Preprint Article Version 1 This version is not peer-reviewed

Green Affordable Housing: Implications of Costs and Benefits for Municipal Incentives

Version 1 : Received: 13 October 2019 / Approved: 15 October 2019 / Online: 15 October 2019 (04:00:55 CEST)

A peer-reviewed article of this Preprint also exists.

Jeddi Yeganeh, A.; McCoy, A.P.; Hankey, S. Green Affordable Housing: Cost-Benefit Analysis for Zoning Incentives. Sustainability 2019, 11, 6269. Jeddi Yeganeh, A.; McCoy, A.P.; Hankey, S. Green Affordable Housing: Cost-Benefit Analysis for Zoning Incentives. Sustainability 2019, 11, 6269.

Journal reference: Sustainability 2019, 11, 6269
DOI: 10.3390/su11226269

Abstract

In the year 2017, about 89 percent of the total energy consumed in the US was produced using non-renewable energy sources, and about 43 percent of tenant households were cost-burdened. Local governments are in a unique position to facilitate green affordable housing that could reduce cost burdens, environmental degradation, and environmental injustice. Nonetheless, limited studies have made progress on costs and benefits of green affordable housing to guide decision-making, particularly in small communities. This study investigates density bonus options for green affordable housing by analyzing construction costs, sale prices, and spillover effects for green certifications and affordable housing units. The authors employ construction costs and sale data from 422 Low-Income Housing Tax Credit (LIHTC) projects and 11,418 Multiple Listing Service (MLS) transactions in Virginia. Using hedonic regression analyses controlling for mediating factors, we find that the new construction of market-rate green certified houses is associated with small upfront costs but large and statistically significant price premiums. The construction of market-rate green certified houses has large and statistically significant spillover effects on existing non-certified houses. Existing non-certified affordable housing units show small and statistically insignificant negative price impacts on transactions of surrounding properties. The magnitude of social benefits associated with green building justifies the local provision of voluntary programs for green affordable housing where housing is expensive relative to its basic costs of production to promote sustainable development.

Subject Areas

density incentive; earthcraft; energystar; green premium; hedonic pricing; LIHTC; rehabilitation

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