Clean Energy Revolving Loan Fund helps A2 landlords improve rental unit efficiency
A few years back, Ford School alumnus Cassie Brown (MPP ’14) and an interdisciplinary team of Dow Sustainability Fellows worked with the City of Ann Arbor to establish a $40,000 Clean Energy Revolving Loan Fund for landlords and renters seeking to improve the energy efficiency of their rental properties.
Ann Arbor Sustainability Coordinator Matthew Naud (MPP '90), a Ford School alumnus who helped Brown’s team get the project off the ground, says greening Ann Arbor's rental housing is critically important for the city, which is working to cut greenhouse gas emissions 25 percent by 2025.
Why are rental units so important to this broader sustainability goal? Because rental properties are ubiquitous in Ann Arbor; in fact, a full half of the city’s housing stock is rental. And according to the U.S. Census Bureau, two-thirds of these rental properties were constructed before 1979, which means many are grandfathered in under older, and significantly less efficient, city codes.
Unfortunately, says Naud, there are few incentives for improving the energy efficiency of Ann Arbor’s rental units. Many of Ann Arbor’s renters are young, and don’t feel comfortable negotiating with landlords to winterize or upgrade poorly insulated properties. And the landlords themselves have few economic incentives to make energy efficiency improvements since they're not the ones who pay the utility bills.
The Clean Energy Revolving Loan Fund is designed to address these problems, he says.
Bonnie Bona, who manages the fund for Ann Arbor through the non-profit Clean Energy Coalition, reports that the city has received 15 applications to date, and has awarded half of the value of the Clean Energy Revolving Loan Fund to finance efficiency upgrades on three rental units.
Sonia Schmerl, an Ann Arbor landlord who borrowed from the revolving fund to insulate two Victorian-era homes, says the work decreased utility costs and made the properties quieter and more comfortable. Schmerl, who doesn’t like waste—even in the form of energy other people are paying for—says she did the work to be green, but also to improve the quality of her property.
“If I lower the utility rates it makes the unit more marketable to tenants,” she says. “I like it when I get good tenants and they stay for a few years. The likelihood of that is increased by the things I do to make the home more comfortable.”
Bona believes that energy efficient properties like these are attractive to Ann Arbor’s young renters, and that they significantly reduce the number of tenant complaints. One of the property owners who utilized the fund reported receiving calls every winter about frozen kitchen pipes due to poor insulation. The upgrades he made will eliminate that problem, says Bona.
The next steps? Marketing the loan fund, growing its value, and finding ways to make it more attractive to the city's large rental management firms, which oversee a significant portion of Ann Arbor's rental market.