Green Affordable Housing: Cost-Benefit Analysis for Zoning Incentives

Armin Jeddi Yeganeh,Steve Hankey,Andrew Patton Mccoy

doi:10.3390/su11226269

Abstract

In the year 2017, about 89% of the total energy consumed in the US was produced using non-renewable energy sources, and about 43% of tenant households were cost burdened. Local governments are in a unique position to facilitate green affordable housing, that could reduce cost burdens, environmental degradation, and environmental injustice. Nonetheless, limited studies have made progress on the costs and benefits of green affordable housing, to guide decision-making, particularly in small communities. This study investigates density bonus options for green affordable housing by analyzing construction costs, transaction prices, and spillover effects of green certifications and affordable housing units. The authors employ pooled cross-sectional construction cost and price data from 422 Low-Income Housing Tax Credit (LIHTC) projects and 11,016 Multiple Listing Service (MLS) transactions in Virginia. Using hedonic regression analyses controlling for mediating factors, the study finds that the new construction of market-rate green certified houses is associated with small upfront costs, but large and statistically significant price premiums. In addition, the construction of market-rate green certified houses has large and statistically significant spillover effects on existing non-certified houses. Existing non-certified affordable housing units show small and often insignificant negative price impacts on the transaction prices of surrounding properties. The study concludes that the magnitude of social benefits associated with green building justifies the local provision of voluntary programs for green affordable housing, where housing is expensive relative to its basic cost of production.

Highlights

In the year 2017, the residential sector in the US consumed 20% of total energy production, and 89% of the total energy consumed by all sectors was produced using non-renewable energy sources, including petroleum, natural gas, coal and nuclear power [1]
Green buildings represent less than one percent of the total building stock, and tend to be in larger cities with higher socioeconomic capacity, and there is a concern about the economic viability of green affordable housing, in smaller urban areas with existing stock [8,9]
The Low-Income Housing Tax Credit (LIHTC) properties data suggest that the level of ‘greenness’ of LIHTC buildings has become increasingly important, as opposed to obtaining the ‘barely green’ (i.e., EarthCraft VA Certified) certification

Summary

Introduction

In the year 2017, the residential sector in the US consumed 20% of total energy production, and 89% of the total energy consumed by all sectors was produced using non-renewable energy sources, including petroleum, natural gas, coal (all of them considered fossil fuels) and nuclear power (not a fossil, but a nonrenewable, fuel) [1]. In the same year, according to the American Housing Survey data, about 47% of tenant households were cost-burdened (i.e., spent more than 30% of their income on housing costs) often due to poverty and, in large metropolitan areas, rising house prices [2]. These trends indicate that there is a critical need to simultaneously address housing affordability and environmental sustainability in the residential sector, to reduce growing concerns about national economy, energy security, declining world reserves, and climate change. Green buildings represent less than one percent of the total building stock, and tend to be in larger cities with higher socioeconomic capacity, and there is a concern about the economic viability of green affordable housing, in smaller urban areas with existing stock [8,9]

Results

Discussion

Conclusion