GRAPEVINE

The Case for Building Green

BY BART HARVEY AND STOCKTON WILLIAMS

AFFORDABLE HOUSING FINANCE • SEPTEMBER 2007

For years, many developers thought of “green” and “affordable” as incompatible. Yet, in some parts of the country, green is rapidly becoming the affordable mainstream as developers and policymakers are rethinking how and where we create homes and communities for low-income people. It is possible to foresee a day in the near future when all affordable housing is healthy, efficient, and environmentally responsible.

Three factors account for this emerging transformation in our industry.

Cost effectiveness. It used to be the case that green features meant much higher development costs. Research and experience on the ground are showing that is no longer the case.

A recent study of a national sample of green affordable developments found that the green features increased development costs an average of 2.4 percent. Of course, life-cycle costs are greatly reduced and payback periods are minimal. Preliminary results from Enterprise’s analysis of green developments in our Green Communities portfolio are generally consistent with this finding. Studies on green building in other sectors indicate that costs come down with experience and the anecdotal evidence in affordable housing suggests the same.

Tangible benefits. The aforementioned study noted that “For residents of [green] affordable housing units, the life-cycle financial outcome is almost always positive.” In addition, we are learning more about the health benefits of green homes. According to Rebecca Morley, executive director of the National Center for Healthy Housing: “It is clear that we can expect substantial health gains by building green.” Finally, locating developments near transit, a key green strategy, can cut transportation costs, which are rising even faster for poor families than rents.

Policy leadership. Mayors around the country are integrating green affordable housing into holistic strategies to cut their cities’ greenhouse gas emissions. Most state housing agencies strongly encourage sustainable practices through their low-income housing tax credit allocation plans. The Department of Housing and Urban Development is rolling out green initiatives. The Internal Revenue Service has acted to improve utility allowance regulations, creating a strong incentive for developers to increase energy efficiency.

Sustainable affordable housing is no longer a niche reserved for industry pioneers. But sustainability is not yet the way we all do business. So what needs to happen for green and affordable to be one and the same everywhere?

First, developers and policymakers need to learn more about best practices, costs and benefits, and successful strategies for bringing the holistic health, economic, and environmental benefits of sustainable development to low-income people and communities. Those of us active in the green transformation of our industry must constantly communicate what we are learning.

Second, mainstream financial institutions must recognize the benefits of green development and reflect them in products and programs to support it. The good news is that some major players are starting to step forward.

Third, we should all challenge ourselves to achieve a higher standard. With the ingenuity and innovation that have been hallmarks of our industry in recent years, we can redefine “affordable housing” to encompass healthier, more energy efficient, and more environmentally responsible homes and neighborhoods. We should not settle for anything less for the people and communities we serve.

In short, developers that do not change their practices of development to incorporate green building techniques may find themselves on the outside, looking in, not only out of favor but also out of the mainstream.