LeadingAge applauds the landmark funding program and will work with members to promote green and resilient affordable housing retrofits. HUD is accepting applications for green retrofit loans and grants until Spring of 2024.
Department of Housing and Urban Development (HUD) on May 11 announced details of a new landmark funding program, with almost $5 billion in loans and grants to rehabilitate affordable Multifamily Housing programs for energy efficiency and climate resilience.
This is the first HUD program to simultaneously invest in utility efficiency, renewable energy generation, and climate resilience strategies in HUD Multifamily Assisted Housing. According to HUD, affordable housing properties will be able to use the funds invest in technologies such as solar panels, heat pumps, wind-resistant roofing, and other measures that will reduce greenhouse gas emissions and make properties healthier and safer for residents in the face of more severe weather and a changing climate.
Calling HUD’s news “a tremendous step forward towards ensuring that low-income older adults are safe and protected as threats from climate change escalate,” LeadingAge president and CEO Katie Smith Sloan in a press release said, “Providers are eager to make much-needed property upgrades that will help to ensure ensure existing housing stock is preserved and that buildings operate efficiently.”
Three Funding Opportunities
HUD published three Notices of Funding Opportunity (NOFOs) for the Green and Resilient Retrofit Program, totaling $837.5 million in grant funding and $4 billion in loan authority through HUD. The funding is targeted for HUD’s Multifamily Housing programs, including project-based Section 8, Section 202, Section 236, and Section 811 properties. HUD estimates that hundreds of properties will receive the new funding, covering tens of thousands of households.
The GRRP includes three funding buckets, ranging from smaller to larger investments at properties. An owner must select which cohort is most appropriate for any particular property and may submit an eligible property to only one of the NOFOs available under the GRRP–a property cannot receive an award under more than one GRRP NOFO.
Within each cohort, HUD is making funding available in tranches so that owners not ready to apply immediately are not disadvantaged in the application process.
Elements Awards target properties that already have rehabilitation underway and need gap financing to fund specific utility-efficient or resilient elements. Approximately $140 million is made available for the Elements Awards in the form of grants and Surplus Cash Loans. The funding is capped at $40,000 per unit or $750,000 per property. Applications are due 3/28/2024, and HUD will implement a rolling application submission process with unfunded applications ranked for selection on three occasions (roughly two, five, and eight months after publication of the Notice on May 11).
Example Elements applicant: The property owner is well advanced in planning and financing a property rehab, and will replace the in-unit HVAC systems with higher-efficiency electric HVAC systems.
Leading Edge Awardstarget properties that are in early stages of recapitalization planning. These awards fund projects that will achieve a high-level third-party green certification. Approximately $400 million is made available for the Leading Edge Awards in the form of grants and Surplus Cash Loans. The funding is capped at $60,000 per unit or $10 million per property. Applications are due April 30, 2024, and HUD will implement a rolling application submission process with unfunded applications ranked for selection on three occasions, roughly three, six, and nine months after publication of the Notice on May 11.
Example Leading Edge applicant: An experienced property owner is ready to move forward with a complete renovation to a Passive House certification financed by low-income housing tax credits, a new first mortgage, a GRRP loan, and other sources.
Comprehensive Awards will target properties with high needs where HUD-procured Multifamily Assessment Contractors will support owners by commissioning third-party reports and assessments to develop a scope of work. The resulting plan will include whole-building retrofits to incorporate green retrofit and resilient design elements. Approximately $1.47 billion is made available for the Comprehensive Awards in the form of grants and Surplus Cash Loans. The funding is capped at $80,000 per unit or $20 million per property. Applications are due May 30, 2024, and HUD will implement a rolling application submission process with unfunded applications ranked for selection on three occasions, roughly four, seven and ten months after publication of the Notice on May 11.
Example Comprehensive applicant: The property has high REAC scores and low capital needs, but is using older equipment dependent on fossil fuel sources. It is in an area of wildfire risk. The property owner is considering either a refinancing with rehab or a stand-alone renovation for efficiency, emissions reductions, and resilience. Additional example applicant: The property owner is in the early stages of planning a low-income housing tax credit-financed renovation and needs additional funding for green and resilience improvements.
LeadingAge Priorities Reflected in New Green and Resilient Funding Program
In October 2022, in response to HUD’s Request for Information to help inform GRRP program design, LeadingAge called for an emphasis on equity and scalability. In particular, LeadingAge proposed that HUD issue separate buckets of GRRP funding, including a simplified categories of small- and mid-sized grants to HUD-assisted multifamily housing properties nationwide to implement basic energy retrofitting at scale; and a funding category for larger grants and loans to properties undergoing more comprehensive resilience retrofits, targeted to climate-vulnerable areas or properties serving overburdened populations.
To help affordable housing communities with various levels of capacity access the green funding, LeadingAge also proposed that the some of the grants should have a lower barrier to participation than the more comprehensive funding opportunities, which may require energy audits and reporting. LeadingAge also emphasized equity and opportunities for energy efficiency pass-through benefits to residents, as well as opportunities to leverage GRRP funding within other recapitalization transactions, in our October comments.
LeadingAge is pleased to see many LeadingAge proposals incorporated into HUD’s GRRP program announcement and will continue working with HUD and our affordable senior housing members to improve green and resilient efforts across the affordable housing portfolio.
In addition to the Notices of Funding Opportunity, HUD has made a variety of resources available for the GRRP:
HUD’s Office of Multifamily Housing Programs is hosting a webinar on the GRRP on Tuesday, May 23, at 2 p.m. ET, and you can register here. HUD is also hosting office hours on Wednesdays starting on May 24.