Inflation Reduction Act and Bipartisan Infrastructure Law: Resources for Agencies Seeking to Expend Their Allocations

The following information was compiled for federal and state agencies seeking to expend their Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL) funding on residential markets.  A downloaded PDF version of the White Paper is also available at the bottom of this page.   This document aims to demonstrate that targeting multifamily (MF), especially the MF affordable housing (MFAH) segment, will allow agencies to meet their goals in a manner that is streamlined, cost-effective, efficient, scalable, replicable, and responsive to the federal Justice40 Initiative.

The Need for Multifamily-Focused Programs 

• Almost a third (and growing) of the nation's housing is in MF housing.
• Historically, 85% of all MF residents are low- to moderate-income (LMI).
  
• Historically, the MFAH sector has been grossly underserved by clean energy programs.
  
• The nation is facing an ever-worsening housing shortage, plus a loss of affordable rental housing.
  
• Housing (its availability, affordability, and condition) is a recognized social determinant of mental, emotional, and physical health.

How to Launch a Top-Notch Multifamily Affordable Housing Program

The Benefits of Multifamily-Focused Programs  

• The demographics of MF residents make it an easier fit with Justice40 goals
• A well-designed MF program can scale easily, is more cost-effective, and is simpler to administer than a single-family (SF) program
  

Below are best practices and lessons learned culled from existing work in the MF and MFAH space. Note that programs work best when done on a whole-property basis.

• The same program design cannot serve both SF and MF (especially MFAH) because:
  • MF is a business-to-business relationship that relies heavily on building trust with its customers. It also follows the 80/20 rule, i.e., 80% of projects come from a small group of clients who own large portfolios of properties. SF is a business-to-consumer program that has no relationship with the homeowner, and the homeowner is not a repeat client. Instead, the program relies heavily on its contractor network.
  • Contractors serving SF are not the same as those serving MF. Those that serve MF are commercial and larger operations with a better ability to scale, and they possess different technical skills.
  • SF reporting is per individual home; MF reporting is per property.
• DOE, ACEEE, and others highly recommend a "one-stop-shop" (OSS) approach, where the program implementer has the expertise and experience to offer a turn-key solution that is simple and hassle-free for MF clients and minimizes the resources they need to expend to participate. Examples of programs using this model can be found in the downloadable pdf provided below.
  • The OSS offers outreach and education to MF owners and managers, energy assessments, project design and engineering, identification and accessing of other incentives and financing, construction planning, contractor selection and management, inspection/monitoring, invoicing, and reporting.

• OSS implementers will reduce cost of project by the value of ALL available incentives i.e., offer point-of-sale discounts, while meeting braiding and co-funding rules. This is critical to a successful MFAH program since these properties are not cash-rich.

• Programs should utilize simple rules for qualification, intake, processing, and reporting. For example, programs should allow an entire MFAH property to income qualify via certifications and proof from the owner, rather than requiring each tenant to provide proof of income. Program design should allow the submission of project details for the entire property, not one apartment at a time.

  • Income qualification of MFAH is much simpler than SF because these properties document tenant incomes, as this information is needed for them to meet their subsidizing agency(s) income requirements.  

• When possible, programs should incorporate a 100% Pay-for-Performance model, where implementers and MFAH properties are compensated for achieved program goals, such as energy savings. This aligns the goals for all stakeholders and minimizes the risk for the State in managing the program.

• Programs should offer "braiding" and "co-funding" with other available programs, per guidelines, to facilitate deep retrofits and energy savings and reduce the need for heavy investments from MFAH property owners. The lower investment by the owner, in combination with education regarding the benefits property owners can expect from the upgrades (e.g., increased property value and net operating income, reduced operating costs), helps negate the "split incentive" hurdle (which is the owners' concern that they will pay for upgrades and their tenants will benefit from the cost savings).

• Programs should utilize a "mass customization" approach wherein every project is tailored to drive the greatest benefits based on each property's specific needs. A "one-size-fits-all" retrofit program ultimately offers very low-impact solutions such as LED lights, low-flow devices, thermostats, and pipe insulation.

• Electrification must be implemented with thorough due diligence. Gas is typically cheaper than electricity, so properties transitioning away from gas can see utility bills increase. A best practice for ensuring utility cost reductions is leveraging other energy efficiency measures and PV solar with electrification.

• Successful programs need strong partnerships for guidance, referrals, and execution. Partners should include MF owners and managers, local associations, utilities, financial institutions, other program providers, etc. Existing partnerships can make the program launch easy and quick (within weeks, not months).

Click here to download this resource.