In Chicago, an affordable housing community will undergo major rehabilitation work, with updates that include high-efficiency windows, new solar panels, and all-electric appliances. The 60-unit Brainerd Senior Center, owned by Full Circle Communities, is benefiting from several programs, including decarbonization funding from the City of Chicago and a $750,000 loan through the Inflation Reduction Act (IRA)’s Green and Resilient Retrofit Program.
The multifamily development sector is one of many around the country expected to benefit from the IRA’s unprecedented investments to make older homes healthier, more efficient, and cheaper to operate – an integral piece of the national and global goal to lower harmful emissions and fight climate change.
Almost a third of the nation’s housing is comprised of multifamily homes, and historically, 85% of multifamily residents are considered low to moderate income. While many of the communities have long been underserved and under-resourced – including in the area of clean energy – recent federal legislation aims to change that, in part through the Justice40 Initiative, which aims to direct the flow of new clean energy, housing and other investments to disadvantaged communities.
The IRA, along with the Infrastructure Investment and Jobs Act (IIJA), provides more than $25 billion for work on energy efficiency, electrification, and greenhouse gas (GHG) emission reduction for existing homes, including multifamily homes. Programs include rebates for whole-home retrofit projects, heat pumps and other electric equipment; grants to states, Tribes, nonprofits and other entities for pollution reduction work; and the Weatherization Assistance Program (WAP), which typically provides grants to families living under the federal poverty level.
Funding also includes billions of dollars in renewable energy tax-credit investments for low-income communities. Such federal investments in clean energy could achieve 10% to 30% of the 2030 goal to cut emissions in half.
Building operations account for 30% of global energy consumption and 26% of global energy-related emissions, so making existing housing stock more efficient is vital. Retrofitting can involve installing new heating, ventilation, and air conditioning systems; replacing appliances that use fossil fuels with those that are electric or use renewable energy such as solar; and making everything from a building’s envelope to its lighting system more energy efficient.
“We need to reuse and adapt what we have, and there are numerous benefits to doing so, from lower energy bills for residents and property managers, to retaining the character of communities, and connection to the past,” said Theresa Backhus, director of the Building Innovation Hub, a project of the Institute for Market Transformation (IMT), a Washington, D.C.-based organization that works to spotlight practices and advance policies that improve buildings. “Renovations can make buildings more efficient, cut GHG emissions, improve comfort, create jobs, and make budlings more resilient to extreme weather and blackouts.”
Increased Efficiency, Enhanced Comfort
Retrofitting existing buildings is often more complicated than new construction. But in addition to making properties more efficient, retrofits can make residents significantly more comfortable, said Nick Dirr, senior director of programs at the Association for Energy Affordability, a nonprofit dedicated to achieving energy efficiency to foster affordable and healthy housing and communities, especially low-income communities. Given the growing impact of the climate crisis and the increased frequency of extreme weather events and temperatures, retrofitting is increasingly important, he said.
“We can get rid of old oil and gas furnaces and boilers, or poorly operating air-conditioning,” he said. “And if we put in new heat pumps and if it’s done correctly, that may be the biggest takeaway for the occupant – they can say, ‘I’m way more comfortable now, I feel healthier, and can sleep well.’”
States should take advantage of the IRA’s flexibility to prioritize affordable multifamily units and reach the most people, including the most vulnerable residents, said Ryan Kristoff, vice president of grant programs at the International Center for Appropriate and Sustainable Technology (ICAST), a nonprofit that provides economic, environmental, and social benefits to communities toward building local capacity.
“We want these programs to service single-family homeowners well, but there are ways we can reach more people by putting money towards multifamily homes,” he said.
Planning for Additional Resources
The federal investments come at a critical time because many state and municipal budgets are tight, said Stacie Birenbach, vice president of real estate development at Enterprise Community Development, which serves 24,000 residents across 115 communities in 52 cities in the Mid-Atlantic region.
“We have been planning for these additional resources for some time – evaluating our rooftops for solar installation across our entire portfolio, benchmarking our energy usage, and conducting energy audits to identify potential energy efficiency updates,” she said. “We are also evaluating whether there are opportunities to do more substantial renovations, including electrification projects,” with the availability of new resources.
Retrofitting leads to many benefits, but comes with challenges. Older buildings may require an overhaul to meet codes, electrical systems may need upgrading to handle higher loads, and residents may need to be temporarily displaced. And while some investors and housing owners are excited about new designs and technologies, others are apprehensive about change.
“Some folks are enticed by being an early adapter – they want to be a leader or a champion so the early adapter concept appeals to them, while others are put off by risks,” said the Association for Energy Affordability’s Dirr.
Navigating New Technology and Capital Stacks
In the affordable multifamily housing sector, there is not a lot of room for risk, said Adam Meier, director of Green & Healthy Communities at the Housing Partnership Network, which has more than 100 housing and community development organizations as members.
“We often aren’t in the position to be testing new materials and products all the time,” he said. “We want stuff that can be durable and we know how to maintain, so when there are a lot of new technologies coming out, there can be hesitation to adopt.”
Enterprise is part of a new coalition, Power Forward Communities, which aims to help homeowners and housing providers phase out older technologies and make homes more efficient and affordable through financing as well as technical assistance, training, digital resources, and other tools focused on decarbonization.
While the IRA provides once-in-a-generation opportunities, staffing and technical expertise are needed to determine which projects qualify, and how to braid or stack local, state, and federal programs for maximum impact. Skilled project managers are needed to ensure adherence to legislation and any funding requirements. And officials said all stakeholders should be included; for example, many utility companies already run energy-efficiency programs.
Meier, from the Housing Partnership Network, said it is important to remember that there are many stages in a building’s cycle when energy retrofitting can be done. “Any time you’re doing acquisition rehabs, planned renovations, or a big capital project, and planning to move people out – those are great opportunities to loop in decarbonization work,” he said.
Adalia Rodriguez, vice president of human capital and chief operating officer at East LA Community Corporation (ELACC), said her nonprofit is piloting retrofitting work on two affordable housing developments in hopes of gaining insight for future work. One project will include everything from installing new heat pumps to smart thermostats and LED lighting, with the hope of saving $15,000 annually in property operations and trimming $250 from residents’ yearly utility bills, she said. The second phase would involve solar installation, which will bring additional savings and benefits.
One lesson learned so far is that as we switch to green energy, more education and resident engagement may be needed. “Many of our tenants are unaccustomed to the significant improvements being made, which not only enhance their homes but also their overall well-being,” Rodriguez said. “There's a learning curve associated with energy efficiency and its benefits, underscoring the need for us to facilitate comfort and understanding of the new technologies being introduced in their buildings.”
Joshua Wilmoth, president and CEO of Full Circle Communities, the Chicago-based nonprofit whose properties include the Brainerd Senior Center, stressed the importance of understanding a community’s needs. For example, about 40% of renters in his organization’s portfolio do not have a car. So while the IRA may encourage electric vehicle charging stations, some residents would be better served with larger units, enhanced building amenities, or more green spaces.
“We’re trying to build more housing, but don’t want to be left behind in terms of amenities that will be common five to 10 years from now,” he said. “It's this fine balancing act of how do we allocate resources, and who can we help when we allocate those resources?”
Vesna Jaksic Lowe has written for the New York Times, the Washington Post, and the New York Daily News. This article is part of a series exploring how the affordable housing sector can maximize the potential of the IRA. Read more from the series: What the IRA Means for Tribal Nations and Why They Must Lead on Decarbonization, How Decarbonization Can Build a More Equitable Workforce, How State Finance Agencies Are Gearing Up for the IRA, How the IRA will Help Solar Gardens Power Affordable Housing, and From Roadmaps to Software: Tools to Help Leverage the IRA.