Page 28
— Multifamily Properties Quarterly — August 2016
T
he Federal Housing Authority
reduced mortgage insurance
premiums for multifam-
ily housing this spring. The
savings realized from the
reduced rates more than covers the
cost to design, build or rehab a mul-
tifamily property to meet the energy
and sustainability requirements
needed to qualify. For every $10
million of U.S. Department of Hous-
ing and Urban Development debt
financed, the reduced MIP rates save
an estimated $75,000 at closing and
an additional $20,000 annually.
FHA reduced closing MIP from 100
to 25 basis points and reduced the
annual premium from 45-95 bps to
25 bps for multifamily housing that
meets green certification and ener-
gy-efficiency requirements. Projects
can qualify by certifying under LEED,
Enterprise Green Communities (if
there is an affordable component),
Energy Star or the National Green
Building Standard. FHA also recog-
nizes other qualifying certifications
that we typically do not see in Colo-
rado.
As for energy efficiency, a project
must be designed and operated in
the top 25 percent nationwide as
determined by the U.S. Environ-
mental Protection Agency’s Portfolio
Manager. To achieve this, a building
with four stories or more in Denver
would need a site energy-use inten-
sity of less than 50 thousand British
thermal units per square foot per
year and a source energy-use inten-
sity of less than 117 kBtu per sf per
year.
Those energy targets may seem
like gibberish, so we recommend
going through
Xcel’s Energy
Design Assistance
program as an
easy way to ensure
the project meets
the energy goals.
The Energy Design
Assistance program
covers energy mod-
eling and rebates
the owner or devel-
oper once the proj-
ect is complete.
If the project is
not in Xcel territo-
ry, the local utility
may offer a com-
parable program. If
that is not the case,
engaging the energy
modeler early in
the design process
will ensure the FHA
requirements are
met and can assist
with energy code
compliance.
We anticipate
projects under the
2015 International
Energy Conservation
Code will meet the
targets as long as
efficient lighting is installed.
The soft costs to certify the project
under a green-rating system and meet
the efficiency targets generally are
less than the first-year savings from
the MIP reduction. Hard costs depend
on the project and original goals and
priorities.
The MIP reduction also applies to
broadly affordable housing and afford-
able housing. Broadly affordable hous-
ing has Section 8 in 90 percent of the
units. Affordable housing includes
set-aside units based on affordability
and may be comprised of low-income
housing tax credit, Section 8, inclu-
sionary zoning, etc. The rate reduction
is intended to preserve existing afford-
able housing as well as save tenants
money on their monthly utility costs.
There are additional financing
opportunities that can be coupled
with FHA mortgages or used with
projects that do not have an FHA loan.
We mentioned utility energy-conser-
vation programs. These apply to new
and existing building renovations, as
does the MIP reduction.
Another financing mechanism
available is the C-PACE – Colorado
Commercial Property Assessed Clean
Energy program. The PACE program
can finance 15 to 20 percent of the
new construction costs for projects
that at least meet the 2015 Interna-
tional Energy Conservation Code. The
financing repayment is accomplished
through a county property tax assess-
ment. Currently, Boulder and Adams
counties are participating with other
Colorado counties anticipated to fol-
low.
Taking advantage of these financial
opportunities in order to build more
energy-efficient and sustainable proj-
ects will increase the overall value of
the projects and help maintain afford-
ability in our market.
s
Sue Reilly
Principal,
energy team
leader, Group14
Engineering, PBC,
Denver
Laura Charlier
Sustainability
team leader,
Group14
Engineering, PBC,
Denver
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Sustainability
McWhinney, Craine Architecture and The Weitz Co.
SOVA, a project planned for 1901 Grant St. in Denver, is taking advantage of the reduced
mortgage insurance premium rates through LEED certification.
