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Page 22 — Multifamily Properties Quarterly — November 2016
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COLORADO | TEXAS
Elan Union Station
Aloft Hotel
Park Regency Assisted Living
ONE PROJECT AT A TIME.
A chieving higher-efficiency
standards for multifamily
housing in the U.S. could be a
game changer that provides
billions of dollars in economic
benefit and significantly improves the
standard of living for millions of people.
In a 2014 study, the McKinsey Global
Institute argues that the housing indus-
try would need to cut costs by about 30
percent to deliver a standard unit in a
multifamily building that would meet
affordability requirements.This degree
of cost cutting is achievable through
energy and water conservation mea-
sures, but often is left unrealized due to
several factors.
In the August issue, we covered the
barriers to enhancing the sustainability
and affordability of existing multifamily
housing through green upgrades. Below
we provide some solutions and best
practices for overcoming those barriers.
• Split incentives. By providing infor-
mation on utility rebates, low-cost
financing options, savings projections
from reduced utilities and operations
and maintenance expenses, increases
in property value and revenue gains
due to potential green upgrades, prop-
erty owners can be given the informa-
tion they need to make smart decisions
based on cost-benefit analysis.
• Lack of knowledge and resources
at ownership level.A comprehensive
energy audit that includes an itemized
assessment of all energy-efficiency,
water conservation and renewable
energy options can be an effective way
to help multifamily owners overcome
their lack of knowledge and help them
select the optimal solution from the
wide variety and fast-changing green
options they are confronted with. For
each suggested
green upgrade, the
audit report can pro-
vide the costs, sav-
ings, rebates, incen-
tives and payback, so
that the owner can
select solutions that
best meet his needs.
Issues regarding
a lack of resources
can be overcome by
working with one of
the many “one-stop-
shop” service provid-
ers who can manage the entire green
rehabilitation process for the owner,
including providing access to financing
and the technical assistance to make
the smart decisions at the lowest pos-
sible cost.
• Small project size: High transaction
costs and lack of volume efficiency.
For owners of small multifamily
properties, high transaction costs and
inefficiencies can be overcome by bun-
dling multiple services from a single
service provider. Instead of hiring sepa-
rate energy auditing, engineering, con-
struction management, financing and
other service providers, owners might
consider hiring one turnkey provider.
Owners also might consider offering
additional work such as nongreen
rehab, project capital needs assessment
report and apartment turnover services
to the one-stop-shop service provider
to help increase the project size and
eliminate the disadvantage of high-
transaction costs.
• Financing challenges. Gaining access
to available incentives and rebates can
be instrumental in financing green
upgrades. Incentives include local,
state and federal grants, tax credits and
deductions, accelerated depreciation,
weatherization assistance program
funds and utility rebates. In many
cases a multifamily property will quali-
fy for one or several of these incentives,
which can be used as owner contribu-
tions to leverage other financing.
In addition, off-balance-sheet
financing programs such as Property
Assessed Clean Energy, Energy Per-
formance Contracts and Pay-for-Suc-
cess are potential methods for over-
coming financing hurdles. Access
to low-cost financing from state
housing finance agencies, other
government agencies or community-
development financial institutions
provides further support for primar-
ily affordable multifamily properties.
• Lack of control over tenant behavior.
Resident engagement programs can
educate tenants on the best ways to
use the existing energy and water
resources in their apartments and can
teach them additional ways to become
more efficient in their consumption
behavior.These educational programs
can be on site or online. Studies show
that if the multifamily property staff
also participate, then tenant engage-
ment programs can produce significant
results that help reduce multifamily
owner fears regarding the impact of
resident behavior on energy savings.
• Best practices for installing green
Ravi Malhotra
President and
founder, ICAST,
Denver
Sustainability
ICAST
Tallmadge & Boyer Block is a multifamily affordable housing property in Denver listed
on the National Register of Historic Places that was retrofitted in 2016.