Raleigh Seniors Housing Development Built to Energy Efficiency Standards
By Caitlin Jones & A. J. Johnson
7 min read
A NEW CONSTRUCTION seniors rental property in Raleigh, NC illustrates the process and benefits of building to energy efficiency standards.
Carousel Place, developed by an affiliate of the Raleigh Housing Authority (RHA), is a new two-story building with 55 apartments restricted to low-income persons 55 or older. The 100% low-income housing tax credit (LIHTC) property, completed in August 2007 and fully leased by November, is an ENERGY STAR certified development.
Housing credits for the project were allocated by the North Carolina Housing Finance Agency, which has made ENERGY STAR a key feature of its LIHTC program.
ENERGY STAR (www.energystar.gov) is a federally sponsored program, overseen by the U.S. Environmental Protection Agency (EPA), which establishes guidelines and standards for the design and construction of energy-efficient homes — single-family and multifamily — as well as minimum energy-efficiency standards that appliances and certain other products must meet to qualify for the ENERGY STAR label. Housing must be tested and pass the standards in order to be certified as ENERGY STAR qualified.
ENERGY STAR differs from other national “green” building ratings systems and standards, such as Enterprise Community Partners’ Green Communities Initiative, the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED), and the National Association of Home Builders’ green building guidelines.
Public Housing Revitalization
Carousel Place is but one part of a larger project by RHA that redeveloped its distressed 1938-era Chavis Heights public housing complex and replaced it with new housing units, using a HOPE VI grant from the U.S. Department of Housing and Urban Development. In addition to Carousel Place, the redevelopment involved the construction of an additional 113 housing units of different types, a community building, park, and other amenities.
Developed by Capital Area Developments, Inc. (CAD), RHA’s nonprofit affiliate, Carousel Place has 40 one-bedroom and 15 twobedroom apartments ranging in size from 617 to 941 square feet. Fourteen units are targeted to households earning 30% or less of area median income (AMI); 11 units, 40% or less of AMI; and 30 units, 60% or less of AMI. The current median annual income for a four-person household in the Raleigh-Cary, NC metro area is $74,900.
RHA Executive Director Steve Beam told the Tax Credit Advisor in an interview that the authority built the entire HOPE VI development, not just Carousel Place, to be ENERGY STAR certified. He explained RHA decided to do so after seeing how much the authority saved in utility costs after making energy efficiency improvements to some of its older public housing properties — utility costs were slashed one-third at a 300-unitt, 1970s-style high-rise. In addition, Beam said RHA also reaped significant savings from going back and making improvements to its first housing credit project, the 90-unit Parkview Manor, which opened in 2002. Just replacing the traditional incandescent light bulbs with more efficient compact fluorescent lights (CFLs) ““EPA says they cut energy use by 75% and last 10 times long — is cutting RHA’s utility bill for Parkview Manor by more than $13,000 a year, Beam said.
Cost, Funding Sources
The all-electric Carousel Place had a total development cost of $7,389,242, including hard costs of $5,393,311, soft costs of $1,431,431, and $564,500 for the purchase of the cleared site from RHA.
Of the total funding sources of $7,389,242, $5,763,303 came from equity from the Community Affordable Housing Equity Corporation (CAHEC), a Raleighbased regional nonprofit syndicator that purchased the housing credits.
Other funding sources included: state housing tax credit funding of $691,943, as a loan (30 years, 0% interest) from the North Carolina Housing Housing Finance Agency (NCHFA); a $700,000 loan (18 years, 2%) from RHA; a deferred developer’s fee of $204,628; and $29,368 in equity from CAD.
CAD received a housing credit allocation for the project in 2005, of $588,151 per year, from NCHFA.
Chuck Newcomer, of CAHEC, told TCA his organization was attracted to investing in Carousel Place primarily because of its favorable experience from investing in the previous HOPE VI seniors housing credit project by CAD. “We were way more than satisfied with the way that turned out,” said Newcomer. “Our initial interest was to be able to partner with them again on another successful project.”
Newcomer said CAHEC supports the incorporation of energyefficiency features in housing credit projects. He explained this has become “more critical” for the LIHTC industry as rising utility costs and stagnant maximum LIHTC rents in many areas squeeze the operating budgets of housing credit properties.
Energy Features, Partners
ENERGY STAR features incorporated in Carousel Place included: on-demand tankless electric water heaters in the apartments and in common area bathrooms; ENERGY STAR-qualified heat pumps, refrigerators, and dishwashers in the units; Low-E doubleinsulated glass windows; and insulation of R-13 thickness in the walls and R-3 in the attic. In addition, quality control was performed during construction to assure such things as framing being airtight and proper installation of insulation.
RHA worked with several partners to ensure that the design and construction of Carousel Place would meet ENERGY STAR guidelines. These partners included: JDavis Architects; Advanced Energy of North Carolina, a nonprofit consultant; Southern Energy Management, a consulting firm; Progress Energy, the local electric utility; and Bill Warren Energy Services.
RHA consulted with Advanced Energy on the energy-efficiency features to incorporate in Carousel Place and the rest of the HOPE VI development. Beam said Advanced Energy also trained contractors and subcontractors on how to construct the entire development to ENERGY STAR guidelines, monitored construction periodically to make sure it was being done properly, and trained RHA staff on how to maintain the properties going forward.
Beam said the additional cost to build the entire development including Carousel Place to ENERGY STAR standards was a little over $2,000 per unit, excluding the cost for Advanced Energy. Progress Energy funded most of the cost for the consultant, along with certain other expenses. The extra cost of building Carousel Place to ENERGY STAR standards is expected to be recouped in three to four years from utility savings.
Progress Energy provides a 5% discount on its total electric bill for ENERGY STAR-qualified units, a discount that has been passed on to Carousel Place residents, who pay their own utility bills. This discount, together with lower electric bills for residents due to lower energy consumption, is expected to produce annual savings of between $350 and $550 per unit.
Rent Levels
Beam said the incorporation of ENERGY STAR features enabled RHA to set its initial rents for Carousel Place at a lower level than it would have if built conventionally, and should enable it to minimize future rent increases for many years. He said RHA came up with a LIHTC utility allowance for Carousel Place units, different from that used for its older public housing projects, which was patterned after the utility allowance used for the more energy-efficient, new Parkview Manor project.
According to Beam, gross monthly tax credit rents for onebedroom apartments are $402 for units for households at 30% or less of AMI, $537 for households at 40% or less of AMI, and $664 for households at 60% or less of AMI. The adjusted month rents for the same households, after subtracting the utility allowance from gross rent, are, respectively, $332, $467, and $594. For two-bedroom units, gross monthly rents for the same three tenant income brackets are $483, $644, and $808, while the adjusted monthly rents are $399, $560, and $724.
