11/20/18

1

THE REAL COST OF AFFORDABLE HOUSING:

COPING WITH THE SOUTH’S HIGH HOUSING BURDENS

William D. Bryan

SEEA SERVES THE SOUTH

Mission:The Southeast Energy Efficiency Alliance (SEEA) works to ensure people in the Southeast have the knowledge, resources, and opportunities to optimize energy use.Vision:Energy efficiency is a primary driver of a prosperous, healthy and sustainable Southeast.Work Areas:qBuilt Environment

qState, local and utility policyqEnergy equityq Innovative finance

www.seealliance.org

11/20/18

2

THE SOUTH HAS SOME OF THE NATION’S LOWEST ELECTRIC RATES,

BUT IT HAS THE NATION’S HIGHESTENERGY BILLS.

THE SOUTH HAS SOME OF THE NATION’S LOWEST ELECTRIC RATES

Average 2017 Residential Electricity Price per kWh

Only Alabama and South Carolina residential customers paid more than the national median (12.37 ¢/kWh) for their electricity in 2017.

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BUT IT HAS THE NATION’S HIGHEST ENERGY BILLS.

ENERGY COSTS ARE STATIC ACROSS INCOME LEVELS

$209.99$198.07 $204.47 $204.03

$223.45

$165.01$147.81

$157.77 $155.53 $160.75

Extremely LowIncome

Very Low Income Low Income Not Low Income Median Income +

Own Rent

Average Monthly Energy Bills by Income: North Carolina

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4

ENERGY BURDEN

qA measure of the percentage of household income required to cover utility bills.

ENERGY BURDEN

Average Household Income

Average Household Energy Costs(electric + gas)

STATE ENERGY BURDEN

LMI HOUSEHOLDS

q Low and moderate income is defined as 0-80% of area median income (AMI).

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AVERAGE COUNTY ENERGY BURDEN

LMI HOUSEHOLDS

qAverage county energy burdens range from 2.3% in Falls Church, Virginia to 60.3% in Holmes County, Mississippi.

qAverage energy burden for LMI households: 17.9%

HIGH ENERGY COSTS AFFECT MILLIONS OF LOW INCOME

HOUSEHOLDS

Households experiencing any energy insecurity (in millions)

Northeast

MidwestWest

South

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AVERAGE COUNTY ENERGY BURDEN

NON-LMI HOUSEHOLDS

Not low and moderate income is defined as 80% to 100%+ of area median income (AMI).

qAverage county energy burdens range from 1.6%in Miami-Dade County, Florida to 22.3% in Lee County, Georgia.

qAverage energy burden for Non-LMI households: 7%

STATE ENERGY BURDEN

NON-LMI HOUSEHOLDS

Difference Between Average LMI and Non-LMI Energy

Burdens

1. Mississippi: 18%2. Alabama: 13%3. Arkansas: 13%4. Georgia: 12%5. Kentucky: 12%6. North Carolina: 12%7. South Carolina: 10%8. Tennessee: 9%9. Louisiana: 8%10.Virginia: 7%11. Florida: 3%

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KEEPING ENERGY BURDENS LOW IS VITAL TO HOUSING AFFORDABILITY

q All energy burdens are not created equal.

q It is important to determine a proper threshold of affordability.

q Common energy burden thresholds are pegged to the cost of affordable housing.

< 30% OF INCOME

~ 20% OF SHELTER

< 6% OF INCOME

ENERGY COSTS ARE MAKING HOUSING UNAFFORDABLE FOR MANY LOW- AND MODERATE-INCOME HOUSEHOLDS

Non-LMI Households

LMI Households

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ENERGY COSTS ARE LAYERED ON TOP OF OTHER BURDENS

A WATER BURDEN MEANS PAYING MORE THAN 4.5% OF

HOUSEHOLD INCOME FOR WATER/WASTEWATER SERVICE.

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MONTHLY WATER COSTS

South Atlantic Region

East South Central Region

THE SOUTH IS AT RISK FOR UNAFFORDABLE WATER

Source: Mack E.A., Wrase S. (2017) A Burgeoning Crisis? A Nationwide Assessment of the Geography of Water Affordability in the United States. PLOS ONE 12(1): e0169488. https://doi.org/10.1371/journal.pone.0169488

Most High-Risk Tracts1. Mississippi (36.5%)2. Louisiana (29.3%3. Alabama (28.3%)4. Kentucky (27.8%)5. Arkansas (27.3%)6. Tennessee (24.7%)7. West Virginia (22.7%)8. South Carolina (22.5%)9. Ohio (22.3%)10. Georgia (22.0%)

Most At-Risk Tracts1. West Virginia (46.9%)2. Arkansas (42.3%)3. Idaho (39.9%4. Montana (37.6%)5. Mississippi (37.1%)6. Alabama (36.4%)7. Oklahoma (36.2%)8. South Carolina (36.1%)9. Maine (35.9%)10. Tennessee (34.4%)

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WATER AND ENERGY BURDENS HAVE SIMILAR CAUSES

q Low-income households tend to reside in older housing stock

q Low-income households have less capital for improvements

qThe “split incentive problem” for renters and landlords

q Lack of effective (and widespread) programs to aid households in paying bills and supporting transportation needs

q Lack of awareness about cost-effective ways to correct problems

TRANSPORTATION

Annual Transit Costs

Source: Center for Neighborhood Technology, the H+T Index®Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey Microdata, www.bls.gov/cex.

$- $5,000 $10,000 $15,000 $20,000

Housing

Transportation

Food

Other

Insurance and pensions

Health

Apparel and servi ces

Household Expenditures (2016)

32.8%

16.2%

14.8%

13.8%

12.5%

8.1%

1.9%

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ENERGY, WATER, AND TRANSPORTATION BURDENS HAVE CASCADING EFFECTS

q Stress over shutoffs and arrearages

q Unsafe methods of heating and cooling

qThe “heat or eat” dilemma

q Unaffordable housing

LOW- AND MODERATE- INCOME HOUSEHOLDS ARE SQUEEZED BY

HIGH COSTS

Households experiencing any energy insecurity (in millions)

South

Midwest

Northeast

West

Households at an unhealthy temperature

Households receiving disconnect notices

Households reducing consumption of food or medicine to pay for energy

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INEFFICIENCIES ARE RELATED TO OLDER HOUSING STOCK

474,134

5,615,529

8,727,036

Owner-Occupied

Pre-1940 1940-1979 Post-1979

252,747

2,419,9202,704,933

Rental

Pre-1940 1940-1979 Post-1979

INEFFICIENT HOMES CAN BE UNHEALTHY HOMES

0 250,000 500,000 750,000 1,000,000 1,250,000

Holes in floors

Open cracks or holes in walls

Broken plaster/peel ing paint

Signs o f rats

Signs o f mice

Water leaks from inside

Water leaks from outside

Water supply stoppage

Flush toilet breakdown

Sewage disposal breakdown

Lacking complete plumbing

Heating equipment breakdown

Space Heater w/o f lue

Exposed wiring

Rooms w/o working electrical outlet

Lacking kitchen facilities

Rental Owner-occupied

0

100,000

200,000

300,000

400,000

Severe Physical Problems Severe/Moderate physicalproblems

Moderate phyiscalproblems

Reported Health Problems in the Home

Owner-occupied Rental

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13

POLICY SOLUTIONS PAIR WITH HOME EFFICIENCY

qFederal programs like the Low Income Home Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program (WAP)

qState/municipal programs like Philadelphia's Tiered Assistance ProgramqUtility energy and water efficiency programs and on-bill programs like Pay-As-

You-Save (PAYS®)

qPrivate/nonprofit programs like Southface Energy Institute’s Care and Conserve Plumbing Repair Program (Atlanta, Georgia)

qLow-income Housing Tax Credits administered with a Qualified Allocation Plan (QAP)