Our Major Goals
Collaboratively determine the most appropriate funding pathways to scale equitable decarbonization of housing in California’s LIDACs to advance the state's climate goals.
Provide recommended strategies for filling the capacity, governance, and funding gaps for equitable decarbonization in the state.
Financing Steps
INFUSING ENERGY FUNDS INTO LIDACs
Our roadmap is marked by four financing strategies to help fill the financing gap in decarbonizing CA’s affordable housing
HARNESS NEWLY EXPANDED TAX CREDITS
Help housing developers harness the new federal energy tax credits through the IRA.STRUCTURE FEDERAL ENERGY FUNDS FOR LIDACS
Leverage federal funds into existing energy incentive programs to directly serve LIDACs and enable more extensive capital upgrades and decarbonization.LEVERAGE PRIVATE CAPITAL
Utilizing a public or green bank-type entity to secure federal dollars can increase and leverage private and public funding.PRIORITIZE STATE FUNDS FOR NET-ZERO AFFORDABLE HOUSING
Increase state investments to directly benefit affordable housing projects that meet net-zero standards. Start with the state programs that have the best uptake from the affordable housing sector with a particular emphasis on existing developments.
1 Harness Newly Expanded Tax Credits
Provide education and technical support to affordable housing developers on how to integrate new energy federal tax credits provided through the Inflation Reduction Act.
Direct benefits to affordable housing developers from IRA and BIL could amount to $125,000,000 a year.
The Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL) present a new set of funding opportunities that developers can access directly in pursuit of their sustainability goals and to fill gaps within affordable housing developments.
These resources can play a critical role to reduce carbon emissions, preserve existing affordable housing, and leverage housing investments when constructing new affordable units.
Yet to secure these resources, most affordable housing developers will need technical support.
Many affordable housing developers are still not fully aware of the opportunities and are clamoring for support in understanding the programs, applying for them, and technically integrating the opportunities into their projects.
A substantial technical assistance network can be created to educate the affordable housing community about the opportunities and provide training modules, workbooks, sample templates, financial modeling, and deep engagement through individualized support into specific deals and portfolios.
Provide education and technical support to affordable housing developers on how to integrate new energy federal tax credits provided through the Inflation Reduction Act.
Given the complexity of both energy programs and affordable housing development in California, successful implementation of green energy programs within the affordable housing sector requires a comprehensively sourced team of experts who can understand both sectors and the implications of specific program elements.
Recommended Pathway
Strengthen Financing Technical Assistance (TA) Network
The IRA Section 45L Energy Efficiency Home Credit is an as-of-right credit earned immediately for qualified developers but often requires consultant support early in the process to determine eligibility.
To bring in these resources, start by building up capacity of organizations already providing energy efficiency technical support to the housing community, such as California Housing Partnership, Reginal Energy Networks, and other providers.
Coordinate a statewide strategy to build a decarbonization technical assistance network in California leveraging and investing in state, regional, and local capacity.
Leverage Increased Federal Solar and Energy Tax Credits
IRA Solar Tax Credits: Increased from 26 to 30 percent, with tax credit boosts for certain projects, including low-income properties, that can go up to 70 percent; Includes a tax credit for battery storage. Nonprofits can take cash payment in lieu of the tax credit.
IRA Section 45L Energy Efficiency Home Credit is a tax credit stackable with LIHTC; (45L) incentive is up to $5,000 per unit for 3rd party certification, and the 179D Incentive is up to $5 per square foot based on site EUI reduction (may be applied to commercial multifamily).
2 Structure Federal Energy Funds for LMI Housing
Leverage federal funds into existing energy incentive programs to directly serve LMI communities and enable more extensive capital upgrades and decarbonization.
More than $582 million is anticipated to be allocated to CA for the HOMES/HER and HEEHRA/HEAR programs.
The IRA includes two residential energy rebate programs and funding for contractor training grants. The funds are being administered from the U.S. Department of Energy to the State Energy Office. California will receive close to $600 million for the Home Efficiency Rebates (HOMES / HER) rebate program and the point-of-sale Home Electrification and Appliance Rebates (HEEHRA / HEAR) program (see Appendix: Federal Resources – Inflation Reduction Act for more details).
Increased incentives from federal programs help overcome upfront costs of installing the most efficient appliances.
Increased funding for incentive programs would help to overcome barriers of added upfront costs of decarbonizing buildings, allowing installation of most energy-efficient electric appliances possible to meet the state's GHG reduction goals.
In addition, low-income homeowners can greatly benefit in bill savings seen through the California Alternate Rates for Energy (CARE) program, which provides a higher discount of 35 percent for electric service compared to a 20 percent discount for gas service.
Federal Funds create opportunities to bring cost savings and GHG reductions to LIDACs.
State agencies need to prepare to apply and receive funds by building a pipeline of projects ready for use.
State agencies can coordinate to ensure the programs are effectively distributing funds to achieve decarbonization goals in LIDACs.
California's state agencies can leverage federal funds into existing energy incentive programs to directly serve LIDACs and affordable housing, bringing both cost savings and progress towards GHG emission reduction goals.
Additional funding could be used to enable more extensive capital upgrades and decarbonization as part of this programs.
Recommended Pathway
Enhance Existing State Programs with Federal Funds.
The IRA includes $9 billion for the DOE HOMES/HER ($4.3B) and HEEHRA/HEAR ($4.5B) programs with significant per-unit investments (up to $8,000/unit) in consumer home energy rebate programs focused on low-income consumers for energy efficiency and electrification.
California will receive nearly $600 million in funding, with $96M integrated into the TECH Clean California program and $194M in HEEHRA funding currently unprogrammed (see Appendix: Federal Resources – Inflation Reduction Act for more details).
Allow more extensive capital upgrades and decarbonization in affordable housing with the new federal funding that can flow through government housing agencies.
Leverage unprogrammed federal funds into California’s existing energy incentive programs to enable deeper capital upgrades for low-income households and existing multifamily buildings like the:
Building Initiative for Low-Emissions Development (BUILD) Program – provides technical assistance and incentives for new all-electric affordable buildings
Solar on Multifamily Affordable Housing (SOMAH) - funding for solar should also include decarbonization funding used for existing multifamily buildings
3 Leverage Private Capital with Federal Funds
Utilizing a public or green bank type entity to secure federal dollars can increase and leverage private funding.
The State of California has several programs that use state funds to leverage both private capital and provide technical assistance. With the low-interest debt coming from the US EPA Greenhouse Gas Reduction Fund to fund energy and solar, we estimate that if the state utilizes a public or green bank type entity to secure federal climate dollars, it can increase and leverage funding to decrease the gap to meet state climate goals. There are two ways this can happen:
Federal Funds create opportunities to build a pipeline of projects to bring cost savings and GHG reductions to LIDACs.
When sizing loans for high-performance buildings, private lenders hedge risk by reducing the amount of energy savings projected. Considering high- performance buildings employ new technologies and require different maintenance strategies, this approach can be justified.
However, commercial loans are sized based on income available to pay debt. When a lender values or under-values energy savings in high-performance buildings, this reduces available upfront funding. Typical underwriting of energy savings from high-performance buildings is 50 percent of savings.
If all the private lenders in California learn how to ensure high-performance buildings perform as anticipated, it would be possible to increase the savings underwritten from 50% to 85%. If able to do that on all debt issued to finance new affordable housing in California each year, it could unlock an additional $100,000,000 in funding per year.
Leverage federal funding to lower interest rates on privately issued mortgages to raise capital to reinvest in decarbonization.
Federal funds can be utilized to lower interest rates on privately issued mortgages, and the state could raise a significant sum to fill the gap in meeting climate goals.
By using US EPA funds to lower interest rates by 1 percent on all the private debt issued to affordable housing developers, it could raise $500,000,000 per year, which could be reinvested in decarbonization retrofits.
Utilizing a public or green bank type entity to secure federal dollars can increase and leverage private funding.
Recommended Pathway
Identify a statewide green lender for affordable housing.
States can identify one or a small handful of dedicated statewide organizations to become a green lender for affordable housing. These agencies can play the critical role needed in delivering energy funding into LIDACs by leveraging private capital to create a pool of IRA capital set asides for affordable housing. More strategies this green lender can pursue are in Table 1. In California, the California Infrastructure and Economic Development Bank (Ibank) and the CA State Treasury Office (the main administrator of interest rate buy- downs through the Go-Green programs), serve in this role.
Partner energy and housing agencies to implement US EPA Solar for All program funds by building new and enhancing existing state programs to reach multifamily affordable homes most in need across the state.
California IBank, SGC, LWDA, CEC and CPUC received $250 million from the US EPA Solar For All Program to leverage the existing market for solar energy to reach homes and businesses most in need statewide through new capacity and expansion of established programs. This team can work with housing agencies to formulate a strategy to utilize the Solar For All Program funds, building off the successes of the existing Solar on Multifamily Affordable Housing Program (SOMAH).
A statewide green lender for affordable housing in California, such as California IBank and the CA State Treasury Office, can play a critical role in scaling delivery of energy funding into LMI communities across the state by leveraging private capital and creating a pool of IRA capital set asides for affordable housing. Green lenders can implement the following strategies to fill the gap needed for equitable decarbonization of affordable housing.
| Table 1. Financing Strategies For A Green Lender In California For Affordable Housing | |
| Credit enhance first position mortgage products. | The dedicated organization can work with first-mortgage lenders, using their funds to create credit-enhancement products that enable first-mortgage lenders to provide even better terms on existing products in affordable housing. Target these funds to LIDAC projects pursuing carbon reduction efforts. This fund should include a focus on reducing interest rates on private capital by at least 1%, or 100 Basis points. |
| Improve underwriting of energy savings. | Leveraging energy bill reductions will lower expenses, boost project income, and ultimately increase the upfront loan size to fund decarbonization. A dedicated organization could ensure their financing programs underwrite at least 85% of energy savings as a condition on receiving subsidized capital. Creating better rates and boosting NOI. |
| Utilize EPA National Clean Investment funds to fund the dedicated organizations. | State agencies can pursue partnerships with National Clean Investment Fund awardees (see Appendix pg. 2 for awardees) to make direct investments in state financing products or low-interest loans, and to coordinate and assist with gathering/providing information on California affordable housing properties that present a viable project pipeline in LIDAC communities across the state. |
We suggest that 5 key actions taken by a state agencies and other stakeholders would increase private investment across California by addressing the most common challenges and misperceptions in the private lending sector. Taking these actions collectively over time will increase certainty on returns, mitigate risk, and develop better benchmarking and underwriting processes across the industry.
| Table 2. Increase Private Investment In Affordable Multifamily Energy Efficiency: 8 Actions | |
| Streamline Data Collection + Sharing | Streamline data collection and sharing across the state to develop a standardized public database that captures performance and cost comparison data of high-performance new construction and deep energy retrofits of affordable, multifamily properties across California. Providing the data as an expense comparable would be useful and help mitigate the currently common, more drastic risk assumptions lenders make for high-performance buildings. Tracking the performance of buildings across different geographies, building types, and age in the state would provide useful data and assist with proving savings opportunities across different markets and building types statewide. |
| Training | Engage engineers and underwriters at lending institutions across the state to reduce their uncertainty when evaluating energy efficiency savings, build their capacity, increase their understanding of energy efficiency opportunities in affordable housing, and to develop more accurate benchmarking and underwriting standards. |
| Low Barrier Technical Assistance | The state can provide strategic leadership to coordinate technical support already provided by energy, housing, and climate agencies across the state and develop a clearinghouse of technical assistance providers for housing, energy, and other climate projects. Through this process, identify the technical expertise available and where gaps still exist for specific technical and wraparound services, such as anti-displacement avoidance planning services, technical support to ensure newly introduced features maximize performance and efficiency, and specialized assistance lenders require. When a throughline of TA can be provided to support owners, protect residents, and assist lenders, the state will be positioned to mobilize public and private capital together and scale investment in low- and moderate-income communities without causing harm to residents. |
| State Incentives + Guarantees | The government can provide incentives, such as tax benefits for properties that engage in energy efficient renovations that meet thresholds, which would provide a guarantee of energy and cost savings and would make underwriting easier for private lenders to invest more in these high-performance buildings. See next Table 3 for more information and examples. |
| Comprehensive Alignment of State Goals | Provide clarity on the state’s goals to help limit competing interests at the local level. Developing a long-range plan on how to decarbonize California’s affordable, multifamily residential real estate to meet the state’s Climate GHG reduction goals would be an asset to the market and draw in more investment. This would allow the financial industry to explore financial and programmatic innovations (based on existing programs) to help accelerate scaling efforts and support more properties. Engage with resources and capacity from the California Workforce Development Board, their programs, and data To ensure the field has the workforce capacity to scale up the transition of affordable housing properties. |
| Table 3. Primary Financing Strategies For Leveraging Private Capital For LIDAC | |
| Fill Financing Gaps | Use GGRF capital to fund all energy measures to layer in more private capital. EXAMPLE: Affordable housing solar projects: Fill gaps with GGRF capital and indirectly boost NOI with savings to then take out more debt to do more scope. EXAMPLE: Use GGRF NCIF capital with existing housing finance agency or other housing funding sources to fill gaps for reaching decarbonization goals. |
| Lower Cost of Private Capital | Use GGRF capital to create better rates for private capital. EXAMPLE: Blend GGRF with private capital to lower the rate, allowing the same loan payment while borrowing more. EXAMPLE: Improve underwriting of energy savings and give rate adjustments for projects meeting green requirements, boosting Net Operating Income (NOI). |
| Reduce Risk of Private Capital | Use GGRF dollars to help de-risk perceived risk for private investors. EXAMPLE: Create loan loss reserve, loan guarantees, or credit enhancements to provide security to a lender and better terms for the borrower. EXAMPLE: Use GGRF dollars for deeper loan-to-value to deploy more capital, or bigger loss positions than private capital. EXAMPLE: #1 from slide 25. Credit enhance first position mortgages. |
California’s Green Bank seeks to deploy capital quickly and efficiently while building a durable program that can support California for years to come.
The California Infrastructure and Economic Development Bank (“IBank”) and the State Treasurer’s Office (“STO”) jointly serve as California’s “Green Bank.” Informed by the Climate Financing Request for Information that IBank issued in December 2023, California’s Green Bank anticipates offering the following products at the launch of their program under the National Clean Investment Fund:
A Climate Loan Guarantee Product (Reduces risk of private capital)
A Climate Loan Participation product (Lowers cost of private capital), and
A Climate Incentives Bridge Loan product (Helps fill financing gaps).
More details on the RFI and the proposed financial products IBank plans to offer in California’s market for climate infrastructure can be found here.
4 Prioritize State Funds For Net Zero Affordable Housing
Increase state investments to directly benefit affordable housing projects that meet net-zero standards. Start with the state programs that have the greatest uptake from the affordable housing sector.
Targeting existing state programs, such as the California Climate Investments (CCI) programs that are embraced by the affordable housing sector can bring greater impact.
The Affordable Housing and Sustainable Communities (AHSC) program is one of the largest state-financed public subsidy programs from the Cap- and-Trade funds that the affordable housing sector has embraced. It requires 50% of its program funds be invested in Disadvantaged Communities (DACs) and provides direct capital for the construction of affordable housing units paired with grants for transit-related infrastructure projects for residents and the community at large.
As of November 2023, AHSC has allocated nearly $4.5 million resulting in 140 projects and an estimated 3.4 million metric tons of reduced GHG emissions. While AHSC is already achieving very high GHG-avoidance buildings, it mostly funds new construction. Additional funds directed to the AHSC program that would specifically support decarbonizing existing affordable housing could help fill an important gap for this property type and help bring more AHSC resources to disadvantaged communities.
Cap-and-Trade auction proceeds can help fill the funding gap and bring benefits to priority populations.
Many state programs are working to support the decarbonization of affordable housing, but they are not large enough to fill the gap.
The Cap-and-Trade Program is a financial mechanism launched in 2013 which requires GHG-generating entities to comply with mandated reduction standards through the purchase of allowances and a limited number of offset credits.
Billions of dollars from the Cap-and-Trade auction proceeds are directed to California Climate Investments (CCI) to reduce GHGs and benefit priority populations. From December 2022 through the end of May 2023, over
84 percent of the CCI benefited disadvantaged communities and low- income communities and households, well above the 35 percent required.
Increase state investments to directly benefit affordable housing projects that meet net-zero standards. Start with the state programs that have the best uptake from the affordable housing sector with a particular emphasis on existing developments. Move to adjustments for valuing carbon in property appraisals.
Recommended Pathway
Assess how Cap-and-Trade revenues and state energy programs can work with the state's affordable housing programs to leverage new solutions
Directing more resources to meet net-zero standards in existing state programs that have both (1) high-uptake from the affordable housing community and (2) resources dedicated to LMI households will help meet the state’s climate, equity, and housing goals. See Table 4 for more details on strategies.
Provide financial incentives for net-zero affordable housing projects.
This could be done through tax credits, grants, or other forms of financial assistance.
Move to ensuring carbon is valued in property appraisals.
Property appraisals can also serve as financial incentives. The environmental and economic costs of carbon emissions need to be considered when making decisions about the value of a property.
Increasing state investments and incentives to directly benefit affordable housing projects that meet net-zero standards could help scale the production and preservation of affordable housing to reach the state's climate and housing goals. Starting with the state programs that have the best uptake from the affordable housing sector would help yield the greatest impact most quickly while the state progresses in streamlining energy and housing finance programs. AHSC is one such proven program that the affordable housing industry has gravitated towards. It is successful in achieving very high GHG reductions in new affordable housing construction and has pushed multisector collaboration in the field, advanced innovations, and tested limits for solar construction in the affordable housing industry in California. We recommend that the state consider applying these strategies and lessons from AHSC on existing developments. The following strategies are opportunities the state can continue exploring to scale equitable decarbonization and net-zero affordable housing.
| Table 4. Strategies to Prioritize State Funds for Net-Zero Affordable Housing in California | |
| Explore leveraging DOE LPO Financing with AHSC | The AHSC program has found that new dense infill buildings that are more than 3 or 4 stories have difficulty generating sufficient power from rooftop solar alone and require gas heating for water. For their Resiliency Center Program and Transformative Climate Communities program, SGC is working to competitively select a third-party Virtual Power Plant (VPP) provider who applies for the Department of Energy (DOE) LPO financing to work directly with SGC grant recipients of these programs to design, finance, build, own, and operate a power purchase agreement (PPA) on the grant recipient’s space/facility. Exploring if a PPA strategy like this could work with AHSC-funded projects, particularly housing projects that do not already have solar or battery storage, could unlock more opportunities for net-zero affordable housing. |
| Establish an AHSC Pilot Preservation Program Set Aside using CCI funds leveraged with federal energy programs | AHSC allows for preservation projects, yet in practice these projects haven't been competitive. With the increasing state budget challenges in 2024 and elimination of the $500 million appropriated to Foreclosure Intervention Housing Preservation Program (FIHPP), the state is facing an ever-growing crisis of homelessness and insufficient resources to preserve existing units. This creates an opportunity for AHSC program to structure a pilot preservation program and preservation set aside for AHSC. The pilot could establish more realistic GHG reduction targets for existing subsidized and unsubsidized private affordable housing properties. The state could also explore collaborating with state energy programs to help invest in decarbonization retrofits of these properties and leverage the technical support network developed for FIHPP to support the owners and tenants during the transition of these properties. |
| Evaluate CCI Programs to decrease tax credit | Many AHSC projects face challenges receiving full funding from CDLAC and CTCAC due to the competitiveness of these programs. An increase of CCI or other funding for AHSC could cause a bottleneck in the final phase of funding, which could ultimately disencumber funding. Before considering adding more funds to AHSC, the state can evaluate other projects funded under CCI to determine if they should be moved to other direct funding or eliminated in order to increase affordable housing awards in other CCI programs that can support the decarbonization of affordable housing, such as AHSC or the Transformative Climate Communities programs. An increase in award amounts for net-zero affordable housing projects would help reduce the funding needed from other sources in a LIHTC structured project, while also working to fill the financing gap for net-zero developments. |
Program Design Steps
DEVELOPING INVESTMENT AND GOVERNANCE SOLUTIONS
Our roadmap details five program design strategies to scale equitable decarbonization of housing through multisector collaboration.
ACCELERATE INTERAGENCY COLLABORATION
Take deliberate steps with energy, housing, and climate agencies to coordinate resources allocation and program delivery.INCREASE DECARBONIZATION PLANNING & RESEARCH
Establish a multisector statewide commission to conduct strategic research and analysis to inform policy and regulatory changes.DEVELOP AND MAINTAIN PROJECT PIPELINES
Develop and maintain project pipelines that include multiple housing typologies to increase competitiveness for new funding.ENHANCE AND COMBINE ENERGY PROGRAMS
Identify what is working for both agencies and affordable housing developers and enhance it.IMPLEMENT TRAINING & TECHNICAL SUPPORT
Develop new training materials for the IRA and provide group trainings and direct technical assistance.
1 Accelerate Interagency Collaboration
By looking at existing successful administrative structures, housing, climate and energy agencies can further leverage partnerships to develop and implement more effective and achievable funding interventions focusing on devising new programs or adapting current ones. For example, state or local agencies can draw from New York State's Clean Energy Initiative, which takes State energy dollars and combines them with State affordable housing subsidy dollars into one subordinate loan package to fund high-performance improvements to affordable housing.
Recommended Pathway
Deliberately convene trainings for energy and housing agencies to understand financing and policy priorities of each sector.
Establish an inter-agency task force made up of energy, climate, and housing agencies to design effective programs and data collection, develop shared goals and metrics, and coordinate on applications and implementation plans for federal funds.
Coordinate with regional and local energy and housing organizations in the conversations, applications, and solutions.
Leverage new and emerging housing finance tools at the local state and regional levels. Focus on housing agencies that possess the flexibility to adapt existing programs or create new ones specifically to integrate decarbonization resources into the programs, such as competitive scoring criteria and by including energy efficiency retrofits in eligible costs.
Designate a single entity to lead and centralize policy development and program design.
2 Increase multisector decarbonization planning and research
In 2023 we held two advisory meetings with stakeholders from the housing, energy, advocacy, and equity sectors at the State, local, and regional level. The focus was to walk through barriers and opportunities to meet funding gaps to meet State climate goals for affordable housing.
One major barrier identified was that the current landscape of resources for housing and climate is disaggregated, unknown, or does not work well together. Today, there is not a clear pathway to pursue both housing and energy funds, or a clear way to quantify costs or analyze risk.
Advisory Board members expressed interest in continuing to convene meetings of multisector stakeholders to level set and collaboratively solve the funding gap.
Facilitating multisector collaboration to ensure regular coordination and progress in the same direction will help state actors address the funding gap.
Recommended Pathway
Establish a multisector statewide commission or workgroup to:
Study more deeply the different ownership types and associated challenges for unsubsidized affordable housing
Understand and develop tenant protections needs for decarbonization projects across the state for different affordable housing typologies
Detail agency needs and opportunities to support an increase in sustainable energy investments in LIDACs
Gather data from housing, climate, and energy agencies to create a streamlined data system and conduct a full assessment of state and regional programs to:
Compare program uptake, application, regulatory, and compliance processes
Identify opportunities to enhance or consolidate programs
Identify opportunities to establish or increase set-asides for LIDACs within energy programs
Next, complete a strategic analysis to develop high-impact, cost effective actions that can leverage federal decarbonization energy and climate funding with affordable housing funds to further encourage all-electric construction and rehabilitation of existing properties, protect tenants, and establish affordability covenants in ways that meet the needs of communities, developer/implementation partners, and agencies.
Pursue policy changes at the state-level for legislation and program regulations that will truly reach LIDACs and create more coordination across agencies and policies.
3 Develop and maintain project pipelines that include multiple housing typologies
To increase competitiveness for federal funding opportunities, the State will need to quantify project pipelines.
Focus on building project pipelines that include multiple affordable housing typologies in different regions of the state, including urban, suburban, rural, and disaster-prone areas.
Affordable housing typologies should include existing unsubsidized affordable housing (both large and small), regulated affordable housing (including public housing), and new construction. This will provide the ability to test and understand implementation challenges more clearly, and compare any new strategies employed by region and/or housing typology.
Recommended Pathway
Existing Unsubsidized Affordable Housing: Start with state and local programs across the state, such as:
Regional acquisition-rehabilitation programs working with community land trusts and nonprofit or mission-aligned developers.
Initiatives targeting BIPOC-led developers.
HCDs FIHPP program, which includes 1-25 unit properties, a large portion of unsubsidized affordable housing across CA.
Existing Regulated Affordable Housing: Given the limited preservation funding across the state and barriers with the bond cap limiting re- syndications, focus on:
New or existing financing tools at the local and state levels that include preservation as a priority.
Local Housing Authorities pursuing RAD conversions of their public housing projects.
Prioritize projects from these programs that can integrate in energy dollars to support decarbonization and other MCIs (where possible) as pilots for decarbonization.
New Construction Affordable Housing: Integrate energy funding into the existing housing financing pathways through state and local housing agency term sheets, programs for bond financing, and LIHTC.
Allow flexibility in programs, such as including soft costs and capital upgrades as eligible expenses.
4 Enhance and combine existing energy and affordable housing programs
Identify what is working for both agencies and affordable housing developers and enhance it. Target technical assistance to the programs that are working.
Through multiple interview and feedback sessions affordable housing developers shared a common concern that there are too many energy incentive programs.
The ones that exist are too small, and the application processes are too onerous relative to the benefits that they provide.
Recommended Pathway
Convene housing and energy agencies to hear feedback from housing owners and open a dialogue about the future of the energy programs.
Identify the specific programs that are successful for both agencies and developers.
Examine ways of improving uptake of existing clean energy programs with different owner types, focusing on owners from low-income areas and historically disinvested communities.
Determine how to streamline and prioritize programs for increased uptake in LIDACs. Building off research and planning efforts in previous steps, work with the multisector state leadership (such as a statewide commission) to analyze the assessment of state and regional programs and related findings to prioritize and determine which programs to enhance, consolidate, or eliminate.
Develop and implement strategies to enhance those priority programs to design for behavior change and predictability by authorizing programs for the long-term and ensuring funding awards are flexible, easy to use, and large enough to change behavior for affordable multifamily properties
Develop a state-level combination preservation and decarbonization “soft” subsidy program that can serve properties of all sizes to address necessary capital improvements and decarbonization retrofits (including system upgrades required to achieve full electrification). This subsidy program could be used in conjunction with a low-income housing tax credit (LIHTC) financing structure, or without.
5 Implement Training and Technical Support
The push to meet climate goals puts an already strained affordable housing community under even more pressure.
In addition, owners of affordable housing commonly have limited capacity and operate in a challenging finance space, which requires expertise to pull in resources effectively. It also poses financial risks when implementing incentive-based rebates.
Despite this, the affordable housing sector is innovative and has led the way in many green building and renewable energy efforts.
Many affordable housing developers acknowledge the need to meet the state's climate goal and strive to do so without sacrificing affordability.
Recommended Pathway
Enhance collaboration and systems change efforts through multisectoral training, workshops, outreach on program design efforts. This will help increase public awareness and prepare California’s leaders across housing, energy, infrastructure, finance, and policy sectors to deepen collaboration and to strengthen a shared language, understanding, and vision or solutions together.
Provide technical support, capacity, and strategic leadership to help state and local agencies in California to bring new energy dollars into existing affordable housing programs to fill gaps. Effective policymaking and systems change requires robust multi-sector collaboration among partners and a shared understanding and commitment to common goals. Carefully curated technical services and facilitated learning spaces are needed to streamline, disseminate best practices, and develop compelling solutions to produce a scalable, sustainable, and equitable housing ecosystem at the state, regional, and local levels.
Provide technical assistance to developers, including their property and asset managers.
The IRA’s new tax credits and incentives will require owners to get training and assistance to apply for federal funds to technically integrate the opportunities into their deals and portfolios.
Technical Assistance to Developers and their property and asset management partners to teach them how to meet requirements w/out raising rents.
Training for asset and property managers on how to maintain clean energy technology in their properties.