U.S. Department of Housing Urban Development Secretary Julián Castro and California Governor Jerry Brown announced a plan to expand financing for energy efficiency and solar energy in multifamily housing. Their plan includes unlocking property-assessed clean energy (PACE) financing for multifamily housing in California, establishing the California Master-Metered Multifamily Finance Pilot Project, and engaging philanthropy and the financial sector in supporting renewable energy in affordable housing.
In order to accelerate the use of PACE financing for multifamily housing, Governor Brown is implementing a California Multifamily PACE Pilot in partnership with the MacArthur Foundation. The Pilot will enable PACE financing for certain multifamily properties, including specific properties within HUD, the California Department of Housing and Community Development, and the California Housing Finance Agency’s portfolios, opening up financing to an entire segment of commercial PACE projects. The U.S. Department of Energy plans to work with the state to assess the performance of this program as data becomes available. In support of these efforts, Secretary Castro will issue guidance to clarify the circumstances under which HUD can approve PACE financing on HUD-assisted and-insured housing in California.
In an additional effort, HUD will support the State of California in creating the California Master-Metered Multifamily Finance Pilot Project. The Pilot will enhance affordable multifamily properties’, which have a substantial majority of a property’s energy consumption billed through a common meter, access to upfront capital for financing energy efficiency improvements, on affordable terms and time frames, and which are repaid through the master meter utility bill. The $3 million program of technical assistance and credit support may include a loan loss reserve and/or a debt-service reserve fund. The pilot is intended to inform project performance and repayment experience while managing finance risk perception.
As a first step in their new effort to engage philanthropy and the financial sector, the White House and HUD will host a roundtable on February 19 with leaders from the finance and philanthropic communities to discuss opportunities to enhance solar financing for affordable housing. The MacArthur Foundation has already committed to make at least $10 million in impact investments to create and expand the California PACE and On-Bill Pilots, and explore other innovations, including the use of Pay for Success.
In the United States, about a quarter of households live in multifamily housing units, including more than 3 million units in California alone. According to the White House, improving the energy efficiency of these buildings nationwide by 20 percent would save nearly $7 billion in energy costs each year and cut 350 million tons of carbon pollution in a decade.
The NH&RA Preservation Through Energy Efficiency initiative supports multifamily affordable housing owners in making their properties more energy efficient. Our regional Road Show series has worked with owners and developers to better understand PACE financing and leverage the benefits of investing in solar. Our next Road Show event is on April 9, 2015 in Indianapolis, IN. Click here for more information.
