The problem of where to find the financing for energy efficient developments and retrofits has not been as severe on the affordable housing side, as energy savings essentially go hand-in-hand with the mission of affordable housing. But on the market rate side, the data to show evidence that spending money on energy efficient retrofits pays off for investors in the long run is simply not sufficient. And there has historically been a lack of resources.
“There’s this impression that there’s a lot of programs available for energy efficient financing, but they’re really not geared toward the multifamily market rate sector,” said Paula Cino, director of energy and environmental policy at the National Multi Housing Council (NMHC).
However, two HUD programs are currently underway that are aimed at attracting private investors to energy efficient incentives. The first is The Energy Innovation Fund, which plans to award $25 million in funding through a grant process that will seed up to $200 million in revolving loan funds, loan guarantees, and green mortgages. In March, it awarded $23 million to 12 organizations in the funds pilot phase. And the other is Green Refinance Plus, a program in which the Federal Housing Administration (FHA) assumes half of the risk on a loan or acquisition underwritten by Fannie Mae on existing green projects while allowing owners to borrow additional money to make energy-saving improvements to their properties.
Plus, Green Campus Partners, developer and operator of a variety of multifamily properties, recently closed on a $50 million warehouse funding facility with Citi Public Affairs to establish some much needed capital for energy saving upgrades. The partnership gives companies access to the needed capital to fund energy efficient projects in the public sector by providing a revolving line of credit to the industry.
According to Bob Anderson, CEO of Green Campus Partners, implementing energy efficient improvements to universities, healthcare organizations, and state and local governments can be a lot more significant on operating expenses at the different infrastructures than many owners realize. “Energy costs represent a significant portion of any organization’s operating expenses. Reducing these costs and becoming more efficient are critical objectives for the success of any organization. Improving the environment along the way is an added benefit,” said Anderson in a recent statement.
There are organizations that are well on their way to quantifying the financial benefits of green retrofits to help get more lenders on board, too. For example, Living Cities, the MacArthur Foundation, the White House Council on Environmental Equality, and the Urban Land Institute agreed last year to standardize their collective energy consumption data in hopes of compiling broad-reaching energy data taxonomy for the multifamily industry’s green innovators. And Fannie Mae is contributing to the effort as well by compiling energy use data on multifamily buildings in hopes of developing a ratings scale.