Serving Affordable Multifamily Buildings with Home Energy Rebates

Many diverse organizations are involved in multifamily housing that serve low-income groups and can be useful channels for reaching building owners. These include affordable housing providers and developers, multifamily and affordable housing trade organizations, state housing finance agencies, and Public Housing Authorities (PHAs). In addition to marketing and outreach, these stakeholders can play valuable roles in identifying potential projects, leveraging resources, and/or braiding funding (e.g., the Low-Income Housing Tax Credit (LIHTC), state and local grants) to move more comprehensive projects to implementation and achieve deeper savings. These groups often share an interest in energy efficiency as a means of keeping housing (including utility costs) affordable and sustainable and, therefore, should be viewed as strategic partners.

Under the national Low-Income Housing Tax Credit (LIHTC) program, state and local LIHTC-allocating agencies issue tax credits for the acquisition, rehabilitation, or new construction of rental housing targeted to low-income households. LIHTC compliance periods (i.e., the duration of affordability restrictions) last approximately 15 years, and recapitalization time periods for LIHTC properties generally coincide with the end of that compliance period. At that time, the U.S. Department of Housing and Urban Development encourages the preservation and rehabilitation of the housing and encourages new investment in that housing to continue to maintain its affordability after the termination of LIHTC-related use restrictions.

Housing finance agencies can serve as a strategic entry point for program administrators to identify a pipeline of projects slated for recapitalization and rehabilitation and ripe for additional upgrade/retrofit incentives. During a recapitalization period, LIHTC properties may receive funds with new affordability restrictions, and Home Energy Rebates could drive investments in these properties to ensure energy costs stay affordable for property owners and residents.

A multifamily rehabilitation can take upward of 3 years when accounting for predevelopment through construction. To factor rebates into housing finance, developers/owners will need some guarantee that rebates will be reserved over this time for their project (i.e., options beyond point-of-sale). In addition, the Department of Energy encourages states to include staged incentive payments to ensure affordable multifamily housing owners can make timely payments to subcontractors throughout the retrofit process. Examples of a staged incentive payment program for multifamily housing owners include:

• The New York State Energy Research and Development Authority (NYSERDA) Multifamily Performance Program pays owners at a minimum of three milestones: scope of work finalized, 50% construction completed, and 100% construction completed.
• The New Jersey PSE&G Residential Multifamily Program provides progress payments and upfront incentives.

States should consider providing direct technical assistance and project management services to multifamily building owners to facilitate the use of rebate funds in multifamily buildings—especially where there is a need for the braiding of resources, financing, and technical expertise to be deployed together. For example, one-stop-shop models can provide building owners access to integrated program services through a single point of contact. These models give building owners all the tools they need to evaluate and implement energy retrofits and make decisions based on cost, process, and funding opportunities. This model will also help facilitate the braiding of funding, helping to ensure that additional resources are combined and allocated to cover as much of the projects cost as possible including much needed health and safety improvements in conjunction with home energy upgrades.

By providing technical assistance and encouraging delivery mechanisms that braid resources and financing, the Department of Energy encourages states to ensure that electrification is coupled with deep energy efficiency. Doing so will cut energy waste and minimize energy burden and costs. In addition, such measures will improve housing quality, resident comfort, and overall affordability. Where possible, applicable rebates should be used for in-unit, common area, and whole-building energy-saving opportunities. The California Low-Income Weatherization Program (LIWP) provides higher incentives for measures that benefit tenants than measures that benefit owners. The LIWP program also requires all projects to install required in-unit measures, including low-flow aerators, duct sealing, and lighting upgrades.

The contractor base for home energy upgrades serving multifamily buildings is limited. States should invest in growing this skilled workforce. They should also ensure that the networks of existing contractors coordinate their outreach and interactions with consumers to minimize confusion when there are multiple program offerings through different organizations that are applicable to multifamily building owners and residents.

Building owners need streamlined access to building energy data to prioritize and make informed investment decisions. The Department of Energy encourages States to work with their utilities so that they provide building owners aggregated, whole-building energy data in an easily accessible and standardized format.