SILVERTHORNE, COLO. — All the garden apartments in Villa Sierra Madre here have brand-new furnaces.
“People love them,” says Josh Russell, executive director of Denver-based Archdiocesan Housing, which manages the 61-unit affordable housing property. Residents say their energy bills are half the cost of what they were last year. The maintenance manager also reports fewer comfort complaints, even on cold, zero-degree nights.
So where did the money come from? Local utility company Xcel Energy provided $153,000, or $2,500 per unit, to pay for the furnaces along with individual programmable thermostats, attic insulation, energy-efficient light fixtures, and water-saving measures through its Xcel Energy Demand Side Management Low Income Multifamily Program. The upgrades were completed in December.
Xcel is not alone. More than 25 states have passed laws that require privately owned, regulated utilities to implement energy-efficiency programs. With billions of dollars available, affordable housing developers are getting in line to get their share—using this money to help preserve aging affordable housing properties like Villa Sierra Madre, which was built in 1992.
Each of these states has its own version of the program, usually mandated by state law. Colorado's Legislature passed its version in 2008, and the program has been running since 2010.
“It's been going great,” says Jennifer Gremmert, deputy director of Denverbased Energy Outreach Colorado (EOC), which partnered with Archdiocesan to make the energy improvements at Villa Sierra Madre.
Publicly regulated utility companies now spend about $5.6 billion a year on programs to make buildings more energy efficient. This spending should increase to as much as $12 billion by 2020, according to the Institute for Electric Efficiency. The programs are designed to protect consumers from sharp increases in future utility costs and are often paid for by charges included in customer utility rates. As the U.S. population grows and consumes more energy, utility companies would be forced to build expensive new power plants and energy infrastructure. The cost would inevitably get passed on to the consumer. A growing number of state governments now mandate certain reductions in energy consumption to stop that from happening.
The $5.6 billion now available is a huge amount of money. Just to compare, the federal weatherization program typically provided $200 million to $250 million a year nationwide before the American Recovery and Reinvestment Act of 2009 gave weatherization a massive, temporary boost.
Now Congress has drawn a line through the weatherization program. “They have almost zeroed it out,” says Todd Nedwick, assistant director of public policy for the National Housing Trust, a housing advocacy group dedicated to preserving the affordability of housing.
CHERCHER LE CASH
As state programs grow stronger, affordable housing advocates work to make sure apartments for low-income people get their share of the retrofit cash. Apartment properties tend to be overlooked. Instead, utility programs focus either on single-family residential properties or commercial real estate such as retail or office properties.
“The residential program officer says you have to call commercial, and the commercial program says you have to call residential,” says Betsy Glynn, a program officer at Boston Local Initiatives Support Corp.
Affordable housing advocates are forming partnerships between state officials and utility companies to change program rules, such as allowing affordable housing properties to use existing income certifications to qualify for lowincome programs. Other rule changes include allowing property owners to receive funding up front for energy audits and other improvements, rather than waiting for a rebate. “Multifamily is just not getting its share of these resources. In most states it's close to zero,” says Nedwick.
Advocates have shown officials that energy retrofits to affordable housing projects benefit low-income residents, even though the cost savings often go to property managers who pay to heat the buildings. That's because the upgrades help preserve affordable housing by keeping these communities financially viable.
So far, utility companies have responded well. “Once you present multifamily as an opportunity to reach these very aggressive goals set by the states, utilities are very interested,” says Nedwick.
NHT is working with seven states to bring these resources to affordable apartment properties: Colorado, Maryland, Michigan, Minnesota, Ohio, Pennsylvania, and Rhode Island. “These are states where the utilities have increased their investment pretty dramatically,” says Nedwick.
Another housing advocacy organization dedicated to the preservation of affordable housing, Stewards of Affordable Housing for the Future, is working with state officials and utility company executives in California. Enterprise Community Partners is also working with states in the Northwest.
New Jersey's largest utility company, PSE&G, has partnered with the New Jersey Housing and Mortgage Finance Agency to provide up-front interest-free financing and grant incentives to pay for eligible energy improvements.
Demand is high for the retrofit funding provided by these partnerships.
In Colorado, organizations like EOC are helping affordable housing developers link up with utility companies, which provide about $9 million a year in energy retrofit funding.
In June 2011, EOC received about 100 applications from affordable housing properties. So far, only 15 have been funded with utility money. About 50 have been funded in other ways.
Like most states, Colorado has more than one active, publicly regulated utility company—that means more than one program for developers to keep an eye on. “There might be dozens in a state,” says Nedwick.
However, that can provide an opportunity for projects in rural areas. That's because utilities are often required to spend their retrofit money in the areas where they provide power. “I'll actually have to look for a project in the southern region,” says EOC's Gremmert. This new funding will help pay to repair crumbling rural housing properties as other rural housing programs have been deeply cut.
A LITTLE MONEY GOES A LONG WAY
Even relatively small investments can make a big difference. In the Northeast, the Massachusetts Department of Housing and Community Development has partnered with utility companies and affordable developers to create the Massachusetts Low-Income Energy Assistance Network (LEAN). Launched in 2010, the program's electric utilityfunded budget for 2011 is $14 million, and the gas budget is $8.5 million.
That might not sound like a lot of money to spread over the whole state, but the program focuses its resources to have the greatest impact. “LEAN has been a huge success,” says Glynn.
For example, affordable housing developer Urban Edge, based in Roxbury, identified Dixwell Park Apartments as the least energy-efficient property in its entire 1,147-unit portfolio by using an online energy and water benchmarking program called Wegowise, utilized by the LEAN program.
Using utility company dollars, contractors made $39,000 in energy improvements to Dixwell, including air sealing and extra insulation in ceilings and around steam pipes. That's just more than $1,000 a unit. Heating costs have dropped 7 percent—a significant improvement to the balance sheet of this affordable housing property.
In most states, utility retrofit programs provide about $4,000 per housing unit to add improvements such as extra insulation and energy-efficient appliances and light fixtures, according to NHT. These energy retrofits often accomplish many of the necessary repairs that would be needed in a renovation to preserve affordable housing. Plus, the properties tend to come out of the retrofit in a much stronger financial position. “The average property sees a 20 percent reduction of its energy bills,” says Nedwick.