Altoona Towers proves that rental housing has great potential to reduce global warming. The typical rental housing situation has a landlord building buildings, purchasing equipment and appliances, and the tenants paying most utility bills. Since the landlord is not paying the utilities, there is no incentive to make investments to lower tenant utility bills. This is known as the “split-incentive problem,” and results in most of the 745,000 Iowans living in rental housing with utilities bills that are higher than necessary.

Altoona Towers has proven that energy-efficient investments and building practices can dramatically reduce energy consumption while eliminating tenant utility expense. PPM, Inc. and the Iowa Utility Board used the Altoona Towers development as a pilot project to demonstrate a solution to the split-incentive problem by creating an energy-efficient building and including utilities in the rent. The development includes two, four-story buildings with 120 rental units of various sizes and multiple common areas.

In an attempt to answer the question, “What capital investments could a landlord reasonably make to lower utility bills to make it viable for landlords to include utilities while reducing consumption, even if tenants don’t have an incentive to conserve?” the following building decisions were implemented in several areas.

• Site: Double required landscape installed, location is convenient to shopping and employment, four blocks to bicycle, walking trails, stormwater detention designed to resolve existing neighborhood deficiency
• Building: Maintenance-free brick/steel exterior with metal-shingled roof, 2X6 foam-filled walls, high-efficiency windows and doors, photovoltaic solar collectors, recirculating pumps provide hot water faster with less waste, variable-speed drive pumps
• HVAC: Air conditioning rated SEER 21 1⁄2 (code requires SEER 13), HSPF heating index is 12 (Energy Star requires 8.2), 96% efficient hydronic heat (80% required)
• Lighting: All LED lighting, lighting in common areas dim to 50% depending on activity
• Interior features: Energy Star appliances, variable-speed bathroom fans, in-unit European-style laundry equipment (Estimated annual cost of washer $11, ventless dryers avoid need to introduce unconditioned outside air), convection ovens, flush toilets use 0.8 gal, quilted window coverings on patio doors and windows triple the R-value of conventional coverings and stop most air infiltration

The actual first year bills for the Towers electric and natural gas totaled $78,998, or 55% less than a minimally energy code-compliant building. Gas and electricity for the Towers’ last year cost $60,465, or 42.5% of a code-compliant building. The savings are based on building components and are not dependent upon future landlord actions and lack of tenant interest to conserve consumption.