{"id":1004106225,"date":"2014-10-27T07:45:42","date_gmt":"2014-10-27T15:45:42","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004106225"},"modified":"2022-12-07T07:56:11","modified_gmt":"2022-12-07T15:56:11","slug":"greenbuild-2014-financing-green-retrofits-for-affordable-housing","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/","title":{"rendered":"Greenbuild Special Report: Financing Green Retrofits for Affordable Housing"},"content":{"rendered":"

By Mike Ratliff, Senior Associate Editor<\/em><\/p>\n

The inherent complexities of the affordable sector make financing green retrofits at affordable properties a particularly demanding task. Yet our industry has some very creative professionals that are turning to numerous sources to make federally assisted properties more efficient. A Greenbuild panel titled “Financing Green Retrofits for Affordable Housing: A Polyphonic View” examined the challenges and emerging solutions this past Thursday in New Orleans.<\/p>\n

\"From

From left to right: Darien Crimmin, WinnDevelopment; Rebecca Schaaf, Stewards of Affordable Housing for the Future; Jeffrey Greenberger, Affordable Community Energy Inc.; Hunter Johnson, LINC Housing.<\/p><\/div>\n

There are four major challenges, one of which is accessing capital, said Darien Crimmin, vice president of energy and sustainability at WinnDevelopmnet.<\/p>\n

\u201cIf you walked into a bank to finance a retrofit for affordable housing, they would laugh at you and you would leave without a loan,\u201d Crimmin said. There are some mission-driven banks sprouting up to fill the gap, but landing capital is no easy task. Money can end up coming from a number of sources, like Fannie Mae\u2019s new Green Preservation Plus execution option, state utility assistance programs, multi-family energy efficiency programs and weatherization rebates.<\/p>\n

Concerns over returns are another barrier. There are three factors at play here: worries over whether or not savings will materialize; utility rate volatility (i.e. natural gas has dropped 20 percent over the last five years); and concern over the “R” factor, which is this case stands for Residents.<\/p>\n

\u201cWe have seen the utmost efficient buildings in the world with their lights left on and their windows wide open in winter,\u201d Crimmin added.<\/p>\n

The third major challenge is regulatory and utility barriers, added Rebecca Schaaf, vice president of the energy division at Stewards of Affordable Housing for the Future. Taking on debt is precluded for some properties. The split incentive of owners taking the risk while residents reap the savings is another struggle. HUD is trying to address the problem.<\/p>\n

\u201cRents are set on budgets. If owners reduce their own utility costs, that means a reduction in budget and thus savings on rent that are ultimately passed on to HUD,\u201d Schaaf said. \u201cWell, HUD is now offering options for owners through the Better Buildings Challenge to access those savings.\u201d<\/p>\n

Schaaf also addressed the fourth big hurdle, which is human resources. Some owners just don\u2019t have the expertise on staff. Having an energy manager is often not enough.<\/p>\n

\u201cThird parties are a great way to bring in expertise and resources without having to hire,\u201d she added.<\/p>\n

Two case studies were presented to showcase the emerging solutions used to surmount these challenges.<\/p>\n

Hunter Johnson, president & CEO of LINC Housing, first detailed a recapitalization of a 274-unit garden-style community in California that was hitting the 15-year LIHTC mark. LINC bought out its co-owner and closed the first Fannie Mae Green Plus loan (now known as Green Preservation Plus). There were, however, six layers of financing in total, Fannie being the only one that was conventional. The five non-conventional layers included California\u2019s Energy Savings Assistance Program, the Multifamily Energy Efficiency Rebate, California Solar Initiative, Multifamily Affordable Solar Housing and Weatherization. Approximately $400,000 of the $715,000 total cost was composed of rebates. LINC put up roughly $318,000 that had to be paid back.<\/p>\n

\u201cBut we are seeing $80,000 a year in savings, making this essentially a bit over a four-year payback,\u201d Johnson said. \u201cWe think this is good, and consistent with what we can offer other people.\u201d<\/p>\n

In terms of the impact on utilities, the retrofit was able to secure a 45 percent reduction in water use, a 14 percent reduction in gas consumption and a 12 percent reduction in electricity use.<\/p>\n

LINC also took some creative steps to address the “R” factor. A “healthy and sustainable homes coordinator” on the central staff is tasked with helping on-site staff help residents be more efficient. LINC also found that it can bring the topic of energy use into the homes through the property\u2019s youngest residents, who are taught to be “energy detectives” in the free after-school program.<\/p>\n

\u201cWe also offer job training as we are putting solar on the roof,\u201d Johnson added. \u201cAfter the training program with the solar installer, they have enough skills to be part of the group putting solar on their own building.\u201d LINC also connects the freshly trained residents with job placement services.<\/p>\n

The second case study took a look at a how an energy services company (ESCO) known as Affordable Community Energy Inc. retrofitted a 1,174-unit portfolio serving seniors, the disabled and families. The firm targets the full range of energy efficiency programs: water and electricity efficiencies, as well as all the renewables and cogeneration that can fit on an affordable site.<\/p>\n

ACE takes on the costs of improvements and operations. During the life of the agreement, it takes a substantial portion of the measured savings in energy, and a smaller percentage of the water savings. It also charges the customers for the electricity produced on site at a rate 10 percent lower than what they would have been paying their utility company. This covers the owner\u2019s capital hurdles and concerns about returns.<\/p>\n

\u201cBecause we are paying for it, we believe we are eating most of the performance risk,\u201d said Jeffrey Greenberger, COO at ACE.<\/p>\n

For this particular portfolio, which involved all types of properties in order to diversify risks, the total project cost was $6.25 million. Of that, $4 million went to 2,400 solar panels and seven combined heat and power units. The remaining $2.25 million went to energy efficiency improvements, while water conservation was financed separately. The end result was a 37 percent reduction in electricity use and a 15 percent reduction in natural gas consumption.<\/p>\n

Greenberger\u00a0added that ACE\u2019s major challenge is on the capital side. The company has its own layered approach that starts with federal tax credits for renewables and cogeneration. Its scale allows the company to pursue New Markets Tax Credits (NMTC), as well as state and utility incentives.<\/p>\n

Greenberger\u00a0reiterated that these two case studies represented just two creative solutions. Myriad others exist\u2014and will emerge\u2014within the affordable sector to meet the increasing demand for retrofits.<\/p>\n

\u201cWe believe strongly that having renewable energy sources at affordable housing is critical to keeping it affordable for the long term.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Financing green retrofits for affordable properties is no simple task. Yet as this Greenbuild panel presents, there are some very clever ways the industry is surmounting the unique set of challenges.<\/p>\n","protected":false},"author":1335,"featured_media":1004106226,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21742],"tags":[],"class_list":["post-1004106225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest"],"acf":[],"yoast_head":"\nGreenbuild Special Report: Financing Green Retrofits for Affordable Housing - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Greenbuild Special Report: Financing Green Retrofits for Affordable Housing\" \/>\n<meta property=\"og:description\" content=\"Financing green retrofits for affordable properties is no simple task. Yet as this Greenbuild panel presents, there are some very clever ways the industry is surmounting the unique set of challenges.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2014-10-27T15:45:42+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-07T15:56:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/10\/Affordable-Retrofit-Panel.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"450\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"michaelratliff\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/\",\"name\":\"Greenbuild Special Report: Financing Green Retrofits for Affordable Housing - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/10\/Affordable-Retrofit-Panel.jpg\",\"datePublished\":\"2014-10-27T15:45:42+00:00\",\"dateModified\":\"2022-12-07T15:56:11+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/e3587e458e21524ccf71ab97d31c045c\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/greenbuild-2014-financing-green-retrofits-for-affordable-housing\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/10\/Affordable-Retrofit-Panel.jpg\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2014\/10\/Affordable-Retrofit-Panel.jpg\",\"width\":800,\"height\":450,\"caption\":\"From left to right: Darien Crimmin, WinnDevelopment; 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