Tenant Displacement from Building Electrification Program: What are Landlords Willing to Do?

• In Event: Lightning Session: Methods and Tools of Analysis & Housing, Community Development, and Urban Policy

Abstract

The need for equitable building electrification programs in the apartment sector stems from the three intersecting crises of energy affordability, climate change, and housing affordability. While electrification measures offer benefits to both landlords and tenants, a split incentive typically discourages either from actively pursuing them. Subsidy or incentive programs have the potential to correct this market failure but come with displacement risks for tenants. Ceteris paribus, there is a high probability that lower income residents would be displaced from retrofitted  housing before ever realizing the promised benefits of lower utility bills.

 

The most commonly utilized program tool is an affordability covenant which landlords sign to limit rent increases to area inflation rates for a period of up to 10 years. However, empirical evidence is lacking on landlords’ interest in such programs.  We present the results of two waves of a survey of landlords’ willingness-to-accept (WTA) rent covenants, and other restrictions, in return for electrification upgrades. In both studies, a double dichotomous choice experiment methodology was employed, and participants were presented a hypothetical covenant offer of variable duration between 1 and 19 years.

 

The second study (Northern California) also included a question for landlords to rank order different displacement tools. In addition to rent covenants, landlords evaluated zero interest loans, long term lease options for tenants, and property tax relief. These findings drive important implications for program design and future research. To the authors knowledge, it provides the first empirical estimates of landlord willingness-to-accept rent covenants and other restrictions in return for public money for electrification retrofits.

 

Author

• Hal T. Nelson, Portland State University
  Presenting Author