When I started at the National Housing Trust two decades ago, the furthest thing from my mind was how our work would involve solar power. We were, and still are, known as an affordable housing preservation policy shop whose policy engagement is informed and supported by our businesses, NHT/Enterprise and NHT Community Development Fund.
But one emerging policy trend and one simple fact led us to consider solar. Approximately seven years ago our board determined that the Trust should make the case that affordable housing preservation was “inherently green.” Consequently, we embarked on a “Green Preservation” campaign advocating that the most environmentally responsible action to take in affordable housing was preserving and improving our nation’s existing housing. The data was indisputable: demolishing and constructing new buildings was often much more wasteful than rehabilitating what had already been built.
Moreover, as our own affordable housing portfolio grew, it became more and more apparent that our energy costs were high…and getting higher. Today, utility costs are the largest variable operating expense in subsidized multifamily rental buildings. Inspired by our partnership with the Department of Energy’s Better Buildings Challenge, which aims to make commercial, public, industrial, and residential buildings 20% more energy efficient over the next decade, we created an affiliate, NHT Renewable, to take to take a significant chunk out of our utility costs. First, we worked on building conservation, making our buildings more energy efficient. Next, we decided to harness the sun’s rays to build a more sustainable future for our properties and the people who call it home.
Success was achieved last fall. In September 2014, Department of Housing and Urban Development Secretary Julian Castro joined NHT/Enterprise, our partners and residents from our buildings in a ceremony to celebrate the installation of solar panels at St. Dennis Apartments, a 32-unit subsidized apartment building in Washington D.C.’s rapidly gentrifying Mt. Pleasant neighborhood. “This ultimately translates into a triple win,” said Castro. “A victory for building owners, a victory for residents who can achieve lower energy costs, and of course, a victory for all of us with better environmental results.”
It wasn’t just St. Dennis Apartments, however, that had the triple win. We realized that we needed to focus on our entire portfolio of affordable housing in the District—five properties with 11 buildings, approximately 350 apartments. That level of scale was required to control costs and attract investors. When completed—four photovoltaic and two thermal solar systems were installed—the project represented the broadest multi-site solar affordable housing development on the east coast. The projected 500,000 kWh/year in electricity that would be generated is equal about half of the electricity used to power all of the common area space in our D.C. portfolio.
NHT Renewable assembled a diverse financing package to this $1.25 million solar project with our own equity, equity secured from the MacArthur Foundation and the District of Columbia Sustainable Energy Utility, and a loan from Enterprise Community Partners.
Here’s what makes NHT Renewable’s solar financing model innovative:
· It focuses on the low-income end of the multifamily market;
· It works on the portfolio level, enabling a property owner to negotiate preferred pricing with solar installers and attract investors; and
· It enables owners to partner with an interested party and benefit from federal and state tax incentives for solar.
Notably, the financing model delivers all of the energy savings to NHT, as opposed to the prevailing model of leasing a solar system from an outside party. This translates into stable affordable rents for low income tenants and additional capital to invest in resident services and improvements. And our solar initiative reduces carbon emissions. Our solar panels will reduce 345 metric tons of greenhouse gases/annually. Moreover, reducing the cost of utilities for the owner leads to long-term affordability, meaning our residents are in stable housing for a longer period of time. Over the life of the project, NHT Renewable expects to save $1.2 million to NHT/Enterprise. We are now working on a second large scale solar installation which should return hundreds of thousands of dollars back to NHT/Enterprise. In addition, we want to help other owners put solar on their roofs. Says Jared Lang, NHT’s sustainability director, “We want to replicate this model both inside and outside of the D.C. area.”
Solar investments will repay NHT again and again and again,
making our properties and our organization and our residents sustainable. Here
comes the sun!
Michael Bodaken serves as president of the National
Housing Trust and of the National Housing Community Development Fund. The Trust engages in preservation policy, affordable housing
development and lending. He is also president of NHT/Enterprise, which owns and operates 3,000 affordable apartments in
eight states and the