Green At Work Magazine
Premier Corporate Sustainability Publication
 
NEWS AND INFORMATION
Between Blue and Yellow
Newslines
Corporate Acts
Read On
Green Gateways
GREEN@WORK MAGAZINE
Back Issues
On Our Covers
Feature Stories
Headlines
Special Section
Corporate Social Responsibility (CSR) is an idea that corporations have to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all
Read More >>
Socially responsible investing (SRI) describes an investment strategy which combines the intentions to maximize both financial return and social good.
Read More >>


green@work : Magazine : Back Issues : May/June 2006 : Cover Story

Cover Story

Greening Affordable Housing

The housing industry, along with cities across America, is starting to see the link between the goals of green building and those of affordable housing.

by Diane Greer

The apartments feature energy-efficient appliances, lighting and windows. Building insulation and ventilation systems are designed to ensure a healthy, comfortable environment with good indoor air quality. Environmentally responsible materials are employed throughout the facility. A rooftop garden insulates the structure, controls stormwater runoff and provides an outdoor area for residents.

This is not a high-end residential project showcasing Leadership in Energy and Environmental Design (LEED) green building standards, but instead a green affordable housing development called Diversity Houses on Manhattan’s Lower East Side. When completed, the two seven-story buildings developed by the Lower East Side People’s Mutual Housing Association (LESPMHA) will contain 44 units occupied by low- to very-low-income families at risk of being priced out of Manhattan’s skyrocketing rental market.

Diversity Houses is one of 77 developments in 21 states financed by Enterprise Community Partners’ Green Communities initiative. Launched in October 2004, Green Communities will invest $555 million to fund the development of more than 8,500 environmentally friendly affordable housing units in five years, according to Dana Bourland, director of the Green Communities program. Since its inception more than two decades ago, Enterprise has built more than 180,000 affordable homes. “Enterprise’s mission is to see that all low-income people have the opportunity for fit and affordable housing,” Bourland said. “We see an affordable and fit place to live as the foundation for helping to move people up and out of poverty into the mainstream of American life.”

Two years ago, Enterprise re-examined its mission in light of the huge impact of home building on the environment and the health of residents. “To provide fit and affordable housing actually means something a bit different today because of the progression of the green buildings movement,” Bourland said “We know there are better strategies to integrate into affordable housing that lessen the impact on the environment, lower operating costs and provide housing that is healthier, better located and made from more durable materials.”

Enterprise formed the Green Communities initiative to address the need for green affordable housing. Its mission is to transform the way people think about, design and build affordable housing. The program is also working with state and local government agencies to “green” their affordable housing programs.

One of the program’s messages, “Green is the New Affordable,” highlights the linkage between the goals of building affordable housing and the goals of green building. Green building’s emphasis on energy-efficiency measures, when applied to affordable housing, offers opportunities to lower utility bills for people who can least afford skyrocketing energy costs. Green Communities estimates homes built using its green criteria are 30 percent more energy-efficient than traditional affordable housing, saving residents hundreds of dollars per year. The health of residents and the surrounding community also benefit from an integrated approach to housing and environmental problems. Green building stresses the importance of good indoor air quality through the use of proper ventilation, strategies to eliminate the growth of mold and mildew, and specification of building products that emit fewer health-endangering toxins. By building greener and healthier affordable housing, developers are improving the living conditions for low-income people who typically have the least access to health care, and often suffer disproportionately from health problems such as asthma.

To achieve its goals, the initiative offers a package of financial incentives and technical help to developers committed to satisfying the program’s green criteria. The green criteria aim to reduce the environmental impact of home building, to safeguard the health of residents and to site developments within easy access to public transportation and community services. The bulk of the program’s funds, $500 million, are offered in the form of tax credit equity under the Low Income Housing Tax Credit (LIHTC) program. Under the Tax Reform Act of 1986, the federal government created the LIHTC program to fund low- and moderate-income housing. Each year, states receive per-capita tax credits to allocate to private developers who invest in affordable housing projects.

Enterprise Community Partners’ syndication group raises capital from private investors and companies who wish to invest in low-income housing through LIHTC equity funds. The syndication group invests these funds in affordable housing, passing the federal tax credits to the investors. In the case of the Green Communities initiative, affordable housing projects must commit to meeting the program’s green criteria to be eligible for equity funding. Enterprise provides an additional $50 million in low-interest loans. The loans finance predevelopment activities, the acquisition of land, and building and construction costs. Another $5 million is available as green grants, from a fund whose contributors include the Home Depot Foundation, The Kresge Foundation and the Citigroup Foundation. The grants help offset higher first costs incurred by developers to meet the Green Communities criteria. In addition to financial help, the initiative provides technical assistance to projects that have discrete challenges to building green.

Green Communities financed more than $7.5 million of the total $11.8 million required for Diversity Houses with LIHTC equity. The project is the third affordable housing project developed by LESPMHA. Experience and careful selection of options are allowing LESPMHA to build the project at the same cost as a conventional project, explained Mary Spinks, director of LESPMHA. “The stuff that I am a fanatic about is not the bells and whistles, like solar panels,” Spinks said. Instead she focuses on insulation and sealing the building to conserve energy. “Caulk is cheap,” she said. “Operating costs this year for my first green building are 25 percent less than a building with equivalent square footage because of lower energy costs.”

Community Partners for Affordable Housing (CPAH) in Oregon obtained both LIHTC equity and a green grant from Green Communities to build Oleson Woods Apartments. The development features one-, three- and four-bedroom apartments and townhouses for families that make 30 percent or less of the area’s median income.

The green grant helps pay for the material and labor costs to green the project. “We have not been fortunate enough to find that green is cheaper yet,” said Shelia Greenlaw-Fink, executive director of CPAH. The green funding also helped in negotiations with the contractors who complained about the premium and difficulty of building green. “We told them the funders will not give us the funding unless we achieve these criteria,” Greenlaw-Fink said. “It backed us up and helped us to keep our resolve.

“We are a tiny grassroots organization,” she continued. “Without the power of a national intermediary like Enterprise, it would be difficult to go to funders to get this extra money. We wouldn’t be able to put in all the green features, and I do not think that we would get to the critical mass and excitement about green building without them. So their role is really seminal.”

During Green Communities’ first year, which ended in October 2005, the initiative awarded more than $179 million in grants, loans and equity for 4,300 homes and rental apartments. “There has been a surprising amount of interest in the program,” Bourland said. “In some markets it is becoming the way people do business.”

Green Communities estimates housing created under the program in the first year reduced energy costs by $1.5 million, or $350 per household, and decreased water consumption by 30 million gallons (7,000 gallons per household). The initiative also projects reduction of more than 5,000 tons of greenhouse gas emissions. Preliminary data for the year suggests the incremental first costs of building green to be two to three percent. Grants awarded under the program appear to be covering the incremental costs, according to Bourland. Informal surveys of grantees found that in two-thirds of the cases the grants allowed developers to go green for the first time. For developers with experience building green, the grants “allowed them to be that much greener,” Bourland said.

The program has also been effective in transforming the way states and localities build affordable housing. To date, the initiative received 10 commitments from localities across the country to use the Green Communities criteria to award LIHTC and other affordable housing subsidies. Thirty-seven national, state and local partners also have formed partnerships with Green Communities.

Recently, green@work spoke to Dana Bourland, director of Green Communities, about the initiative.

green@work: What does your organization see as the main challenge to moving green affordable housing into the mainstream?

Bourland: There is a huge perception that green can’t be done cost-effectively. The perception of the higher first cost of green is really a barrier. Because people perceive it to be expensive, they haven’t always investigated the possibilities. The more we can demonstrate that the projects are getting built—show what was done to make them green and share that information—the more we will help to overcome the hurdle that green has to cost more.

g@w: What other factors have held back the growth of green affordable housing?

Bourland: I think within the community-development industry there is a growing understanding of the need, almost the obligation, to provide green housing. But there is a slow uptake because you have to reorient the way you are thinking about designing, locating and building the housing. There is a learning curve. It is really a new way of doing business that requires integrating the design process in such a way that you bring your development team together, very intentionally, to integrate systems and think about the best possible development strategies. So, there are some fundamental business shifts that need to take place. But after people engage in the process for the first time, it becomes a way to operate.

We are by no means at a tipping point, but I think there is more and better information, and we are addressing the costs. Since providing these incentives, Enterprise has already seen a tremendous increase in the amount of green affordable housing under development.

g@w: What are some of the factors causing the price differential between building traditional affordable housing and green affordable housing?

Bourland: If this is the first time you have ever built a green project, a lot of the cost differential happens up front in the planning and the design phase. If this is the second time around, you may still incur costs around the most efficient heating and cooling systems. Oftentimes, even just properly venting the homes and the apartments incurs an additional cost. And then every project is a little different in its priorities. So there might be additional costs for more permeable pavements or installation of a green roof or the use of renewable energy.

g@w: How did Enterprise develop the Green Communities criteria for the initiative?

Bourland: We developed the Green Communities criteria with the Natural Resources Defense Council, the American Institute of Architects, the American Planning Association, Global Green, Southface and other developers who were already building green affordable housing. We looked at what was already being done in places like Seattle, through their SeaGreen affordable housing program, and Portland, which also has criteria for green affordable housing. We set up a very prescriptive set of criteria. So if a developer integrated the criteria into any development, we feel confident it could be done at little or no cost and have significant benefits.

g@w: How do the Green Communities criteria differ from other green building standards such as the U.S. Green Building Council’s (USGBC) LEED standards?

Bourland: LEED is a rating system where there are some mandatory criteria, or what they call prerequisites; otherwise, you can pick and choose what gets done to earn enough points to obtain certification. There is also a real cost involved with LEED, a cost to apply, a cost to track the submittals to USGBC/LEED and a cost to obtaining certification. It is somewhat different for LEED homes, but that is the system that the USGBC follows.

Green Communities, on the other hand, is very prescriptive. We take some of the guesswork out for developers, especially those who are doing this for the very first time. We say you have to do all of these 30 things in your project that will have economic, health and environmental benefits, and then we added some optional items. The optional items recognize that this is a national program, and some of the items would not make sense in every location for every project. We wanted to offer criteria that were very understandable and could be implemented cost-effectively through a process that would not incur additional costs just for participating.

g@w: How do you select programs to fund?

Bourland: We have an application form where the applicant has to spell out how they intend to meet the Green Communities criteria. It is also very important that an applicant show that they have someone on their team, either a consultant or a staff member, with some green experience and expertise. Not having an experienced team member adds costs to the development. Once they submit their completed application to us we are able to respond within three to four weeks.

g@w: How do you verify the development has been built to your criteria?

Bourland: When they complete their construction documents, they have their project architect and sponsor of the project certify through their signature that all the items were indeed put into the construction documents, and that they will be met.

g@w: Will you track the results of the program?

Bourland: One of the other reasons for creating a set of criteria rather than a rating system or a guideline is that we really want to measure what it means to go green in terms of costs and benefits. This data was missing when we launched this initiative. There continues to be a lack of information. On every single project we are collecting cost data. How much did it cost to meet the Green Communities criteria and build the development green? We are also collecting data on operating expenses for the building. It is a requirement that each project give us this information.

We are also working on ways to measure the health impacts for residents living in green housing. But that is quite a bit harder to do. Right now we are exploring this possibility with the National Center for Healthy Housing.

g@w: How do the city and state collaborative partnerships work?

Bourland: Those have just been tremendous. When we launched Green Communities, state agencies and other entities that wanted to participate immediately contacted us. Typically Green Communities fell in line with some other things that were already happening on the ground in those locations. Depending on location, the state collaboratives look a little bit different. Primarily they leverage our ability to finance green affordable housing nationally with local funding sources. I think as importantly, they help us impact state and local policy more effectively and connect with local affordable housing developers.

MassHousing, the Massachusetts Technology Collaborative (MTC) and Enterprise all formed a collaborative in the state of Massachusetts to promote green affordable housing. We are using resources that MassHousing has through a smart growth program and a housing trust fund, and $8.5 million that the MTC has committed for renewable energy to help developments go that much greener in the commonwealth.

In Michigan, the Michigan State Housing Finance Agency and Great Lakes Capital Fund (a local equity fund) each put in $250,000 in grant funding. So a Green Communities project in Michigan is actually eligible for twice the amount of grant money they would get otherwise. We are also working with both Michigan and Massachusetts to address policy, develop training curriculum and the like.

g@w: How is Green Communities assisting state and local governments to green their housing and economic development policies?

Bourland: The LIHTC program has been the No. 1 financial mechanism for building rental affordable housing. It is a federal program that allocates funding for tax credits based on the population of the state. Every state has a Qualified Allocation Plan that has specific criteria to determine which projects will receive the tax credits.

We have been working with housing finance agencies to add criteria to the Qualified Allocation Plans that award points to projects meeting the Green Communities criteria. Over the last year we have directly and indirectly influenced 10 of those plans to become greener.

g@w: What has your organization learned during the first year of the program?

Bourland: We have learned that there is huge interest in green affordable housing, and we have learned that green buildings really can be done cost-effectively. We have also learned that municipalities and states are very interested in requiring more of this development because they see the direct benefits. Other lessons are that it is not easy, and we have not reached a tipping point.

There still is a lot to demonstrate and learn. For example, we need to learn more about how to do this for single-family housing developers. We are also going to focus more on what this means for rehabilitation projects. We did not see quite as many rehab applicants in the first year, and for us it makes perfect sense that rehab should be green.

On the Web:
Green Communities:
www.greencommunitiesonline.org

Enterprise Community Partners:
www.enterprisecommunity.org/

Lower East Side People’s Mutual Housing Association:
www.lespmha.org

Community Partners for Affordable Housing:
www.cpahinc.org

Diane Greer is a freelance writer and researcher based in New York, specializing in sustainable business, green building and alternative energy. Her articles have appeared in major magazines, newspapers and trade publications. She can be reached at dgreer@greerresearch.com.


Home | Magazine | Latest Posts | Current News | Media Kit | Contact
Corporate Social Responsibility | Socially Responsible Investing

© 2000-2016 green@work magazine. All rights reserved.
GreenatWork.com