ULI Outlook for Green Affordable Multifamily Housing

The Loop at Mattapan Station in Boston will provide 135 affordable and market-rate residential units, plus retail and community space, next to a Massachusetts Bay Transportation Authority Red Line station. Designed to Passive House energy standards, the building includes a rooftop solar array and a high-performance building envelope, as well as e-bike stations.

What can speed the greening of affordable housing?

Members of ULI’s Sustainable Development Council and Affordable/Workforce Housing Council discuss sustainability strategies for affordable multifamily housing, the challenges and opportunities for net zero, other ambitious goals in affordable housing, and rising trends.

What sustainability strategies for affordable multifamily housing are particularly ripe for adoption now?

Steve PonTell: One would be resident-oriented initiatives, whether that means changing patterns of behavior or introducing different technologies or appliances into their units. For example, we had a competition among our properties to see which one could reduce their water usage the most. And then we sent an In-N-Out Burger food truck (a California thing) to the residents of the winning property, and they all had burgers. It’s all about thinking how to get your residents more engaged in solutions.

Rodger Brown: As we see a shift away from fossil fuels to electric heating and cooling, we’re exploring electrification in our buildings. Traditionally, we passed on as much of the utility bill to residents in order to give them an incentive to use less power. But then we have to rely on residents to use technologies appropriately, and they are buying electricity at the retail level as opposed to the wholesale level. In some instances, it makes more sense for us, the owner, to take on the electric load because we can apply photovoltaic systems and more efficient heating, ventilation, and cooling
systems to drive costs down while having a better and cleaner environment in the building.

Caroline Johns: There are there lots of opportunities with passive energy sources, like ground-source heat pumps. Anything that can use passive energy is going to be helpful meeting the goals of not only the development, but also the occupants. Sustainability strategies don’t have to be something that is done in the sacrifice of something else. There are ways to enable minimal energy use without having to pay a lot extra for it.

Steven Baumgartner: I believe we have to challenge the idea of affordable housing as just a typology or a goal in itself. It’s about seeing housing as part of a larger set of systems of mobility, access to jobs and services, and urban infrastructure. Energy and water and food systems need to be considered as enablers for affordability, and in a context that enables health, happiness, equity, and economic growth for everyone who connects with it. Developers, municipalities, and planners should consider how affordable housing can be more than a program element—how it can also build stronger community connections.

Brian Swett: In the Northeast, we are seeing more adoption of building electrification and use of heat-pump and mini-split systems for heating and air conditioning. Also, with the renovation of historic multifamily affordable housing, there are great ways to increase energy efficiency. Castle Square in Boston is an example: they added a solar array to the roof, made the apartments much more comfortable by adding insulation to interior walls, and added a new insulated facade on top of the original brick one.

What are some challenges of meeting net zero energy or net zero carbon goals for affordable housing?

Baumgartner: Often, a net zero building is thought of as using as much energy every year as it produces through on-site renewables. I don’t think that strategy is always necessarily the right one. We need to consider the larger systems that serve this building: the cleanliness of the electric grid—now and in the future—and the opportunities that come from the electrification of buildings. On-site renewables may not always be the most effective or cost-effective or efficient way to achieve our goals. Again, we have to consider not just the carbon attributes of energy, but also affordability, access, health, and transparency; these are all qualities of a sustainable energy system, and they all have tradeoffs. You could potentially solve one of them at the detriment of another set of systems. There’s as much an art as a science to positioning these projects.

Brown: We have done at least one net zero project, and it worked well, but it was feasible only because we received grant money to cover the additional costs. The feasibility of net zero changes over time because programs, incentives, and technologies all change. We haven’t focused on net zero recently because we couldn’t find money for it as easily. However, we have stepped up our game on Passive House strategies, which allow us to achieve very tight building envelopes, high air quality, and highly efficient heating and cooling systems.

PonTell: First, you have to be able to make the business case that the operating costs of the property will not be negatively affected by the net zero goal—or even better, that they will be positively impacted—because affordable housing runs on thin margins. Of course, net zero doesn’t have to have an immediate payoff; it can be a mid- to long-term payoff. That depends on the utility rates and the regulatory environment of the locale. Second, for us, net zero also has to make sense from a long-term physical property operations perspective because we don’t sell our properties. So we very carefully evaluate the life-cycle costs of each technology.

Swett: Achieving net zero requires getting creative with funding and financing. There are different pockets of money available for renovating affordable housing for energy efficiency and carbon reduction, but also for addressing other factors. For example, if you make the building envelope tighter, you also have to address air quality issues as well to avoid mold or mildew issues if ventilation is inadequate. So it requires holistic thinking about a healthy, energy-efficient, and decarbonized building.

Johns: For new urban developments, one of the biggest challenges that I see is the jurisdiction’s requirements and the monopoly of infrastructure. Net zero energy requires a lot of renewable resources on site, which can be challenging in an urban environment. But net zero carbon is best achieved by making the development all electric. For example, in Boston the utility company requires an additional transformer to be on site, not underneath the sidewalk, so this takes up a considerable amount of developable space, in addition to access requirements. This creates a disincentive to electrification. Different cities have different priorities in terms of historic preservation and sustainability. If certain aspects of a historic building are required to be retained in a renovation, the developer may be required to spend their money on that instead of on more efficient equipment or strategies that would lead to net zero carbon.

“We asked the contractor if we could provide training to the subcontractors. Our project management team trained them on Passive House construction methods before the job started, and afterward, their bids dropped by 60 or 70 percent, just because of that transfer of knowledge.”
—Rodger brown, managing director, preservation of affordable housing Inc.

What would make adopting net zero and other sustainability goals easier?

Johns: Governments could modify some of those requirements I mentioned above, but we could also focus on things like prefabrication—anything to shorten the construction timeline to maximize the profits for the developer. There are also many government tax rebates and subsidies available, so continued promotion of those would help.

Brown: If knowledge of sustainable design strategies were spread more widely through the industry, then the premium associated with implementing these strategies would go down. We’re building a Passive House transit-oriented mixed-income project in Boston now, and when we put out bids for the contractor, we had very specific requirements in order to meet the Passive House standard. Some of the subcontractors added a premium to their bids because they didn’t have experience meeting those requirements. So we asked the contractor if we could provide training to the subcontractors. Our project management team trained them on Passive House construction methods before the job started, and afterward, their bids dropped by 60 or 70 percent, just because of that transfer of knowledge.

Swett: When I was a city official in Boston, I saw a number of property owners who aligned federal, state, and local incentives and grants, as well as getting creative with power purchase agreements and virtual power purchase agreements. However, some programs that support affordable housing could be set up to meet environmental goals more effectively. For example, the federally funded Low Income Home Energy Assistance Program [LIHEAP] helps families with their home energy bills. But money from sources like LIHEAP could also be invested in more cost-effective heat pumps or a more efficient natural gas boiler, which would lower utility bills while lowering emissions.

Baumgartner: Passive design strategies, urban density, and centralization of energy systems can be designed and financed in new and innovative ways. If we just build sustainable design elements as line items, they can be very difficult to justify financially, and affordable housing developments are often financially stretched. But if we take a broader approach and factor in the larger costs to society of not doing things effectively for the community as a whole and the larger costs of not making decisions through the lens of sustainability, resiliency, and equity, then the financial case becomes clearer.

PonTell: So much depends on the rate structures for water or energy and whether the alternative sources of energy are cost competitive with the incumbent sources of energy. A lot of that has to do with innovation from a technology standpoint and how quickly that innovation is coming along. If the affordable housing industry can see more models of how to incorporate sustainable technologies and we can share that information, that would really help speed adoption of more sustainable practices. When you’re trying to figure it out on your own and all you’re doing is talking to the solar panel salesman, you’re more likely to be risk adverse when it comes to switching to renewables.

What other innovations or trends are you excited about?

Swett: We need to transition away from fossil fuels, and so sometimes, in the near term, that may result in using more energy as we travel the pathway to electrification supported by renewable sources of energy. Also, I’m excited by opportunities for cross-subsidization through building emissions trading schemes. Affordable housing stock that may have cost-effective opportunities to reduce emissions but be capital constrained could benefit from a carbon emissions trading scheme or compliance payment system and get money for equity or debt to renovate. That could be provided by the owner of a laboratory building or a hospital system buying into a trading system that then subsidizes near-term decarbonization of affordable housing while the owner waits for the next major plant turnover in their asset before decarbonizing their own building. Such a scheme is contemplated in Boston’s recently passed emissions reduction ordinance.

Brown: If we could get Passive House to become the industry standard, that would be big. Some contractors tell us they could lower the upfront cost of the building if we didn’t have such stringent standards. But we maintain ownership of the properties we build, and if you cost it out over 15 years, then it’s a different story. Also, to the extent that investors and lenders focus on environmental, sustainability, and governance goals as they make their investments, they can raise the bar for all of us.

Johns: With housing going all electric, the units are not going to have gas-fired stoves. Induction units have the potential to provide a strong health equity solution because they are better for indoor air quality than gas and faster cooking than conventional electric. They will need to come down in price in order to make sense for affordable housing, but I’m excited about this technology because it has the capability to deliver both a better product and a net zero carbon potential. It is also safer than either conventional electric cooktops or gas cooktops because the cooking surface doesn’t get hot. In markets where electricity is less expensive than gas, this efficient technology would contribute to lower bills for the occupants. Therefore, incentives targeted at affordable housing could include those related to reducing the upfront cost of induction units as well as compatible cookware.

PonTell: One of the things that makes our net zero buildings possible is that we’re also general contractors, so we build our own developments. We’ve been able to get the building envelopes of our units incredibly tight, with air regulators to let air into the spaces so that the air circulates. Traditionally, the suppliers of mechanical equipment size equipment with a margin of error. So if a unit needs 20 pounds of air conditioning, they’ll say 25 just to be safe. But because we have such tight controls, we size our mechanical equipment exactly to what’s needed for the space. That alone drives down energy usage tremendously.

Baumgartner: I’m excited about transitioning the idea of affordable housing from just a single building typology in and of itself to a broader conversation on how to achieve the goals for our community. We need a set of integrated system solutions to make our communities more sustainable, elevating all of our community members. Developers should be asking their teams to ask the tough questions about what investments raise all boats and make systems change in our cities.

RON NYREN is a freelance architecture, urban planning, and real estate writer based in the San Francisco Bay area.

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