Costs and Benefits of Green Affordable Housing and Enterprise’s Green Communities Initiative

By Melissa Peterson of the Enterprise Foundation

As enthusiasm and resources have grown within the green building field over the past several years, the need for its application to affordable and workforce housing has increased. As communities more strategically consider energy efficiency, community walkability, and indoor air quality factors of residential development, social equity needs to be acknowledged as a critical part of the conversation.

Enterprise’s Green Communities initiative is the largest effort taken nationally to bring sustainable principles and practices in the affordable housing industry into the mainstream. Enterprise has invested $437 million in grants, loans and Low Income Housing Tax Credit equity to create healthier, more sustainable affordable homes for low-income people. This investment is currently supporting 217 developments comprising 9,248 affordable green homes around the country. 

The Green Communities pipeline makes up the country’s largest collection of affordable housing developments designed and built to a strict and comprehensive set of environmental criteria. The Criteria apply to new construction and rehabilitation, to multifamily buildings as well as single family homes. They incorporate both smart site planning and green building features, such as energy efficiency and healthy homes practices. 

Development Costs

The environmental criteria provide a unique opportunity to examine building performance, development costs, financial incentives, and other benefits at a significant scale. We are using this platform to conduct several interrelated evaluations:

• Testing the performance of Green Communities developments to establish their effectiveness at incorporating holistic environmental criteria and providing technical support to achieve better building performance.
• Applying the initial version of the “cost collection template” Enterprise has developed specifically to 1) compare the construction costs of Green Communities developments with conventional developments by the same developers and baseline energy code; and 2) collect data on early energy and water savings in the Green Communities developments.
• Determining the feasibility of measuring, verifying and marketing the carbon emissions reductions associated with Green Communities developments.
• Tracking the initial health outcomes associated with green affordable homes on one project.
• Comparing the performance of HOPE VI developments in Washington State that were constructed to varying standards, from conventional to Green Communities.

Those who are less enthusiastic about incorporating green building features into affordable housing developments typically point to the up-front extra cost which can be associated with more efficient, durable building strategies. However, this additional cost tends to be less than anticipated for the value added to projects incorporating sustainability features. The average cost increase as a result of the green features was 2.4 percent. Higher incremental costs in the properties analyzed were largely due to increased construction costs as opposed to design costs.

Certain green improvements may actually have lower first costs than conventional construction practices and could help compensate for any incrementally higher costs associated with other green features in the project. Properly sized HVAC systems may be smaller and less expensive, advanced framing may use less lumber and recycling construction waste may reduce tipping fees, just to cite three examples. More broadly, denser development may also save localities in infrastructure costs.

Energy & Water Savings

High utility costs often create a significant financial hardship on low-income households, forcing many to make tradeoffs between heat or electricity and other basic necessities.

A recent national study documented the brutal choices that poor families make when faced with unaffordable home energy bills. The study found that during the prior five years, due to their energy bills: 57 percent of non-senior owners and 36 percent of non-senior renters went without medical or dental care; 25 percent made a partial payment or missed a whole rent or mortgage payment; and 20 percent went without food for at least one day.

In addition, energy costs have increased much faster than incomes for low-income households in recent years. Today a family earning minimum wage pays more than four times as much of their income for energy as a median income household.

The aforementioned study found strong evidence of financial benefits of green affordable housing for low-income residents over time. “For residents of affordable housing units, the life-cycle financial outcome is almost always positive” (emphasis supplied). The study found that:

In virtually all the cases, energy and water utility costs are lower than their conventional counterparts. In many cases, decreased operating expenditures alone more than pay for the incremental initial investment in greening the project in present value terms.

The use of more durable materials and equipment in several of the case study projects result in reduced replacement costs and provide additional life-cycle financial benefits. Moreover, the value of improved comfort and health for residents, as well as reduced environmental impacts, is substantial, although not captured quantitatively in our analyses.

Healthy Homes & Communities

Green design and building practices can create healthier home environments through better indoor air quality and healthier building materials. Sustainable developers are still learning which practices have the most positive health outcomes. As Jacobs notes: "There is new evidence that housing interventions are indeed effective in reducing the onset and severity of asthma [and] there is similar evidence for other health outcomes…[although] considerably more research is needed to understand which interventions hold the greatest promise."

While researchers remain cautious, many public health professionals, and a growing number of affordable housing developers believe sufficient evidence exists to justify adoption of basic “healthy homes” practices to keep homes dry, clean, well ventilated and free of pests, combustion products and toxic materials. Such practices are integral to Green Communities and other green residential programs.

Smarter site planning and development that creates a sense of community, encourages walking and provides access to parks and mass transit is also healthier. Research suggests that people who live in sprawling areas walk less, weigh more and are more likely to suffer from high blood pressure.

Through these and many other studies and strategies, Enterprise is working to building partnership and momentum around how to effectively provide sustainable home for all members of our community.