The Inflation Reduction Act and Bipartisan Infrastructure Law have created a once-in-a-generation opportunity for multifamily affordable housing (MFAH) to leverage tax credits, rebates, and other incentives for holistic upgrade projects.
Technologies like solar and heat pumps can improve net operating income; reduce operations and maintenance costs; and create healthier, safer, more comfortable, and more affordable homes for the low-income tenants.
The Solar and Storage Investment Tax Credit (ITC) was increased to 30%, and MFAH can tap certain bonus credits. ITCs can be transferred to third parties and nonprofits can claim them as cash (“direct pay”). They can also be stacked with other financial resources which, though varied across states, can include:
- Low-Income Housing Tax Credits,
- Energy Efficient Commercial Buildings Deduction (179D),
- Utility rebates
- IRA Grant Funding such as EPA Solar for All,
- Weatherization Assistance Program (WAP) funds, and
- Solar Renewable Energy Credits
Holistic, successful upgrade projects rely on (1) developers’ ability to create sophisticated capital stacks, and (2) supportive policy, regulatory, and administrative infrastructure. For example, MFAH can only access WAP dollars if their state has multifamily-focused weatherization services. Statewide community solar programs can enable MFAH owners to subscribe entire properties to shared solar projects, thus keeping the benefits with the property regardless of tenant turnover (seen in New Mexico). Onsite solar is most cost-effective when projects can benefit from virtual net metering, which “virtually” allocates the solar from one large install to each apartment on the property.
Unfortunately, supportive frameworks for solar-in-MFAH are underdeveloped or nonexistent in most states. However, the MFAH market constitutes an economic heavyweight, meaning the industry has the power to advocate and push for a change.
About the author:
Ryan Kristoff is the Grants Director at ICAST, a national nonprofit that designs holistic retrofit solutions for MFAH. He works with local government, utility, state, and federal partners to design and launch MFAH-focused clean energy programs.