Energy Ratings for Rental Units

Auditors Sarita Kinney and Steve Kerr of the Erie County Redevelopment Authority measure a property's air leakage rate as part of determining its rating.

MCEP Advisory Board member Joe Galbo III, landlord Fran Richmond, and auditor Sarita Kinney discuss making rental properties more energy efficient.

MCEP interns Matt Frank and Liz Long place a sign in front of a rated property after completing the tenant education session.

The solutions that lead to energy savings in owner-occupied housing have not worked in many rental units. Although landlords may have the means to carry out energy-efficient capital improvements to their rental property, they typically have little incentive to pay for energy-saving measures, especially in areas like Meadville where tenants usually pay the utility bills. While tenants are generally motivated to reduce their utility bills, they frequently don't have the means to install any energy-saving equipment, other than the occasional plastic-covered window or low-flow showerhead. MCEP decided that one way to entice landlords to invest in energy efficiency might be to make a property's energy use more visible, through the use of a home energy rating. If a landlord could advertise a property's home energy rating, then tenants could shop for a rental unit with the most reasonable total costs--rent plus utilities.

Ratings: A Possible Solution

In 1998, MCEP launched its pilot program with the modest goal of rating just ten rental properties. MCEP solicited prospective landlords through articles in the local newspaper, interviews on radio stations, and contacts on their community advisory board. MCEP selected the Erie County Redevelopment Authority (ECRA), a weatherization agency, to conduct audits using the REM/Rate rating software developed by the Architectural Energy Corporation. Foundation funding allowed MCEP to offer energy ratings for $50, or one-third the usual cost.

The ECRA auditing team visited interested landlords and assessed the energy-using features of each of their properties. MCEP then analyzed this information, using REM/Rate, to develop two products: (1) a star rating; and (2) a list of cost-effective efficiency improvements most appropriate for the property, complete with estimated
installation costs and payback times. These results were then mailed to each landlord and discussed in a follow-up visit.

By the summer of 1999, nine landlords had taken part in the pilot, resulting in the rating of 15 rental units. Tenants in the properties represented a cross section of the rental community in Meadville, including college students, senior citizens, low-income families, and professionals. In terms of energy usage, REM/Rate modeling predicted that the pilot homes would use an average of 76,000,000 btu per year, for a typical rating of three stars, and they had a large potential for cost-effective energy savings. If all the participating landlords invested in the conservation measures recommended by MCEP, for an average cost of $2,850, they would improve their dwellings' energy ratings by 33%. These measures would save an average of $600 per year, yielding an average payback time of five and one-half years. Some of the more common measures to be recommended included installing attic insulation and sidewall insulation, air sealing, cleaning and tuning the heating system, and installing a night set-back thermostat.

In evaluating the pilot, MCEP interviewed participating landlords to find out what motivated them to get involved. Landlords cited three main reasons for participating in the pilot:

• The ratings would give them recognition for energy efficiency improvements they had already done.
• For those who were considering specific improvements, such as replacing a furnace, the program could offer guidance in making the most cost-effective and energy-efficient choices.
• For those who knew generally that their properties needed improvement, the program could provide guidance about which energy improvements would be most worthwhile.

A number of landlords mentioned that they were surprised at how easy and straightforward some of the efficiency changes were. Several saw participation in the pilot as a chance to show their tenants, and the larger community, that they were responsible property owners.

What's Next for MCEP?

MCEP's pilot was a success in demonstrating that area landlords are interested in investing in energy efficiency and that a large potential exists for cost-effective improvement in participating rental properties. However, the pilot also highlighted several areas MCEP needs to address in expanding this pilot within the community. Chief among them is the need to give tenants in rated properties the tools to be more responsible for their energy usage. MCEP has addressed this need in its second round of ratings, which was begun last November, by developing a tenant partnership agreement. Under this partnership, tenants agree to participate in an education session and choose three energy-saving activities to implement, in exchange for which they receive a compact fluorescent lamp.

Another step to making energy efficiency in rental properties a reality is helping landlords take the leap from learning what needs to be done to actually installing conservation measures. To help landlords find contractors who can properly weatherize a building, MCEP plans to start a contractor-training and -certification program. MCEP's ratings pilot also highlighted the need for a funding mechanism to help participating landlords afford conservation improvements, as well as to lure additional landlords into the program. Although it is too early to know if Meadville's rental sector will wholeheartedly adopt the ratings approach, MCEP believes that home energy ratings can be an important step in helping landlords and tenants realize that energy efficiency can be in their own, as well as the community's, interest.

--Kathleen Greely

Kathleen Greely is codirector of the Meadville Community Energy Project.

For more information: Visit the Meadville Community Energy Project Web site at http://welcome.to/mcep. Contact Kathleen Greely at kgreely@alleg.edu.

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