If we want to reverse climate change, we have to reach people who don't think about it. Let's make climate-friendly housing decisions easy.
Nearly 36% of housing units in the US are rentals. In some cities, the proportion is as high as 70%.
Renters often pay utility bills, but don't make major efficiency investments in properties they do not own. Landlords lack an incentive to invest in efficiency because they do not pay utility bills. This "split incentive" problem makes it difficult for cities to achieve greenhouse gas reduction and affordable housing goals.
The split incentive problem is compounded by a lack of information. Renters lack information about utility bills, recycling availability, and access to active transportation when they search for housing. Landlords lack information about energy consumption at their properties because utility bills are usually in the tenant’s name.
The end result across the US and beyond is that landlords fail to perceive sustainability services and investments as a need because renters fail to articulate them as an important factor in housing decisions. Without better transparency, rentals will remain a barrier to equitable and significant progress on climate change.
To address this issue, 10 cities teamed together in 2013 to create an innovative and disruptive solution to share the full costs of housing. RentRocket.org, currently a prototype, does the following:
- Unlike other rental sites, it enables renters to see and compare utility costs, access to active transportation, and recycling options to make rental housing decisions that align with their values, fit their budgets, and improve the performance of rental housing.
- It enables landlords to promote energy saving and other improvements to their properties and achieve maximum return on those investments.
- Like other rental sites, it also includes info renters need to make housing decisions, including monthly rent, # of bedrooms, etc.
When fully developed, this tool will be a plug-in for existing rental websites, and will enable communities to target incentive, education and other programs that increase sustainability.
What actions do you propose?
This proposal would accomplish the following:
A. Recruit and work with partners to collaboratively build out the RentRocket.org website and associated dataset (including user-contributed snow-melt images to identify homes needing attic insulation like those in the attachments), and create a plan for ongoing data management.
In addition to the 10 cities originally involved in the development of RentRocket.org (including Ann Arbor MI, Bloomington IN, Burlington VT, Columbia MO, and Evanston IL), we have received inquiries from an additional 10 cities who are interested in joining the site, but have not been able to accommodate these requests until the site is more built out. Other logical partners include energy utilities and universities (more detail below), energy- and affordable-housing advocacy organizations (such as the Rocky Mountain Institute and the Center for Neighborhood Technology), for-profit information technology companies (e.g. EnerScore.com). and additional cities (including additional members of the Urban Sustainability Directors Network, which is the source of our original grant funds and the network that enabled the original partnership).
Together, these stakeholders could transform the way the rental housing market works.
B. Facilitate a multi-stakeholder discussion with energy utility companies to identify ways of sharing data (e.g. average monthly energy costs) without compromising privacy.
When we first embarked on the RentRocket.org project, we envisioned that partnerships would lead to greater data access, particularly with respect to energy usage and costs. However, we found that investor-owned energy utilities across the country resist greater data transparency, ostensibly due to privacy concerns. Municipally owned utilities - Columbia (MO) Water & Light, City of Burlington (VT) Electric, and Austin (TX) Energy, for example - have been more willing to experiment. Columbia, for example, agreed to make public consumption and cost data for every rental property they serve.
We believe that if we can show through the continued development of the tool that there is interest in better information and that the data can be used to support utilities' own efficiency and emissions-reduction goals, there will be room for additional discussion. To demonstrate this, we need to prove that the concept of RentRocket.org works.
Energy data is a key component of the value that RentRocket adds to the rental market, and is much more difficult to obtain than other data (access to active transportation and recycling services, for example). Energy data for the site currently comes from the following sources:
- Energy data is crowdsourced from tenants, and calculated as a per-bedroom cost (we originally used a per-square-foot figure but found that square footage wasn't meaningful to many renters). Currently, on the map on a given community's homepage on the RentRocket site, the properties in the highest quartile are shown in red, and the lowest quartile in green. Crowdsourced data accumulates for a given property as more users contribute data, and the average cost (and corresponding color) adjust accordingly over time. The amount of crowdsourced data is limited due to challenges getting renters to share this data on a regular basis.
- As of late 2015, we added an asset-based energy bill estimator called EnerScore (www.EnerScore.com) that calculates an estimated bill based on age of home, square footage, heat source, etc. This data is less susceptible to variations in behavior than crowdsourced data. EnerScore has developed calculations for 56m homes in the US, and as noted below we plan to shift the color-coding for the map on each community's homepage to EnerScore, which will result in color-coding for nearly every property in each community. Crowdsourced data will still be retained for comparison.
In communities like Columbia MO that have chosen to make their data accessible to all, greater detail can be incorporated immediately. For other communities, there are opportunities to incorporate the proxy data described above and work with utilities as the site develops to explore additional options for energy data sourcing, such as allowing customers to "opt in" to sharing their data on the website. RentRocket provides a framework for these discussions.
C. Where large amounts of off-campus student housing exist, recruit university partners to develop a joint city/university strategy to owning and addressing emissions and impacts associated with off-campus housing.
Although universities have been leaders in pushing both climate action and broader sustainability goals, it is not common practice for universities to own or address the emissions and impacts associated with their off-campus housing. Instead, these emissions are effectively outsourced to the communities where they are located.
In addition to the split incentive problem and lack of information associated with rental properties generally, student rentals suffer from the additional challenge of a highly transient population. At most, student renters typically stay in one place for 2-3 years, making it challenging to provide information, affect behavior, and generate interest in the costly energy consumption associated with a given property.
To address this, universities are uniquely positioned to serve as a conduit for information aimed at both student renters, staff, and their landlords. Inclusion on university-controlled off-campus housing websites could be offered to only those landlords who meet certain requirements. Messaging could be targeted at students via bursar bills, email blasts, text blasts, and other communications mechanisms controlled by the university. By strengthening community/university cooperation and norms around off-campus housing, an effective strategy would be developed that takes advantage of these outreach opportunities. In an effort to begin building these connections, the current partners in the RentRocket project published this blog post in partnership with the Association for the Advancement of Sustainability in Higher Education (AASHE), and have received inquiries from several major universities (Yale, U. of Minnesota, and the U. of Oregon).
A university partnership could keep the project open-sourced and develop a relationship with several schools to update and expand RentRocket for the market. For example, students could design tools to take photographs of energy bills for quick and easy entry into RentRocket. Similarly, student teams could create tools to take real time energy data from smart meters and provide access to the information to multiple student renters in the household and supply aggregate data to RentRocket.
D. Establish a coordinated and iterative effort to evaluate the impact of better information on both landlords and tenants.
Detailed information on energy use and energy costs, transportation costs, and other expenses associated with rental housing has never been widely available before in the rental market. Without better, more easily accessible data, the energy and emissions associated with both utility consumption and transportation will continue to be invisible in the rental housing market, making it exceedingly difficult to make climate-positive strides in this sector.
We hypothesize that access to better data will create smarter renters and increase incentives for landlords to invest in the sustainability and efficiency of the housing options they offer. We also know that cities can use the provided data to target properties most in need of improvements with incentive, financing, education programs, and other experiments like residential green leases (also in progress in Bloomington, IN) that allow tenants and landlords to split the cost of improvements and for tenants to pay their portion out of energy savings. However, since this project is an experiment, and it will require iterative steps to determine what works to actually change behavior.
Before this project began, we conducted surveys at two major universities (U. of Michigan and Indiana U.) to evaluate the factors influencing housing decisions by students. These surveys - which found that students are price-sensitive, but often unaware of important components of living costs like energy - will be the basis for follow-up evaluations to determine how better rental data is impacting the market.
As part of the project, we have also reached out to landlords and property managers - including one-on-one meetings and an open public forum - and have received a positive response. More-proactive landlords see the site as an opportunity to market the improvements they've made to their properties; others see it as free advertising.
In addition, we plan to conduct user testing, evaluate the amount and types of data shared, the types of data retrieved, visits to the website and other measures to determine what works and what needs to be changed.
Eventually, we envision that RentRocket.org will supply basic sustainability data to other major websites like Zillow, Apartments.com, and others. We want climate-friendly housing to be available to everyone - even those who may not identify climate impacts as a major consideration in their housing decisions. Before approaching these sites, however, we need to both develop the data set and prove that the concept works - others have attempted to gather and share energy data, but the barriers have been high and maintaining the data has been a challenge. When we are further along in finding solutions to these challenges, we will be in a better position to propose incorporation into existing websites.
By continuing our communication with our target populations, we will be able to continue improving the site and measuring its impacts over time.
Over the long-term, there is an opportunity to link this knowledge of energy data with survey data on behavior change. RentRocket has the potential to develop a large social science database to compare and contrast energy use across building types, efficiency investments, and renter behavior.
Who will take these actions?
Getting better data to both renters and landlords - and helping them take steps to reduce the huge climate impacts of inefficient rental housing - will need to be a collaborative, cross-sector effort including:
Government: Ten cities have worked together to build the website to this point, and 10 more have expressed interest in joining. We know from previous work that other cities are seeking ways to address the split incentive problem, meet carbon reduction goals in the rental sector, and communicate programs to increase rental sustainability.
Private and non-profit organizations: Interest in improving the transparency of rental housing costs, for environmental, economic, and social reasons, is widespread and growing. The Center for Neighborhood Technology created a "Housing+Transportation" tool that illuminates the costs associated with housing locations. EnerScore.com has developed an asset-based calculation of energy use based on widely available assessor data. Landlords, who will also benefit from better information, will help build the site too. RentRocket.org is an opportunity to integrate multiple existing tools, and make it easy for renters to compare options and demand better ones.
Universities: Between climate and sustainability goals, research capacity, expert faculty, and students interested in both the experience of creating the tool and benefiting from the information it contains, universities are well-positioned to support RentRocket.org in coordination with other partners. This is also an opportunity for universities to begin to "own" off campus housing GHG emissions and take credit for measurable reductions in energy use and when new efficiency investments are made.
Utilities: Many utilities have been reluctant to delve into data transparency because of privacy concerns. A multi-stakeholder effort could identify ways to increase access to data without compromising privacy. RentRocket.org provides the framework for operationalizing transparency.
Where will these actions be taken?
To date, the focus of this project has been the US, with partner cities scattered across the country from California to Vermont. As the website is built out, it can be expanded to cities across the globe.
To join RentRocket, communities will need to be able to identify where their rental properties are located. Typically this is accomplished with rental inspection databases or property assessor data, but other means of identifying properties (including through crowdsourcing or existing rental/landlord data or websites) are possible.
Soon, we hope to also establish a basic onboarding and subscription fee to enable basic maintenance and upgrades. The amount is still under negotiation, and we hope to keep costs from being a barrier to inclusion.
How much will emissions be reduced or sequestered vs. business as usual levels?
Because of the split incentive problem and consequent lack of investment in efficiency, rental properties are likely to have an abundance of high-impact, quick-payback opportunities to reduce energy use like lighting upgrades and attic sealing/insulation. Better information via RentRocket.org, especially when paired with green leases and other programs, will help communities encourage landlords to make these investments.
In the US, the residential sector accounts for around 1 billion metric tons of CO2 emissions per year (https://www.eia.gov/environment/emissions/carbon/). If we estimate that 1/3 of this is from rental properties (333 million metric tons), that RentRocket will affect 10% of rental properties within 10 years, and that it will achieve an average reduction in energy use of 10% per year, this would mean a reduction of 3.3 million metric tons of CO2 per year, or the equivalent of removing 700,000 cars from the road (epa.gov/energy/greenhouse-gas-equivalencies-calculator).
What are other key benefits?
This proposal has a number of other beneficial outcomes. For example, it would:
- Help lower-income families evaluate the full cost of all housing options, and increase housing affordability.
- Drive utilities to be more transparent with energy data.
- Drive tenant education on energy use.
- Increase community-university partnerships to reduce GHG emissions in off-campus housing.
- Link landlords with tenants around common goals of affordability, GHG reductions and comfort.
- Evaluate whether students in more efficient and comfortable housing will rent for longer periods of time and reduce landlord transaction costs.
- Develop an integrated data set of building energy use and behavior change.
What are the proposal’s costs?
To develop partnerships and pursue funding, we need to prove that the concept works, and that will require additional data. To develop data, we need to drive both landlords and tenants to the site. To do this, the site needs to be more functional.
If we are awarded funds through this competition, it will be used for the following:
- Enabling landlords to list properties. More progressive landlords have already contributed data to the site, and more will do so when we make the site available as free marketing.
- Sourcing homepage map color-coding from EnerScore rather than crowdsourced data so virtually all properties will be color-coded by relative energy use. One of the primary barriers in proving RentRocket's added value to the rental market has been the lack of detailed energy data. This step will immediately allow renters to compare properties by estimated energy cost.
- Upgrading the data-sharing interface (including photos) to encourage users to post their own data.
- Adding search/filtering functions to enable users to use the site to compare rental options. Renters will visit the site because it offers a complete list of local rentals and because it offers information not currently available from any other website.
Other costs for full implementation will include costs to cities to develop their own databases. This will involve uploading rental location data, working with landlords, and crowdsourcing. Estimated cost per city (including onboarding fees): $10k-$15k
Ongoing maintenance of the site, including support and marketing staff, web hosting, and other costs, could initially run $75k-$120k.
We expect negative side effects to be minimal, but will face several challenges. Integrating user-sourced, asset-based, and other data will require experimentation and tweaking. Landlords and utility companies could both have concerns with the transparency offered by the site. We hope to address these issues with site monitoring and partnership building as outlined above.
By building on existing partnerships, working with new partners, and recruiting additional financial and other resources, the system could be up and running in a year. Our existing grant will enable a number of upgrades to be implemented by the end of 2016. The additional funds received through this competition would accelerate site development as outlined above and enable us to drive users to the site and develop the dataset and the usability of the website.
Features will continue to be added as the user base grows. Within two years, we hope to add WalkScore, transportation overlays (e.g. bike infrastructure and transit maps), and links to the Housing + Transportation tool developed by the Center for Neighborhood Technology, among other features.
In subsequent years, an additional 25-50 communities could be onboarded each year, with an eventual reach that rivals similar sites like Zillow. Within 5-10 years, RentRocket data could be integrated into sites like Zillow, Apartments.com, and others as a way to build full cost of housing considerations into housing searches everywhere.
Snow-melt images: https://drive.google.com/folderview?id=0B7Wy1jmrRmx_N2N0Q3F1eVM0ME0&usp=sharing