Incorporating Energy Efficiency and Renewable Energy Standards as a Criterion in LIHTC Applications

This fact sheet from the Better Buildings’ Clean Energy for Low-Income Communities Accelerator describes how state housing finance agencies (HFAs) use the Federal Low-Income Housing Tax Credit (LIHTC) program to promote the construction of energy- and water-efficient affordable rental housing by including energy efficiency and renewable energy (EERE) standards in applications. As of July 2018, HFAs in 12 states (Arizona, California, Connecticut, Delaware, Georgia, Iowa, Kansas, Maryland, Missouri, Nevada, Pennsylvania, and Wisconsin) and the New York City Department of Housing Preservation and Development require LIHTC applicants to conduct energy audits for rehabilitation projects. Eight of them (Arizona, California, Connecticut, Delaware, Iowa, Kansas, Nevada, and Wisconsin) require energy modeling analysis for new construction. In accordance with the provisions of Section 42 of the Federal Internal Revenue Code, states adopt and regularly update a “Qualified Allocation Plan,” which outlines the procedures for administering and allocating LIHTC.