a 5/8" meter and 1/2" plumbing lines. If sprinklers are installed, designers may ask for a 1" supply line, and they will always ask for a 3/4" meter - even if the 3/4" supply line will suffice.

The reason for needing a minimum of a 3/4" meter is because a 5/8" meter does not have enough capacity to flow the amount of water to supply the sprinklers, which is a minimum of 26 GPM at the two remote sprinklers. This applies to all types of sprinkler systems including the new multi-purpose system that uses 1/2" plumbing pipe. This sounds counterintuitive, because why do we need a 3/4" meter if it goes to 1/2" pipe? It is because the 1/2" multi-purpose system uses a different type of sprinkler fitting with four ports. At least three of the ports must bring water into the fitting, so the sprinkler is actually being supplied by three 1/2" lines.

If the water authority is using the meter larger issue as a revenue enhancer, this is a good candidate for a cost reduction incentive. As we said at the top, it will take some education to show them that sprinklers actually reduce demand on the water system so there is absolutely no logic for homeowners to pay commercial meter prices. After the education, some arm twisting might be needed. Water authorities that have used such devices to increase revenues will need to find ways to replace it or do with less. One good way to approach them is to tell them that the reduction can be their contribution to solving the community's fire problem and conserving water at the same time.
(top)

No Special Connection Charge

Many water authorities will demand a special fee for connecting a sprinkler system, even though it adds mere minutes to an inspector's time when approving the water connections. To us, this is simply another way to get more revenue. It is hard for them to defend and thus is a good candidate for a cost reduction incentive. The same logic we suggested in the section on meter charges can be used here. Make them part of the solution by reducing these fees. (top)

No Water Standby Fee

Some water authorities have created monthly "water standby" fees for commercial sprinkler systems. Their reasoning is that is that more connections mean more water and more maintenance. There is no basis for either position. Like residential sprinklers, commercial sprinklers will save huge amounts of water that would be needed to manually suppress a fire. As for maintenance costs, a large meter does not create that much more of a maintenance cost, certainly not the charges we have seen. Water standby fees can be hundreds of dollars a month, which the owner is stuck with. We have always argued against water standby fees for commercial sprinkler systems and have helped jurisdictions get them dropped. They certainly should not be applied to residential systems for the same reasons noted above, and this makes the charge a good candidate for a cost reduction incentive. (top)

Check Valves Instead of Low - Pressure - Principle Backflow Preventer

In the recent past, health authorities have become more concerned about potable water becoming contaminated if stagnant water leaks into the system. The initial concern was lawn sprinklers. A check valve is installed where the lawn sprinkler line is connected to the potable water line. If the water pressure in the potable water system got lower than that pressure in the lawn system, the fear was that the check valve could leak. The concern was heightened by the fact that this could siphon ground water contaminated with lawn chemicals.

Then someone realized that fire sprinkler systems had stagnant water held in place by check valves, and the argument for better protection spread to them as well. The answer in many states has been to require a "low-pressure-principle" backflow prevention valve. This is s sophisticated device with a series of valves that are designed to detect a pressure reduction and keep the check valves shut. The health authorities in many jurisdictions have successfully argued that even a double check valve on a sprinkler system is not enough and that the low-pressure-principle valve is needed.

Low-pressure-principle valves are costly. They also require annual inspections and maintenance by a specialist. If you can get the water and health authorities to accept a normal check valve in lieu of the low-pressure principle type, you can save the installer and owner a lot of money. When we last checked prices, the low-pressure-principle backflow preventer for a 1-family home was $600.00. This is a very significant increase in the cost of a residential sprinkler system, so reducing it can be quite an incentive. (top)

No Backflow Preventer

Many jurisdictions now require a reduced-pressure-zone backflow preventer instead of a check valve. This adds a substantial cost to the installer, who must pass the cost to the builder and ultimately the home buyer. This has created more interest in multipurpose systems, which combine the sprinkler system with the potable water system. Because there is no stagnant water in the system, a check valve or backflow preventer is not necessary. At present, multipurpose systems are only allowed in one- and two-family homes. (top)

Multipurpose Systems

This incentive applies to one- and two-family homes, whose sprinkler systems are governed by NFPA 13D. The standards allows multipurpose systems, which combine the sprinkler system with a home's plumbing system. Because all of the water in the system is potable, there is no need for a check valve or backflow preventer and thus a lower cost. One trade can install both. The reduction of the number of subcontractors on the job makes coordinating simpler for the builder. (top)

Lower Insurance Premiums

More property insurers are reducing premiums when residential sprinklers are installed. The reduction runs from 10-20 percent in the U. S. to over 40 percent in Canada. One caveat for 1-family homes here is that the reduction may only apply to the fire portion of the premium, so check before making estimates of the dollars to be saved. A homeowners policy is called a multi-peril policy because it covers more than fire. Things like theft and liability are also included, and the fire portion of the total premium may be 25-35 percent. If the insurer says that they will reduce the fire portion by 20 percent, then this can only be applied to the fire portion and not the total premium.

For owners of apartments and commercial buildings, the news is better. Insurers are willing to reduce the liability portion as well, and we saw one report where this was decreased by 50 percent. In these cases, the insurance savings can be very significant. (top)

Lower ISO Rating

When property insurers set the premium for an individual building, they do it in two segments. The first is a baseline rate (they call it the basis rate), and it is determined by the amount of public fire protection. An insurance service called the Insurance Services Office (ISO) periodically evaluates the water supply and fire department in every city, and it gives the city a rating of 1 to 10. A 10 indicates that there is no fire department, and the basis rate for this city is the highest. Correspondingly, a city with an ISO rating of 1 has the lowest basis rate.

The second segment is the individual rate for each building, and it depends upon the material used in the structure, the type of occupancy and the built-in fire protection. Fire sprinklers can reduce this part of the premium by 5-20 percent. This is independent of the basis rate, so a building in a city with a high ISO rating can still get an insurance break from sprinklers.

The news is not as good for owners of 1-family homes. In most areas, once the ISO rating drops below 7, homeowners do not get a reduced basis rate, only commercial building owners. In some states, homeowners will get a break down to an ISO 5. On the other hand, lower ISO ratings do not necessarily improve life safety for homeowners. The objective of the ISO rating is to give credit where the risk of conflagration has been reduced. Consequently, the rating schedule focuses on the amount of water available for fire suppression and the firefighters and apparatus needed to pump the desired amount. Homeowners pay for the increased benefit to commercial building owners but do not necessarily get any additional benefit themselves. (top)

Reduction in Annual Fire Service Assessment

Some jurisdictions that have volunteer fire departments levy an annual fire service fee to pay for apparatus and equipment. Since sprinklers will reduce the demand on the fire department, some jurisdictions have considered reducing the fire assessment as an incentive to get sprinklers installed. (top)

Property Tax Reductions

A lot of jurisdictions, especially those with career fire departments, pay for the fire service by levying property taxes. If the property tax is based on the assessed valuation of structures. buildings, this will increase the tax burden for owner of sprinklered homes and buildings. When a permit is issued for things like sprinkler installation, the tax assessor checks the cost of the addition and increases the assessed valuation accordingly. Thus, owners of sprinklered homes and buildings must pay more taxes even though they have significantly reduced the demand on the jurisdiction's water system and fire department. To counter this, some jurisdictions will ignore the increased valuation caused by sprinkler systems. (top)

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