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Maryland Multifamily Energy Efficiency and Housing Affordability Program (MEEHA)

An example of a flexible energy program for LMI projects that can be awarded as a grant or a subordinate loan, in addition to being eligible for both construction projects or operating assets.

Keys to Success

  1. Carve Out Funds For LMI Programs

  2. Create Deep Partnerships between Energy and Housing Agencies to Lead Programs

  3. Streamline Energy Funds with Affordable Housing Funds

  4. Ensure Funding Awards are Flexible, Easy to Use, and Large Enough to Change Behavior for Affordable Multifamily Properties

  5. Authorize Programs for the Long-term

  6. Streamline Application and Compliance

Program Overview

The Maryland Department of Housing and Community Development (DHCD) has been designated as the administrator of the Multifamily Energy Efficiency and Housing Affordability Program (MEEHA). MEEHA provides loans and funding awards for energy efficiency measures directly to new construction, rehabilitation projects, and operating affordable multifamily housing.

In 2008, the Maryland State Legislature set a goal to reduce Maryland’s per-capita electricity consumption and peak demand by 15 percent. In response, the Maryland Public Service Commission (PSC) launched the EmPOWER Maryland initiative, directing the state’s electric utilities to develop energy efficiency programs for the residential, commercial, and industrial sectors. After initially attempting to implement LMI programs through utility companies, the PSC gave responsibility to the Department of Housing and Community Development (DHCD) to administer EmPOWER Maryland’s low-income energy efficiency programs. EmPOWER Maryland has two programs targeted at both single family and multifamily low-income housing.

Program Snapshot

  • Program Size: $20.5 million annually. Began in 2009, no expiration.

  • Program Objective: The purchase and installation of energy efficiency measures, some soft costs such as energy audits and project management are allowable as well. All scopes of work align with items identified in an energy audit or listed on a prescriptive list. A prescriptive funding option ranges from $2,500 and $3,000 per unit, but some projects are able to receive up to $10,000 per unit, depending on the age and fuel type of equipment being replaced.

  • Funding Source: The Maryland Public Service Commission distributed funds to Maryland Department of Housing and Community Development, administered by the Department’s Housing and Building Energy Programs division (HBEP). The funds come from utility ratepayers through utility companies serving Maryland that are regulated by Maryland’s Public Service Commission. More specifically, fees are added to utility bills for all ratepayers in Maryland to fund energy efficiency and renewable energy in affordable housing.

  • Key Players:

  • Implementation Agency: Maryland Department of Housing and Community Development

  • Funder: State of Maryland Public Service Commission

  • Financing Type: Funds are issued to affordable housing owners or developers through a grant or subordinate loan, whichever is the preference of the property owner. The loan terms are 0% interest and payments are deferred for the term of the loan.

  • Eligible Applicants: New construction, rehabilitation projects, and currently operating affordable multifamily housing projects

  • Eligible Uses: energy efficiency measures and solar

Demonstrating Keys to Success

  1. Carve Out Funds For LMI Programs - The Maryland Energy Administration (MEA) entered into an MOU with the Maryland Department of Housing and Community Development (DHDC) to allocate utility rate-payer funds to DHCD and enable them to administer funds directly into housing projects.

  2. Let LMI Agencies and Organizations Lead - The MEEHA program uses the DHCD’s infrastructure to distribute energy dollars from the Maryland Energy Administration (MEA) directly to housing projects.

  3. Streamline Energy Funds with Housing Funds - Funds are distributed on a rolling basis. Projects seeking MEEHA funds in addition to other DHCD rental housing financing will have the MEEHA application and review process integrated with the funding applications and underwriting process for DHCD’s other rental housing financing. A separate funding application is not required.

  4. Streamline Application Processes and Compliance - DHCD qualifies a pool of contractors to conduct energy audits and perform work to ensure that ratepayer funds are spent responsibly. Building owners first apply to the program for a pre-audit inspection conducted by DHCD. This helps owners better understand whether they will be eligible for energy improvement funding before investing in an energy audit. The measures undertaken must be based on an energy audit completed by a qualified energy auditor.

  5. Energy Funds as a Source - Funds are disbursed only as reimbursement during the course of construction as work is completed and approved by contractors. However, formal terms sheets are provided in the design phase which serve as a commitment to fund if program requirements are met.

  6. Size Funding Awards Large Enough to Change Behavior - The Multifamily Energy Efficiency program covers 100% of costs of energy efficiency upgrades that are recommended by a DHCD-approved energy auditor. The program incentivizes whole-building upgrades both in units and common areas.

Program Strengths and Market Transformations

Appointing DHCD as the program administrator facilitates the financing process and enables program staff to seamlessly integrate energy funds with traditional affordable housing capital. Another key to MEEHA’s success is its flexibility to structure project funding as loans or grants, depending on property owner preference. Other key features of MEEHA include: integrated, whole-building approach to energy efficiency for electricity measures; alignment with the state’s affordable housing incentive programs; provision of funding to cover project energy audits at grant or loan closing; and contractor training opportunities. The program also helps owners by paying for higher efficiency capital improvements they otherwise would have to pay for themselves as part of regular building maintenance, including upgraded HVAC equipment, hot water heaters, and windows.

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