New Housing Virginia Study Finds Residents of Energy Efficient Affordable Rental Housing Save Over $600 per Year on Electricity Bills

Originally posted on HousingVirginia.org

Housing Virginia released today the findings of a first-of-its-kind study that demonstrates the impact of energy efficient construction requirements in affordable rental housing. The new report shows that the average resident of an energy efficient apartment saves $54 per month on their electricity bill, which amounts to $648 annually.

Read the Richmond Times-Dispatch article here.

The year-long study conducted by Virginia Tech’s Center for Housing Research also finds that apartments built to higher energy efficient standards, including third party testing and inspection, outperform new standard construction housing by more than 40% with respect to energy consumption.

The study is the first of its kind in Virginia and one of the first in the nation to verify actual electricity usage in apartments built to meet high level efficiency standards.

View the full study here. Or, for an easy-to read fact sheet, click here.

“Virginia has been a leader in encouraging energy efficiency in the affordable rental housing market and this study verifies the effectiveness of this strategy,” said Robert Adams, Executive Director of Housing Virginia. “The energy efficient design and standards add to the economic benefit that these lower income families and seniors receive. Every dollar not paid for utilities can go to other important family budget items, including food, transportation, and healthcare.”

Another key finding of the study is that construction standards of this type do have a significant impact on the affordability of apartments for lower income families and seniors. The impact is greater as incomes are lower. For example, at 30% ofmedian income, the average tenant will see their ability to afford housing increase by nearly 10%. In Virginia, 30% of area median income is an income of $23,250 per year for a family of four.

The target communities are affordable rental housing that is developed through the Virginia Housing Development Authority’s (VHDA) Low Income Housing Tax Credit (LIHTC) program. The study included senior housing and family housing. It also looked at the differences between new construction, rehabilitated housing and adaptive re-use.

Beginning in 2007, VHDA implemented a set of incentives in the LIHTC program that encouraged developers and builders to use a recognized third-party standard in design and construction in order to reduce long term energy usage. The incentive required the use of rigorous standards, third party testing and inspection from EarthCraft Virginia and LEED. Virginia was one of the first states to provide these types of incentives in the LIHTC program and has been a national leader in this regard. This study confirms that these policies are achieving their intended goals. Construction of EarthCraft homes with these energy efficiency features costs no more than 3% more than that of traditional construction.

“When VHDA made changes to its tax credit program several years ago to encourage green building construction techniques, it created a very positive effect on affordable housing developments in Virginia,” said VHDA Executive Director Susan Dewey. “One of the best results from these changes is that utility bills have been significantly lowered for tenants, thereby improving their quality of life. I am pleased that this study confirms that we are on the right track.”

“Through VHDA’s leadership and the work of our development partners, 196 developments representing more than 13,500 apartments have been certified in Virginia since 2007,” added K.C. Bleile, Executive Director at EarthCraft Virginia. “This study demonstrates the value of green building implementation through public-private partnerships to achieve monthly utility savings for residents, maximize financial investments, and support sustainable communities.”

The study was conducted by the Center for Housing Research at Virginia Tech. Dr. Andrew McCoy, the Center’s Director, served as the principal investigator for the project. During the spring and summer of 2014, researchers visited 15 affordable apartment complexes across the state and met with residents to conduct energy usage surveys. Tenants provided permission to allow access to actual utility consumption for the previous 24 months. The behavioral surveys and consumption data were correlated to the apartment’s original energy usage estimate that was calculated when the unit was built or rehabilitated.

The energy use behavior survey revealed a number of findings that point to opportunities to achieve even greater savings. Residents reported setting thermostats at levels that exceed typical comfort temperatures, which impacts utility costs and building durability. This indicates a need for better education about the potential savings and strategies for adjusting resident behavior. Resident responses also indicated a need for more education about the equipment and design of their apartments in order to take full advantage of efficiency technologies.

“Our interaction with residents reveals that there are substantial savings that can still be achieved with more effective education and incentives. We have also learned some lessons that will help us to refine design standards and make better decisions on what technologies to deploy,” stated Dr. McCoy.

The LIHTC Program is the primary federal housing program designed to create rental housing that is affordable to families and seniors with low and moderate income. Under the program, private investors in affordable rental housing receive a tax credit as an incentive for investment. The program serves families and seniors with incomes up to 60% of the area median. In 2014, 60% of the area median income was $46,500 for a family of four. The program produces over 100,000 apartments every year nationally and approximately 2,000 per year across Virginia.

What’s up with the Virginia Housing Trust Fund?

This article was originally featured in a weekly newsletter of the Virginia Housing Coalition. 

What is it?  During the last session of the Virginia General Assembly (2012), the Virginia Housing Trust Fund was created, and an initial allocation of $7 million was made to the fund.  The HTF will become operational during the 2nd year of the biennium – beginning July 1, 2013. The funding for the HTF came from a one-time payment that Virginia received as a part of the National Mortgage Settlement Agreement. No long-term funding source has yet been identified for the HTF.

How can the funds be used?  The HTF will be administered by the Virginia Department of Housing and Community Development and the Virginia Housing Development Authority.  The budget bill provided a basic description of how the funds are to be used.  The funds are divided into two classes – grants and flexible loans.  Up to 20 percent of the funds may be used for grants – with a special focus on reducing homelessness, including foreclosure and mortgage counseling. The rest of the funds are designated for loans that will need to be repaid to the fund.  These loans will be low interest and can be designed to be as flexible as possible – for example, deferred payment or interest only would be possible under the program.

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