The apartments feature energy-efficient appliances, lighting
and windows. Building insulation and ventilation systems are designed
to ensure a healthy, comfortable environment with good indoor air
quality. Environmentally responsible materials are employed throughout
the facility. A rooftop garden insulates the structure, controls
stormwater runoff and provides an outdoor area for residents.
This is not a high-end residential project showcasing Leadership in Energy and
Environmental Design (LEED) green building standards, but instead a green affordable
housing development called Diversity Houses on Manhattan’s Lower East Side.
When completed, the two seven-story buildings developed by the Lower East Side
People’s Mutual Housing Association (LESPMHA) will contain 44 units occupied
by low- to very-low-income families at risk of being priced out of Manhattan’s
skyrocketing rental market.
Diversity Houses is one of 77 developments in 21 states financed
by Enterprise
Community Partners’ Green Communities initiative. Launched in October 2004,
Green Communities will invest $555 million to fund the development of more than
8,500 environmentally friendly affordable housing units in five years, according
to Dana Bourland, director of the Green Communities program. Since its inception
more than two decades ago, Enterprise has built more than 180,000 affordable
homes. “Enterprise’s mission is to see that all low-income people
have the opportunity for fit and affordable housing,” Bourland said. “We
see an affordable and fit place to live as the foundation for helping to move
people up and out of poverty into the mainstream of American life.”
Two years ago, Enterprise re-examined its mission in light of the huge impact
of home building on the environment and the health of residents. “To provide
fit and affordable housing actually means something a bit different today because
of the progression of the green buildings movement,” Bourland said “We
know there are better strategies to integrate into affordable housing that lessen
the impact on the environment, lower operating costs and provide housing that
is healthier, better located and made from more durable materials.”
Enterprise formed the Green Communities initiative to address the need for green
affordable housing. Its mission is to transform the way people think about, design
and build affordable housing. The program is also working with state and local
government agencies to “green” their affordable housing programs.
One of the program’s messages, “Green is the New Affordable,” highlights
the linkage between the goals of building affordable housing and the goals of
green building. Green building’s emphasis on energy-efficiency measures,
when applied to affordable housing, offers opportunities to lower utility bills
for people who can least afford skyrocketing energy costs. Green Communities
estimates homes built using its green criteria are 30 percent more energy-efficient
than traditional affordable housing, saving residents hundreds of dollars per
year. The health of residents and the surrounding community also benefit from
an integrated approach to housing and environmental problems. Green building
stresses the importance of good indoor air quality through the use of proper
ventilation, strategies to eliminate the growth of mold and mildew, and specification
of building products that emit fewer health-endangering toxins. By building greener
and healthier affordable housing, developers are improving the living conditions
for low-income people who typically have the least access to health care, and
often suffer disproportionately from health problems such as asthma.
To achieve its goals, the initiative offers a package of financial incentives
and technical help to developers committed to satisfying the program’s
green criteria. The green criteria aim to reduce the environmental impact of
home building, to safeguard the health of residents and to site developments
within easy access to public transportation and community services. The bulk
of the program’s funds, $500 million, are offered in the form of tax credit
equity under the Low Income Housing Tax Credit (LIHTC) program. Under the Tax
Reform Act of 1986, the federal government created the LIHTC program to fund
low- and moderate-income housing. Each year, states receive per-capita tax credits
to allocate to private developers who invest in affordable housing projects.
Enterprise Community Partners’ syndication group raises capital from private
investors and companies who wish to invest in low-income housing through LIHTC
equity funds. The syndication group invests these funds in affordable housing,
passing the federal tax credits to the investors. In the case of the Green Communities
initiative, affordable housing projects must commit to meeting the program’s
green criteria to be eligible for equity funding. Enterprise provides an additional
$50 million in low-interest loans. The loans finance predevelopment activities,
the acquisition of land, and building and construction costs. Another $5 million
is available as green grants, from a fund whose contributors include the Home
Depot Foundation, The Kresge Foundation and the Citigroup Foundation. The grants
help offset higher first costs incurred by developers to meet the Green Communities
criteria. In addition to financial help, the initiative provides technical assistance
to projects that have discrete challenges to building green.
Green Communities financed more than $7.5 million of the total $11.8 million
required for Diversity Houses with LIHTC equity. The project is the third affordable
housing project developed by LESPMHA. Experience and careful selection of options
are allowing LESPMHA to build the project at the same cost as a conventional
project, explained Mary Spinks, director of LESPMHA. “The stuff that I
am a fanatic about is not the bells and whistles, like solar panels,” Spinks
said. Instead she focuses on insulation and sealing the building to conserve
energy. “Caulk is cheap,” she said. “Operating costs this year
for my first green building are 25 percent less than a building with equivalent
square footage because of lower energy costs.”
Community Partners for Affordable Housing (CPAH) in Oregon obtained both LIHTC
equity and a green grant from Green Communities to build Oleson Woods Apartments.
The development features one-, three- and four-bedroom apartments and townhouses
for families that make 30 percent or less of the area’s median income.
The green grant helps pay for the material and labor costs to green the project. “We
have not been fortunate enough to find that green is cheaper yet,” said
Shelia Greenlaw-Fink, executive director of CPAH. The green funding also helped
in negotiations with the contractors who complained about the premium and difficulty
of building green. “We told them the funders will not give us the funding
unless we achieve these criteria,” Greenlaw-Fink said. “It backed
us up and helped us to keep our resolve.
“We are a tiny grassroots organization,” she continued. “Without
the power of a national intermediary like Enterprise, it would be difficult to
go to funders to get this extra money. We wouldn’t be able to put in all
the green features, and I do not think that we would get to the critical mass
and excitement about green building without them. So their role is really seminal.”
During Green Communities’ first year, which ended in October 2005, the
initiative awarded more than $179 million in grants, loans and equity for 4,300
homes and rental apartments. “There has been a surprising amount of interest
in the program,” Bourland said. “In some markets it is becoming the
way people do business.”
Green Communities estimates housing created under the program in the first year
reduced energy costs by $1.5 million, or $350 per household, and decreased water
consumption by 30 million gallons (7,000 gallons per household). The initiative
also projects reduction of more than 5,000 tons of greenhouse gas emissions.
Preliminary data for the year suggests the incremental first costs of building
green to be two to three percent. Grants awarded under the program appear to
be covering the incremental costs, according to Bourland. Informal surveys of
grantees found that in two-thirds of the cases the grants allowed developers
to go green for the first time. For developers with experience building green,
the grants “allowed them to be that much greener,” Bourland said.
The program has also been effective in transforming the way states and localities
build affordable housing. To date, the initiative received 10 commitments from
localities across the country to use the Green Communities criteria to award
LIHTC and other affordable housing subsidies. Thirty-seven national, state and
local partners also have formed partnerships with Green Communities.
Recently, green@work spoke to Dana Bourland, director of Green Communities, about
the initiative.
green@work: What does your organization see as the main challenge to moving green
affordable housing into the mainstream?
Bourland: There is a huge perception that green can’t be done cost-effectively.
The perception of the higher first cost of green is really a barrier. Because
people perceive it to be expensive, they haven’t always investigated the
possibilities. The more we can demonstrate that the projects are getting built—show
what was done to make them green and share that information—the more we
will help to overcome the hurdle that green has to cost more.
g@w: What other factors have held back the growth of green affordable housing?
Bourland: I think within the community-development industry there is a growing
understanding of the need, almost the obligation, to provide green housing. But
there is a slow uptake because you have to reorient the way you are thinking
about designing, locating and building the housing. There is a learning curve.
It is really a new way of doing business that requires integrating the design
process in such a way that you bring your development team together, very intentionally,
to integrate systems and think about the best possible development strategies.
So, there are some fundamental business shifts that need to take place. But after
people engage in the process for the first time, it becomes a way to operate.
We are by no means at a tipping point, but I think there is more and better information,
and we are addressing the costs. Since providing these incentives, Enterprise
has already seen a tremendous increase in the amount of green affordable housing
under development.
g@w: What are some of the factors causing the price differential between building
traditional affordable housing and green affordable housing?
Bourland: If this is the first time you have ever built a green project, a lot
of the cost differential happens up front in the planning and the design phase.
If this is the second time around, you may still incur costs around the most
efficient heating and cooling systems. Oftentimes, even just properly venting
the homes and the apartments incurs an additional cost. And then every project
is a little different in its priorities. So there might be additional costs for
more permeable pavements or installation of a green roof or the use of renewable
energy.
g@w: How did Enterprise develop the Green Communities criteria for the initiative?
Bourland: We developed the Green Communities criteria with the Natural Resources
Defense Council, the American Institute of Architects, the American Planning
Association, Global Green, Southface and other developers who were already building
green affordable housing. We looked at what was already being done in places
like Seattle, through their SeaGreen affordable housing program, and Portland,
which also has criteria for green affordable housing. We set up a very prescriptive
set of criteria. So if a developer integrated the criteria into any development,
we feel confident it could be done at little or no cost and have significant
benefits.
g@w: How do the Green Communities criteria differ from other green building standards
such as the U.S. Green Building Council’s (USGBC) LEED standards?
Bourland: LEED is a rating system where there are some mandatory criteria, or
what they call prerequisites; otherwise, you can pick and choose what gets done
to earn enough points to obtain certification. There is also a real cost involved
with LEED, a cost to apply, a cost to track the submittals to USGBC/LEED and
a cost to obtaining certification. It is somewhat different for LEED homes, but
that is the system that the USGBC follows.
Green Communities, on the other hand, is very prescriptive. We take some of the
guesswork out for developers, especially those who are doing this for the very
first time. We say you have to do all of these 30 things in your project that
will have economic, health and environmental benefits, and then we added some
optional items. The optional items recognize that this is a national program,
and some of the items would not make sense in every location for every project.
We wanted to offer criteria that were very understandable and could be implemented
cost-effectively through a process that would not incur additional costs just
for participating.
g@w: How do you select programs to fund?
Bourland: We have an application form where the applicant has to spell out how
they intend to meet the Green Communities criteria. It is also very important
that an applicant show that they have someone on their team, either a consultant
or a staff member, with some green experience and expertise. Not having an experienced
team member adds costs to the development. Once they submit their completed application
to us we are able to respond within three to four weeks.
g@w: How do you verify the development has been built to your criteria?
Bourland: When they complete their construction documents, they have their project
architect and sponsor of the project certify through their signature that all
the items were indeed put into the construction documents, and that they will
be met.
g@w: Will you track the results of the program?
Bourland: One of the other reasons for creating a set of criteria rather than
a rating system or a guideline is that we really want to measure what it means
to go green in terms of costs and benefits. This data was missing when we launched
this initiative. There continues to be a lack of information. On every single
project we are collecting cost data. How much did it cost to meet the Green Communities
criteria and build the development green? We are also collecting data on operating
expenses for the building. It is a requirement that each project give us this
information.
We are also working on ways to measure the health impacts for residents living
in green housing. But that is quite a bit harder to do. Right now we are exploring
this possibility with the National Center for Healthy Housing.
g@w: How do the city and state collaborative partnerships work?
Bourland: Those have just been tremendous. When we launched Green Communities,
state agencies and other entities that wanted to participate immediately contacted
us. Typically Green Communities fell in line with some other things that were
already happening on the ground in those locations. Depending on location, the
state collaboratives look a little bit different. Primarily they leverage our
ability to finance green affordable housing nationally with local funding sources.
I think as importantly, they help us impact state and local policy more effectively
and connect with local affordable housing developers.
MassHousing, the Massachusetts Technology Collaborative (MTC) and Enterprise
all formed a collaborative in the state of Massachusetts to promote green affordable
housing. We are using resources that MassHousing has through a smart growth program
and a housing trust fund, and $8.5 million that the MTC has committed for renewable
energy to help developments go that much greener in the commonwealth.
In Michigan, the Michigan State Housing Finance Agency and Great Lakes Capital
Fund (a local equity fund) each put in $250,000 in grant funding. So a Green
Communities project in Michigan is actually eligible for twice the amount of
grant money they would get otherwise. We are also working with both Michigan
and Massachusetts to address policy, develop training curriculum and the like.
g@w: How is Green Communities assisting state and local governments to green
their housing and economic development policies?
Bourland: The LIHTC program has been the No. 1 financial mechanism for building
rental affordable housing. It is a federal program that allocates funding for
tax credits based on the population of the state. Every state has a Qualified
Allocation Plan that has specific criteria to determine which projects will receive
the tax credits.
We have been working with housing finance agencies to add criteria to the Qualified
Allocation Plans that award points to projects meeting the Green Communities
criteria. Over the last year we have directly and indirectly influenced 10 of
those plans to become greener.
g@w: What has your organization learned during the first year of the program?
Bourland: We have learned that there is huge interest in green affordable housing,
and we have learned that green buildings really can be done cost-effectively.
We have also learned that municipalities and states are very interested in requiring
more of this development because they see the direct benefits. Other lessons
are that it is not easy, and we have not reached a tipping point.
There still is a lot to demonstrate and learn. For example, we need to learn
more about how to do this for single-family housing developers. We are also going
to focus more on what this means for rehabilitation projects. We did not see
quite as many rehab applicants in the first year, and for us it makes perfect
sense that rehab should be green.
On the Web:
Green Communities:
www.greencommunitiesonline.org
Enterprise Community Partners:
www.enterprisecommunity.org/
Lower East Side People’s Mutual Housing Association:
www.lespmha.org
Community Partners for Affordable Housing:
www.cpahinc.org
Diane Greer is a freelance writer and researcher based in New York, specializing
in sustainable business, green building and alternative energy. Her articles
have appeared in major magazines, newspapers and trade publications. She can
be reached at dgreer@greerresearch.com.
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