Communities can now take advantage of historic funding opportunities in the IRA to preserve and improve affordable housing and reduce pollution - thereby addressing two major challenges: affordable housing and climate change.Cary Ritzler | December 29, 2023
Two Crises at Once
In the summer of 2022, while Congress negotiated the Inflation Reduction Act, people in several entire neighborhoods in Athens, Georgia received notice that their monthly rent was increasing several hundred dollars, their Section 8 vouchers would no longer be honored, and they had one month to decide whether to stay or go. Many tenants in these mostly Black neighborhoods had lived for years in their homes, some for decades. Long enough to fix up the kitchen, see the neighbors’ children grow up, and build community. And, long enough to see apartments fall into disrepair and the septic system become overwhelmed.
Housing investors from out of state bought several whole neighborhoods, raised rents, rejected vouchers, and displaced over a hundred households. Some of the tenants organized, attempting to pressure the developers or seek help from elected officials. The community’s pleas to the property developers were largely ignored, and the local government had limited options for an emergency response. A few people were able to pay the higher rent. Most people just had to try to find another place to live in a town where rents are rising due to many pressures and the supply of affordable housing does not meet the needs. Many people had to move out of the county or become homeless.
The Summer of 2022 was also the hottest summer on record, until the record was broken the following year. A few months later, in December, the South experienced an extreme and unusual winter storm with record-low temperatures across the country, including in Athens. It is hard to know where the displaced residents went or how many people were still unsheltered by then. By January, 2023, the city’s homeless population had increased by 20% over the previous year’s count, following an upward trend that began during the COVID-19 pandemic.
Athens is not unique. All over the South and across the country, communities are grappling with a lack of affordable housing to meet the needs of the people who work and live in cities, small towns, and even rural communities.
According to a recent report from the National Low Income Housing Institution, no state in the United States has an adequate supply of affordable housing. And all over the south and across the country, climate disasters are increasing. These two major problems are linked. Their solutions are too.
Affordable Housing and Climate Change
Lack of affordable housing makes people and communities more vulnerable to the effects of climate change and climate disasters. As weather becomes more extreme in a changing climate, the unaffordability or inability to properly heat and cool inefficient homes can contribute to weather-related health problems; and extreme heat poses even greater threats to unhoused people, who are often displaced by unaffordable housing prices.
People with few resources may be forced to live in places where they are more exposed to climate risks, such as flooding or urban heat islands, in order to be able to afford housing. This displacement can also contribute to urban sprawl, which can lead people to travel further by car and contribute to rising emissions. Meanwhile, high utility costs, which disproportionately burden low-income residents, are often indicative of inefficient housing that lacks enough insulation and leaks air during cold and hot weather. Inefficient housing drives up residents’ bills while wasting energy and unnecessarily burning polluting fuels.
Improving housing can shore up our communities and protect vulnerable populations while lowering climate emissions. Layering climate-smart practices with efforts to preserve affordable housing can stabilize communities and make them more resilient to the threats of climate disasters while also driving down harmful pollution that causes climate change.
Building new housing with climate in mind can provide safe, healthy, and affordable housing for the workforce necessary to build the new electric vehicles, solar panels, batteries, and associated goods that will allow us to accomplish the energy transition.
At the same time while the Athens residents were receiving their rent notices, during that hottest-summer-ever-until-the-next-summer, Congress passed the IRA on party line votes, directing historic funding to low-income communities like the ones affected by the housing crisis in Athens. Several programs in the IRA are aimed at building community resilience, improving existing affordable housing with climate-smart retrofits, and encouraging energy efficiency in new construction. Local governments, affordable housing owners, and nonprofit organizations can take advantage of historic funding targeted to disadvantaged communities through the Justice40 initiative.
These programs will not be enough alone to solve the climate crisis or the affordable housing crisis, but they can begin to shift the trends. Below are some of the opportunities available now. If you know of a property owner, local government, or community based organization who might be eligible for any of these programs, please send this blog post to them and encourage them to look into it!
Funding and Assistance Available Now
Below are several IRA programs that are available now. Some programs are for communities meeting specific criteria, and some are more broadly available.
These programs are subject to the Biden Administration’s Justice40 Initiative, an executive order that sets the goal of delivering at least 40% of the benefits of funding for climate and clean energy to communities defined as “disadvantaged” by the Environmental Protection Agency’s Climate and Economic Justice Screening Tool.
HUD Thriving Communities Technical Assistance
What does it do?
The HUD Thriving Communities Technical Assistance program (TCTA) will support coordination and integration of transportation and housing in infrastructure planning and implementation. The TCTA is part of an interagency initiative among the Department of Transportation, HUD, Energy, Commerce, and Agriculture, as well as the General Services Administration and the Environmental Protection Agency.
Who is it for?
TCTA is for local governments that have received federal funding for transportation projects and want to explore options for addressing local housing needs while completing infrastructure projects. For example, a community that has a project to construct multimodal improvements and connect a disadvantaged community could include TCTA to preserve affordable housing in the community.
When is it due?
Applications are accepted on a rolling basis.
The TCTA program can help local governments make the most of opportunities to address multiple community needs and get guidance on how to meet community priorities that cross federal agency boundaries. Often, infrastructure projects have consequences for affordable housing in communities. Receiving technical assistance across agencies could help mitigate the potential negative impacts and ensure that communities see better outcomes from current transportation projects.
HUD Green and Resilient Retrofits Program
What does it do?
The Green and Resilient Retrofits Program (GRRP) provides three different grants to help property owners add energy efficiency and resilience measures to existing affordable multi-family housing. The three programs are called Elements, Leading Edge, and Comprehensive. Which cohort fits a project best depends on where the project is in relation to the recapitalization process and how ambitious the property owner wants to be.
The Elements program provides up to $750,000 per property for gap funding for energy efficiency, renewable energy, carbon emissions reduction, and / or climate resilience measures. Gap funding allows the owner to finance the additional cost of the measures. For example, if a property owner is planning to replace windows in housing units, this grant could provide the additional funding needed to purchase high-efficiency windows instead of lower efficiency windows. To be eligible for this grant, properties must be in the process of recapitalization (a process whereby the owner uses third-party financing to make improvements on the property).
The Leading Edge program provides up to $10 million per property for projects where the owner is interested in pursuing an advanced green certification (examples of green building certifications at this link). Measures could include: energy efficiency, renewable energy, materials with lower embodied carbon, and other resiliency measures.
The Comprehensive program provides up to $20 million per property to properties with extensive needs for energy efficiency and climate resilience. Under this program, HUD provides owners with substantial assistance through recapitalization and the green building process.
Who is it for?
This program has grants for owners of existing HUD-subsidized multifamily housing that are in need of eligible updates. Most eligible properties fall under Section 8, including project-based rental assistance housing with housing assistance payment contracts (PBRA with HAP), Section 202 housing (for the elderly), Section 811 housing (for people with disabilities), and Section 236 (housing preservation). The GRRP is not for non-Section 8 public housing (for example, housing projects owned by public housing authorities), properties that accept housing vouchers but do not have HUD subsidies, or homes owned by low-income homeowners. You can use this map to identify HUD assisted multifamily housing projects in your community, but not all of the identified properties fall under Section 8.
When are they due?
Elements Deadline: March 28, 2024 (Elements NOFO)
Leading Edge: April 30, 2024 (Leading Edge NOFO)
Comprehensive: May 30, 2024 (Comprehensive NOFO)
The HUD GRRP grants could help preserve and maintain existing affordable housing units, and improve the health and wellbeing of residents. These grants are limited to certain properties in specific conditions, so they may not be widely useful across communities, but will make a big impact where eligible properties take advantage of the grants.
Environmental Justice Community Change Grants
What do they do?
Safe and affordable housing is a crucial condition for delivering environmental justice, particularly to communities that have faced disproportionate harm from housing policies that have segregated people by race and restricted access to housing and homeownership for Black and brown people in the United States. The EPA’s new Environmental Justice Community Change Grants program is one of many efforts by the Biden administration to deliver investments and opportunities to disadvantaged communities and begin to redress the harms of past policies. While these grants are not targeted specifically at housing, the goal of these place-based grants to “reduce pollution, increase community climate resilience, and build community capacity to address environment and climate justice challenges” could align well with community goals to improve affordable housing in communities through clean energy, energy efficiency, and other climate resilience measures. Read our Environmental Justice Community Change Grants blog to find out more about these grants.
Who are they for?
Community-based organizations (CBOs) that are governmentally recognized as nonprofits can apply for the Environmental Justice Community Change Grants in partnership with at least one other CBO, or in partnership with tribal governments, institutes of higher education, or local governments.
When are they due?
Applications will be accepted on a rolling basis until November 2024.
The EPA’s Community Change Grants represent huge opportunities for communities to address complex environmental justice problems through community-driven solutions. Safe, affordable housing is just one aspect of environmental justice that could be realized for communities through this grant program. These grants could make a big impact on communities that have often been left out of the benefits of federal investments.
Climate Pollution Reduction Grants
What do they do?
Agencies in most states and the largest metropolitan centers in the Southeast are currently engaged in developing priority action plans to reduce climate pollution through the Climate Pollution Reduction Grants program (CPRG). Plans will be submitted to EPA by March 1, 2024. Once plans are submitted, local governments will have until April 1, 2024 to apply for short-term, “shovel-ready” implementation grants (due May 1 for tribes).
State or local governments for whom affordable housing is a high priority could apply for CPRG implementation grants that provide for energy efficiency, renewable energy, electric vehicle charging, and other climate pollution reducing actions in affordable housing. See SACE’s letter to Tennessee’s Department of Environment and Conservation for example for how CPRG can be used for investing in multifamily affordable housing. For these projects to be included, planning agencies must include them as priorities in their planning grants, so it is important for communities to notify planning agencies that this is a priority for their community. For more information on how to provide feedback to CPRG planning agencies, check out our blog at this link.
Who are they for?
Local or tribal governments, states, and state agencies must lead in implementation grant applications. Local governments are encouraged to form coalitions with other local governments, and can also include community-based organizations, institutions, or private companies as coalition partners.
When are they due?
State, local, and tribal governments must apply for CPRG implementation grants by April 1, 2024.
Residential and commercial buildings are a key sector for climate emissions. While the CPRG program allows for broad measures, communities that are focused on rehabilitating housing could benefit from applying CPRG funds to energy efficiency and clean energy measures for affordable housing.
What do they do?
The IRA included many tax credits for homeowners, developers, and builders to make home improvements such as energy efficiency, solar, batteries, and electric vehicle chargers.. Some base tax credits can be increased if developers deliver the benefits of clean energy and energy efficiency to low-income residents. The tax credits also encourage local workforce development by providing credit adders if developers pay prevailing wages, establish apprenticeship programs, and locate projects in low-income communities.
The New Energy Efficient Homes tax credit (Section 45 L) provides up to $2,500 per single family home (site built or manufactured), and up to $500 per multifamily unit for builders of new housing that meets ENERGY STAR specifications. This tax credit does not require the housing to meet affordability standards, but the builders could access additional credits if they pay prevailing wages. This tax credit is stackable with Low Income Housing Tax Credits. Only builders can access this tax credit–it is not available to local governments through direct pay.
The Investment Tax Credit for Energy Property (ITC) has been newly increased and extended under the IRA. The tax credit could go to a building owner or other entity that installs solar or battery energy storage systems on a property. The ITC includes additional credits for locating the project on low income-housing, benefitting low-income residents, and meeting prevailing wage and apprenticeship requirements. If all conditions are met, the developer can get up to 70% credit on the investment.
The Alternative Fuel Infrastructure Tax Credit (AFITC) provides up to 30% tax credit for electric vehicle chargers that are installed in rural or lower-income areas. To receive the full tax credit, developers must meet prevailing wage and apprenticeship requirements.
Who are they for?
The New Energy Efficient Homes tax credit (Section 45 L) is for builders of new single family or multifamily housing. This tax credit is stackable with Low Income Housing Tax Credits. Only builders can access this tax credit–it is not available to local governments through direct pay.
The Investment Tax Credit for Energy Property (ITC) (Section 48) is for property owners or other entities that install solar or batteries on a property. The ITC is eligible for direct pay, so local governments and nonprofits that do not have a tax liability can receive a payment in lieu of the tax credit. There is also a residential version of this tax credit for residents’ homes.
The Alternative Fuel Infrastructure Tax Credit (AFITC) (Section 30C), also known as the alternative fuel vehicle refueling property credit, is for property owners or other entities that install electric vehicle chargers or other alternative fuel equipment. The ITC is eligible for direct pay, so local governments and nonprofits that do not have a tax liability can receive a payment in lieu of the tax credit. There is also a residential version of this tax credit for owner-occupied homes.
When are they due?
The IRA tax credits are extended at current levels through 2032. Developers and builders can apply for the credits for the year when the project was completed.
The IRA tax credits provide opportunities for new and existing affordable housing. Building owners and developers who apply these credits can help residents lower their bills and reduce pollution, while increasing property value and reducing tenant turnover rate. Local governments can work to make sure that developers in their communities are aware of the tax credits, and may have opportunities to encourage developers and building owners to take advantage of tax credits to improve affordable housing in their communities.
Home Energy Rebates
What do they do?
The Department of Energy Home Energy Rebate Program provides rebates for home upgrades that reduce energy use. The rebates can be used for whole home upgrades, including insulation and weatherization. Rebates can also be used to offset the cost of new energy efficient appliances, such as electric stoves, heat pump HVAC equipment, and electric heat pump dryers, as well as electrical wiring and panel upgrades. Some of the rebate programs are designed for low-income households, with upfront rebates up to 100% allowed under the legislation for people earning below 80% of the area median income.
Who are they for?
The DOE Home Energy Rebates programs will be administered by state energy offices, which may develop their own eligibility criteria within the elements of the legal framework of the IRA. Homeowners and renters may be eligible for the funds, and building owners or other entities performing the work can access the funds on behalf of residents. Many of the rebate programs will be designed to be used by low-income households.
When are they due?
Most states are currently developing their rebate plans, and most programs are expected to be open by fall 2024. The rebate program is enabled to run through September 30, 2031.
The Home Energy Rebate programs will make available hundreds of millions of dollars to states in the Southeast to upgrade low income homes. Unlike tax credits, the rebate programs have a limited pool of funding. It could make sense for states to target funds to benefit the most vulnerable populations who may not otherwise be able to access funding for home energy upgrades.
Stay Up to Date With SACE
Affordable housing and climate change can be addressed together with investments for local governments, nonprofit organizations, and housing developers. Above, we have outlined some of the opportunities available now, but there are more coming. At SACE, we are always looking for ways for our members to advocate for their communities to thrive with investments in climate and clean energy. To stay up to date as new grants and programs open up, join us on our next Clean Energy Generation monthly call.