6 August 2008

Affordable Housing goes Green

building is often regarded as a luxury of the rich, but affordable housing developers are beginning to take on the green standard. Low-income communities, many experts say, have a lot to gain from greener, more sustainable homes. Sustainable building practices lead to energy conservation, water conservation, healthier indoor air quality, more durable structures and access to public transportation -- all of which significantly cut down on long-term costs for residents.

The green building movement is also creating more jobs -- not only with new construction but also by retrofitting older structures. From a public-health perspective, building affordable housing as green has been shown to reduce injury and disease caused by environmental factors like lead poisoning, particularly in low-income neighborhoods.

While greening houses makes them more affordable on a daily-use basis, the process increases construction costs and also adds the expense of being certified as officially "green." According to an affordable housing study by the non-profit New Ecology Inc., going green can cost developers up to $9,700 more per unit of housing. On average, developers that build green affordable housing face a "greening premium" of roughly 2.42 percent.

This higher cost is the key reason most developers still shy away from building green lower-income housing. Since affordable units are rented or sold below-market rate, any additional building costs can make developers hesitate. In addition, the greening process can also take longer to build, and the certification process requires far more paperwork.

Some housing experts now talk about having local, state and federal governments pick up some of these added costs, in order to make the green standard the mainstream standard for affordable housing.
The challenge with affordable housing is balancing short-term costs with long-term gains, according to New Ecology Inc., a sustainable development group in New England that recently released a cost-benefit analysis of green affordable housing. Take, for example, a building located in a colder climate. Adding more insulation during construction can mean big savings on heating costs, but also means increased initial materials costs.

Other long-term considerations include operational costs, said New Ecology president Ed Connelly. "The challenge for affordable housing isn't just raising the money to build it. It's having the funds going forward to operate it," he said. "It's really not hard to come to a good balance between reducing operating costs by improving construction and performance of new buildings."

The additional price for greening these projects is about 2 to 3 percent of the total construction cost, according to data from the Maryland-based Enterprise Community Partners, a leading provider of capital and expertise for affordable housing and community development. But some developers say the government should be picking up that premium.

Eric Anderson, a developer with the New York-based Urban Green Builders, says the public sector could defray the marginal costs associated with green affordable housing. Urban Green Builders has gained attention for building green affordable housing in the same neighborhoods as green market-rate housing.

"I think the public side," Anderson said, "should take into account the additional capital cost in making decisions about how to finance housing."

That's because, he said, the long-term benefits of green housing are undeniable. He cited getting cars off the road and building stronger communities. According to Enterprise Community Partners, green developments also reduce energy use, cut CO2 emissions, cut health-care costs and even relieve some of the financial burden faced by Americans living in poverty.

Whether the federal government is doing enough is up for debate. But the Environmental Protection Agency has taken some action over the last decade, said New Ecology's Connelly. In 1992, the EPA instituted Energy Star, an international standard or qualification system for energy-efficient products and buildings. Buildings with an Energy Star certification use at least 15 percent less energy than standard buildings.

While the Energy Star rating system can be useful for affordable housing developers, there's a lot the federal government could offer in the way of public policy, says Dana Bourland, a green affordable housing expert who is senior director of Green Communities, a program of Enterprise Community Partners.

Green Communities is now carrying out a five-year plan to build 8,500 green homes for low-income residents. The project's goal is to make environmentally sustainable development the "mainstream" standard for affordable housing.

It's "critically important," says Bourland, that the government offer incentives for developers to go green and provide resources for them to do so. "It's good economic policy. And, at the same time, it leverages the investments that we're already putting into affordable housing," she said.

That's exactly what Green Communities has found at the state and local levels -- where governments take the resources they're already using for affordable housing and make them go farther, by investing in sustainability.

Green Communities, Bourland says, has found that public policy can do a lot even if it doesn't supply funding. Since building to the green standard is so different from building to regular building codes, a rethinking of the financial process is needed, Bourland says. "We need to reprioritize how we're allocating resources," said Bourland. "We can do green affordable housing currently, but if we can use additional or just current resources more effectively and just target them...buildings will have better performance over time."

The U.S. Green Building Council agrees that most progress now is at the local level. USGBC developed the LEED (Leadership in Energy and Environment Design) rating system -- the most widely used green-building certification system in the country. The LEED system has varying degrees of certification, and the one generally used for affordable housing is LEED For Homes. Achieving the highest LEED rating, LEED Platinum, means investing the most money into the most sustainable practices, because Platinum standards are especially strict. For example, developers would be required to obtain a certain number of materials manufactured within a few hundred miles of the building site, or to use state-of-the-art lighting systems.

Michelle Moore, senior vice president of policy and public affairs at USGBC, says efforts to make affordable housing green are often driven by local public policy. "There are many jurisdictions where mayors or city councils have taken leadership positions in delivering green communities for public investment in affordable housing," she said.

Moore also said that public support should go beyond investment in buildings. She talked about how local, state and federal government could invest in green-collar jobs.

"There's a great opportunity," Moore said, "to raise the skill level of people in the building trade, open up new local jobs and keep the jobs here." Skills training could also focus on not just new construction but on retrofitting existing buildings to bring them up to the green standard, says Moore.

Affordable housing advocates might be waiting for help on the federal level, says Moore, but there this is already happening on the local level. "We've seen a huge uptick in the number of green affordable housing projects," she said. "Most of the activity is happening at the local level...Mind shift happens at the local level in a lot of places."

But it may take more than just a mind shift. Experts seem to all agree that what's really needed to make affordable housing green is more green. The current cost premium on green construction, remains a real hurdle for developers of low-income housing, despite the benefits that these new studies show.

From the Washington Post.

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