Agencies brace for higher fuel costs
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By Mel Huff Times Argus Staff - Published: June 26, 2008
It's not just home owners looking ahead to a hard winter because of high heating oil prices. The Central Vermont Community Land Trust, which owns 372 units of affordable housing and manages almost all of them, is expecting a huge budget crunch this winter.
And that's going to mean rent increases.
CVCLT pays the heating and hot water bills for its properties, but rents are capped, putting it between a rock and a hard place.
"Five years ago we were paying 85 cents a gallon (for fuel oil). Last year we locked in $2.39 for the year. Now prices are approaching $5 a gallon. Nobody anticipated that," said Garth Genge, director of real estate operations for the land trust. "We're talking about buildings that have $30,000 or $40,000 oil bills a year, so double that. We pretty aggressively anticipated a 30 percent increase, but not over 100 percent increase."
Last year the agency spent $168,000 on fuel oil. This year's budgeted amount, which includes more units and a 30 percent increase, is $208,000, but the spike in the cost of oil means the actual cost will be much higher, Genge said.
Rents that the community land trust charges have not yet reached capped amounts, but the organization tries to avoid charging the maximum. Nonetheless, Genge cautioned, "we're going to have to raise the rents. We're trying to keep our increases down to the bare minimum that will cover the cost, but there are going to have to be some appreciable rent increases for everybody, and it's going to make it really hard for our tenant base."
Genge couldn't provide a definitive figure for how much the increases would be, noting that each property is financed independently and has its own income and expenses.
That means some properties have a smaller margin for absorbing increased costs. For one property, a 10 percent increase would cover $4 a gallon oil though the winter, he said, but "whether we could even get $4 oil at this point is very questionable. Some properties will need more than others, and some properties can afford less than others, but all of them are being hit really hard. Right now, we're looking at 10 percent, but honestly, some tenants that can't afford that."
Although rent increases won't take place until fall, the land trust plans to meet with tenants over the summer and "try to get everybody on the same page as far as conservation – 'close your windows in the wintertime, make sure the doors are closed, keep your heat at a reasonable level' – and try to get everyone to understand that it's a really difficult environment for us," he said. "People have to understand that it's going to be reflected in their rent if it's not reflected in their habits.
"As a society we're going to have to change our patterns," Genge said. The land trust will encourage conservation heat, electricity and water, since conservation will help offset the increase in heating costs.
The agency is considering changing its leases to make wasting heat a lease violation, however, he noted, "We're still in the drawing board stage of this. We're trying to figure it out as we go along."
The potential effects have a number of agencies worried.
"We're seeing people panicky now about next winter – what are they going to do about fuel costs? How are they going to fill their tanks – people who have not even finished paying off last winter," said Beth Stern, executive director of the Central Vermont Council on Aging.
"It's not only clients, it's staff," Stern said.
Between March and May, the agency saw a 75 percent jump in calls to its senior helpline about fuel and food stamps, Stern said. One of Stern's employees is leaving for economic reasons (taking a job closer to home because of rising gas prices) and Stern predicts the clients' hardships will take an emotional toll on her staff next winter.
"If you don't get paid very much, you need to have something that makes you feel good at the end of the day, and what makes people feel good is helping other people," Stern said.
But if employees "have to say no and realize that people are in a tough situation and there's not a whole lot we can do to help, my concern is that staff are going to go home at the end of the day not feeling as good."
Area agencies are meeting to map out responses to the anticipated difficulties.
Stern, Hal Cohen, executive director of the Central Vermont Community Action Council, and Nancy Zorn, executive director of Green Mountain United Way, hope to get United Way member agencies to begin coordinating efforts.
Like people downstream in the Midwest who see a flood coming, Stern said, "we're trying to shore up the banks now rather than wait until the winter."
One idea is to get a larger group together to set up a community emergency fund, however, she conceded, "we don't know what the parameters of that are yet."
Meanwhile, another group that includes Cohen, the Rev. Ralph Howe, pastor of Hedding United Methodist Church in Barre, Montpelier Mayor Mary Hooper, Joseph Kiefer of Food Works and Carl Etnier of the Vermont Peak Oil Network, was scheduled to meet for the first time to talk about how to meet the coming need for emergency fuel and food.
"It's just the beginning of trying to understand how we should organize ourselves at the community level to make sure people are safe," Hooper said.
But according to Stern, the problem exceeds the scope of local bodies.
"It's going to take change at the federal level, change at the state level and change at the local level to insure that people aren't in total crisis this winter. It's one thing to say nobody will freeze in their home. It's another to say that if someone's not freezing, are they living so much on the edge that the next thing can push the person out of their home?" she said.
"I'm wondering about homeless shelters. I'm wondering if we'll see an increase going into nursing homes and residential care homes," she said. "Will we see an increase in people moving in together? I don't know."
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