RMI Answers Your Questions: Superefficient Affordable Housing

On Thursday, November 15, RMI hosted a Google Hangout focused on integrating superefficiency into America’s affordable housing. Today Alexis Karolides—AIA, LEED AP, and RMI Principal—answers your questions from the Hangout.

When we tighten houses through efficiency, how does that impact indoor air quality (IAQ)?

Indoor air quality is extremely important, particularly when we make our homes tighter for energy efficiency, whether during new or retrofit construction. Most homes today rely on “leakiness”—gaps at doors, windows, electrical outlets, pipes, etc.—to freshen the air because mechanical ventilation is neither required by code nor voluntarily provided. But air and water leakage and water vapor condensation within walls risks mold and its associated IAQ problems. Fortunately, building designs that optimize energy efficiency can also optimize IAQ. For instance, proper detailing to eliminate leakiness will also reduce the mold risk and other IAQ problems.

Secondly, providing heat-recovery ventilation (“ventilation by choice not by chance,” as my colleague James Brew likes to say) is also a strategy—necessary in tight, superefficient homes—that optimizes air quality. Additionally, using “green” materials that eliminate formaldehyde and other toxic volatile compounds improves IAQ. Our Superefficient Housing Challenge will include air quality testing to highlight the importance of good indoor air quality.

Even if one eliminates all toxic building materials and interior finishes, humans create air “pollutants” in their daily activities, including cooking, using the bathroom, and sometimes using products such as perfume, nail polish, WD-40 on a squeaky door, certain cleaners, etc. These pollutants must be removed to maintain good air quality.

Ultimately, in a tight superefficient house, mechanical ventilation with heat- or energy-recovery is a must. Controlling the ventilation so that the proper amount is provided for optimal health—and not some random amount that slips through the gaps in sloppy construction (and allowing the heating or cooling to be recovered instead of wasted)—provides a much better guarantee of good air quality than can be relied upon in the standard house. But that ventilation must be provided—you can’t build a super-tight house and then disengage the ventilation system and expect the air to be healthy.

What is considered “affordable” housing, and how do you build that housing—either new or retrofit—on the often-limited budgets of public housing authorities?

Affordability is typically defined as housing costs (including rent or mortgage, insurance, taxes, and utility payments) that do not exceed 30 percent of a household’s gross income. Eligibility for most federal housing assistance programs is determined by using comparisons to area median income (AMI). “Low-income households” make 80 percent or below AMI, “very low-income households” make 50 percent or below AMI, and “extremely low-income households” make 30 percent or below AMI.

The U.S. recession has exacerbated the gap between available affordable housing and the people that need it. The housing meltdown and foreclosure crisis have actually worked to the disadvantage of extremely low-income households, according to the National Low Income Housing Coalition. Families with modest incomes, which once were able to own homes, have flooded the rental market, reducing vacancy rates and driving up rents.

There are over 3,000 Public Housing Agencies (PHAs) in the U.S., which develop and manage 1.2 million public housing units and house over 2.1 million low-income individuals. In 2008, PHAs spent almost $1.5 billion in direct utility payments, accounting for almost 27 percent of their annual operating budgets. And the problems are getting larger—PHA utility payments increased by 25 percent between 2001 and 2008 and the number of low-income renters increased while available and affordable units have decreased. Between 2003 and 2009, the affordable housing supply gap increased from 4.3 million to 6.4 million units.

Clearly cost matters, and RMI stresses that making housing affordable includes keeping its utility bills affordable. Energy efficiency is a major lever to do this. So how do we “afford” the superefficiency?

The German Passivhaus and its sister organization Passive House Institute U.S. have found that superefficient housing—housing that is at least 80 percent better than code—costs 15 percent more upfront than standard construction. For private housing, this may seem like a small price to pay for long-term energy savings and higher quality, but how do we “afford” any upcharge in the public housing arena where budgets are extremely limited?

One approach is simply to be more efficient with space—one affordable housing developer met budget with Passive House-certified construction by using clever design to make rooms smaller and to eliminate unnecessary spaces. This is the first time in history that housing sizes are actually trending downward. Some innovators are rethinking how much space people really need and are designing “micro” houses (e.g. 100-700 square feet) that won’t require a big mortgage to buy or build, as well as modern, slightly larger (upwards of 1,000 square feet), but still modest, energy-efficient versions of the mobile/prefab home. (RMI’s Superefficient Housing Challenge is considering homes under about 1,500 square feet.)

Another approach is to find additional funding and/or make arguments for value beyond immediate energy cost savings. For instance, better-constructed units with tight windows, proper moisture detailing, and no through-wall “thermal bridging” will reduce the likelihood of mold growth and its serious associated health problems, such as asthma, and will dramatically reduce long-term maintenance costs associated with building envelope decay. Homes that are comfortable without much energy input are also a good hedge against rising fuel and utility costs.

A third approach—though less ideal, if other options suffice—is to build to near superefficiency, but to stop short when budgets prohibit. Though you may not be able to achieve the 80 percent better than code goal, you may be able to achieve 60 percent better within budget constraints.

Finally, the DOE Building America teams are researching building methods that are both technically effective and cost-effective. While solutions vary by market, the most cost-effective systems build on commonly used existing systems that are adjusted in key ways to achieve superefficiency, such as “advanced framing.”

How are energy savings calculated? Modeling? Verified at end user?

The old adage that you can’t improve what you don’t measure is true for housing. RMI’s Superefficient Housing Challenge will require energy modeling, on-site measurement (such as blower door tests, infrared images and indoor air quality measurements), and ongoing monitoring, for at least a year, of actual utility bills and occupant satisfaction.

With a wealth of existing building stock (much of which needs improvement), what role do major retrofits and rehabilitation play?

RMI’s Superefficient Housing Initiative aims to team with our RetroFit Initiative to work with leading public housing authorities and generate examples for others to follow—deep retrofits with lessons or strategies that could be broadly applied across a PHA’s portfolio. Portfolio-scale retrofits face certain barriers, and in addition PHA’s are often understaffed and underfunded. This reinforces the need for creative retrofit implementation and financing through energy service companies, utilities, government programs, and philanthropic organizations. To be as cost-efficient as possible, right-timing is particularly important—making sure that energy upgrades are done at the same time that renovations and replacements are planned anyway.

How do we get property owners—whether an individual or a PHA—to focus more on total cost of ownership and less on initial purchase price?

It is a human tendency to focus on purchase price rather than total cost of ownership, including long-term maintenance costs, fuel costs, etc. Other industries have managed to shift that thinking, however. Consider automobiles. A friend of mine walked into a car dealership in 2000 and asked for “the most fuel efficient station wagon you have.” The salesman looked at him with a combination of shock and disdain. But today fuel economy is not only listed when you buy a car, it is even sometimes noted when you rent a car. Similarly, when you buy an appliance, the yearly electricity cost is on that now-familiar yellow sticker. But what if you asked your realtor for the most fuel-efficient home in the neighborhood? She would probably be even more perplexed than that car salesman back in 2000. When annual utility costs start to be listed in the MLS, and realtors are informed about energy-saving systems and features of homes, people will be able to focus more on total monthly cost of ownership. Or imagine if mortgage companies recognized not only principal, interest, taxes, and insurance (“PITI”), but also utility and maintenance costs (“PITIUM”)? At that point efficient homes could start to reap the market advantage they deserve.

In the public housing arena, many public housing authorities (PHAs) build, own, maintain, and pay the utility costs of their housing portfolio. One would think the total cost of ownership would be their foremost consideration, but traditionally (like private homebuyers) housing authorities focus almost exclusively on lowest first cost. This is because PHAs have different budgets for capital and operation expenses, their immediate concern is to build as much housing as they can, and they are not well informed about strategies for achieving superefficiency or the business case for it. Consequently, the U.S. public housing stock today is on average 40 percent less energy efficient than private, owner-occupied housing. This problem is RMI’s first target to address.

Most companies still do retrofits on a like-for-like replacement basis when equipment breaks down, even though they could achieve huge net present value through holistic energy retrofits. This business case needs to be proven out for government-funded housing authorities as well. The work RMI aims to do—to provide great examples of public housing portfolio energy retrofits “making money” for those PHAs—will also help make the case for stricter energy standards for building and retrofitting housing. In Germany, for instance, energy audits are required at point of sale; this kind of policy could be applied when U.S. housing is sold or rented to new tenants. Finally, RMI aims to work with Housing Finance Authorities to institute education programs (and potentially tougher energy standards) for developers who use low-income-housing-tax-credits (LIHTC) to build affordable housing.