Cambridge Multifamily
Energy Program
Terms of Reference – DRAFT
1. Introduction
During the practicum11.___ Energy Efficiency Strategy, MIT students will engage in the conceptual
development of a multifamily energy upgrade program in Cambridge, focused on achieving broad
adoption of deep energy retrofits in multifamily housing of approximately 2-20 units. The program
concept will be provided for the City of Cambridge’s and local energy utility NStar’s consideration. The
practicum will provide an introduction to: energy efficiency and utility governance; multi-stakeholder
program design; and social entrepreneurship. We aim to develop a viable, transformational model
that can realize deep energy savings and climate change pollution reduction in Cambridge; moreover,
the program will ideally be scalable to broader geographic regions.
This Terms of Reference document prepared by the Energy Efficiency Strategy Project’s (EESP)
research team provides background information to support the design of the program. The document
suggests some further research opportunities and potential program design ideas, which the
Practicum participants can consider and expand upon. This document is not meant to dictate the
content of the Practicum. Rather, it presents a summary of the EESP’s research and thinking during
Fall 2012.
The Challenge of Achieving Efficiency in Multifamily Housing
A variety of opportunities to cost-effectively reduce energy use and integrate renewable energy systems
exist in multifamily housing. A recent analysis suggests that 15 percent of multifamily electricity demand,
and 24 percent of multifamily natural gas demand, can be cost-effectively met by energy efficiency for
the year 2030.1 Indeed, multifamily housing tends to be more energy intensive than single-family.
However, achieving significant uptake of energy efficiency in multifamily housing has proven difficult. A
literature review, and conversations with multifamily housing market participants during Fall 2012,
suggest the following are key barriers to achieving energy upgrades in multifamily housing:
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Split-incentives - Many tenants pay utility bills, while landlords are typically expected to pay
improvement costs. Conversely, in cases where landlords pay some of the energy bill (such as
heating), tenants have little incentive to conserve.
Landlords are hesitant to improve properties, even when costs are low - Landlords and tenants
often have a strained relationship, with tenants desiring property improvements. Some property
developers noted that any effort to improve properties, regardless of whether it costs landlords
money, as they fear tenants will demand further improvements.
Owners lack capacity - Building owners, especially smaller property owners, often have minimal
understanding of the energy efficiency potential of their property, and the construction processes
The Cadmus Group. May 2012. Massachusetts Multifamily Market Characterization and Potential Study.
Volume 1. Final Report.
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necessary to achieve upgrades. They are often wary of committing to manage construction
projects.
Disaggregated owners - While data on ownership is incomplete, interviews with individuals
experienced with the market indicate that a large number of rental properties in Cambridge are
owned by small-scale property owners. Thus, programs must reach and sway a diffuse array of
decision-makers, rather than a few individuals responsible for large portfolios.
Difficulties of financing and managing upgrade process with condominiums - Condominium
associations may face barriers to credit, and be difficult to coordinate to achieve upgrades.
Intrusive construction - Building owners are hesitant to disturb occupants in their unit; however,
many upgrades necessitate work in occupants space. This work must be performed speedily, or
occur during re-tenanting.
A lack of building manager and operator incentive - Building management companies and
building operators have limited incentives to facilitate upgrade projects. Upgrade projects may
entail additional work on their end, and they are not usually compensated for achieving energy or
water savings.
Technical challenges - While cost-effective energy efficiency options exist in multifamily buildings,
they are often pricier than the low-cost efficiency that can be achieved in larger commercial
buildings. Deep energy upgrade measures require specialized design skills in many instances.
Lack of transparency around energy costs - Most tenants do not have a good understanding of
the energy costs and environmental impacts of their rented units.
Convoluted, fragmented energy efficiency programs - Programs offered to multifamily buildings,
particular market-rate buildings, are not wholistic; they offer only a few upgrade opportunities and
do not entail “whole building” upgrades. Additionally, navigating these programs can be
cumbersome for building owners - The presence of various “pre-retrofit barriers”, hazards such
as knob-and-tube wiring or asbestos, can necessitate additional work; this extra work increases
the likelihood that a building owner or manager will drop out of efficiency programs.
Poorly delivered energy programs - Some industry observers noted that utility program vendors
do not always provide optimal service. Moreover, many organizations provide volunteer
outreach and marketing on behalf of upgrade programs, but they have limited communication
with the program vendors and intake personnel - thus, volunteer marketers do not have a strong
sense of what works and why.2
Sources citing these barriers include: Ellen Tohn. October 2012. Tohn Environmental Consulting. Personal
communication; Homeowners Rehabilitation. November 2012. Non-profit housing developer located in
Cambridge. Personal communication. City of Cambridge staff. McKibben, Anne, Anne Evens, Steven Nadel and
Eric Makres. January 2012. Engaging as Partners in Energy Efficiency: Multifamily Housing and Utilities.
ACEEE and CNT Energy.
Figure 1. Energy Expenditure by residential building type. Source: US EIA. 2009 Residential
Energy Consumption Survey.
Given these challenges, uptake of energy efficiency in multifamily housing has lagged comparable (and
still low) rates in single family and commercial buildings. Indeed, in most states (though not
Massachusetts) multifamily program utility energy efficiency budgets are proportionately much less than
single family budgets.
Hypothesized Elements of Better Energy Upgrade Programs
A well designed and executed partnership between utilities, local government, businesses, community
organizations and other actors may overcome these barriers, however. Together, these actors can
serve to improve programs and transform markets for energy services. There is potential to:
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Use energy data to identify buildings needing upgrades, and to inspire owners and tenants to
take action based on comparisons with their peers.
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Engage stakeholders, to co-create energy efficiency program architecture, and provide more
targeted program marketing.
Provide improved financing mechanisms, which can enable the large investments required in
the housing stock and reduce split-incentives.
Maximize the value of engagement in a building, by providing opportunities for deep energy
improvements, addressing healthy homes issues, and exploring opportunities to implement
other environmental improvements, such as stormwater improvements. Buildings may not
necessarily have to undergo all upgrades simultaneously, but programs could connect buildings
with timely future improvements.
Improve building owners’ experience navigating programs, by providing a consistent point of
contact and improving the flow of information between contractors, utilities, and outreach actors
via improved customer relationship management systems.
Explore the implications of allowing a greater number of vendors to participate in programs.
By piloting and experimenting with these innovative approaches, Cambridge and NStar can develop
replicable models to improve the delivery of sustainable energy services in multifamily housing across
the state and the nation.
The Following section provides background on Cambridge’s multifamily housing market, energy
programs in Cambridge, and industry trends pertinent to program design. Subsequent sections explore
the EESP research team’s program design ideas.
Background
Characterizing the Cambridge Housing Stock
The prospects for a residential energy efficiency program depend in large part to the characteristics of
the local housing market, and Cambridge offers a unique market for several reasons. To develop a
strategy that will encourage local energy efficiency investments, it is crucial to understand the
dimensions of this market. Several aspects of the local housing market are examined below, including
the nature of home ownership, resident demographics, and physical characteristics of the home.
In addition to Cambridge as a whole, this project targets three distinct regions of the city: Mid-Cambridge,
Area IV, and Cambridgeport. We examined the specific nature of the housing market in these areas, but
they did not differ dramatically from Cambridge as a whole.
Home Ownership Rates
Cambridge’s housing stock is dominated by multifamily rental properties. In the city as a whole, only
35% of the population lives in owner-occupied housing.3 Unsurprisingly, rental housing appears to be a
more temporary living situation in Cambridge than home-ownership. Under 40% of renters have lived in
their current residence for more than 5 years, compared to three quarters of homeowners.
In addition to a strong rental presence, many of Cambridge’s residential units are condominiums. These
account for 27% of the city’s housing.4 Some of these condo units are rented out by owners.
Resident Demographics
Cambridge deservedly has a reputation as a young, student-oriented city. 27% of it’s adult population is
currently enrolled in school either as an undergraduate or graduate student. This is reflected in the rental
market - 53% of the primary householders in rental units are under the age of 35. Additionally,
Cambridge’s rental market has a low rate of family residence. While just over half of owner-occupied
housing is lived in by families, only 33% of Cambridge’s rental properties are rented by families.
Cambridge is also a predominantly White community. The head householder in 69% of Cambridge’s
residences and 63% of rental residences is Non-Hispanic White. Among minority groups, Black and
Asian communities each account for 13% of rental residences, and Hispanics for an additional 8%.
As of 2009, over 3,000 housing units in Cambridge were designated as affordable units and subsidized,
accounting for 9.6% of the local rental market.5
3
Unless otherwise noted, all statistics in this section are from the US Census Bureau 2010 Census and 2006-2010
American Community Survey.
4
5
City of Cambridge Community Development Department, 2010 Housing Profile.
City of Summer Office of Strategic Planning and Community Development. Trends in Somerville: Housing
Technical Report. 2009
The vast majority (95%) of Cambridge’s rental households are located in multifamily housing. 33% of
rentals are in small buildings of with 2-4 units, and another 24% are in moderate-sized buildings of 5-19
units.
Physical Characteristics
The housing stock in Cambridge tends to be very old, though this is true more of owner-occupied
residences than rentals. 52% of rental units in Cambridge were built before 1940, compared to 72% of
owned units. Despite the general age of the units, there is a small but noticeably number of newer
properties, with around 17% of units among both rented and owned properties constructed since 1980.
The housing market throughout New England is unique for its reliance on fuel oil to provide space
heating. However, this effect is not as strong in Cambridge, which boasts a well-developed utility natural
gas network. 60% of rental units are heated by natural gas, 21% by electricity (which includes both the
old technology of resistance heating and more efficient heat pump technology), and 13% by fuel oil.
Among owner-occupied homes, there is a slightly higher percentage of gas-heated homes, and a lower
electric heat presence.
Property and Energy Management Characteristics
There are a number of useful metrics related to property management trends and energy use in
Cambridge’s rental market for which data is non-existent or difficult to obtain. While the identity of
property owners is publicly available through tax assessment data, it is difficult to confirm how many
properties a given owner may own due to the nature of available data. It is also difficult to identify
landlords who live on-site in multi-family buildings. Additionally, no good source of data exists on the
number of small property owners who contract with independent property management firms to conduct
business with tenant. Finally, information on the number of apartments that are individually or master
metered is only available through NSTAR and is restricted for privacy concerns.
Therefore, much of this information must be collected qualitatively through interviews with those familiar
with the local housing market. Preliminary discussions have indicated a fragmented market where parttime property owners account for much of small-to -medium residential properties and a significant
portion of landlords live on-site. While some of these owners contract with property management firms,
most seem not to. Finally, most multi-family buildings in Cambridge are thought to be metered
individually for both electricity and heat; however, many units, especially in larger or oil-heated buildings,
have heat provided central with tenants typically responsible for electricity bills.6 In this case, landlords
have greater fiscal incentive to undertake upgrades that reduce heating costs.
Summary
The characteristics of Cambridge’s multifamily housing market pose serious barriers to an energy
efficiency program. The market is dominated by renters, and the rental community is a social
demographic in transition with less incentive to encourage landlords to make upgrades, and less wellestablished relationships with landlords. Small-to-medium rental properties tend to be owned by
6
Personal communications with Peter Shapiro (Just-a-Start) and Meghan Shaw (Cambridge Energy Alliance).
individuals with small property portfolios. The transitory nature of renters and the decentralized
ownership of properties will make a coordinated efficiency effort challenging.
Additionally, a sizeable minority of housing units in Cambridge are condominiums. The institutional
barriers to implement energy upgrades in these homes are separate from that of rental housing, but also
imposing. This makes establishing a consolidated energy efficiency program that is able to serve all of
Cambridge’s multifamily market challenging.
Despite the difficulty of reaching this market, there is ample money to be saved and pollution mitigated
by upgrading buildings. Cambridge’s building stock is older, with less efficient systems. Also, though
space heating is dominated by natural gas, there is a significant presence of less efficient oil heating.
This indicates that there is much room for efficiency improvements in Cambridge’s rental housing stock.
Energy Programs – Past and Present
Overview of Multi-Family Efficiency Programs in Massachusetts
A number of energy efficiency programs pertain to multifamily building in Cambridge. These programs
are described below, and summarized in Appendix 1.
MassSave Homes - 1-4 Unit Buildings
At present the primary mechanism for enabling multi-family energy efficiency in Massachusetts is the
utility-funded MassSave for Homes program, which provides no-cost home energy assessments and
incentives for efficiency upgrades like insulation, air sealing and improved heating, cooling and hot water
systems. Available financing....
Low Income 1-4 Unit Buildings
Please include a short description of the Weatherization Assistance Programs available in Mass - the
Low Income programs for 1-4 units.
MassSave Multifamily buildings - Higher Income 5+ Unit Buildings
Briefly explain MassSave for Multifamily.
Massachusetts Green Retrofit Initiative & LEAN - Lower Income 5+ Unit Buildings
Low Income Multi-Family program (also known as the LEAN program) available for housing
developments of five or more units that are owned by a Public Housing Authority, a non-profit or a forprofit entity. An additional qualification for LEAN is that 50 percent of development households must be
at or below 60 percent of median income.
The Massachusetts Green Retrofit Initiative, a partnership between New Ecology and the Local
Initiatives Support Corporation (LISC), is another initiative that similarly to LEAN targets owners of multifamily affordable housing for efficiency upgrades. (Both New Ecology and LISC have been involved in
programmatic efforts around LEAN as well.) However the Green Retrofit Initiative has slightly different
income criteria and funding sources compared to LEAN, as summarized in the table below. As part of
this initiative property owners can submit applications for their buildings, which are then subject to
approval by New Ecology before an energy audit can take place. The Green Retrofit Initiative seeks to
provide a one-stop shop for a broad range of energy efficiency services and enable building managers
to identify a variety of financing options for related upgrades, while also emphasizing results and overall
building performance in ways that LEAN to date has not.
LEAN Program
MA Green Retrofit Initiative
Income Criteria
50 percent of development 50 percent of development
households at or below 60 households at or below 80
percent of median income
percent of median income
Funding Source
Utilities (NStar, National Grid, Private
foundations
(Barr
etc.)
Foundation)
and
federal
agencies
(Department
of
Housing
and
Urban
Development)
Do the utilities not contribute
funds? I doubt it.
State programs are also available to support financing for energy efficiency upgrades in affordable multifamily properties. The Massachusetts Housing Partnership (MHP) has an Energy Performance
Improvement Program (EPIP) that provides loans of up to $15,000 per unit for a wide range of efficiency
improvements in multi-family buildings, including water conservation, air sealing and insulation and more
efficient heating, cooling, ventilation and hot water systems. The EPIP is intended to complement
energy assessment grant programs like LEAN and the Green Retrofit Initiative.
Outreach & Marketing Channels
Provide a brief overview of the community outreach strategies... MassSave terms these “community
engagement” and Efficient Neighborhoods+” Note that City of Cambridge & HEET have been outreach
people & expand below.
Note that for LEAN, GRI, much of the outreach has been through affordable housing networks. The
played a role in creating the program & were keen to conduct outreach.
Future Utility Program Directions - The Recent MassSave Plan
State planning provides important signals for the future direction of energy efficiency in Massachusetts.
Right now the state is in the process of developing a new energy efficiency plan for 2013-2015, and the
draft plan proposes several adjustments to current multi-family programs. These include: treating condo
owners as single family homeowners for the purposes of energy audits and upgrades, given that many
condo owners see themselves as such; better coordinating multi-family and commercial programs to
enhance service delivery, as many multi-family buildings are currently metered as commercial; and
better coordinating low-income programs for both single-family and multi-family properties as well as for
both non-profit and for-profit multi-family housing developments.
Cambridge’s Experience to Date and Potential Next Steps
New potential multi-family efficiency programs in Cambridge must recognize and build off the city’s
experiences and challenges with the existing programs described above, as well as potential shifts in
programs based upon the state’s upcoming 2013-2015 efficiency plan. Through the city-sponsored
Cambridge Energy Alliance (CEA) the city is already connecting residents and businesses with energy
efficiency retrofit programs, with a primary focus on MassSave. Working in coordination with home
performance contractors like Next Step Living and community-based nonprofit organizations like the
Home Energy Efficiency Team, CEA has primarily pursued an event-based outreach strategy to sign
people up for home energy assessments through MassSave. Cambridge has also partnered with NStar
(the utility serving the city) to do walk-in audits of small businesses in neighborhoods like Inman and
Kendall Squares. Finally, the city has done some targeted mailings to landlords, finding that the
landlords who are most engaged about energy efficiency tend to live in the relevant properties.
CEA has found that having a motivated tenant who enjoys a good relationship with the landlord is
important to the success of multi-family efficiency efforts. The city has been able to track requests for
multi-family efficiency via their website, but has experienced challenges in the follow-up stages. Once
its contacts are turned over to NStar, the city is unable to access data on multi-family energy audits
unless it maintains contact with the landlord and tenants throughout the entire process. NStar’s
contractors do not report to the City the status of different projects. The reports that NStar does submit
to the city on multi-family assessments are also of limited utility, as they are not disaggregated by
property. Thus, the City and other outreach partners have limited understanding of what marketing
initiatives are effective, and whether they should follow up with buildings that have dropped out of the
process, face pre-weatherization barriers, or are not pursuing deep energy retrofits. These reports also
appear to indicate that uptake of deep energy retrofits is limited, as many of the audits focus on light
bulbs or other surface-level measures while doing little to track actual implementation.
To address many of these issues, the Massachusetts Green Retrofit Initiative could provide a model for
new utility-funded energy efficiency programs in Cambridge and beyond. As described earlier, the
Green Retrofit Initiative seeks to provide deeper engagement around a broad portfolio of energy
efficiency measures and their long-term performance. This one-stop shop framework could be
integrated with Cambridge’s current efforts to assess citywide solar potential and develop a guide for
doing solar upgrades at multi-family properties, creating a process that engages both landlords and
tenants in deep energy retrofits and their long-term impact. This would be consistent with a “strategic
focus on multi-family and performance-based community engagement initiatives, combined with an
overall goal of delivering robust, cost-effective programs,” which are outlined as key objectives in
Massachusetts’ draft energy efficiency plan for 2013-2015.
Finally, delivery of multi-family energy efficiency services and funding could potentially be integrated with
existing programs in Cambridge. In partnership with Cambridge Neighborhood Apartment Housing
Services, the city has a Multi-Family Rehab Loan Program that provides up to $20,000 per unit for
upgrades and addressing code violations and exterior improvements; however, this program currently
does not mention energy efficiency. Integrating energy efficiency options and the MHP’s Energy
Performance Improvement Program into the Multi-Family Loan Rehab Program could be another means
to increase the uptake of multi-family energy efficiency in Cambridge.
Healthy Homes Programs
It is important that any housing retrofit program not exacerbate home health issues, such lead exposure
and asthma, which effect some Cambridge residents; ideally, a program can ameliorate these issues. A
number of initiatives may be considered as the program is designed, to consider how healthy homes
issues can be better integrated into a multifamily program:
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The Green and Healthy Homes Initiative (GHHI) is a national project of the Coalition to Prevent
Childhood Lead poisoning. In Maryland, GHHI is piloting a program that integrates family
advocacy, resident education, lead and other health hazard mitigation services, and home
energy upgrades. GHHI offers a Compact of Core Standards that regions’ home improvement
programs are encourage to collaboratively adopt, to facilitate the development of more
streamlined program delivery. It also certifies cities in which home improvement agencies have
taken steps to align their delivery.
The EPA has developed Healthy Indoor Environment Protocols for Home Energy Upgrades. The
EPA also requires that home improvement contractors are properly certified in lead abatement.
A variety of home health improvement programs have operated in the Boston area over the
years. The Boston-based Asthma Regional Council of New England has resources on healthy
home upgrades, including their penetration, cost-benefit justification, and recommendations for
implementing programs.
Energy Data
Utilities, businesses, governments, and non-governmental actors are increasingly devising innovative
methods to acquire, analyze, and present data about energy use in buildings. The practicum will
explore ways to publicly disclose energy data, and inferred energy efficiency potential data, in
multifamily buildings. Such disclosure facilitates greater transparency in renters and buyers decisions of
their housing; can help pressure building owners to engage in upgrades; and can provide an engaging
means of educating the public about energy efficiency opportunities in buildings. The subsections
below outline background information and industry initiatives relating to energy data.
Types of Data
Building energy data can be classified into two broad categories:
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Energy data. Such data may include:
○ Monthly billing records for individual meters.
○ Smart meter interval readings, which may provide a data record of energy used every five
minutes, 15 minutes, or hourly. Having energy use profiles using this data can allow
analysts to infer what equipment exists in properties (the can “read” energy use profiles to
infer the efficiency of equipment, and what equipment is in use). Thus, it can act as a
type of asset data (see below).
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Asset data, referring to information about a building. Asset data may be derived from:
○ User inputs - from building operators, tenants, etc.
○ Local government tax assessor records, which may contain information on building age,
size, heating systems, wall assembly, etc.
○ Representations of buildings’ size and massing, such as LIDAR data.
○ Thermal images of buildings, from which thermal fluxes may be inferred.
○ Onsite building assessments.
Energy data can indicate the energy costs and pollution associated with living in an apartment. Asset
data can be used to indicate the energy efficiency and renewable energy potential of a building.
buildings can be benchmarked against one another, as well as evaluated for energy improvements.
These opportunities are expanded upon in the following sub-sections.
Benchmarking and Building Rating
Two fundamental types of building ratings have been developed to benchmark buildings’ energy
efficiency:
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Operations ratings are based on the actual energy consumption data of buildings. Buildings
with similar uses and climates can be compared. EnergyStar Portfolio Manager is the prominent
operations rating nationally, used for commercial buildings and multi-unit building. Wego Wise is
used in multifamily and single family buildings. The energy use of a building is influenced by its
constructions, systems operations and maintenance, and occupant behavior. Thus, an
operations rating reflects all three of these considerations.
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Asset ratings assess the energy efficiency of buildings’ construction. Asset ratings may be
quite complex, such as Home Energy Score or ASHRAE compliant building energy model; these
models input details of a buildings construction and systems, and run energy simulations. Other
asset models are based on fewer inputs, which have particularly strong building energy use
prediction abilities. Asset ratings can inform potential building utility payers of how much energy
the building may use under normal occupancy, regardless of how it was operated conversely.
Automated Building Assessments Driven by Engineering Models
Data and building energy modeling techniques are increasingly being used to rapidly assess potential
energy improvement opportunities based on relatively few data inputs. Such assessment strategies
include:
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Building operators or assessment professionals can implement relatively few pieces of asset
information. This data is then used to develop a model of the buildings energy use, informed by
prior detailed audit data.
Tax assessor records can indicate what buildings feature the highest energy efficiency potential,
based off of correlations with detailed audit data and assessor data.
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Interval meter data can be subjected to algorithms that disaggregate energy consumption into
different end-use loads. A model of the buildings’ energy use may then be automatically
constructed based on these inferred loads, and upgrade scenarios tested in this model.
Such assessment tools are evolving rapidly. They promise to reduce the costs of auditing buildings’
energy efficiency potential, and to allow for identification of the most promising energy efficiency
opportunities across a portfolio of buildings.
The Appendix includes case studies of a range of building benchmarking and data-driven assessment
tools.
Energy Data Privacy and Disclosure
The US Department of Energy has convened stakeholders to articulate principles for smart meter
interval energy data; similar principles seem to hold for less granular meter consumption data VERIFY.
They found that most market participants believe consumers should have the right to disclose energy
use data to non-utility third-parties, and that this disclosure should be a streamlined, simplified process.
They felt data should not be disclosed unless consumers opted-in to the program, meaning consumers
initiate an action to participate in data disclosure. An opt-out program, where by default consumer data
is released unless they actively opt-out, would likely garner higher participation rates and more data..
Utilities have the right to use data for their business activities, including efficiency program delivery.
Thus, utility vendors reportedly have access to all buildings energy usage data, though they do not
share this data. Typically residential (and commercial) energy consumption data has not been publicly
disclosed. Some opposition stems from privacy and safety concerns. Residents worry that with real
time data disclosure, potential robbers could identify when they are gone and break into their homes.
Commercial and industrial entities fear that their energy data could reveal they are significantly more or
less efficient than competitors which may reveal they are using different technologies or business
strategies. Furthermore, clandestine grow operations also oppose public disclosure of data fearing that
authorities would use the information to target and arrest them. However, the largest obstacle to data
disclosure seems to be utility inertia and a general institutional reluctance to take aggressive stances on
data disclosure. But, new programs, such as the Green Button Initiative are prompting utilities to be
more open with data disclosure.
Green Button Initiative
Federal recognition of the importance of energy data galvanized the creation of the Green Button
Initiative, an industry-led effort to improve availability of energy data. Sparked by a challenge in
September 2011 from U.S. Chief Technology Officer Aneesh Chopra to give customers greater access
to their energy data, industry stakeholders worked together to officially launch the program in January
2012.7 This voluntary program encourages utilities to release personal energy data to customers in a
standard format as an XML file.8 To date, 20 utilities have committed to the Green Button Initiative. This
amounts to 36 million residential customers gaining digital access to their energy data (Innovation
Electricity Efficiency 2012).9
Standard Energy Efficiency Data Platform (SEED)
The Federal government is developing tools which will standardize the taxonomy of energy data.
Currently in beta testing, Standard Energy Efficiency Data Platform (SEED) is software for large building
portfolios that provides a standard format for collecting, storing, and analyzing large. (The SEED
taxonomy is based upon the Department of Energy’s Building Performance.) Database The tool is
available to state and local governments and other building portfolio owners. SEED can also import
data from the EPA’s portfolio manager, export data to the Department of Energy’s Building Performance
Database, and publish results via an open API. SEED is free and open source.
7
White House Office of Science and Technology Policy. "Administration Announces New Tools to Help
Consumers Manage Electricity Use and Shrink Bills." whitehouse.gov. January 18, 2012.
http://www.whitehouse.gov/administration/eop/ostp/pressroom/01182012 (accessed October 29, 2012).
7
8
EnerNex. Green Button Data. n.d. http://www.greenbuttondata.org (accessed October 29, 2012).
8
9
Innovation Electricity Efficiency. Green Button: One Year Later. Issue Brief, September, 2012.
This is the DOE Building Energy Performance Taxonomy which SEED is based upon.10
SEED enables users to analyze efficiency potential, compare building performance, and track
compliance with efficiency programs. Moreover, creating a large database of energy data will enable
greater understanding of a city or region’s building stock as well as enable statistical analyses of
regional or community building performance.11 Efforts to design a database of energy use and building
asset data should be compatible with the SEED taxonomy.
10
U.S. Department of Energy. (2012, May 05). Standard Energy Efficiency Data Platform. Retrieved November 10,
2012, from Department of Energy:
http://www1.eere.energy.gov/buildings/commercial/pdfs/doe_building_energy_performance_taxonomy.pdf
10
11
U.S. Department of Energy. (2012, September 13). Standard Energy Efficiency Data Platform. Retrieved
November 10, 2012, from Department of Energy:
http://www1.eere.energy.gov/buildings/commercial/seed_platform.html
11
More information can be found at:
http://www1.eere.energy.gov/buildings/commercial/seed_platform.html
3. Program Components
A variety of program components could be included in the ultimate design of this project. A few
promising opportunities are noted here.
3.1 Improved Program Administration & Structure
Overview
The MassSave Homes program for 1-4 unit buildings is currently operating well. However, their appear
to be a number of issues hindering the success of the MassSave multifamily program. MassSave and
its vendors are taking action to address these issues. Nevertheless, the case could be made to
experiment with other program administration structures. The EESP team considered the following
options:
●
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Continue to improve the MassSave Multifamily Market Integrator.
Extend and expand the MA Green Retrofit Initiative to all 5+ unit multifamily buildings.
Establish a City administered program.
Program Priorities
Priorities for a new program:
● Integrate healthy home improvements to the greatest extent possible. Have the flexibility to
accommodate new healthy home initiaitives and sources of funding as these come online.
● Better communicate with community and city outreach partners.
Different options exist for how a program could be administered. Outreach and marketing strategies
should stream buildings into different programs based on construction type - the MASSSave Homes
program for 1-4 unit buildings, and a multifamily program for >5 unit buildings. Interviews with market
participants suggest that the management of the MASSSave Homes program works well; thus, it should
not be changed. However, our interviews revealed problems with the program administrators’ offerings
for >5 unit market-rate (e.g. not “affordable”) multifamily buildings:
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They are disaggregated into HVAC, Weatherization, Fuel Switching, and other programs, making
comprehensive upgrade measures difficult.
They do not provide insufficient “hand holding” and customer relationship development with
owners, who lack technical capacity in upgrade decisions.
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Program management vendors do not communicate with outside program marketers (such as
community organizations or local government) about whether buildings enter into upgrade
programs, making it difficult for these marketers to learn about what marketing strategies are
effective.
Program administrators have made efforts to address these concerns, introducing the Multifamily Market
Integrator program in 2010 to serve as a “one stop shop” for multifamily buildings, and refer them to a
variety of programs. However, it is not clear that the MMI sufficiently addresses these issues.
Thus, the EESP team believes that management of the 1-4 unit market should continue to
operate in its current fashion, but a new program management for >5 unit buildings may be
warranted. The EESP team considered the following options:
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●
●
Extend and expand the MA Green Retrofit Initiative. The Green Retrofit Initiative (itself an
expansion on the LEAN program) was developed to provide comprehensive whole-building
treatment to affordable multifamily buildings, and richer customer service. It could be extended
to all 5+ unit multifamily buildings.
Continue to improve the Multifamily Market Integrator.
Establish a City administered program.
3.2 Energy Map: A Benchmarking and Disclosure Tool
Overview
In this practicum, building an energy map seeks to help overcome the landlord-tenant barrier in making
efficiency changes in multifamily buildings. By illuminating energy differences among multifamily
buildings, prospective tenants will be able to make more informed decisions about which apartments
they choose to rent. By publicly disclosing building performance, landlords may feel social pressure to
improve their buildings. Moreover, government agencies and other efficiency-related agencies could
target lower performing neighborhoods and buildings for upgrades.
Potential Impact
The Energy Map has the potential to influence the housing decisions of renters. Mapping tools for other
types of information are already commonly used, so there would be a very short learning curve for users.
Presuming that energy data is readily available through a government mandate, the next biggest
obstacle may be creating awareness of the map so that it becomes popularly used. Integrating social
media could help to address this issue and Walk Score could prove to be a model for diffusing rental
information to other websites.
The Energy Map could be used to enable other community based social marketing campaigns. The
visual display of building performance in colors (e.g., green, yellow, red) may establish new social norms
which encourage landlords to upgrade their buildings. City agencies or utility departments responsible
for implementing residential efficiency programs could use the map to more effectively target their
programs at buildings and communities most in need.
The map may also be used to develop other creative outreach strategies. For example, the Energy Map
could be used in an energy efficiency competition. Blocks, neighborhoods, or even friends living in
disparate buildings could form teams to compete against each other to save the most energy. The
Energy map could be used in a dynamic web platform to monitor building performance and show how
different teams are faring against each other.
By revealing the energy performance of buildings on the public Energy Map renters can make more
informed decisions about their housing decisions and this may ultimately encourage landlords to
upgrade their buildings. Moreover, the map could also provide the opportunity for more geo-targeted
efficiency outreach and the opportunity to develop other creative community-based social marketing
programs.
The Landlord-tenant Barrier
The landlord-tenant barrier is a significant obstacle to upgrading rental units in Cambridge and in other
cities. Especially when tenants pay their own utility bills, neither party has an incentive to invest in
efficiency upgrades. Landlords have no financial incentive to do so since they do not pay the energy bills
and tenants may not live in the unit long enough to recoup the costs of initial investment in efficiency
upgrades. Because of this obstacle, the multi-family rental market is a particularly challenging sector to
get to participate in efficiency programs.
One significant barrier to implementing energy efficiency in multifamily residences is that renters
typically do not consider the energy efficiency of a home in their search for housing. To give energy
efficiency a greater role in the real estate market, home energy scorecards and labelling systems are
being given greater attention in the efficiency field, and the Energy Upgrade California program found
that energy efficiency certification can increase the resale value of a home.12 One example is the DOE
Home Energy Score.13 Other programs offer more immediately visible recognition to participants through
the use of yard signs.14
Creating more transparent information on energy use and utility bills in rental units could open a door to
implementing more efficiency upgrades. For many tenants, utility costs are unknown when they sign
leases and can significantly increase their monthly living expenses. If prospective tenants were able to
understand their expected utility bills prior to making a housing decision, they would be able to choose
apartments within their budget or ones that they perceive to be more “green” if that is something they
value. Landlords would realize that tenants were selecting certain apartments over others because of
12
13
http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/stories_eu_california.html
http://www1.eere.energy.gov/buildings/residential/hes_index.html
14
http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/innovations.html?tab=2&list=10&div=10#gro
uped
energy performance. This could prod them to invest in efficiency strategies so their rental units would
become more desirable. Moreover, if energy information on multi-family rental units is displayed publicly,
landlords may feel some social pressure to make their buildings more efficient.
Building an interactive map to help prospective renters identify high energy consuming apartments
would create social incentives for landlords to upgrade their buildings. Moreover, other interested parties
such as government agencies and energy contractors could use the map to target neighborhoods for
energy efficiency outreach.
The Energy Map
Energy information transparency could be displayed in an interactive energy map (the Energy Map)
where renters can get estimates of monthly electricity and gas bills. Buildings could be color coded for
relative energy performance compared to similar buildings in the area (e.g. red is a high energy user,
yellow is moderate, and green is low). Users could click on a building to see average monthly electricity
and gas bills (in kWh, therms, and dollars) as well as heating fuel type. Other information on the map
could include: a benchmark or efficiency potential score, recommended upgrades, available rebates with
the appropriate links, and estimates of potential savings.
A map is the optimal energy display tool in this market for many reasons. Renters will likely be looking at
a map to determine whether the potential housing location suits them. Other online resources already
use maps, so this is a comfortable tool for many people. For example, Yelp - an online public review
platform for restaurants, bars, and other places - pairs entries with a Google Maps location. Moreover,
using a map could enable city agencies or energy contractors to identify neighborhoods which show the
greatest need for energy efficiency upgrades.
Elements Needed for Energy Map
The following components are needed for the Energy Map, though this list is not exhaustive:
● Monthly energy use data from multifamily homes
○ Potential sources: acquired from the utility or residents voluntarily release data
● Building characteristic information
○ Potential sources: Tax assessor records, GIS records, user input, official audit
● Benchmarking and building rating
○ Uses energy data and building characteristic information to score individual buildings. An
appropriate benchmarking system that uses the information available needs to be
developed or selected. (The image below represents how different information sources
may feed a rating for an individual building.)
● Database management
○ Building a database to manage utility energy data, building characteristics, and building
ratings and to communicate with the website.
Monthly energy use data
To build the Energy Map, monthly energy use is needed from rental units. Energy data is increasingly
available, though still difficult to access, especially in the residential sector. NSTAR has implemented
Green Button functionality and energy information can be downloaded as a CSV or XML file. The file
includes the associated address, the start and end dates of 12 previous billing periods, the KWH usage
for each period, and the cost ($) for each period.
Two different approaches could be used to collect data - either from the utility or from the tenants.
For reasons discussed earlier, utilities have been reluctant to release ratepayer consumption data.
Recently in New York, ConEd has agreed to release data for buildings with three or more tenants
because end users cannot connect the energy usage to a specific tenant. Perhaps this precedent could
pave the way for other utilities to release energy consumption data for multi-family homes in Cambridge,
especially if energy data is presented as an average representing a typical unit in the building. Utilityprovided data would be ideal because it would be up-to-date and access to data would not change as
tenants come and go.
A way to enable the Energy Map and other groups to access data would be for states or the federal
government to mandate public disclosure of energy data. Some building owner may protest due to
privacy or safety concerns. One common safety concern is that if real-time data is publicly disclosed
then it may be possible to tell when buildings are unoccupied leaving them vulnerable to theft. Other
concerns include individuals or organizations simply wanting to keep their energy data private.
Legislation could address the safety issue by requiring disclosure only on a monthly basis so that realtime information remains private. And initial disclosure requirements could focus on multi-tenant
buildings where information could be aggregated to protect privacy and where there may be support
among tenant’s rights groups to give renters more information about units they lease.
If utilities are unwilling to provide data, tenants could voluntarily contribute their own data. Tenants
could manually enter usage from historic utility bills. Or tenants could provide their e-bill account
information and the mapping application could automatically screen scrape their data each month. The
drawbacks to tenant provided data are that not all tenants in a building may participate; manually
entering data is tedious and users may stop doing it eventually; as users move to new apartments e-bill
accounts may change or deactivate, making it difficult to keep up-to-date records; and there would need
to be a marketing campaign encouraging renters to contribute their data to reach a threshold
participation rate that would make the map useful.
Building Characteristic Information
As seen above, Green Button downloads provide information on billing period start and end dates, KWH
usage, and cost in dollars of the usage. The building address is also provided. Using the address to
search the Cambridge tax assessor records [these are publicly available] could provide other information
such as heat type, living area, and whether there is central AC. GIS databases could provide
information on parcel size and building height. The building characteristics are needed to establish a
building rating. Depending on the type of benchmarking system selected, owner or tenant inputs may be
required for more sophisticated evaluation. Ideally, a touchless audit using the publicly available data
could be given so that little or no user input is required for an initial rating.
Benchmarking and Building Rating
Benchmarking and building rating programs in residential buildings can improve the functioning of real
estate markets, allowing greater transparency in the anticipated energy costs of buildings. Such
transparency can help stimulate upgrade activity. The Energy Map could facilitate building rating by
including a benchmarking score for each building represented. Nadkarni and Michaels (2012) articulate
that an optimal building rating and benchmarking system for residential buildings would entail:
●
●
●
●
●
●
Requiring annual operational updates.
An asset rating of the building within a specified time (10 years), providing that cost-effective
rating tools were available.
Rating confidentiality, save for web-based disclosure to relevant stakeholders, like owners,
tenants and prospective buyers/lessees.
Public disclosure during time of listing for sale or lease.
A standardized process for building asset rating, delivered by a certified rating authority.
A consistent, easy to understand energy label, providing both asset and operational scores,
comparable within and between residential building types.
The Energy Map needs to use a benchmarking system that can be applied to many homes, with
possibly limited data, and that is accurate enough to establish user confidence. The Energy Map should
also make a distinction between a building’s asset rating versus and its operational rating (e.g., a
building may receive a score of 89/100 but the residents operate it at a score of 75/100), either by giving
two scores or making it clear which rating is being displayed. Distinguishing between an operational
score and an asset score could alleviate concerns of landlords that even if they upgrade their buildings,
tenants would make poor energy decisions and negatively impact their building’s rating.
Potential Practicum Work Items
● Develop a strategy to access the necessary energy data information.
○ Decide whether it should be crowd-sourced or provided directly from the utility.
○ Develop an action plan to acquire the data.
● Evaluate different benchmarking models and select the best system given the data available.
● Reach out to existing energy efficiency firms like WegoWise or Next Step Living to see how to
develop a partnership and leverage their resources.
● Determine what information should be displayed on the map (what information would most
inspire action).
3.3 Demand -side Stakeholder Engagement & Marketing
Overview
The multi-family housing market remains one of the most difficult-to-reach areas in the energy efficiency
field, due in large part to the “split incentive” program. In rental homes, tenants generally pay energy bills
and would stand to gain immediately from efficiency improvements, but any large projects must be
financed by the owner, who has no such immediate gain. As noted above, this problem is particularly
salient in Cambridge, which is characterized by younger tenants who do not live in one home for long
and therefore do not have a long-term interest in the home’s efficiency. Additionally, many area property
owners are small-scale landlords who may not have the available capital to make major investments in
efficiency.
There are also a significant number of condominiums in the Cambridge area, which present present a
separate but equally challenging barrier to implementation. Condominium associations generally have
veto power over a range of energy efficiency improvements, and have no direct interest in the increased
efficiency of an individual unit.
Overcoming these barriers to implementation requires a program structure that appeals to multiple
parties. This will necessarily involve an educational and outreach component to these groups to
understand their concerns and barriers to the program’s success. Below, we discuss the categories of
stakeholders who will have an interest in such a program as well as existing means of interaction and
best practices for engagement.
Stakeholders and Institutional Pathways for Engagement
The specific market segment targeted by this project—small multi-family buildings with between 2 and
20 units—is particularly difficult to reach. In the large multifamily rental market, there are relatively few
property managers to conduct outreach to and there are more likely to be established modes of
organization among tenants. There are significantly fewer such organizations in the small rental market,
though they do exist.
On the landlord side, there are several state and regional organizations of small property owners to
conduct outreach to. These include the Small Property Ownership Association,15 the Massachusetts
Rental Housing Association,16 the Greater Boston Real Estate Board,17 and the Boston chapter of
the Institute for Real Estate Management.18 There is also a diverse number of condominium
associations that represent property owner interests as well.
While less organized, there are also established mechanisms that can be used to reach tenant groups.
The focus of tenant advocacy groups is typically on eviction and poverty, though it clear that energy
savings has relevance to this mission. The nonprofit Cambridge Economic Opportunity Committee19
serves as the local Community Action Program. On the city side, the Environmental and
Transportation Planning Division20 within the Cambridge Community Development Department is also
an important actor in this space. Unfortunately, the majority of tenant-engagement activities are
restricted to subsidized housing, and there are few existing means of organization among market-rate
tenants. This is made more difficult by the transitory nature of Cambridge’s rental population, particularly
its students.
Beyond landlords and tenants, there are a number of related industries with an interest in energy
efficiency in multifamily housing. These include, but are not limited to, property management firms,
energy contractors, and realtors.
Another relevant actor is Just-A-Start,21 a local organization dedicated to mediating landlord-tenant
disputes in the Boston area, with a heavy focus on Cambridge. Just-A-Start’s mediators have valuable
experience navigating the institutional context of landlord-tenant relationships, and it is likely that they
will be able to act as an important resource in conducting outreach and information to these groups.
Finally, NSTAR’s current multifamily housing program includes an outreach component conducted in
partnership with local community organizations and likely has established inroads into local communities
that can be leveraged for this project.
Best Practices for Condominium Outreach
Condominiums present a less-often considered variant of the split-incentive problem. As such, there are
fewer existing efficiency programs that explicitly call out condominiums in the established scope, and no
uniform methodology among those that do. The simplest approach--taken by both Wisconsin’s Focus on
Energy22 and NYSEG23--is to direct condo owners to take advantage of rebates on the upgrades that
15
http://spoa.com/
http://www.massrha.com/
17
http://www.gbreb.com/
18
http://www.iremboston.org/
19
http://www.ceoccambridge.org/
20
http://www.cambridgema.gov/CDD/etdiv.aspx
21
http://www.justastart.org/
16
22
http://www.focusonenergy.com/residential/apartments-and-condos/programs.aspx
they are able to control directly, like lighting and appliances. Other programs take more concerted
approaches to the split incentive problem by targeting condominium associations. Efficiency programs
run by National Grid,24 Energy Trust of Oregon,25 and NYSERDA26 aim to work directly with
condominium associations by conducting individual outreach and recruit energy champions within
buildings. Policy interventions could also be made on a higher level than that of a utility-operated
energy efficiency program, and condominiums may be encouraged to make efficiency upgrades through
practices like Energy Improvement Districts, taxpayer-funded natural gas pipeline extensions, and
changes to applicable condominium laws.27 Of these methods, we believe that the first is too narrow
and the last may be too impractical. We believe that an appropriate approach to condominiums is to
consider the market to be a unique program stream and offer dedicated resources to engage and
market to condominium associations and encourage condominium owners to advocate for efficiency to
their boards.
Potential Practicum Work Items
We believe that obtaining buy-in from landlord and tenant groups and condominium associations will be
a crucial element to this program’s success. Over the coming months, we propose to conduct outreach
efforts to the groups identified to gauge their interests and concerns regarding opportunities for energy
efficiency in multifamily housing.
Stakeholder analysis - One option is to model this outreach effort on the established practice of
stakeholder assessment. In this methodology, our outreach effort would begin by speaking with the
stakeholders identified above. Through preliminary discussions with those groups and individuals, we
would identify additional stakeholder groups and develop a matrix of interests and interested parties.
Focus groups - Due to the fragmented nature of the rental community in Cambridge, it will be
prohibitively difficult to conduct outreach to each stakeholder that would be impacted by a program.
Instead, we plan to conduct focus groups with representative samples of property owners, tenants, and
other stakeholder groups. Through these interviews and focus groups we will seek the understand the
concerns and interests of various stakeholders and identify one or several program delivery
mechanisms that could be used to implement an effective efficiency program in various settings. We are
prepared for the likelihood that unique program delivery mechanisms may be appropriate for distinct
groups--such as rental properties with student residents, properties where landlords reside on-site, and
condominium housing.
Interviews with building owners and managers - An important aspect of these discussions will be to
identify and interview multifamily properties fitting our target profile that have already implemented
23
http://www.nyseg.com/UsageAndSafety/usingenergywisely/eeps/multifamily.html
23
24
http://www.nationalgridus.com/masselectric/home/energyeff/4_energy_svcs.asp
http://energytrust.org/residential/rental-properties/ForCondoOwners.aspx
26
http://www.nyserda.ny.gov/en/Multifamily-Performance-Program/Co-op-and-condo-boards.aspx
27
http://www.cga.ct.gov/2009/rpt/2009-R-0391.htm
25
energy efficiency upgrades. We intend to interview a sample of landlords and tenants in this group to
understand why the decision to invest in an upgrade was made, and what factors acted as important
drivers in that decision. These findings would be crucial in developing an effective program design. Key
owners and property managers to engage include....
3.4 Financing - An On-bill Tariff Repayment Scheme
Overview
The EESP team believes that an On-bill Tariff Repayment mechanisms can facilitate the financing of
energy efficiency in multifamily housing, and other building types.
Background
Financing challenges in large part have precluded the widespread adoption of energy efficiency
measures. High upfront costs for efficiency upgrades, as well as the split incentive problem between
landlords and tenants, have often dissuaded customers from making investments in energy efficiency.
In addition customers often lack information about financing programs, perceive them as costly or timeconsuming or face credit barriers to accessing financing, and lenders often lack data on energy savings
projections and see energy efficiency as a risky proposition in the absence of this information (Deutsche
Bank 2012). Effective financing programs for multi-family efficiency must proactively address these
issues.
On-bill financing presents a promising approach to tackle many of the aforementioned challenges.
Under on-bill financing utilities make upfront investments in energy efficiency measures and the
ratepayer then pays back these initial investments over time via a monthly surcharge on his/her energy
bill. As a result the upfront cost barrier is largely eliminated, and the customer further benefits if the
payback terms are structured such that the resulting monthly energy savings exceed the monthly
repayments. By tying these repayments to regular utility bills, on-bill financing also presents a
mechanism to use customer payments as a proxy for creditworthiness and reduce overall risk to lenders
(ACEEE 2011).
On-bill financing can also overcome the split incentive barrier in multifamily and rental properties if
structured properly (ACEEE 2011). There are two main types of on-bill financing measures: on-bill loans
and on-bill tariffs. On-bill loans are non-transferrable and stay with the borrower, so even if a tenant
moves out of a unit or a building is sold before the upfront efficiency investment is entirely repaid, the
tenant or building owner in question is still responsible for paying off the balance of the loan. As a result
the split incentive problem persists, as neither landlords nor tenants are willing to take on payments for
which they receive no benefit. On-bill tariffs, on the other hand, are tied to specific properties via utility
meters; when a tenant moves out or a building is sold, the new tenant or building owner assumes
responsibility for the monthly repayments where the previous tenant or owner left off. As a result on-bill
tariffs present a powerful strategy for addressing the split incentive challenge, as they ensure that
landlords or tenants can benefit from efficiency investments without facing a longer-term financial
burden.
While on-bill tariffs present an attractive solution to many energy efficiency financing barriers, their
implementation comes with its own set of challenges. Perhaps most notably, on-bill financing can often
require complicated modifications to utility billing systems (ACEEE 2011), and NSTAR in the past has
declined to implement on-bill financing in Cambridge for precisely this reason (Cascadia Consulting
Group 2008). However given the City of Cambridge’s and NSTAR’s current mutual interest in
developing a pilot multifamily efficiency pilot that can be a model for long-term programmatic change, we
believe the time is now to revisit these issues and think critically about strategies to implement on-bill
tariffs in the multifamily sector.
These include difficulty assuring that energy savings will exceed payments, limited support for
comprehensive retrofits, and an inability for programs to cover their costs in some instances (ACEEE
2011).
In conjunction with on-bill tariffs, Cambridge and NSTAR can consider several other strategies to
address financial barriers to energy efficiency. These include providing energy data before or at the
point of loan application to enable lenders to incorporate cost and savings projections into their
underwriting (Deutsche Bank 2012), using financing products to bundle together multiple energy
efficiency measures to spur deeper retrofits (ACEEE 2011), and using public benefit and utility funds to
provide credit enhancements or buy down interest rates (ACEEE 2011). Employing a portfolio of these
approaches will ensure that both customers and lenders can access important information, reduce their
overall financial risks and have stronger incentives for participation.
Program Recommendation
Potential Practicum Work Items
●
●
Develop guidance for establishing and managing a Fund through which on-bill repayment could
be made.
Pro-forma, suggesting what IRR of measures could be included in projects, given different terms
of financing.
3.5 Upgrade Ordinances
Overview
Residential Energy Conservation Ordinances (RECOs) specify that as part of the purchase of an
existing rental housing unit, property owners must either fulfill a prescriptive set of mandatory upgrades
or invest a set portion of the purchase price in efficiency improvements.28 The City should consider
opportunities to implement energy conservation ordinances. Likewise, the Massachusetts Green
Communities Designation and Grant Program and the Massachusetts Board of Building Regulations and
28
Beth Williams thesis.
Standards should provide a standard energy improvement code for existing construction, which leading
Green Communities can adopt.
This policy option overcomes the split incentive problem by mandating that one party--the property
owner--make efficiency improvements as part of a property sale. However, there are two substantial
drawbacks to this policy tool. The first is the political difficulty of implementing such an ordinance, and
the second is its limited effectiveness. Because the policy only comes into effect when a housing unit is
sold, an upper limit is enforced on the number of homes that would be retrofitted through this approach.
The EESP team believes that, ultimately, requiring upgrades may be necessary to realizing deep energy
efficiency across a broad range of properties. However, it is politically difficult to get such requirements
established. Thus, efforts to grow the voluntary market for upgrades are justified.
Background
Previous Use
RECOs have been used to advance energy efficiency since the 1980s and are in place in several cities
across the nation--including San Francisco, Berkeley, Austin, Boulder, Ann Arbor, Minneapolis,
Burlington, and Roseville, CA--as well as statewide in Wisconsin. In other areas, such as Portland and
San Diego, proposed RECOs were abandoned due to opposition from real estate organizations and
other groups. However, opposition from commercial groups is not a given. Realtors in San Francisco
and Berkeley use energy upgrades as a selling point for buyers,29 and in Austin, realtor groups
negotiated and support a watered-down ordinance that requires energy audits, but not mandatory
upgrades.30
There are slight variations in program scope and administration that are worth discussing. While most
program apply to the entire residential sector, the programs in Wisconsin, Ann Arbor, and Minneapolis
specifically target multi-family housing.31 This implies that they are intended to address--or rather,
sidestep--the split-incentive problem in rental housing. While most programs are run through a housing,
building, or code department, the ordinances in Burlington and Roseville are operated by local municipal
utilities.32
29
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%20
Ordinances%20ACEEE.pdf
30
Pat Coleman thesis.
31
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%20
Ordinances%20ACEEE.pdf
31
32
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%20
Ordinances%20ACEEE.pdf
There are also differences in penalties for non-compliance. Most cities specify monetary penalties for
noncompliance that vary in severity. In Ann Arbor and Wisconsin, noncompliance has additional legal
consequences, and can actually lead to jail time. Conversely, Roseville and Berkeley do not have any
established enforcement mechanisms to deal with noncompliance.33 In Boulder, landlords must be
licensed by the city, providing an additional leverage point for enforcement.34
There has been a general failure to track and evaluate the impact of RECOs, and as a result, there is
little information available regarding their effectiveness in achieving energy savings. 35
Applicability to Cambridge
While implementing a RECO is difficult in any context, Cambridge is perhaps better situated than other
most municipalities to make a successful attempt. Cambridge’s participation in the Green Communities
Act and its implementation of stretch energy codes could provide a foundation for further actions around
energy regulation. However, the extreme opposition that an attempt to enact a RECO is sure to
encounter demands that the chances at success of such an attempt be carefully evaluated in advance.
Potential Practicum Work Items
Time-of-sale upgrade ordinances present a unique means of addressing the split-incentive problem in
multifamily energy efficiency, largely by sidestepping the issue entirely. However, due to the great
political difficulty in establishing and implementing a RECO, it should not be assumed that Cambridge
will be able to. Instead, through conversations with stakeholders occurring throughout the engagement
process, RECOs should be included as one of several possible solutions for achieving energy efficiency
in Cambridge. If a universally beneficial solution can be found, an energy ordinance may indeed be
implemented in Cambridge, but it should only be considered as one of many potential solutions.
An Adaptive Approach to Marketing
The Need for Experimentation
As noted above, multifamily housing remains an unsolved problem in the energy efficiency sector, and
the industry has not yet found a silver bullet to unlock energy savings in this sector. The range of
interests and fragmentation of incentives has so far been impenetrable to program implementers.
DOE’s Better Buildings Neighborhood Program (BBNP)36 provides a potential blueprint to address the
uncertainty around appropriate program designs. BBNP encourages innovation among local energy
33
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%20
Ordinances%20ACEEE.pdf
34
Find a source.
35
Beth Williams thesis, ACEEE.
36
http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/
efficiency programs, and offers a collaborative atmosphere that stresses the role of experimentation in
the search for effective solutions.
We believe that it may be necessary to replicate this principle on a smaller scale in Cambridge to
determine effective methods for addressing the multifamily sector specifically. We are interested in
implementing a suite of program design elements, and establishing mechanisms that are able to
evaluate them through an experimental design. Below, we provide a general schematic for the elements
that may be included in this, and how they may best be deployed in the local market.
Innovations in Energy Efficiency Program Outreach
A number of innovative approaches to program design are currently being tested through BBNP and
other simultaneous initiatives in the energy efficiency space. Below, we describe several that we think
may be useful in assisting program outreach in this context:
● Incentivizing Community Organizations. Currently, NSTAR’s multifamily energy efficiency
program conducts outreach through a number of community organization partners. However,
these organizations are not given a clear incentive to participate beyond offering a service to the
constituents they serve. Some energy efficiency programs, such as Los Angeles County’s
Energy Champions program,37 offer financial incentives to local non-profits that successfully
recruit program participants. In Massachusetts, Next Step Living is currently implementing a
similar approach.
● Certification and Recognition. One barrier to implementing energy efficiency in multifamily
residences is that renters typically do not consider the energy efficiency of a home in their search
for housing. To give energy efficiency a greater role in the real estate market, home energy
scorecards and labelling systems are being given greater attention in the efficiency field, and the
Energy Upgrade California program found that energy efficiency certification can increase the
resale value of a home.38 One example is the DOE Home Energy Score.39 Other programs offer
more immediately visible recognition to participants through the use of yard signs.40
● Deadline-Based Marketing. Some energy efficiency program implementers--such as Efficiency
Maine41--use deadlines to more effectively market energy efficiency program. By offering a lowcost installation for a limited period of time, these programs are able to motivate potential
participants to take action.
● Bulk Purchasing. Some programs coordinate the purchasing efforts of multiple participants with
a single contractor to achieve discounts from bulk purchases. Solarize Portland has been
particularly successful in negotiating low prices for solar panels through this approach.42
37
https://energyupgradeca.org/county/los_angeles/energy_champions_home
http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/stories_eu_california.html
39
http://www1.eere.energy.gov/buildings/residential/hes_index.html
38
40
http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/innovations.html?tab=2&list=10&div=10#gro
uped
41
http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/maine_profile.html#driving
42
http://www.portlandoregon.gov/bps/article/405686
●
Leveraging Anchor Institutions. Similar to community organization approaches, some
programs leverage trusted organizations in the target community to conduct program outreach
through. For example, the Michigan Saves program partnered with Grand Valley State University
in Grand Rapids to market and implement their energy efficiency program.43
We will investigate whether these approaches can be appropriately deployed in the Cambridge multifamily housing sector. We hope to implement several approaches in this initiative. To do this
successfully, it is crucial to understand the specific interventions that each approach offers, and how it
would be received by different stakeholder groups and market segments.
Market Segmentation Approach
One approach to overcome barriers to multi-family energy efficiency is to break the problem into more
manageable pieces that can be more directly targeted. In essence, energy efficiency incentive programs
operate by appealing to potential participants’ interests. In the case of owner-occupied single family
housing, efficiency can easily be framed as a beneficial financial investment. Because of the split
incentives and fragmented interests inherent in multi-family energy efficiency, it is much more difficult to
make a cohesive argument for energy efficiency and therefore much harder to craft a single program
that appeals to the entire sector.
We are interested in avoiding this problem by identifying and isolated segments of the multifamily market
that offer specific points of intervention and developing a program design that can be tailored to present
to multiple markets. Where a single approach to program outreach and recruitment would likely only
appeal to a portion of the entire multi-family market, an adaptive approach that recognizes the different
interests of varying actors in the multi-family space could be much more effective in establishing a
broader participant pool.
While we are in the early stages of identifying and targeting potential market segments, a preliminary
assessment of how this approach could work in practice is presented below. This schematic of
segmentation and points of intervention may be fleshed out in the stakeholder outreach and
engagement process described above.
● Resident Landlords. A currently undetermined number of landlords reside on-site in one of
several units in an otherwise rental property. Unlike most property owners, these individuals
share the same self-interest in efficiency upgrades as single-family owners and--if they can be
identified--could be targeted accordingly. Additional incentives could be designed to encourage
landlords to invest in efficiency upgrades for the other units in their property as well as their own.
● Oil-Heated Homes. 13% of Cambridge’s rental units are heated by fuel oil. Because of the
difficulty of metering multi-family tenants individually for oil heat, it is likely that space heat is
included in rent in many of these units. If homes where this is the case, landlords would have an
opportunity to reduce their operating costs without losing revenue, and could be targeted by
traditional incentives.
● Student Housing. 27% of Cambridge’s adult population is in college or graduate school, and
students account for a large number of rental properties. An efficiency program could take
43
http://bbmgr.org/wp-content/themes/Starkers/media/01172012BBMGR_GVSU_INFO.pdf
●
●
●
●
advantage of this fact by operating a program outreach strategy that treats Cambridge’s two
major universities as anchor institutions, similar to the Michigan Saves program mentioned
above. A program could either target the university (leveraging the trusted nature of the
institution by developing co-branded marketing, student-specific webpages, and utilizing the
resources of student services offices) or the student body itself through a social marketing
campaign.
Condominiums. As noted above, there are very few efficiency programs that specifically target
condominiums and address the specific barriers that they pose to energy efficiency. A program
could recruit energy champions within condominiums and empower them with resources
specifically designed to recruit condo owners and address the concerns of homeowner
associations.
Property Management Firms. Many landlords in Cambridge contract with specialized property
management firms to take care of their properties and deal with tenants, and these firms may
benefit from differentiating themselves in the market by adding energy efficiency to their list of
services. Therefore, a program could target these firms rather than landlords or tenants and
design resources and outreach strategies from their perspective.
Vacant/Available Units. Units available for sale or rent present an opportunity to intervene at
the time of sale. A program that offered certification or recognition of energy efficiency
improvements could be effective in changing the rental market by increasing demand for efficient
units.
The Remainder. It is likely that the these even an adaptive program that takes advantage of
market segmentation would not be able to reach a large portion of the multifamily housing market
in Cambridge and for the remaining market, it may be more difficult to establish a point of
intervention. However, through the efforts discussed elsewhere in this report--such as eneryg
data utilization or on-bill financing--we may be able to craft a program design that is able
sufficiently increase awareness of energy efficiency or bridge split incentives entirely. The
stakeholder engagement process described above will be crucial in understanding what
approach to take in this area.
3.6 Comprehensive, Deep Energy Upgrade Measures
Scope of Design
·
Outline typical measures appropriate for MF housing typologies in Cambridge.
·
Outline required contractor certifications
Background information
·
Identify MF upgrade contractors.
·
Pre-weatherization barriers.
·
Status of rent controls.
Conclusion
Appendixes
Program Summary
Prog
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Tec
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Case Study - WegoWise
https://www.wegowise.com/
Monitors energy consumption primarily in multifamily buildings.
● Building Type: multifamily/residential
○ Tweaked application so it could comply with NY Law 84 and function for commercial
buildings
○ Developing commercial and single-family residential platform.
● Asset Data:
○ Basic building characteristics that can be discovered in about 27 questions.
○ Do not actively use Tax Assessor data, but are exploring possibilities.
● Operational Data: Accesses E-bill online payment systems most utilities have
○ Monthly reports of energy data
○ WegoWise is not as concerned right now about smart meters and receiving 15-minute
interval data.
● Visualization Tool:
○ Online dashboard
WegoWise is an online platform designed to monitor energy and water use of multi-family homes.
Primarily targeted at property managers, clients pay $5/building/month to have their electric, gas, and
water consumption automatically tracked each month.
As part of the energy assessment for each building, property managers respond to approximately 27
questions regarding the physical characteristics of each property. WegoWise’s main value-add is in
automatically tracking monthly energy consumption and payments. Property managers share e-Bill
account numbers and passwords with WegoWise. WegoWise then screen scrapes data every 20 days
to update energy consumption.
WegoWise offers their clients comprehensive analysis of building energy information. Users can build
custom reports to compare specific buildings and specific energy consumption. Generated charts show
how the client’s buildings perform compared to physically similar buildings in the same climate zone and
with the same type of heating system in WegoWise’s database. Users can also specify a geographic
location for comparison. For example, perhaps they only want to know how their buildings compare to
buildings in Massachusetts, or even more specifically in Boston. They are showed how their buildings
compare to efficient buildings. This efficiency threshold is based upon performance information of the
top 25% of similar buildings in WegoWise’s database. WegoWise also offers the option to compare the
energy performance developments, not just single buildings, which may be valuable to expansive
property owners.
WegoWise offers a simple, easy-to-use energy monitoring tool to property managers. Automatically
capturing utility bill information saves the time of users having to enter information manually. Moreover,
graphs and charts help property managers understand which are their low- and high-performing
buildings. WegoWise has been used to show changes in building performance after retrofits, to help
qualify a building for other energy funding, and to verify LEED performance criteria.
A main obstacle with WegoWise is getting utility data if building tenants pay their own utility bills.
Property managers must have tenants sign releases of information and acquire their individual utility
account numbers and passwords. This can slow the process and some tenants do not want to release
their information. However, if property managers are able to obtain the permission of 50 to 60% of
tenants, WegoWise can calculate an average consumption pattern for units and then create a building
estimate. Some buildings overcome this obstacle by including a data release provision in leases.
WegoWise has developed and extensive network within Massachusetts, but is working nationally with
presences in New York, California, and other areas as well. WegoWise is looking to expand its market
by developing a similar online platform for commercial buildings and single-family homes. Online energy
management is a young market and WegoWise is one of only a few companies in the arena
[EnergyScoreCards is a potential competitor].
Case Study - EnergyView
PDF Report
Community map of building energy performance and individual ratepayer comparison calculator.
● Building Type: Multifamily/residential/commercial
● Asset Data:
○ Tax assessor records and geographic survey information
■ 35 features were collected from these data sets
● Operational Data
○ Monthly electric and gas data from NSTAR
● Visualization Tool:
○ Color-coded map which ranks building performance. This tool was only ever hypothetical
and never launched live.
○ Online calculator for an individual to enter household data outputs graphs on:
■ Monthly electricity use compared to similar homes
■ Electricity usage distribution
■ Monthly gas use compared to similar homes
■ Gas usage distribution
EnergyView was developed by an MIT PhD student and faculty member to model energy consumption
in residential and commercial buildings. Their approach used exclusively remotely available data,
meaning no home visit was necessary, nor did anyone need to collect descriptive information from
building owners or tenants.
Using tax assessor records, geographic survey information, and monthly energy information provided by
the local utility NSTAR, the authors created models to predict energy usage for 6,500 buildings in
Cambridge, Massachusetts. These models were able explain about 75% of observed variance in energy
consumption given building characteristics.
From their models, the authors designed two potential tools. For utilities - which are able to access all of
their clients’ data without privacy restrictions - the authors developed a map which color codes buildings
by energy consumption; this tool enables utilities to readily see which buildings which are consuming
more energy than would be expected by their given features. For individual ratepayers, the others
created an online calculator where users can manually enter their monthly energy information and then
see resulting charts which compare their energy usage to the predicted energy usage of similar
buildings.
The authors noted the difficulty in assigning specific utility records to buildings. If utilities were able to
include a Building ID code which matched with tax assessor parcel IDs, this would facilitate the analysis
process. The authors also stated knowing whether buildings were owner-occupied or tenant-occupied
would be helpful, but that information was not available in tax assessor records.
The authors faced another challenge when multiple meters were associated with one building. They
didn’t necessarily know which meters were attached to units and which were associated with common
spaces. This suggests a potential difficulty in conducting remote energy analyses; without tenant or
owner input, it may hard to know what space meters represent.
EnergyView faces limitations in that due to privacy restrictions, only utilities can use the mapping feature.
Moreover, utility energy data sets do not necessarily identify which meters are for occupied spaces and
which are for common spaces, making the analysis more complicated. However, even with these
obstacles, EnergyView and similar platforms have the potential to be scaled up and offer utilities
mapping tools which could enable them to target efficiency programs at high energy users.
This relationship diagram explains how different data relates to each other in EnergyView.
Case Study – Cambridge Solar Map
http://www.cambridgema.gov/solar/
Academic Paper by Christoph Reinhart and Alstan Jakubiec
Ranks solar potential of roofs and provides info on solar potential, financial costs, environmental benefits,
and installation information.
● Building Type: Multifamily/residential/commercial - indiscriminate
● Asset Data:
○ LIDAR scan
○ RADIANCE/DAYSIM simulation
○ Standard local weather data
● Operational Data:
○ None
○ Potentially this could be added to make an even more convincing tool.
● Visualization Tool:
○ Interactive map which color codes solar suitability on roofs
■ Users can search for specific addresses or zoom and move map
■ Generates numerical breakdowns for individual roofs of solar potential, financial
costs, and environmental benefits.
■ Provides an installation overview.
While not an efficiency or energy consumption map, the Cambridge Solar Map demonstrates the power
of an interactive map for relating energy information to individual homeowners and to community groups.
Developed by MIT’s Sustainable Design Lab, the map color codes roofs for excellent, good, or poor
photovoltaic potential. The data used to build the map includes a LIDAR scan of Cambridge to establish
urban geometries, a solar radiance simulation model built by Christoph Reinhart, and local weather
station data. The developers used the specifications of a SunPower 185-watt panel to calculate the
annual PV generation.
Users are able to search a specific address or manually move the map and select buildings. Upon
selection, the “Solar Tool” generates PV related information for that building if it has a ranking of
excellent or good. This information generated includes estimates of potential PV size (kW), annual
electricity generation, cost of installation, tax credits and rebates, annual revenue, payback time, and
environmental benefits. The map also provides links to find out more about how to get a PV system
installed.
The power of the Solar Map is that individual homeowners can quite quickly determine whether their
home may be suitable for solar power and see and estimate of financial benefits for installing a system.
Installers or other community groups can use the map to target specific homes or neighborhoods which
would benefit the most from PV installations. Individual homeowners may be able to convince neighbors
to also install solar, and perhaps negotiate a group discount on contractor cost. One of the map
developers also noted that they compared the map to an existing MIT solar installation. The solar
installation seemed to be under producing based on what the map predicts. The system is currently
being analyzed, but this suggests that the map could also be used to verify system performance after
installation.
The Sustainable Design Lab is continuing to work on the map. In the future, they would like to develop a
tool to outline panels on a roof to get more specific information about system configuration. They also
recognized the potential of incorporating actual energy consumption data to enable house-to-house
comparison and augment the financial incentive calculations.
If possible to generate, a community efficiency map could benefit from leveraging similar features to the
Cambridge Solar Map. These include:
● Simple, easy-to-understand color coding
● User-friendly searching and moving
● Speaks to multiple user groups - individuals, community groups, contractors, utilities, and
government agencies
● Includes estimates of savings and financial incentives
Case Study – Next Step Living
http://nextstepliving.com
Next Step Living is a one-stop-shop for home energy assessments and weatherization.
● Building Type: Residential
● Asset Data:
○ Audits
○ Infrared Imaging
○ Blower Door Tests
○ Tax Assessor Records
● Operational Data
○ Utility bills
■ 12 months pre-installation and 12-months post-installation
○ Energy assessment database
● Visualization Tool:
○ Heat Map compares tax assessor record characteristics to audits of similar homes in the
NSL database
Next Step Living (NSL) is a Massachusetts-based turnkey home energy assessment and weatherization
provider. NSL accounts for 90% of the home performance market in Massachusetts and will be
expanding to Connecticut and Maryland. The four-year-old company conducts 25,000 home energy
assessments per year and expects that number to continue to grow.
NSL collects twelve months of utility data from customers before they complete a weatherization of their
home. NSL also asks for 12 months of energy data post-installation. Using this information, NSL is
building a detailed database of home energy audits. Using 20,000 homes worth of data, NSL built a
“Heat Map” of Somerville. They used a handful of important data points pulled from tax assessor
records to compare Somerville homes to similar homes in their database of audits. They color coded
homes so that “hot” homes were the ones with the most potential for upgrade.
Next Step Living’s Heat Map is leveraging an increasingly popular method of analyzing home efficiency
performance by comparing remote, publicly available housing data (from tax assessor records) to
historic energy audits of similar buildings. This enables contractors to develop building profiles before
contacting potential customers. They can identify neighborhoods and communities that offer the
greatest opportunity for savings and target their outreach efforts there.
Case Study - Retroficiency
http://www.retroficiency.com/
Creates building audits with minimal information by using algorithms to model building performance and
making comparisons to prototypical buildings with same characteristics from historic audits.
● Building Type: Commercial
● Asset Data:
○ Builds increasingly accurate building profile, but starts with basic info and improve over
time by augmenting with more information.
● Operational:
○ 15-minute interval data
○ 12 months of historical energy data
Retroficiency developed two different tools to conduct remote energy assessments which are highly
accurate. Retroficiency leases their tools to energy auditing businesses or to utilities which are able to
conduct audits in less time and with less demand of inputs from property owners.
Retroficiency’s Virtual Energy Assessment (VEA) requires only an address and 12 months of historic
energy consumption data to identify end use loads such as heating, cooling, and lighting. (VEA may
also use 15-minute interval data from clients if they have smart meters installed.) VEA can identify
building usage patterns and recognize moments of inefficiency such high use during periods of low
occupancy. From these analytics, VEA can make recommendations for upgrades or performance
measures to reduce energy use.
Retroficiency also offers an Automated Energy Audit (AEA) which uses limited building asset information
to make accurate energy profiles of a building. A building owner or property manager can enter in just a
few building characteristics and the AEA will compare that building to Retroficiency’s library of
thousands of actual audits to build an energy model of the building. As the property manager enters
more information overtime, the model becomes more accurate. Similar to the VEA, this is a remote
energy assessment tool and it also makes efficiency recommendations.
Retroficiency does not currently work in the residential sector though it has been building a database of
multi-family [bigger than houses or garden-style apartments] energy models. In an interview, CEO
Bennett Fisher indicated that Retroficiency’s VEA and AEA tools could be modified to work for
residential homes if demand existed in that market.
Case Study – Renew Boston Lean Program
Program management
Case Study – Seattle Benchmarking & Reporting Policy
Covers MF housing >5 units. http://www.seattle.gov/environment/benchmarking.htm
Appendix: Green Leasing
Overview
Green Leases are one policy tool that has been implemented to overcome the split incentive problem
discussed above. The term refers to a standard rental lease that includes a mechanism to finance
energy efficiency improvements in a home. Typically, a Green Lease includes language stating that if a
landlord makes improvements of a certain type, he may raise the rent immediately to begin to recoup
the cost. If structured properly, a Green Lease benefits both landlords—because repayment on capital
improvements is guaranteed—and tenants—whose increases in rent will be more than offset by
decreases in utility bills. As part of defining a scope for the Cambridge Multifamily Energy Program, we
have investigated the viability of utilizing Green Leases and related policy tools that target the split
incentive problem.
Previous Use
While Green Leases are not uncommon in the commercial sector,44 the practice has not yet gained a
foothold in the residential rental market. Late last decade, the Cambridge Energy Alliance began to
consider advocating for their use locally, but the initiative lost steam and has not been restarted.45
Applicability to Cambridge
Previous use of Green Leases in the residential housing market have generally been restricted to rent
controlled areas. In these situations, Green Leasing provides a convenient and mutually beneficial
mechanism that allows landlords to be compensated for making improvements to the home without
causing an increase in total living costs to the tenant. This benefit is not as clear in a rental market
without rent control, where there is no legal barrier to a landlord who wishes to raise rent upon expiration
of a lease.
Cambridge currently has an uncontrolled rental housing market. Rent control had previously been
established in the 1970s, but the market was deregulated by a statewide ballot initiative in 1994.
Predictably, opening the market has led to both increased average rents46 and greater investment in
rental housing47 in Cambridge.
Green Leases are structured to confront a formal barrier in the rental housing market, where landlords
may be unable to guarantee a revenue stream (in the form of increased rents) to recover the cost of
capital investments. However, because of the lack of rent control, the barriers to rent increases in
Cambridge are informal rather than formal. Landlords are hesitant to increase rents because of the
extralegal protests raised by tenants. The key barrier is the willingness of tenants to accept rent
increases on principle. Green Leases are not intended to confront this barrier, but instead present a
legal mechanism for certainty and transparency once parties have already agreed to the general
concept.
Recommendation
While Green Leases may be useful in providing a formalized mechanism of implementing efficiency
improvements in rental housing, we do not believe that they confront the most fundamental barriers to
efficiency in multifamily housing in Cambridge—that is, the agreement by all parties that efficiency
44
See: http://www.imt.org/finance-and-leasing/green-leasing, http://www.greenleaselibrary.com/bestpractices.html, http://www.ci.berkeley.ca.us/uploadedFiles/Planning_and_Development/Level_3__Energy_and_Sustainable_Development/BEES2011FINALfullWeb.pdf
45
Beth Williams thesis, Jason Jay thesis.
46
New York Times, http://www.nytimes.com/2003/06/15/nyregion/when-rent-control-just-vanishes-bothsides-of-debate-cite-boston-s-example.html?pagewanted=all&src=pm
47
Henry Pollakowski, MIT Center for Real Estate. 2003.
http://www.nmhc.org/files/ContentFiles/ThirdPartyGuide/cr_36.pdf.
improvements and resulting rent increases are mutually beneficial for both landlord and tenant. In light of
this, we believe that a focus on Green Leases would a misallocation of this effort’s limited resources and
political capital. Instead, we believe that our efforts should focus on the informal barriers preventing
energy efficiency in the multifamily housing market and must entail a comprehensive outreach and
educational campaign to the small landlord and tenant communities.
Resources, Contacts and Organizations
Multihousing News http://www.multihousingnews.com
National Multi Housing Council http://www.nmhc.org/
● NMHC is a national association representing the interests of the larger and most prominent
apartment firms in the U.S. NMHC's members are the principal officers of firms engaged in all
aspects of the apartment industry, including ownership, development, management, and
financing.
●
National Apartment Association http://www.naahq.org/Pages/welcome.aspx