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December 2012 | Volume 1, Issue 6  

 IN THIS ISSUE:

 Boulder Improves Energy Efficiency in Rental Housing
 Grantee Spotlight: Canal Crossing — From Brownfields to Mixed-Use Community
 Innovative Partnership Funds Transit-Oriented Housing in Denver
 Pilot Program Promotes New Sustainable Farming in Montgomery County, Maryland


 

Boulder Improves Energy Efficiency in Rental Housing

Energy advisors work with Boulder residents to understand their options for complying with SmartRegs
Energy advisors work with Boulder residents to understand their options for complying with SmartRegs. Image courtesy of Walden Hyde, EnergySmart.
In September 2010, the city of Boulder, Colorado created baseline energy-efficiency requirements for existing rental housing by adopting three ordinances, collectively called SmartRegs. As it was finalizing these regulations, the city also participated in developing EnergySmart, a regional program that provides property owners with technical advice and financial assistance for improving the energy efficiency of their properties. Together, SmartRegs and EnergySmart have the potential to become a national model for advancing energy efficiency in rental housing.

SmartRegs and EnergySmart

SmartRegs builds upon earlier efforts by the city to improve energy efficiency. In 2006, Boulder adopted its Climate Action Plan (CAP), a set of strategies to reduce the city’s greenhouse gas (GHG) emissions to 7 percent below 1990 levels by 2012. In the same year, Boulder adopted the CAP tax, the nation’s first tax for the purpose of mitigating climate change. Since 2007, Boulder has required new construction to exceed the minimum standards of the 2006 International Energy Conservation Code. SmartRegs focuses on existing rental properties, which account for about 50 percent of the residences in the city; the nationwide average is only 35 percent. Composed of amendments to the building code, the rental licensing code, and energy-efficiency requirements, SmartRegs requires existing rental properties to meet a minimum level of energy efficiency by 2019.

Rental units, however, present a "split incentive" problem; neither property owners nor tenants have a full financial incentive to improve their property’s energy efficiency — for tenant-paid utilities not included in the rent, owners incur the cost of capital improvements while renters benefit from reduced utility costs. Conversely, for owner-paid utilities, renters have no incentive to invest in energy efficiency unless there is an accompanying reduction in rent to cover the cost of their investments.

In addition, many people find that complying with energy-efficiency requirements such as those outlined in SmartRegs can be challenging. Property owners must resolve numerous technical issues to meet the requirements, such as conducting an energy audit, understanding and prioritizing potential improvements, budgeting for the cost of retrofits, learning about available rebates and tax credits, and finding qualified contractors.

To address these issues, Boulder partnered with the city of Longmont and Boulder County to create a set of incentives, the EnergySmart program. EnergySmart gives participants access to expert advisors who can provide recommendations on needed energy improvements. Within the city of Boulder, these advisors help property owners comply with SmartRegs requirements; outside of the city, they adapt their suggestions to each property owner’s energy-efficiency goals. EnergySmart also provides financial incentives, in the form of low-interest loans and rebates, that make energy improvements to rental properties worthwhile to the property owner despite "split incentives." State and federal governments and utilities provide further rebates for weatherization and upgrades to heating, cooling, and water appliances and systems. The city’s program additionally offers 100-percent rebates for EnergySmart service to properties that serve low-income residents and meet the city’s definition of affordable housing.

EnergySmart was originally funded by the Better Buildings Neighborhood Program, an initiative of the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (with funding provided through the American Recovery and Reinvestment Act). Funding for the city’s incentives includes revenues raised by the CAP tax.

Results

The city’s goal for SmartRegs is to have 9,000 units inspected and 4,500 in compliance by 2013. As of September 2012, 4,134 rental units have been registered for SmartRegs inspections and 2,127 of those are in compliance. EnergySmart set a target to improve 10,000 housing units in the county by June 2013. Through September 2012, 6,386 units have been enrolled in the program countywide, with rentals accounting for 76 percent of the city’s 4,659 enrolled units.

Participants in the EnergySmart program have benefited from energy cost savings. Retrofits made to rental units to achieve compliance have resulted in average savings of $223 in annual energy costs per unit. Participating units that were already in compliance but underwent retrofits suggested by the energy advisor saw annual average savings of $108 per unit.

In April 2012, a U.S. Department of Energy evaluation described the combination of SmartRegs and EnergySmart as a model for large-scale retrofit activities that “could lead to energy-efficiency improvements for millions of residential rental units across the United States and result in lower gross rents for much of the country’s rental population.” The success of the programs helped the city of Boulder earn the 2012 J. Robert Havlick Award for Innovation in Local Government by the Alliance for Innovation. Another measure of success is local property owners’ response to the regulations. “When the policy was being developed, there was pushback from property owners, who worried that there’d be too many costs,” said Megan Cuzzolino, residential sustainability specialist in Boulder’s Community Planning and Sustainability Department. “Then in the first year, they were surprised at how well the policy worked. Now you don’t hear these concerns raised anymore. People are just doing it.”

Note: In a new federal initiative, HUD is working with the White House Domestic Policy Council, U.S. Department of Agriculture, and other agencies to serve low-income households and save taxpayers money by better aligning energy-efficiency policies in federal rental housing programs.

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