By Ravi Malhotra
Tax Credit Advisor, September 2023
As we near the end of the year, federal agencies, including the U.S. Department of Energy (DOE), the U.S. Department of Housing and Urban Development (HUD) and the Environmental Protection Agency (EPA), are finalizing the design of Inflation Reduction Act (IRA)-created programs and releasing more and more of the funds. Many of these dollars can benefit multifamily affordable housing, but the sector needs to act now to make sure it has access to these funds.
The EPA announced the availability of $27 billion through the Greenhouse Gas Reduction Fund. Funds are being distributed through three different programs, the most time-sensitive being Solar for All (SFA). This program will make up to 60 awards, but each state and territory is guaranteed funds if they apply. SFA is 100 percent catered to low-income residential solar. The deadline for states to submit applications is Sept. 26, 2023. Multifamily property owners and managers need to advocate for the multifamily sector to be included in States’ SFA plans – insisting on States’ offerings to include both on-site installations and access to community solar. We expect multifamily housing will benefit most through community solar projects, as these are typically the most cost-effective due to their volume efficiencies, but on-site for multifamily is not a bad investment – especially with its ability to leverage Low Income Housing Tax Credits. For community solar, multifamily housing should push states to subscribe whole properties to the projects, rather than individual households, to reduce administrative costs.
Additionally, owners of select HUD-assisted multifamily properties can use the new money available through the Green and Resilient Retrofit Program (GRRP), created by the IRA and managed by HUD, for energy efficiency, renewable energy generation and climate resilience solutions. Funds are projected to be leveraged with private financing to achieve deep impacts for a small cohort of properties. Applications are open on a rolling basis via three pathways:
- The Elements pathway provides up to $40 thousand per unit or $750 thousand per property. HUD expects to make approximately 200 awards.
- The Leading Edge pathway provides funding of up to $60 thousand per unit or $10 million per property. HUD expects to create approximately 100 awards.
- The Comprehensive Pathway provides funding of up to $80 thousand per unit or $20 million per property. HUD expects to create approximately 300 awards. Note that HUD has set aside up to 40 percent of these funds for properties that cannot achieve benchmarking.
Properties most likely to benefit from GRRP are those with an existing benchmarking program, in need of major rehab and on their way to a repositioning transaction, who can achieve the stringent green certifications GRRP needs.
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