City officials have hit an unexpected hurdle in their effort to build environmentally friendly houses.
Habitat for Humanity has refused to use a city grant to fund the gap between the cost of the “green” house and the amount of money that the low-income buyer can actually afford.
The city had offered Habitat a $75,000 grant for one house, but then asked for a green house. When Habitat Executive Director Jeff Clark said he couldn’t afford it, city officials suggested he spend more than he would take in when the house is sold. They noted that he wouldn’t be losing any money — the city’s grant would cover the extra costs.
“I don’t care. It’s still taxpayer money. I’m not doing it,” Clark said.
Habitat houses are already compact and heavily insulated. Energy-efficient appliances are also installed. But the city envisions solar panels, bamboo flooring and other features that can double the cost of the house. Better Neighborhoods Inc. is using city grants to build that type of house for $177,000, roughly a third more than it normally spends on rehabs and $100,000 more than the expected selling price. But Habitat doesn’t want to take that route.
“I don’t have any objection to the green thing,” Clark said. “It’s just a basic philosophical, business-model conflict. Gap financing — we have a hard time with that philosophically.”
Habitat uses volunteer labor to build small houses for roughly $75,000 apiece. Low-income residents pay off the mortgage through a 30-year, zero-interest loan held by Habitat. The agency uses the payments to build more houses.
“The whole Habitat model is built on sustainability,” Clark said. “Gap financing is a real issue.”
He and city Homeownership Coordinator Ann Petersen are meeting to find a design that meets Habitat’s budget but fulfills at least some of the city’s environmental goals. City officials say they plan to push for green features, arguing that Habitat saves so much money through volunteer labor that it can afford an environmentally friendly project.
Not all the proposals are expensive. Petersen said Habitat could recycle materials on its construction site, dramatically reducing waste by collecting paper and cardboard.
As for solar panels, one of the most costly proposals in Petersen’s ideal design, she said she’s willing to compromise.
“If there’s no money for that, we can’t do it,” she said, but added, “When they got the grant, they said they would double the grant with their volunteer labor. So they’re really building a $150,000 house.”
The issue of gap financing has been raised repeatedly in Schenectady, particularly when a nonprofit spent $230,000 per house to renovate a 20-house section of the Vale neighborhood in 2004 and 2005. Mayor Brian U. Stratton acknowledged that the amount of money spent on low-income housing is sometimes staggering, even before adding environmental features.
“It’s no secret it does require substantial up-front support,” Stratton said. “I’m certainly in support. If you’re going to have an environmental agenda, you’re going to have to be willing to make the investment.”
The expense is so great that the city could build roughly one-third more houses if it did not require green features.
“It’s a trade-off. I think it’s worth it,” Stratton said.
The federal government appears to think so as well. President George W. Bush signed a bill in December that will create a new grant program for energy efficiency and conservation projects. Among the allowed activities is green housing.
City officials estimate that Schenectady will get $347,000 annually for five years under the new program.
“That will certainly help,” Stratton said. “I’m not saying require it for all houses, but at least a percentage of the homes will meet environmental standards.”