M2M Green Initiative

In July of 2007 HUD introduced its Green Initiative, a nationwide pilot initiative to encourage owners and purchasers of affordable, multifamily properties to rehabilitate and operate their properties using sustainable Green Building principles. These principles comprise sustainability, energy efficiency, recycling, and indoor air quality, and incorporate the Healthy Housing approach pioneered by HUD. The Green Initiative will focus on properties within HUD's Section 8 portfolio, specifically properties in the Mark to Market (M2M) Program administered by the Office of Affordable Housing Preservation (OAHP).

What is Green Building? The real estate industry, including the housing industry (and more particularly the affordable housing industry), is undergoing a fundamental shift toward Green Building principles. Green Building is an approach to sustainable development that is designed to result in a property that reduces its impact on the environment, costs less to operate, and improves the residents' quality of life. Green building considerations start with site selection and include building placement and design, materials and techniques used in construction,and all the systems, appliances, and fixtures within the building. Wikipedia provides a good working definition for the OAHP Green Initiative:

  • Green building is the practice of increasing the efficiency with which buildings and their sites use and harvest energy, water, and materials, and reducing building impacts on human health and the environment, through better siting, design, construction, operation, maintenance, and removal - the complete building life cycle.

To date, the focus of green initiatives nationally has been primarily on new construction rather than on rehab, particularly the moderate level of rehab that is typically associated with M2M properties. There are fewer opportunities to Go Green in rehab, but the opportunities are nonetheless significant and worth pursuing, particularly when viewed in the context of the M2M standard 20-year schedule of property repairs and replacements.

Green rehab practices should result in lower utility costs that benefit HUD as well as residents. They should also result in other benefits, generally in the form of lower environmental impact. When rehab is performed in a manner that meets both Green and Healthy Housing principles, residents will benefit from lower utility costs (to the extent the cost savings are shared by the owner and residents), improved indoor air quality, lower risk of pest infestations, lower levels of allergens, and reduced risk of mold-related illness.

Why apply Green principles in the M2M Program? The M2M Program offers a unique platform for establishing a Green Initiative in the HUD affordable housing portfolio because it can be implemented within existing statutes, regulations, and authorities. M2M affords the opportunity to implement Green Building principles in a representative sample of M2M restructurings involving properties that are already undergoing rehabilitation, from within the larger HUD portfolio. As HUD's primary housing preservation tool since its creation in 1997, OAHP has restructured more than 1,600 projects nationwide through the M2M program. These projects are privately owned, HUD-subsidized (through Section 8), multifamily properties, with approx 100 units each, on average. In addition to rehabilitating properties, M2M also resizes and restructures property debt to account for market rent levels, to pay for rehabilitation and 20 years' of estimated repairs and replacements, and to establish a financially viable project for the long term.

M2M provides an opportunity to test the impact of Green and Healthy Housing principles in the existing HUD-subsidized multifamily inventory by providing modest incentives to owners and purchasers to perform needed rehab and maintenance using Green alternatives, and to collect ongoing data to validate impacts on utility consumption and indoor air quality.

In developing the Green Initiative, OAHP has consulted with several industry experts, and their participation has been invaluable in the development of this outline. By launching the Green Initiative through M2M, HUD has the opportunity to continue to work with industry leaders to shape both the future of HUD's efforts and of the Greening of affordable housing in this country.


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