As we reach the end of the first decade of the 21st century, in the midst of an economic recession with an ever-growing population, there are many challenges being faced in the United States. From increased fuel prices that stymie economic growth and greenhouse gases that threaten the world climate, energy conversation and environmental protection are two such challenges, which have fueled an interest in "green building," resource efficient construction and maintenance practices that reduce adverse impacts on the natural environment. Since buildings use about 39 percent of the nation's energy, a greater share than either industry (33 percent) or (transportation), and residences utilize over half the total energy consumed by building of all types, it is no wonder that developers or residential, industrial, and commercials buildings are increasingly becoming aware of the benefits of energy conserving practices. [1] Buildings that follow energy conversation standards can save the occupants operating and capital costs and provide healthier environments.
Across the country, more and more developers of middle- to upper- income housing are incorporating energy efficient and sustainable elements into their projects, but unfortunately these practices have not completely trickled down to the arena affordable housing development. Due to a mix of lack of awareness, experience, and financing, green affordable housing has had a slow start and faced many barriers. Change, while slow, has surfaced through the efforts of housing and environmental organizations and state and federal agencies, who are working hard to bring both the tangible and intangible benefits of sustainable green building practices to affordable housing throughout the country.
Why Build Green?
There are many different reasons to build green, and even more reasons that affordable housing should be green, from economic benefits, to lowering the impact on the environment, to social and health concerns.
The economic benefits of green affordable housing may be the most important, for a number of reasons. Primarily, energy costs in the United States continue to increase. The United States Department of Housing and Urban Development spends an estimated $5 billion on energy costs annually in its affordable housing programs, and homes in the Northeast built prior to 1970 use 30% more energy per square foot than homes build since 1990. [2] Improved building practices and supplies can work to lower heating and electric bills.
Secondly, most residents in affordable housing developments have limited incomes which may hinder their ability to sustain higher energy costs. Indeed, those who need housing assistance the most tend to spend more on energy, often due to leaky buildings, inefficient heating and cooling equipment, and outdated appliances. Families eligible for federal home energy assistance spend 1/5 of their income on home energy bills; six times more than the level other income groups spend. [3] A survey of households that received federal home energy assistance over a five-year period found that 47 percent went without medical care, 25 percent failed to fully pay their rent or mortgage and 20 percent went without food for at least one day as a result of home energy costs. [4]
Taking a green approach to affordable housing development also has long term economic benefits when considering the sustainability and longevity of a building. The majority of affordable and public housing programs in the 1970s and 1980s were either, like the Section 236 program, aimed at reducing landlords' interest payments or, like the more prominent Section 8 program, direct subsidies for rent. [5] Nearly all focused on the bottom line, and utilized inexpensive, economy construction, even if that led to problems with durability in the future. [6] While it is important to take into account building costs when developing affordable housing, this emphasis on cost is now coming back to haunt the affordable housing community, with many developments across the country requiring extensive repairs due to substandard construction and maintenance. According to Harvard University's 2008 State of the Nation's Housing Report, at least a quarter of the nation's affordable housing stock is in a state of disrepair. [7] By using sustainable, renewable materials, current green developments not only benefit from increased energy efficiency and low environmental impact, but also from an extended life span as well.
With respect to the environment, going green in affordable housing has many benefits, from reduced water consumption via efficient appliances to reductions in air pollution and carbon emissions through compact, transit oriented development projects. Better architecture and energy savings in buildings can do more to fight global warming than all curbs on greenhouse gases agreed to under the United Nation's Kyoto Protocol, according to a 2007 report by the U.N. Environmental Programme. [8]
Perhaps the most perceptible benefits are those felt by the residents, specifically in the areas of health and safety, as a growing body of research has persuasively linked substandard housing conditions with illness and injury, supporting the growing consensus that too many affordable housing developments aren't contributing to the health of their residents. When families pay half their incomes or more for rent, as 13 percent of U.S. households now do, the budget for all other necessities, including health and nutrition, suffers. [9] In addition, the growth of the affordable housing industry, with financial and regulatory programs aimed at keeping both production costs and rents or sale prices low, has at times created a tension between health and housing consideration.
Americans spend up to 90 percent of their time indoors, and as a result, indoor environmental quality has a significant impact on occupant health. [10] Residents living in substandard living conditions experience greater rates of asthma, elevated lead levels, and the greatest risks arise from conditions such as cold, mold, moisture, poor indoor air quality, pesticides, and the presence of allergens, vermin, dust due to worn carpet & porous building material. Green building practices create healthier living environments by improving ventilation, thereby limiting moisture, radon and pests while ensuring cleaning indoor air, avoiding toxic materials through the use of low-VOC (volatile organic compounds) products, and improving durability.
As we can see, the green development of affordable housing has the potential to be a much greater contributor to the health and well-being of their occupants, and by extension, the wider society, than they are now.
Fundamentals of Green Building
With the growing trend of green building, there has been a proliferation of standards and criteria defining the practice. Some organizations, such as the Home Depot Foundation, avoid the word "green," instead focusing on efforts that promote "efficient, healthy, and responsible" affordable housing. [11] The U.S. Green Building Council (USGBC), the leading organization in both commercial and residential green building, has developed the LEED (Leadership in Energy and Environmental Design) standards, a consensus-based national rating system. LEED addresses consideration of site, energy, water, materials, and indoor environmental quality, and is considered by many to be the frontrunner of the various green building standards. [12] Energy Star, in conjunction with the U.S. Environmental Protection Agency (EPA), is a voluntary labeling program designed to identify and promote energy-efficient products to reduce greenhouse gas emissions. [13] Energy Star-qualified homes are at least fifteen percent more energy efficient than homes built to the standards of the 2004 International Energy Conservation Code. [14] In addition to these two programs, the U.S. Department of Energy has launched the "Building America" voluntary challenge to the residential building industry to build 220,000 high performance homes by 2012. [15] Likewise, numerous state and local home builder associations have also adopted their own standards and certification systems.
While it promising to see standards and goals develop, more needs to be done to establish a consolidated set of green affordable housing guidelines. Initiatives such as Green Communities, a collaborative effort between Enterprise Community Partners, the Natural Resource Defense Council (NRDC), USGBC and other organizations, are working towards the development of a consensus document setting forth detailed criteria for green affordable housing. Green Communities has put forth the following eight essential provisions: integrated design process, location, site improvements, water conservation, energy efficiency, materials that are beneficial to the environment, creating of a healthy living environment, sustainable operations and maintenance. Through these efforts, Green Communities has outlined a complex, integrated approach to green development that covers everything from how a property is sited and designed to how it is built to how the finished building contributes to the health of its residents, its surrounding community and the wider environment. [16] Coupled with the organization's latest initiative, a 5 year, $555 million effort to build 8,500 healthy and environmentally sustainable homes for low-income families across the country, it is expected that the Green Communities approach will bring cohesion and unity to the central values and practices of green affordable housing development. [17]
Challenges of Building Green
Although the green affordable housing arena is gaining supporters and adopters, there are many barriers keeping the practice from expanding at a faster pace. There is an almost unanimous agreement that biggest challenge towards the adoption of green principles is cost. Housing producers tend to emphasize "first costs," or the amount initially needed to produce or renovate a house or apartment, or the current cost of renting or maintaining that unit for a year at a time. The focus on costs is even more acute for affordable housing developers, of which the majority are non-profit entities who rely heavily on government subsidies to fund projects. If limiting those costs means using less healthy or durable materials, the negative consequences aren't typically captured in a project's cost analysis. With technological advances and streamlined practices, however, the initial costs of many green principles have fallen over the years. Indeed, many developers are learning that the average "green premium" - the additional cost of earning various levels of LEED certification - is slightly less than 2 percent or $3 to $5 a square foot, which, for affordable housing, would translate into an addition of $2,000 to $5,000 a unit. [18] Unfortunately, the private and public entities that provide funding for affordable housing generally have been slow to factor these considerations into their underwriting and provision of development financing. This problem is especially acute for properties assisted with the Low Income Housing Tax Credit (LIHTC), which constitute a critical segment of the federally subsidized inventory and account for almost all new created low-income rental units. [19] These developers must reduce rents by the amount of a resident "utility allowance" established in most places by local public housing authorities and in some areas by utility companies. In many areas, the utility allowance estimates for tax credit developments are based on older properties with higher energy costs due to less efficient design. This results in higher than necessary utility allowances for many properties, thereby reducing the incentive for developers to incorporate water- and energy-efficient features into their developments. [20]
In addition, other challenges remain in the form of adoption of technology. Many affordable housing developers around the world are ready to implement green building practices, but don't may not have access to the architects, engineers, general contractors or the technical specialists who can get the work done efficiently. In addition, they might not have a clear idea of integrated design, such as how certain elements should fit together in an efficient, well thought out way, which is crucial to the development of green affordable housing. Assembling these resources (technical, financial and professional) takes time and individual attention, but is easier when supportive public policy and cooperation among funders begin to solidify into a green housing system. Another step is to provide and support training and professional development among the contributors who make up an effective green development team. "Green development consultants" are becoming an increasingly common line item in the budgets of Green Communities grants. [21]
As we can see, greater adoption of green building principles will not happen until there is a change in the way "affordability" is conceived and calculated over time. Conversely, there is very little way to change the normal practice of affordable housing development without also changing the way such development is financed, subsidized and regulated. Weaving green criteria into funding decisions for affordable housing is an important first step toward making it a mainstream practice throughout the industry. But this will succeed only if affordable housing developers gradually acquire the knowledge and experience in green techniques that can make these practices truly mainstream.
Federal Efforts and Implementation
Typically a late adopter in most innovations, the federal (and by extension, state) government has started to embrace green affordable housing only in the past five to seven years. One of the leading subsidy programs is the Low Income Housing Tax Credit, which was established by the Tax Reform Act of 1986 and codified in Section 42 of the Internal Revenue Code of 1986. The program requires each state's agencies to allocate low-income tax credits pursuant to a Qualified Allocation Plan (QAP), which is the primary instrument for ensuring that the priorities of the housing credit agency are met. [22] Unfortunately, green building through the LIHTC program remains unequal geographically, with concentrations of states with green building requirements in their tax credit policies in the East in states like Massachusetts and Maryland, and western states like California, Arizona and Nevada. Even with adoption rates in flux, several states with comprehensive green policies that the large majority of Housing Credit developers in their states are incorporating green features into their developments as a direct result of provisions in the state's allocation plan, which is a promising indicator. The four most common sustainable development initiatives among states focus around energy efficiency (45 actively promoting it through a variety of policies), site selection (46 states), resource conservation (45 states), and indoor air quality (34 states). [23]
In addition to the support provided by the LIHTC program, there are other federal programs aimed at increasing energy efficient and sustainable building practices. Weatherization assistance, provided by the U.S. Department of Energy, is available to households up to 150% of poverty level (about $27,000 for a family of 3 in 2007). These funds pay for a wide variety of energy efficient measure that encompass the building envelope, heating and cooling systems, electrical system and electricity consuming appliances. The average expenditure per home is $2,744, resulting in average energy savings of $358 per year and reducing household annual gas consumption by an average of 32%. [24]
Another innovative program is the support of energy efficient mortgages (EEMs), by insuring them through the FHA and VA. EEMs can be used by homeowners to finance more energy efficient new homes and energy upgrades of existing homes, and is repayable largely from savings on fuel bills. [25] The Green Communities rehabilitation of Viking Terrace in Worthington, Minnesota was the first project to receive an EEM, and constitutes a pilot test for what could become a new, widely applicable financial product. The federal government also certifies private lenders to provide EEMs through the Energy Star program, which does not provide the same security as the FHA or VA programs but offers Energy Star certification. [26] As is the case for other programs, more needs to be done with the EEM programs, as government agencies have not aggressively marketed EEMs and lenders have been reluctant to take on the additional paperwork required.
In addition to the LIHTC, another tax credit is the Business Energy Tax Credit provides a credit of 30 percent of expenditures for qualified "energy property," including solar technologies that can be used on multifamily affordable developments, among other purposes. Since low-income multifamily housing often relies heavily on government financing, including other tax credits, some provisions limit the effectiveness in support the full costs of installing solar technologies in very low-income developments. [27]
HUD has also launched two pilot programs to increase energy efficiency in federally assisted properties, the Multifamily Energy Efficiency Initiative (MEEI) and the Green Initiative. Through the MEEI, HUD's western field office is providing energy audit and technical assistance to subsidized multifamily properties through partnerships with energy efficiency technical assistance providers. [28] This is an important move to encourage developers to adopt green building principles, as it helps offset the costs that may act as a barrier to implementation. The Green Initiative is a nationwide pilot program to encourage owners and purchasers of very low-income, multifamily properties to rehabilitate and operate their properties using sustainable building principles. Through the program, HUD will cover almost all the costs owners are otherwise require to pay for building improvements under HUDs regulations when they refinance under the "Mark to Market" financial restricting program. [29]
These programs and initiatives are a key resource in furthering the implementation and goals of green affordable housing development. While adoption by federal government has been somewhat delayed, the momentum is there and will only grow stronger as state and local governments take the next step and further advance green building principles via legislation and building codes.
Conclusion
The view that adequate housing is central to strong communities and a benefit to the greater society is among the founding principles of American housing policy across the affordable housing spectrum, from developers to advocates to analysts, a consensus is solidifying into an established understanding: that green is the right way, and should be the only way, to produce affordable housing. As such, the area of green affordable housing development is a quickly growing field, despite the challenges it faces. In order to take green affordable housing to the next level, it is necessary to develop - or at least envision - a wholesale change in the complex systems of regulation, finance and subsidies, and professional practice that drive the nation's affordable housing industry and determine its methods and products. The principles are already there, they just need the support and space to grow and prosper.
