True cost of housing

September 2, 2014

Knowing Your Cost of Housing and Transportation Makes You a Better Consumer

TOD image

Written by: Harriet Tregoning

For many families, buying a home is the single most important financial decision of their lives. But just as important as choosing the right type of home is the decision of where that home should be.  The housing market provides a wide variety of options at different price points for potential homebuyers and renters—from a condominium on a busy downtown street, to a suburban home with a two-car garage, to a fixer-upper in a revitalizing neighborhood.

Affordability is always a major consideration when deciding on a place to live, but a common mistake that potential homebuyers and renters make is focusing solely on their ability to pay the monthly mortgage or rent. Transportation costs, along with home maintenance, utilities, and other expenses claim a surprising proportion of families’ incomes; and when not factored in, these types of expenses can cause financial strain on a family’s budget, affecting their ability to afford the home.

When we consider that on average American households spend more than half of their annual income on housing and transportation costs, we can see that it is no coincidence that the neighborhoods most devastated in the recent housing crisis were those that were distant and disconnected from other communities, with virtually no transportation options other than driving.

To give potential homebuyers, renters, and investors a more complete picture regarding the affordability of a neighborhood or block, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Transportation (DOT) unveiled the Location Affordability Portal (LAP) in November of 2013 and recently updated it to be even more robust and effective.

The LAP features two tools, “My Transportation Cost Calculator” and the “Location Affordability Index,” which, together, can help consumers better calculate their housing and transportation costs. Users of the transportation cost calculator enter information about their daily commute to work, their vehicles, and the location of the current or potential home, which the tool then uses to generate customized estimates of their cost of living in a particular neighborhood. The Location Affordability Index provides a visual comparison of levels of affordability for eight different household profiles across an entire city or region.  The primary purpose of the LAP is to help individuals and families make more informed decisions and ultimately save money—resulting in stronger and more economically resilient neighborhoods.

I’m excited to announce that the LAP has undergone significant data updates and enhancements that include sophisticated statistical modeling techniques that will make the tools even more effective.  Version 2 of the LAP improves on the existing tools in several important ways:

  •  Updates housing data to 2012
  • Expands coverage to virtually the entire country (not including Puerto Rico)
  • Incorporates data on a neighborhood’s housing stock, which is the biggest constraint on what housing is available to buy or rent and therefore an important determinant of housing costs
  • Incorporates measures of local jobs, which are a major aspect of walkability
  • Employs a Simultaneous Equation Model (SEM) that better reflects real-life trade-offs between housing and transportation costs.

As the housing market continues to recover and individuals and families look for neighborhoods of opportunity, the relevance of location affordability–the combined cost of housing and transportation—is clearer than ever. We at HUD—along with our partners at DOT—will continue to update the tool with the latest information and data available so that individuals, families, municipalities, and investors can make more educated decisions about the place they choose to call home.

Harriet Tregoning is the Director of the Office of Economic Resilience.

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Solar panels were part of the plan at a new food bank in Nevada until funds ran low and bureaucracy won.

Burning Man 2014

Solar panels were part of the plan at a new food bank in Nevada until funds ran low and bureaucracy won.
Appears in Preserving the Environment by Winston Ross on June 19, 2014

How Burning Man Spawned a Solar ‘Gold Rush’

At the end of Nevada’s annual arts festival in 2007, a small group of volunteers donated a solar power array to a local school. Since then, they’ve built more than 70 installations and changed state law in the process.

When the nonprofit Food Bank of Northern Nevada scraped together enough donations to expand to a brand-new 61,000-square-foot facility in McCarran, Nev., in 2008, organizers hoped to power the place with the state’s omnipotent rays.

It was a pipe dream, though. The Food Bank, a distribution and outreach center, didn’t have enough funding left over to pay for a solar project, even one that would eventually pay for itself, as such installations can over time. And even if they could get a rebate from the state utility to help pay for the project, Nevada law at the time capped those incentives to solar installations smaller than 30 kilowatts — not nearly enough to make sense for a facility as large as the food bank. That’s when Black Rock Solar stepped in. The Reno-based nonprofit, spawned at the Burning Man arts festival in 2007, provides low-cost energy to underserved communities. Black Rock put relentless pressure on the state’s Public Utility Commission to remove the cap, according to Food Bank’s president and CEO, Cherie Jamason. Their efforts paid off, and when the agency flipped on the lights a few months later, the juice came from a 150-kilowatt solar array on the roof, installed by the very group that had started out as a bunch of “burners.”

Black Rock Solar was a tiny nonprofit back then, cobbled together by a dozen volunteers after the 2007 “burn,” the weeklong event held in Nevada’s Black Rock Desert where thousands of artists, musicians and creative types gather each August. That year, a solar installation was donated to Burning Man, and the leave-no-trace ethic behind the gathering meant that the volunteers had to find a home for the array once the festival ended. They did — at a local school in Gerlach, Nev., on the edge of the desert 10 miles from the festival. In the process, the volunteers also discovered a substantial portion of utility company rebates for which almost no one was applying. The group, which became Black Rock Solar, sought to combine their new knowledge of the system with the desire to help organizations in need.

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Tom Price, Black Rock’s former executive director and one of its founders, says the nonprofit was founded as a sort of “experiment…to see whether we can continue to express these values outside of the playa [the dried-up lake bed where Burning Man is held] in a different context. Inherent in it is this idea that we’re all in this together, and we have to take care of each other.”

That small cadre of volunteers — with backgrounds in solar energy and construction —discovered that they could position themselves as the ideal middlemen between NV Energy, the state-run utility handing out incentives for solar installations, and Nevada groups that didn’t know money existed or how to take advantage of it.

Now, seven years later, Black Rock Solar has 28 employees and has built more than 80 projects worth roughly $20 million, pushing more than 4.7 megawatts onto the grid, enough to power 1,365 homes. About a third of the projects have gone to Indian tribes, says Patrick McCully, Price’s successor and Black Rock’s executive director. The rest went to schools, community colleges, churches, food banks, homeless shelters and even some government buildings such as wastewater treatment plants. Black Rock Solar — funded entirely by utility rebates, grants and donations — is now the nation’s second-largest nonprofit installer of solar arrays.

“We went from no one applying for the utility rebates to them being applied for 10 times more than what was available.”

TOM PRICE, ONE OF BLACK ROCK SOLAR’S FOUNDERS
But back in 2007, even as renewable energy was getting buzz around the globe, even as state governments across America had begun to adopt standards that required energy portfolios include renewables, and even as obvious as the concept of solar might be in Nevada, one of the sunniest states in the country, it simply wasn’t taking off there.

“Renewable energy had been seen as complicated and expensive,” Price says. “It was for the rich or well connected.”

In part, that’s because most institutions didn’t have the money to pay for a solar project.

“Northwest Nevada is very poor,” said David Shearer, another founding member of Black Rock Solar and vice president of its board. “NGOs, schools, hospitals, Indian reservations and food banks just didn’t have the money to invest up front.”

Price and the other founders believed if the group started putting solar panels on highly visible institutions, like tribes and food banks, those projects would inspire cognitive dissonance among companies and citizens across the state.

“[We wanted people to ask] why is it that the Boys and Girls Club, the home for battered women, this Indian rural health clinic can have solar, but I can’t put it in my home or business?” Price says. “We wanted to change the narrative of the conversation around renewable energy. That’s going to echo throughout the community in ways you can’t imagine.”

At the time, Price says, solar-power distribution was dominated “by a few very small interests. Organized labor groups were charging a lot for solar and getting away with it,” because there wasn’t much competition, he says. “Few jobs were getting done, and they were making a lot of money.”

But Black Rock Solar had a few advantages. The cost of solar panels had begun to drop, and the group had a passel of eager volunteers. With a $50,000 loan from Burning Man’s limited liability company, which organizes the festival, to pay Price and two other staffers’ salaries, Black Rock Solar launched with most of its “employees” paid only in housing, groceries, beer and cigarettes.

Most of the initial volunteers were completely untrained, but Black Rock Solar did have a few key players. One of its early backers and board chairman, Matt Cheney, ran a $50-million solar development company, and he could get panels at competitive prices. Cheney happily brought both clout and expertise to the project, and he convinced suppliers to front the fledgling nonprofit $300,000 worth of panels for the first job, at the Pershing General Hospital in rural Lovelock, Nev. Another early contributor, Joe Pizur, a solar consultant and designer, put up his contracting license so the nonprofit would be qualified to sign contracts, build projects and be connected to the energy grid.

“Everyone else, including me, was a complete beginner” in the solar business, Price says — which is not to say they didn’t have talent. A graphic designer volunteered to sketch a logo. A lawyer helped draft the necessary paperwork. “We had not one, but five different friends who worked at NV Energy. Everywhere we turned, there was someone in our community saying ‘Let me help.’ It became not just easy; it became inevitable. The moment we had the idea and articulated it, it became inevitable.”

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Black Rock Solar soon became an unstoppable force in the statewide solar movement. In 2007, distributed renewable energy like solar couldn’t be owned by a third party, according to state law. Because nonprofits, schools and cities didn’t have the same freedom as businesses or residents to apply for the tax credits upon which most solar incentives are based, the law stifled development. As it turned out, though, there were “burners” in the Nevada Legislature, including Assemblyman David Bobzien. After one brokered brunch meeting with Bobzien Assemblywoman Sheila Leslie and Black Rock representatives, Leslie agreed to carry a bill to the house floor to get the third-party law reversed. The result? An immediate increase in solar projects and jobs in the economically struggling state.

Clamoring for solar power has indeed become contagious, just as Price and others had hoped. “We went from no one applying for the utility rebates to them being applied for 10 times more than what was available,” Price says. “It really changed the market in Nevada, dramatically.”

Many of Black Rock Solar’s installations are on State Highway 447, which the state of Nevada declared in 2010 as “America’s Solar Highway,” lauding the route’s distinction of having more watts of solar power per mile — 17 — than anywhere in the United States.

“They’re [Black Rock] timely, they’re neat, they clean up after themselves well,” says Jim Peckham, executive director of Friends in Service Helping, a nonprofit in Carson City, Nev., that runs thrift stores, a counseling center, a dining room and food pantry, shelter facilities and a medical clinic. The agency worked with Black Rock on two different solar installations, each worth more than $100,000 but costing the company a total of $16,000, thanks to utility rebates and private donations. Peckham expects the panels to cut his power bill in half, saving $5,000 a year.

The installation at the Food Bank of Northern Nevada cost $735,388, according to Cherie Jamason. After the rebates, the nonprofit paid a mere $45,388. Jamason estimates that the resulting cost savings allowed the food bank to provide 1.5 additional million meals to its clients, who numbered 200,000 in 2012.

“That’s a pretty amazing return on investment,” she says.

http://florida.solarhabitats.org