Use Household Income-Based Eligibility Criteria in the CEIP

In another blog posted today, I argue that EPA, as it finalizes the design of the Clean Energy Incentive Program (CEIP), should just get rid of geographic definitions of “low-income community.” Applying the proposed geographic definitions would allow too much of the CEIP’s benefits to flow to higher-income households. Instead, I argue, EPA should require states to use household-based definitions of low-income community.

Which household-based definitions did EPA suggest?

EPA, in addition to the geographic definitions that I argue should be discarded, suggests in its proposed rule on CEIP design details that states could use two household-based definitions of low-income community: the Federal Poverty Guidelines, and the definition states use to determine eligibility for the Weatherization Assistance Program (WAP).

An ideal household-based definition would have two key features:

  1. It would do a good job of identifying households struggling to make ends meet, and

  2. It would be familiar and useful to the people and groups most likely to participate in the CEIP. These groups are affordable housing developers and advocates, local weatherization agencies, and electric utilities.

By this measure, the Federal Poverty Guidelines are imperfect, because they do not take into account differences in living costs in different parts of the country nor safety-net programs many low-income families participate in, like Supplemental Nutrition Assistance. To this end, the Census Bureau has developed the Supplemental Poverty Measure that includes these things, but the supplemental measure is not yet sufficiently well-developed to use in the CEIP.

The Weatherization Assistance Program guidelines are better: states set program eligibility guidelines based on guidance from the Department of Energy. Since the American Recovery and Reinvestment Act, generally, families that make less than two times the Federal Poverty Guidelines are eligible, as are people who receive Supplemental Security Income or Aid to Families with Dependent Children. The WAP guidelines are familiar to community action agencies—frequent administrators of WAP and the Low-income Heating Assistance Program—and I anticipate these agencies will be some of the main developers of CEIP projects in low income communities. Electric utilities frequently partner with Community Action Agencies to implement low-income energy efficiency programs, so they are also familiar with the WAP guidelines, another reason they are a good fit for the CEIP. This is not to say this definition is perfect: because it is based on the Poverty Guidelines, it shares the guidelines’ problems.

What definition would work for affordable housing?

Along with electric utilities and community action agencies, the other set of groups that will likely develop a lot of CEIP low-income efficiency projects are affordable housing developers and advocates. But EPA did not include in their list of suggested definitions of “low-income community” the definition of “low-income” these groups use most: HUD’s 80 percent of Area Median Income income limits. They have a lot of good qualities: they reflect state and regional variations in housing costs and they are already used by most federal and state affordable housing programs. EPA should adopt the HUD 80 percent of Area Median Income standard as presumptively approvable, and furthermore consider presumptively eligible projects in buildings that participate in a federal or state programs tied to this standard.

Don’t make project developers verify everyone’s income

Even though the CEIP’s low-income portion should be based on household-based definitions of low-income, we do not believe project developers should have to verify the income of every program participant. Because so many federal, state, and community programs already use income in determining eligibility, EPA can piggyback on these other programs, saving time, effort, and money.

EPA should publish a list of programs and designations where, if project beneficiaries or buildings already participate in a program or meet the criteria to participate, they are considered presumptively eligible and a project developer need do no further income verification.

Here’s a list of programs and designations:

  1. Projects in buildings, units, and single-family houses whose rents are affordable (30 percent of HUD’s 80 percent of AMI limit) should be presumptively eligible

  2. Projects in buildings, units, and single-family houses that already qualify or participate in the following, not-exhaustive list of federal affordable housing programs should be presumptively eligible:

    1. Public housing

    2. Section 8 Project‐based Rental Assistance Program

    3. Section 8 Project-based Voucher Program

    4. Housing Choice Voucher Program

    5. Section 202 Supportive Housing for the Elderly Program

    6. Section 811 Supportive Housing for Persons with Disabilities Program

    7. Section 521 Rural Rental Assistance Program

    8. Section 515 Rural Rental Housing

    9. Homeless assistance programs administered by HUD

    10. Low‐Income Housing Tax Credit

    11. Section 502 Direct Loan Program,

    12. Single Family Housing Guaranteed Loan Program,

    13. Weatherization Assistance Program

    14. Low Income Heating Assistance Program.

What does the CEIP’s low-income portion look like with NRDC’s proposed changes?

As described in these blogs, NRDC is proposing that EPA change the CEIP, so it provides an incentive rich-enough to actually get new projects off the ground, and so it directly benefits low-income people. In our revised CEIP, states would auction CEIP allowances up-front, creating an incentive fund, which they would then disburse competitively to projects that improve the efficiency of the housing where low-income people live. This modified design better reflects the CEIP’s purpose: to start correcting the lack of investment in clean energy in those communities most affected by power plant pollution.