March 25, 2021

2020 Report Update: NHT finds more states incentivized energy and water efficiency in 9 percent LIHTC properties

NHT has released an update to its 2017 “State Strategies to Increase Energy and Water Efficiency in Low Income Housing Tax Credit Properties” which reviewed hundreds of HFA documents, including Qualified Allocation Plans (QAPs), Housing Credit applications, Design and Construction Guidelines, and other documents, to identify the 10 most prominent strategies in use by HFAs to advance water and energy efficiency. 

The updated report and accompanying appendices examine the same ten strategies to identify trends in how HFAs are using 9 percent LIHTCs to develop and preserve affordable rental housing that is energy and water efficient, and identify states encouraging higher levels of performance and promising practices.

Third-party building standards, like Enterprise Green Communities, LEED or EarthCraft continue to be the most widely adopted method to improve the energy and water efficiency, and health of LIHTC Properties. Thirty-eight HFAs require or incentivize these standards, up from 33 HFAs in 2017. Third-party building standards offer a holistic approach to design and construction that can cost-effectively reduce energy and water consumption, incorporate healthier building materials, and improve resident health.

Another encouraging trend is coordination with utility-sponsored, state, and federal energy efficiency programs. Coordination between HFAs and utilities can make it possible for LIHTC applicants to invest in deeper energy efficiency upgrades by incorporating utility incentives and rebates into the property’s capital stack and stretching housing resources further. In 2020, 17 states required or incentivized coordination with utilities, up from 12 in 2017, and 11 have processes to evaluate and incorporate utility incentives into financing.

The 2020 update to State Strategies Report demonstrates that HFAs are increasing their focus on the long-term benefits of more energy- and water-efficient affordable housing to improve the financial performance of properties, keep rent and utilities affordable, and provide healthier homes for residents.

Click here to access the full report