MacArthur Foundation Commits $25M to Energy Efficiency in Affordable Housing
The MacArthur Foundation recently committed $25 million to support and expand innovative energy efficiency financing programs specifically designed to meet the challenges and needs of multifamily housing in the United States. The foundation's investments are intended to reduce significantly carbon footprints for some of the country’s least energy-efficient buildings and make housing more affordable for low-income families, seniors, and individuals with special needs, such as veterans and the formerly homeless.
According to the American Council for an Energy-Efficient Economy and other experts, a 15-30 percent decrease in energy usage in the U.S. multifamily stock would result in $3.4 billion in annual financial savings for owners and renters across the country and, simultaneously, avert 50 million tons of carbon emissions. Such improvements are urgently needed to combat the rising challenge of climate change and, at the same time, bring relief to the millions of low- and moderate-income households whose unaffordable housing cost burdens lead them to cut back on food, health care, education, and other essentials.
“The lack of efficient, workable financing options is a critical hurdle to meaningful energy efficiency gains throughout the U.S. multifamily sector,” said Debra Schwartz, MacArthur’s director of Program-related Investments. “Fortunately, there are a growing number of creative models that can help owners upgrade multifamily buildings in ways that significantly reduce energy usage while increasing local economic activity and improving long-term affordability for hard-pressed low-income renters.”
Examples of promising financing models the Foundation may help launch or scale up through this new $25 million pool of impact investments include:
- Easy, “one-stop” service providers dedicated to helping multifamily building owners navigate and assemble various programs, options, incentives, vendors, and financing to make their properties more energy- and cost-efficient.
- Alternative repayment mechanisms that give building owners new ways to finance energy efficiency retrofits such as “on-bill” programs that integrate financing into a regular utility bill.
- Creative use of state and federal government incentives to finance efficiency improvements and add renewable sources, such as solar, to U.S. multifamily buildings. Across the country, housing, energy community development finance organizations, including the National Housing Trust, a Foundation grantee, are seeking ways to make Qualified Energy Conservation Bonds, New Markets Tax Credits, and Renewable Energy Certificates, and other tools work well for the multifamily stock.
- A national “pay for success” demonstration program, which would enable HUD to harness future savings to pay the up-front costs of energy and water efficiency upgrades.