When Ed Key tears open his utility bill every month, he sees a clear benefit from living at Denny Park Apartments, an energy-efficient green affordable housing development in Seattle. Since he moved in, his utility costs have dropped from $30 a month at his old studio apartment to $13. That's an important savings for the low-income veteran.
Across the country, the numbers are in from the first generation of green affordable housing projects, finished over the last five years. Developers and investors report utility cost savings of 20 percent to 40 percent, to both landlords and tenants, in hot climates and cold, thanks to green building ideas that conserve resources like electricity, water, and gas.
Proven Savings From Coast to Coast
In the Northeast, where the winters can be long and cold, the New York State Energy Research and Development Authority has helped finance energy improvements at nearly 100,000 apartments across the state, bringing both new construction and existing buildings up to the federal Energy Star standards and cutting their energy costs by a quarter on average, officials said. All of these apartments have been tested on their actual utility expenses as part of the program. The savings work out to an average of nearly $400 per unit annually.
Affordable housing managers have found similar savings ratios in the West, where winters are much milder. Thanks to these energy savings, the reserve accounts of the 600 green affordable apartments in the portfolio of Homestead Capital are an average 36 percent larger than the rest of Homestead's affordable portfolio. The apartments were built to a variety of green standards.
Early operating data from the green portfolio of Enterprise Community Partners, Inc., shows energy savings of up to 40 percent, compared to properties built to the standards of local building codes. Enterprise began aggressively investing in properties that met its own green standards three years ago. So far, six of these 250 properties have been operating for two years or more.
Of course, the biggest energy savings are at projects built to the toughest green standards. Denny Park opened in 2005 as one of the first affordable housing properties to win a Leadership in Energy and Environmental Design (LEED) certification from the U.S. Green Building Council. Denny Park also meets the demanding standards set by Enterprise for its Green Communities investments.
It cost Denny Park's owners, the Seattle-based Low Income Housing Institute (LIHI), a total of $1,000 per apartment in utility expenses to operate Denny Park in 2007, from electricity to hot water to trash pickup. That's as much as $200 per apartment lower than the utility costs at LIHI's other affordable properties.
Green developers and investors also report steep savings on their water bills, which are 35 percent to 40 percent less on average than water costs at comparable properties, according to information from the portfolio of green properties in Enterprise's Green Communities Initiative.
"I've been surprised," said Dana Bourland, director of Green Communities for Enterprise. "So many of us have been focused on energy." But green building ideas that save water can often save a lot of money quickly compared to their cost. Low-flow fixtures, for example, pay for themselves in less than three years, said Bourland.
In water-conscious California, Murphy Ranch, a five-year-old LEED-certified affordable housing project in Morgan Hill, Calif., paid a third less for water and sewer than comparable properties: $450 per apartment in 2007, compared to expenses ranging from $504 to $594 per unit at three nearby communities, according to San Jose, Calif.-based developer First Community Housing.
Denny Park racked up savings, with water and sewer costs of $188 per resident, compared to $235 and $322 per resident at LIHI's comparable properties.
In the struggle to save water, it helps that Denny Park's landscaping doesn't need to be irrigated for most of the year. The planters on its rooftop garden are designed to catch rainwater, and the plants are drought resistant.
Saving water also helps keep the hotwater heating costs down. Denny Park's hot water bill was just $133 per apartment in 2007, roughly a quarter less than at LIHI's comparable properties.
Electric Light and Heat
Developers also report savings on their electric bills of 30 percent. Electricity costs in the Enterprise portfolio averaged about $300 per apartment, or 80 cents per square foot in 2007. That includes both heat and light, since most of the Enterprise apartments use heat pumps.
Residents like Ed Keys at Denny Park get much of the benefit of these electricity savings. Keys saves about $200 a year. At Murphy Ranch, the average tenant saves a similar amount, about $250 per year, according to First Community.
However, these savings for residents, and many savings for the landlords, could evaporate if developers fail to teach residents how to keep their building green and how the residents can benefit.
"It's important to train the residents, so they know that these funny-looking lamps are saving them money," said Bourland.
Education is especially important if you want your tenants to recycle-a huge way to save money. It cost $102 per apartment to haul trash away from Denny Park in 2007. That's half the cost at LIHI's comparable communities.
Green buildings are also relatively easy to maintain. The numbers are more anecdotal, and harder to tabulate than savings on a monthly utility bill. However, the materials used in green housing projects are proving to last longer. For example, the linoleum counters at Murphy Ranch are still in good shape after five years and should last for 25 more, said Jeff Oberdorfer, executive director for First Community Housing. "If [the material] was vinyl, it would be at the end of its life right now."
The cost of replacing the vinyl would easily add up to $1,000 per apartment, he said.
Green Projects Have Low Turnover
Tenants are also less likely to move out of green affordable housing properties, according to developers. For example, the average occupancy in Homestead's portfolio of affordable apartments was 97 percent as of January. That's a full percentage point higher than the rest of Homestead's portfolio.
At Murphy Ranch, only two tenants move out of the 100-unit property each year on average, despite that fact that the rents at many of Murphy Ranch's apartments approach rents in the surrounding market.
Why do tenants stay longer? Green buildings provide benefits to their residents that don't appear on the operating budgets. Many residents appreciate the improved air quality at green building projects, said Oberdorfer. Residents with asthma and allergies often mention to property managers that their symptoms have improved.
Residents also appreciate the natural light that comes in through the windows and skylights at communities like Traugott Terrace, which has provided recently homeless people in Seattle with permanent supportive housing since 2003, when it opened as the first LEED-certified affordable housing property in the United States.
"They really like the natural light. It helps, particularly in the recovery process," said Jacqueline Raymond, program manager for Seattle-based affordable housing developer Archdiocesan Housing Authority.
This article originally appeared in Affordable Housing Finance.
Check out other articles from this series:
Developers, Engineers, Investors Offer 10 Tips for Going Green
More Money for Green Properties
Guest Commentary: Getting Serious About Energy Efficiency in Affordable Rental Housing