Building scientists, auditors, enlightened building owners, and contractors have been retrofitting multifamily buildings in New York City for many decades, but the retrofit industry has largely relied on public subsidies, a limited resource that has constrained the industry’s ability to scale. Private capital, if it could be deployed for retrofits, could prove transformational in achieving significant carbon reductions while upgrading multifamily buildings and stimulating much-needed job creation.
This study has tried to address a key bottleneck for private capital: the lack of confidence in energy savings for lenders to underwrite loans against. New York City proved an exceptional laboratory for commencing the study. A long tradition of public private partnerships enabled the project to be stewarded by hands-on group of practitioners from city and state housing agencies, community development intermediaries, utilities, energy program incentive providers, and other mission-driven nonprofits.
The project team analyzed the 230+ building dataset to assess total savings achieved and savings as a percentage of projections. These data-driven findings suggest a rationale and methodology for underwriting against fuel savings projections.
The next step toward market transformation will be proof of concept, executing transactions that show how underwriting against energy savings projections can be a viable financing practice. The study provides a starting point for an underwriting methodology. Lenders, credit enhancers, and building science experts now need to collaboratively refine the methodology. Similarly, the industry must develop complementary tools and resources, including standardized data reporting protocols, owner best practice guidelines, and energy monitoring standards.
A 2012 follow-up grant to the New York City Energy Efficiency Corporation by Living Cities will permit taking this next step, utilizing the Deutsche Bank and Living Cities dataset to pilot new underwriting guidelines and the development of complementary resources through an initial series of transactions with affordable housing lenders.
As a companion document, Deutsche Bank and Living Cities also solicited a study of the wide ranging benefits of energy efficiency retrofits that accrue to multifamily building owners, tenants and their communities. These benefits include ensuring the viability of existing affordable housing stock; creating jobs; providing savings and improved health and comfort for residents; and reducing greenhouse gas emissions. Read the briefing, The Benefits of Energy Efficiency in Multifamily Affordable Housing, here [PDF, 1.37 MB].