Energy Efficiency – Expensive Luxury or Affordable Necessity?

Curt Monhart and Jeff Dombrowski

Curt Monhart, EAGM V.P., was listening to affordable housing developer Jeff Dombrowski last week as he outlined the various opportunities he has to create energy efficient housing in several settings. One is on a college campus and the other is in the downtown area of Grand Rapids, Michigan, the town which he calls home.

The college campus is located in Mississippi and the focus of the project will be to provide affordable housing for veterans making the transition to a career after the military. With an estimated 2.4 million veterans returning from Iraq and Afghanistan, affordable college housing will become increasingly important.

Dombrowski also discussed the conversion of an empty industrial building into a 140 unit affordable housing facility in the heart of Grand Rapids. Because the city is experiencing a significant rebirth, many of the older structures are being converted to luxury condos. The rising cost of living in the city will drive many residents out if affordable housing is not available. Dombrowski’s goal is to create the most energy efficient affordable housing within walking distance of all the downtown has to offer.

This visionary developer referred to the recent Arbor Green project located in Los Angeles, California. The 40 unit facility was able to reduce energy costs by 80% using a variety of “green measures” (solar electric, solar heating, low water flow fixtures, etc.). Keeping the energy costs to a minimum is not a luxury when the occupant’s income is fixed. In some cases the lower cost of energy is the ultimate determining factor of what makes housing affordable. If the rent is affordable, but the energy cost is too high, it’s not affordable!

“Arbor Green’s various green features will help reduce monthly utility bills for residents by as much as 80 percent, which means some residents could pay $5 or even less.” Novogradac

One of the frustrations Dombrowski voiced was the far too common view traditional lending sources defer to when energy efficiency upgrades are designed into projects. Because most cutting edge technology is over and above the minimum standard the local code “requires”, the energy upgrades are viewed as a luxury and summarily dismissed. They are dismissed because the goal of the lender is a quick return on investment. If they keep the cost per square foot for construction low, they presume a faster and less risky return on investment.

Dombrowski looks at energy efficiency as a necessity that must be considered in addition to minimal code because it makes the cost of living in the affordable housing structures truly more affordable. The energy efficiency components become an investment that pays back perpetual dividends to the residents living within. The reduced energy bills also make green properties more appealing which results in low vacancy rates – a big plus for the building owner and the lender (see PACE video).

“Once PACE financing entered the picture, so too did the full potential of clean energy technologies.” CleanTechnica

According to Dombrowski, Property Assessed Clean Energy or PACE will help him fill in the gap between what traditional lenders are willing to finance for minimal housing standards and the energy efficiency upgrades that he feels are so vital. The comprehensive equation that makes living space truly affordable must include efficient daily use of energy.

Dombrowski is in good company as he aligns with a trend that was initiated by the U.S. Department of Housing and Urban Development. A recent article showcased an affordable housing project in Washington, DC and described the trend in this way: “This investment is the first PACE financing approved by the U.S. Department of Housing and Urban Development (HUD) for a HUD-assisted public housing property, and could become “a model for the nation” to spread sustainability across America’s disadvantaged communities.” (see full project details HERE)

Property Assessed Clean Energy is designed to unlock the economic benefits of energy efficiency. Thanks to PACE what was once considered an expensive luxury has now become a powerful tool, as well as an affordable necessity, for reaching the goal of access to affordable housing for those members of a community who truly need it.

The Energy Alliance Group of Michigan works with businesses and building owners desiring increased profitability and environmentally friendly facilities through energy efficiency. That process often includes a reduction in energy use as well as an increase in renewable energy production and begins HERE!

Housing photo credit – Kimson Doan