1. Home Energy Affordability: Its Importance to Producers and Residents of Affordable Housing
Roger D. Colton
Fisher, Sheehan & Colton, Public Finance and General Economics
34 Warwick Road, Belmont, MA 02478
(voice) * * * ( )
June 2006
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2. The HUD Consolidated Plan
Identifies affordable housing needs.
Discusses housing market.
Identifies barriers to affordable housing.
Identifies and ranks action steps.
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3. Recent Natural Gas Prices (New England): December 1999 through December 2005
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4. Winter Heating Bills (Northeast): 1999/2000 - 2005/2006
1999/2000: $ 685
2000/2001: $ 874
2001/2002: $ 637
2002/2003: $ 851
2003/2004: $ 917
2004/2005: $1,029
2005/2006: $1,276
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5. Starting Point: Home Energy Burdens
Shelter burdens affordable at 30% of income.
Utility costs affordable at 6% of income (20% of shelter costs).
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6. Home Energy Unaffordability (RI): Energy Burdens by Federal Poverty Level
0 - 50% FPL
% FPL
% FPL
% FPL
% FPL
% FPL
53.5% (21,981 HHs)
21.4% (11,545 HHs)
15.3% (15,198 HHs)
11.9% (14,584 HHs)
9.7% (15,792 HHs)
8.0% (22,015 HHs)
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7. Home Energy Affordability Gap
Home energy is a crippling financial burden
for low-income Rhode Island households.
2004 Home Energy Affordability Gap: $104,586,852
2006 Home Energy Affordability Gap: $150,763,949
Growth in Affordability Gap ( ): $46,177,097
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8. Non-energy impacts of energy unaffordability: Housing
Nearly one-in-six frequent mover households cited an energy-related reason as the primary reason for their most recent move. Most frequent mover households citing energy reasons indicated that the primary reason for their move was to find lower energy bills.
Energy insecurity affects the housing of low-income Missouri households by forcing those households to abandon their home for all or part of a day due to their inability to heat or cool it.
A substantial proportion of low-income households overall, as well as in every demographic category, closed off one or more rooms of their homes because they could not afford to heat or cool that space.
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9. Impact on affordable housing development
Tenants can pay less rent; OR
Developer pays more of the energy costs.
Either way, development
supports less debt financing.
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10. Affordable Purchase Prices Adjusted for Utility Bills
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11. Reduced Affordable Purchase Price: Colorado Counties
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12. Reduced Number of Affordable Units: Colorado Counties
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13. Recommended Action
Homeownership and rental units developed as either new construction or substantial rehabilitation by grantees or participating jurisdictions should be developed to Energy Star standards.
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14. HUD Recommendation
Include following in any Request for Proposals or procurement process:
“All new buildings and gut rehab shall be designed to meet the National Energy Five Star efficiency performance standard of 86. All procedures used for this rating (86) shall comply with National Home Energy Rating System guidelines.”
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15. Energy Star: Does it cost more ongoing?
Efficient Home Monthly Annual
Utility Savings* $ $480
Additional
Mortgage Costs** -$15 -$180
Cost Savings $ $300
* Likely to increase while mortgage remains fixed
* * Based on $2,000 additional house price/value
NET SAVINGS: It is always cost effective.
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16. Improved Year 1 cash flow Net Present Value Svgs
Quantifying the Impacts of Efficiency Investments: Reduced Energy Costs the Same Cost Savings As. . .
Improved Year 1 cash flow
Net Present Value Svgs
Effective interest rate reduction
Effective sales price reduction
$160 - $270
$ $4300
0.31% %
$ $5500
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17. Things that just don’t fit
2.5% of HUD-insured mortgages failed because of high energy prices. /a/
Value of home increases $20 for each $1 of energy efficiency investment. /b/
/a/ Metrostudy Corp. (1976). An Analysis of the Contribution of Energy Price Changes to HUD-Insured Mortgage Failures, Federal Energy Administration: Washington D.C.
/b/ 1999 Appraiser Journal.
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18. Where do you work on it? Consolidated Plan (5-year Action Plan)
LIHTC Qualified Allocation Plan (QAP)
Energy education as part of HUD counseling
“When your only tool is a hammer,
you tend to see every problem as a nail.”
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19. What else do you do about it?
EITC promotion
Food Stamp SUAs
Weatherization funding
Public Housing Authority utility allowances
“When your only tool is a hammer,
you tend to see every problem as a nail.”
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20. For more information: http://www.fsconline.com (Library or News)
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21. For more information:
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