The U.S. Housing and Urban Development Department (HUD) recently announced the Green Refinance Plus program to be administered by the Federal Housing Administration (FHA) and Fannie Mae. The program, is geared to refinancing older affordable rental housing properties, such as properties that received Low Income Housing Tax Credits (LIHTC), that include funding for energy and water efficiency upgrades. The U.S. Housing and Urban Development Department (HUD) anticipates approximately $100 million in initial refinance volume with an average loan amount of $3.5 to $5 million. The Federal Housing Administration (FHA) will insure up to an additional 4-5 percent of the loan amount.
According to HUD’s website, the following are required to be eligible for the program:
• Property must be at least 10 years old, with a recorded use agreement of the affordability restrictions that extends for at least the term of the new loan to help preserve affordable housing;
• At least 5 percent of the refinance loan proceeds must be applied to property renovation or energy retrofit; and
• All rehabilitation and energy improvements must enhance value and improve property operations.
Shawn Donovan stated that “[the] program kills two birds with one stone – it preserves our affordable rental stock and it helps finance upgrades that will save energy and money over the long haul. We must make the smart investments in a more energy independent economy. These investments will strengthen our economy, create the new industries and new jobs of the future and reduce our dependence on an ever fluctuating oil market.”