Going Green for Affordable Housing

With rising financial pressures from high energy costs and stricter regulations for buildings’ carbon emissions, the cost to operate and maintain affordable housing developments are increasing. This generates increased risk for Citi Community Capital’s (CCC) affordable housing portfolio as more borrowers approach default or have difficulty refinancing their mortgages. Moreover, recent regulatory changes at all levels of government will require that buildings meet high standards for energy efficiency. However, advances in energy technology and new public policies that incentivize retrofits can lower the energy costs for developers and tenants. 

In addition to recommending how CCC can expand its data collection, the Capstone team found that encouraging green energy audits and implementing green energy retrofits was the optimal way for CCC to mitigate risk and ensure its current affordable housing stock remained financially viable, especially in New York and California. The team developed Policy Incentives TOOLKIT for CCC’s asset managers to  easily identify federal, state, and local incentives, financial products, rebates, and subsidies to finance green energy retrofits in New York and California. Through desk research and conducting interviews with leaders in the affordable housing lending industry, affordable housing developers, and green energy auditors, the Capstone team provided CCC lenders with best practices on green energy policy.