In the past, we have spoken about grants and loans available through the Ohio Department of Development for advanced energy residential projects, such as solar and wind energy installation. Federal funding is also available for residential energy-reduction projects through The American Recovery and Reinvestment Act of 2009 (ARRA). A total of $250 Million from ARRA was allocated to HUD for its Assisted Housing Green Retrofit Program (GRP). Under GRP, HUD is offering up to $15,000 per residential unit for projects that reduce energy costs, reduce water use, and improve indoor environmental quality. HUD expects to fund about 25,000 units (approximately 300-350 properties), with an average $10,000 provided to each unit.
Beginning June 15, 2009, HUD is accepting applications for GRP funding on a first come, first served basis, and subject to allocations for project categories, geographic location and owner/affiliate concentration. HUD may offer either a Green Retrofit Grant or a Green Retrofit Loan repayable from a share of surplus cash and from sale and refinancing proceeds. The performance period for completing all Green Retrofits will generally be twelve (12) months, but in no event may it exceed twenty-four (24) months. The program requirements differ depending on the type of project-based assistance contract and depending on the owner entity (nonprofit or for profit).
The properties eligible to receive GRP funding are the following: Section 202 funded properties that have at least 32 units; Section 811 funded properties that have at least 8 units; properties receiving assistance pursuant to Section 8 with USDA Section 515 loans and which have at least 20 units; and all other Section 8 funded properties having at least 72 units.
GRP offers owner incentives. At the closing of the Green Retrofit Grant or Green Retrofit Loan, the funds will be deposited into a rehabilitation escrow and the owner will receive a Pre-Development Incentive equal to the lesser of 1% of the estimated cost of the Green Retrofits or $10,000. All property owners, including nonprofits, are eligible to receive this incentive. Upon satisfactory completion of the Green Retrofits, the owner may receive an Efficiency Incentive (up to the lesser of 3% of the estimated cost of the Green Retrofits or $30,000). Again, all owners, including nonprofits, are eligible to receive this incentive.
The GRP application process involves two assessments of financial feasibility. The owner submits a GRP Application that includes an Initial Feasibility Assessment, annual and year-to-date financial statements, evidence of authority to accept a Green Retrofit Grant or Green Retrofit Loan, due diligence information, owner commitments and required certifications. Passing this Initial Feasibility Assessment is a precondition for commencement of due diligence and underwriting. After completion of the due diligence and underwriting, the proposed project must pass a Final Feasibility Assessment, based on underwritten cash flow. Passing the Final Feasibility Assessment is a precondition for receiving an offer of a Green Retrofit Grant or Green Retrofit Loan.
Given that funds will be allocated on a first come, first served basis, owners will not want to delay in submitting their applications to HUD. The application is available on the HUD website.