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Inflation Reduction Act Investments in Green and Resilient Affordable Housing

October 4, 2022


Climate change and the affordable housing crisis are inextricably linked, and it’s not possible to solve either challenge without tackling them both head on. The improvements funded in the Inflation Reduction Act allow HUD to work on both.

Not only do w e have a national shortage of affordable housing, but the affordable housing stock is increasingly concentrated in buildings that are at greater risk of disrepair with additional health and safety concerns. We need to both produce more affordable homes and preserve the limited and aging stock we have.

Energy efficiency and resilience upgrades can slow these trends and preserve affordability. By reducing utility costs and improving building conditions, energy efficiency upgrades increase a building’s net operating income, boost the building’s property value, and better position building owners to keep rents affordable.

Energy costs disproportionately burden low-income households, especially those living in multifamily rental housing. In one study, researchers found the overall energy burden of the median low-income household living in multifamily housing was nearly twice as high as the burden of a typical median-income household. Low-income households often live in older, less energy efficient buildings, and their utility bills account for a disproportionately larger share of their monthly income.

Research also shows that energy efficiency upgrades can have nonenergy benefits that improve the health and well-being of residents , often by improving indoor air quality. Basic upgrades can increase overall comfort and improve respiratory health.

The Inflation Reduction Act

The Inflation Reduction Act will help lower costs for the American people and create good jobs across the country and it is, by all accounts, the most significant climate legislation in U.S. history. In addition to bringing us closer to meeting our greenhouse gas emissions commitments, it will be transformative for residential energy use. Because of this law, many families will be able to save hundreds of dollars every year on energy costs.

Green and Resilient Retrofit Program

The Green and Resilient Retrofit Program, funded at $1 billion in the Inflation Reduction Act, will provide funding to the owners of multifamily-assisted properties to rehabilitate these properties to be more energy efficient, healthier, and more resilient to extreme weather events. This increased investment will improve the stock of affordable housing available to many low- and extremely low-income families, often from marginalized communities.

This program will support resiliency and energy efficiency and will reduce the likelihood of catastrophic damage from future disasters. While HUD is committed to moving quickly to get this money in the hands of building owners who need it, we are also eager to hear from stakeholders about the best ways to design and execute the program for maximum impact. Interested parties can read our Request for Information here and comment before October 27, 2022.

Utility Benchmarking

You can’t manage what you can’t measure, so to ensure energy efficiency upgrades provided by the Green and Resilient Retrofit Fund have maximum impact, HUD will also be putting significant resources into helping multifamily owners track and measure the energy and water efficiency performance of their buildings through utility benchmarking. The information on utility usage will help property owners and HUD see where to focus efforts.

Inflation Reduction Action Benefits beyond HUD’s programs

In addition to the funds dedicated for HUD programs, climate and environmental justice provisions in the law will be transformational for HUD-assisted tenants, communities, and residents. Those provisions are wide reaching and include:

  • $9 billion in rebates for energy efficiency and decarbonization efforts, with a plus-up for affordable multifamily households.
  • $27 billion to launch a national Green Bank, which will spur transformational private investment in HUD-assisted communities and properties.
  • $3 billion in Environmental and Climate Justice Block Grants for disadvantaged communities.
  • $3 billion in grants to improve walkability, safety, and affordable transportation access.
  • Resilience measures such as coastal protection and drought prevention and preparedness.

HUD will be collaborating wit h administering agencies to support these investments benefiting HUD-assisted tenants and communities.

The Inflation Reduction Act is an historic step toward ensuring that affordable housing is healthy, green, resilient, and preserved for the long term. The work we are beginning will also point the way toward much needed comprehensive solutions for affordable housing, of which this is only a small step.

Crystal Bergemann and Ethan Handelman contributed to this blog post.