Minnesota Housing Partnership Releases Report on Energy Efficiency Proposal, Highlights Racial Equity Impact

Minnesota Housing Partnership (MHP), an NLIHC state partner, released a new report, “A Better Building Code: Recommendations for Increasing Housing Resilience and Racial Equity for Minnesota Renters,” on January 18. The report analyzes the potential impact of the Better Building Code (HF831/SF2077) – a bill introduced in the Minnesota legislature in 2021 – on multifamily buildings in Minnesota, especially those that predominantly serve marginalized communities. Governmental and nonprofit partners – including the City of Minneapolis, City of St. Paul, Community Stabilization Project, Fresh Energy, New American Development Center (NADC), and National Resources Defense Council (NRDC) – contributed to the report.

The Better Building Code legislation would require new commercial buildings, including multifamily buildings four stories or greater, to strengthen their energy efficiency standards until reaching net-zero emissions by 2036. The report finds that the legislation would decrease households’ energy burdens – defined as the percent of median yearly income that households pay for electricity and gas bills – and result in healthier, more livable homes. Extremely low-income Minnesotans spend an average of 13% of their income on electricity and gas bills, as compared to an average energy burden of 2% among all Minnesotans. A household that spends more than 6% on energy bills is considered to have a high energy burden, and a household that spends more than 10% on energy bills faces a severe energy burden. The Better Building Code would ease these burdens: households in two-bedroom apartments would save an estimated $319 each year if the legislation were enacted.

Housing and energy cost burdens fall disproportionately on Black and Indigenous households and households of color. A race equity impact assessment (REIA) of the Better Building Code conducted in 2020 found that the legislation would have an outsize impact on communities of color because Black and brown Minnesotans are more likely to live in areas zoned for multifamily properties, are more likely to be renters, and face more severe cost burdens. Achieving net-zero emissions in new buildings will also benefit communities of color because they disproportionately experience the health, environmental, and economic consequences of climate change. The impact of the Better Building Code on communities of color may be limited, however, because the code would only apply to new construction and major rehabilitation. Further solutions will be needed to address racial inequities in housing quality and energy cost burdens in existing buildings.

To inform the report’s analysis and recommendations, MHP conducted focus groups with residents and interviews with multifamily housing developers, owners, and managers. People of color constituted more than two-thirds of focus group participants. Elizabeth Glidden, Deputy Executive Director for MHP, said of the focus groups that “[i]ncorporating renter perspectives, as well as those from property owners and developers, led to some ‘a-ha’ moments, such as the importance of targeted strategies to preserve affordable rents in older buildings. Affordable properties, as well as market rate, deserve energy efficient investments to ensure quality of life for all residents.”

Residents’ feedback emphasized the connections between housing, health, economic security, and environmental factors. Focus group participants highlighted the difficult tradeoffs they are forced to confront when utility bills go up, their consciousness of energy efficiency and cost-savings in their daily lives, and the consequences of health hazards in their homes. Many residents pointed to the importance of consistent standards to enable equitable access to energy-efficient homes in all communities, regardless of race and income. Because renters have limited authority to make maintenance decisions, they lack control over the conditions that determine the environmental quality and energy efficiency of their homes. Mandatory code improvements will require landlords to make improvements and therefore benefit renters, but only if accompanied by strong legal enforcement in all communities.

Drawing on focus group participants and interviewees’ feedback, the report concludes with recommendations for implementation of the Better Building Code or other advanced state building codes. The report recommends that Minnesota Housing cooperate with the U.S. Department of Commerce to develop a preservation program to prevent older buildings from raising rents to meet new expenses, which could displace thousands of residents. State and local governments should invest in upgrading affordable homes through mechanisms such as state and local grant and loan programs, property tax relief, project-based rental assistance, utility provider incentives, and other existing tools. Government agencies responsible for assessing the policy impact of the Better Building Code should quantify co-benefits of the proposal for health, weather resiliency, reductions to energy burden, and cost savings over the life cycle of buildings. Implementation of the Better Building Code should occur through an accelerated cohort or phased implementation to collect feedback and test new systems before applying the policy to all sectors. To advance racial equity, investments in energy efficiency should intentionally prioritize and stimulate business opportunities for people of color. Developers, architects, contractors, and residents should develop an ecosystem approach to coordinate implementation of code updates and develop accessible resources that enable residents to participate in building improvements.

In addition to these recommendations for Better Building Code implementation, the report concludes with recommendations for a more equitable energy system. This vision includes treating energy efficiency as a basic need and approaching it through a rights framework; empowering residents and directly impacted communities to make decisions within the energy system; developing an intra-agency strategy to ensure that all housing in Minnesota has a common standard of energy efficiency (applying to existing units as well as new construction); and investing public resources in training, compliance, and equitable enforcement of standards. Implementation could also include ensuring a renter’s right to identify changes needed to improve the livability of their home without putting themselves at risk of displacement or retaliation.

For more information on the report, visit MHP’s website.