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Aug 8, 2012

Leaking Energy and Money From Affordable Housing


Originally posted by GreenBiz.

Energy EfficiencyAmerica spends approximately $1.6 billion on public housing energy payments every year. To put that into perspective, that’s equal to:

  • 15.7 percent of the annual budget of the U.S. Environmental Protection Agency
  • 95.7 percent of U.S. investment in energy-efficiency programs and renewable energy research
  • 110 percent of the operating expenses of the U.S. Agency for International Development
  • 60 times as much as we spend on National Public Radio.

Yet multi-family public housing projects, on average,use 38 percent more energy than the typical U.S. home. To put it simply, our public housing buildings are leaking our money.

If we made affordable housing 30 percent more efficient, we could use the dividends to double the current federal budget for building energy-efficiency research and generate greater future energy savings. But we can go even further.

There are case studies showing that some of our oldest buildings can be 50 percent more efficient. This energy efficiency comes none too soon, because energy conservation codes are demanding more energy efficiency more quickly than ever before in American history.

The Department of Housing and Urban Development (HUD) and the 3,300 public housing authorities (PHAs) that develop and operate public housing are on the hook for (at least a part of) the utility bills of all 1.2 million public housing units. In traditional apartment rentals, energy efficiency is hampered by the curse of split incentives – the landlord builds and owns the apartments, but the tenant pays the energy bills.

However, in the case of public housing, the landlord (the PHA, with support from HUD) is responsible for putting up the building and for paying the utility bills, removing the split-incentives barrier. So, why is there still inefficiency within our portfolio of public affordable housing units? This is one of the questions RMI seeks to answer with the Residential Energy Efficiency Leaders (REEL) working group.

This group is composed of 10 PHAs dedicated to bringing superefficiency to public housing. Members have signed a commitment to identify impediments and solutions to increased energy-efficiency, meet regularly to discuss relevant topics, and share resources and ideas freely. REEL Working Group members include: Albany Housing Authority, British Columbia Housing, Boston Housing Authority, Denver Housing Authority, Home Forward (Portland Housing Authority), Housing Authority of the City of El Paso, Minneapolis Public Housing Authority, San Antonio Housing Authority, Seattle Housing Authority, and Tacoma Housing Authority.

Through the leadership of these PHAs, RMI is identifying roadblocks to efficiency and investigating innovative solutions from our working group members and other PHAs. Together, the group will identify an aggressive, yet achievable energy-efficiency goal that can show the public housing sector that efficient design is not only possible, but also profitable.

In fact, several REEL members are already leading the way toward increased energy efficiency with case studies that show solutions are already available. These projects exhibit exceptional creativity and prescience in their development of public housing that is affordable, not just for the tenant, but also for the landlord:

  • Boston Housing Authority (BHA) – Energy Performance Contracting: By combining private investment, utility incentives, and internal capital funds, the BHA expects to decrease energy usage by 31.5 percent across 13 of its existing buildings, saving approximately $5 million per year before debt service, and $750,000 after. This energy savings was made possible by changes to HUD policies that allow PHAs to recapture the savings from energy-efficiency measures. By investing their internal funds on top of an Energy Performance Contract, BHA was able to make deeper cuts that will allow them to save even more energy (and money) over the life of the performance contract.
  • BC Housing Authority – Life-cycle Cost Assessment: The British Columbia Housing Authority realized the importance of investment in energy efficiency early on. In developing new housing, it accounts for a certain level of funding for energy-efficiency improvements that will pay back over time. It uses net present value and life-cycle costs (instead of simple payback or return on investment) to determine a design feature’s economic efficiency. While BCHA leaders still constantly fight the battle of “building more versus building better,” they know the money saved through these investments will allow the group to better serve the needs of residents in the future.

These are just a two examples of what can happen when the correct incentives are in place for energy efficiency to prosper. By correcting systemic problems that penalize the implementation of energy efficiency in our existing building stock and making sure that the adequate capital is available to fund measures that pay back over their lifetime, we can drive efficiency into our affordable housing units. These gains will not come through any act of charity or fiat, but from a sound long-term strategy for our public housing that accounts for all costs, not just the upfront ones.

Once we capture the cash that is slowly leaking from the walls and windows of our public housing, we can reinvest that money in the innovative ideas and people that will drive us toward a more sustainable and equitable society.

Highlighted Resources

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Freight Efficiency

Landmark emissions standards highlight efficiency potential in the domestic freight sector




Showing 1-3 of 3 comments

August 16, 2012


I agree that there is a lot that can be done in PHAs and other assisted/affordable housing units as well as market rate units. PHAs are in a unique situation in that they are built and owned by the public. They are required to utilize ESCOs (Energy Service Companies) by HUD so that HUD doesn't have to come up with any up-front money to pay for the necessary upgrades. The ESCOs cover the cost and are paid back through energy savings; however, at the same time the reimbursements for their utility bill by HUD is reduced because they should be paying less for utilities, but the individual PHA doesn't benefit and it becomes a Zero-Sum Game for them while the ESCO makes out. It is complicated.

Privately-owned multifamily housing, both market-rate and assisted are even a tougher nut to crack as their owners built the structures as cheaply as possible to maximize their investment and then refuse to help out their utility bill paying customers - the old split incentive. One owner of a number of market-rate and assisted units told me that as long as it didn't cost him a cent we could do all the energy work we wanted to to his units.

Lastly, your use of statistics, or your understanding of them, is suspect. The number you quote about PHAs using "38 percent more energy" is not accurate, while it is a legit figure. It pertains to "energy consumption per square foot", which is next to meaningless in this discussion. It sounds good especially when you are trying to make an argument that energy use in PHAs is running rampant - it isn't. Apartments are much smaller, three to four times smaller, than single-family detached homes and they use 50 percent less energy than single-family homes on a per household basis (you can look that up in the same dataset you got the 38% number). You can compare household energy use between households in different housing types but when you try to compare energy use by square footage that only applies within housing types. It is like comparing the energy use on a per square footage of a grocery store to an office building - they are both commercial buildings but they are not the same.

The bottom line is that multifamily housing, like PHAs, use far less on a per household basis (which is how utility bills are paid) than single-family housing. Which doesn't mean there isn't opportunities in multifamily housing to save energy, there are major savings to achieve to fix the cheap inefficient equipment that was installed to maximize profits. However, the biggest band for the energy buck isn't in multifamily housing, it is in single-family housing.


August 31, 2012

30% , I have found out in my projects that 75% to 90% is just as easily achieved, and payback in phenomenal as one gets insulation and siding breaks, equipment breaks, and using geothermal as heat and cooling source combined with solar, - and utility companies hardly stop in to check the reading. People are truly happy private or other , as surface temperatures are the same as the room temperate - few degrees, and thus comfort is unreal. no more blazing hot or freezing cold ceilings and walls. AND particularly in public housing the exterior is saved from deterioration, in addition from the savings . Most high rise ones are of brick and concrete with every cold bridge associate failure imaginable that are so EXPENSIVE to fix and normally leads to demolition instead. In New York, when oil goes to 150 dollars a barrel, landlord of rent stabilized building will just walk away to avoid the losses -
and so not just windows but the envelope.... as done in Northern Europe for so long...

September 23, 2012

For new affordable homes in York, England I have proposed the cheap and cheerful "shotgun shack" that a US family has downsized to. This sort of housing can be made carbon negative from day one. See "Can your children afford to live in York?" http://www.yorkmix.com/opinion/can-your-children-afford-to-live-in-york/

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