HUD on the right track with new energy efficiency initiative for affordable housing

If you look into the new energy efficiency initiatives announced today by the U.S. Dept. of Housing and Urban Development (HUD), you'll make an important discovery.

Everybody knows investing to improve the energy efficiency of buildings can be a great investment for a utility because of the long-term values it delivers to the utility system (e.g., reduced need for expensive new generation and distribution, better load management, reduced toxic pollution from power plants, etc.).

The surprise is just how much value is created for local communities by improving the energy efficiency of affordable housing -- value in the form of housing that is more affordable due to lower utility bills (and mayors around the country struggle to simply sustain the affordable housing they have); value in the form of better health outcomes for residents especially kids from reduced mold and particulates in indoor air; value in the form of more jobs (directly to do the efficiency work, and indirectly from the increased spending when utility savings are re-injected into the local economy).

For all these reasons, anyone looking for either smart economic initiatives or smart energy initiatives should champion investments to improve the efficiency of affordable housing. HUD's initiative, announced today along with Governor Brown of California, will demonstrate and support new ways for building owners to finance efficiency improvements and solar power in their buildings.

Many people also may not know that the Federal Housing Administration within HUD is in a position to lead on improving our energy future because of their central role in single-family and multifamily mortgage finance. The conventional mortgage is how most houses and apartment buildings are financed and refinanced.

HUD in the Obama Administration has undertaken many initiatives to improve energy efficiency of housing. One that is particularly promising is the work with Fannie Mae to offer a loan product that allows building owners to incorporate efficiency improvements at the time of refinancing (see fact sheet here). Another is the Better Buildings program. There are more...

And there's a lot more HUD can do. The financing initiatives announced today signal HUD's commitment to continue find solutions that will support owners investing in efficiency improvements to our nation's affordable housing.

It's true, efficiency doesn't have the ring of going to the moon (though it often does promote cool cutting-edge technology), and repair work is often hidden (think: insulation), so it's not headline-grabbing....but the facts are that these efforts actually improve peoples' lives. The President, HUD Secretary Castro, and the Governor of California - partners in this venture to improve affordable housing - deserve credit.

About the Authors

Philip Henderson

Senior Financial Policy Specialist, Center for Market Innovation

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