In spring 2012, the City of Ann Arbor received a grant to increase energy efficiency in rental housing units within Washtenaw County as part of the
HUD Sustainable Communities Challenge Grant.
This three-year project aimed to increase energy efficiency in the community by targeting renters, who unlike homeowners have less of an incentive to invest in energy efficiency. This project brought together several different partners, including University of Michigan, Eastern Michigan University, Washtenaw County, and the City of Ypsilanti, to help address the challenge of greening rental housing.
This project developed a strategy and outreach plan that educates the community, uses voluntary, market-based, or policy approaches to spur efficiency investments in the rental housing market, and provides incentives to property owners to increase energy efficiency in their units.
This project helped make progress towards many of the goals in the City's
Energy Conservation - Reduce energy consumption and eliminate net greenhouse gas emissions in our community
Sustainable Buildings – Reduce new and existing buildings’ energy use, carbon impact and construction waste, while respecting community context
The split incentive between landlords and renters is a significant barrier to energy efficiency in rental properties. If the renter pays utilities, the landlord has little financial incentive to invest in energy efficiency upgrades. If a landlord pays the utility for a property, then the renter has little financial incentive to conserve energy.
Renters may not consider the true cost of a unit (utilities + rent + transportation) when selecting a unit. Energy efficiency is also regressive. Lower income households spend a larger portion of their income on utility costs. Housing is considered affordable if housing costs do not exceed more than 30 percent of household income.
In college towns, educating renters presents an even greater challenge, because many students are first-time renters. In Ann Arbor, the University of Michigan pushes about 7,000 new renters into the market each year. These students are likely signing a lease for the first time and may lack the information needed to select a sustainable housing choice.
Renters often do not have access to information to choose an energy efficient rental property or do not recognize the value of renting a more efficient property. Similarly, property owners may not fully understand the impacts of making energy efficiency improvements, or may not be aware of the programs and incentives available to property owners.
According to a communitywide greenhouse gas inventory completed as part of the City's
Climate Action Plan, the residential sector in the City of Ann Arbor accounts for 22 percent of greenhouse gas emissions within the community. Approximately half of the housing units in the city of Ann Arbor are rentals.
Lowering energy consumption will increase the economic competitiveness of our region by keeping more money in the local economy and will increase the efficiency and affordability of housing communitywide.