Seeding Energy Innovation at Minnesota’s Housing Finance Agency

Cross-posted from the NHT newsletter.

Thoughtful, strategic investment in the capacity of housing finance agencies can yield huge dividends. That has certainly been the case with the Minnesota Housing Finance Agency (Minnesota Housing), which accepted an Energy Foundation grant in 2015 to fund an Energy Efficiency Fellow. Seeing promising results from this experiment, the agency doubled down when the fellowship term ended and made the position permanent! The Hubert H. Humphrey School of Public Affairs at the University of Minnesota recently recognized one of the major projects made possible by this position with a State Government Innovation Award.

The goal of creating a Fellow position was to build on a 2012 EnergyScoreCards Minnesota benchmarking pilot (conducted in partnership with Center for Energy and Environment and Bright Power), to leverage energy efficiency to stretch deferred funding sources further, and to assist owners in meeting mandates to achieve Enterprise Green Communities and apply for available utility rebates as a funding source in proposals.

Solutions

The Fellow position allowed Minnesota Housing to design focused energy efficiency activities and incorporate energy expertise into its operations. With more than 150 utilities in the state, Minnesota Housing knew that its development community needed a partner to navigate the utility rebate process and embrace new energy requirements. The Fellow, Katherine Teiken (now Clean Energy Program Specialist), reviews every Low-Income Housing Tax Credit and Publicly Owned Housing Program funding application and works with owners, underwriters, and developers to ensure that projects are leveraging all potential rebates. In her first year working with developers, Katherine observed that 80% of applicants stated that they were pursuing rebates, compared to 98% in the most recent year. More importantly, developers in the first year indicated simply, “we plan to seek out rebates.” Katherine is now seeing developers provide specific numbers and indicate that they have already been communicating with their utilities. This shift from post-construction to design-phase communication should help owners make better, more energy-efficient design decisions.

Owners and managers of affordable housing often struggle to plan and implement efficiency projects because they lack staff capacity and technical and financial resources. For Phase II of the EnergyScoreCards Minnesota pilot, Katherine helped owners of 31 subsidized affordable multifamily buildings implement efficiency projects by collecting utility data and providing in-depth technical assistance through the Center for Energy and Environment and financial assistance through Minnesota Housing. During the pilot, 74% of participating buildings implemented energy and water efficiency projects. Building owners can use the operating savings from reduced energy bills to make much-needed repairs while keeping rents affordable. Tenants who are responsible for paying a portion of their utility bills will see a reduction in their energy burden.

Most owners/managers stated that they would not have completed these projects at all (or as quickly) had they not participated in Phase II of the pilot program, citing individualized support as the biggest benefit.

Learnings and Looking Ahead

Through the EnergyScoreCards work, funding application review, and the Fellow’s involvement in both the national Energy Efficiency for All (EEFA) project and the Minnesota Multifamily Affordable Housing Energy Network, Minnesota Housing learned that owners and managers of subsidized affordable multifamily housing struggle to implement sustainability projects for several reasons. Owners recognize the financial benefits of energy and water efficiency, but don’t prioritize making efficiency upgrades. Other pressing needs, such as addressing health and safety issues, often take priority. Limited staff and financial resources hinder the number and scope of energy and water saving projects that owners undertake.

This feedback encouraged Minnesota Housing to create a permanent position in 2019 that is responsible for educating stakeholders about energy efficiency and renewable energy programs to leverage funds from other programs to make units as safe, comfortable, healthy, and affordable as possible.