Affordable Energy and the Consolidated Plan Process

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Affordable Energy and theConsolidated Plan
Process

• Roger D. Colton
• Fisher, Sheehan Colton
• Public Finance and General Economics
• Belmont, Massachusetts
• June 2005

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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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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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Home Energy Affordability Gap

• County-by-county calculation of home energy
  burdens by Federal Poverty Level.
• To the extent that burdens are above 6, they do
  not result in sustainable housing costs.

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Home Energy Burdens at 30 of Area Median Income
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Impact of price changes
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Gas bills weather and prices
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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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Affordable PaymentsAdjusted for Utility Bills
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Affordable Purchase PricesAdjusted for Utility
Bills
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Reduced Sales PriceColorado Counties
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Reduced Affordable UnitsColorado Counties
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Recommended Action 1

• 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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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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The Efficiency Standard

• Each five percent increase in efficiency results
  in one point on the Energy Rating above 80. A
  home that is built to meet the 1993 Model Energy
  Code has a rating of 80. A home that is five
  percent more efficient has a rating of 81. A home
  that is 30 more efficient has a rating of 86 and
  qualifies as an Energy Star Home.

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Quantifying the Effective Impacts of Efficiency
Investments

• Cash flow
• Net Present Value Svgs
• Reduced interest rates
• Reduced sales price

• 160 - 270
• 2800 - 4300
• 0.31 - 0.45
• 3700 - 5500

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Things that just dont 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.
• /b/ 1999 Appraiser Journal

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For more information

• http//www.fsconline.com
• (Library or News)

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For more information

• roger_at_fsconline.com