Drivers of Energy Efficiency in Affordable Housing

Affordable housing units serve a diverse range of low-income residents. However, because affordable housing units are typically older and in areas more prone to environmental hazards, they are often less energy efficient and more susceptible to high energy costs. Upgrades to affordable housing can improve the quality of life and costs of living for low-income tenants, while benefiting building owners through energy cost savings and higher property values.

However, those interested in upgrading affordable housing must remain aware of the tradeoffs between reducing energy costs, energy consumption, and carbon emissions, all three of which cannot be achieved in every project. There are also social tradeoffs to balance: reducing costs for building owners, reducing costs for tenants, and maximizing prioritized energy outcomes.

This chapter will provide information on the basics of affordable housing, identify the benefits to pursuing building upgrades in affordable housing, discuss the barriers to achieving building upgrades and how to overcome them, and help actors prioritize among building upgrade outcomes to develop a plan that can directly achieve those goals.

What is Affordable Housing?

Housing is considered “affordable” when housing and utility costs combined are less than 30% of a household’s income. Households that pay more than 30% of income towards these costs are considered “cost-burdened.” For most affordable housing, households are considered eligible based on how their household income compares to the Area Median Income (AMI), the midpoint income for their region. A household is considered “low-income” if it makes less than 80% AMI.

When affordable housing is unavailable, low-income households have fewer resources for basic needs, such as healthcare, food, and childcare. These households are therefore more likely to experience housing instability, overcrowding, and eviction.[1]

The effects of a lack housing access and affordability are felt especially by people of color and those living in areas that have been historically underinvested in. For most of the 20th Century, government agencies and private financial institutions reinforced segregation and prevented people of color from building wealth through discriminatory housing and finance policies and exclusionary zoning laws. Today, the quantity, location, availability, and quality of housing stock, along with access to resources in underinvested communities, can trace their roots back to these policies.[2]

Affordable Housing Typologies

Affordable housing in the U.S. ranges in its depth of affordability and subsidy. Only 4% of all housing units (20% of affordable units) are affordable to low- and moderate-income households through subsidies, public housing authorities, deed restrictions, or inclusionary zoningand rent control laws. The rest, 30% of all housing units (80% of the affordable units), is unsubsidized but is still affordable to households making under 80% AMI.[3] This is called Naturally Occurring Affordable Housing (NOAH). Both subsidized affordable housing and NOAH face challenges of building age, deferred maintenance, high utility costs, and high-risk locations for natural disasters.[4]

 

 

Building Upgrades

“Building upgrades” are renovations and improvements made to existing structures for the purpose of improving energy efficiency, reducing greenhouse gas emissions, and/or increasing climate resilience. Upgrades may additionally result in increased energy affordability and the improved health, comfort, and safety of residents.

When pursuing a building upgrade, it is important to determine the primary goals of the upgrade project, as there are often tradeoffs between reducing energy costs, energy consumption, or carbon emissions.

Figure 1: Example Upgrade Strategy Tradeoffs.

Building upgrades can benefit building owners through direct cost savings over time, the ability to charge higher rents, and market value increases at the time of building sale. Tenants can benefit from increased comfort, improved air quality, reduced health and safety hazards, and reduced energy costs.

However, there are numerous challenges to implement building upgrades in affordable housing. Owners and financiers may be concerned about perceived high project costs and unclear knowledge of the return on investments through energy cost savings. Tenants and advocates may be concerned about life disruption during building upgrades. There are also common concerns of tenant displacement resulting from building upgrades that may inadvertently result in increased housing cost burdens. Anticipating the effect that building upgrades might have on tenants’ costs requires a holistic understanding of the local housing market, the incentives building owners can utilize for each type of housing, and how low- to moderate-income tenants in these housing types might experience cost shifts.

One of the greatest challenges to making the case for upgrades in multifamily housing is the diffusion of decision-making among different stakeholders. For instance, if a tenant pays for utilities, an owner does not have an incentive to invest in efficiency (a.k.a. split-incentive). Interventions must work to address these challenges. In this case, a program that provides capital funding support for building upgrades to reduce energy consumption and improve health outcomes will incentive owners to invite in energy efficient upgrades and in turn, improve tenant quality of life and lower their costs.

 

Setting Priorities for Affordable Housing Upgrades

The interests of tenants and building owners may conflict, meaning that as planning begins for building upgrades, actors must begin by identifying priorities among energy outcomes and housing outcomes (see Figure 2 below). Building upgrade strategies and program design will likely require selecting and balancing a combination of these outcomes, but not all of them.

Figure 2: Example Energy and Housing Outcomes for Prioritization

For instance, your team’s goal may be to reduce energy consumption and housing costs, while improving household quality to improve the health of residents (Example 1.A.). To target these priorities, a team may develop a program that reduces capital funding barriers and implements training to decrease workforce constraints (Example 1.B.).

Example 1.A.

Example 1.B.

For those interested in upgrading affordable housing, the content of this chapter will provide:

  • Information on what affordable housing is and who lives in affordable housing;
  • Knowledge on the challenges faced by affordable housing building owners and tenants;
  • A valuable tool to communicate the benefits of affordable housing upgrades to building owners, financiers, and tenants;
  • Information on how projects should prioritize which energy outcomes to promote through building upgrade program design;
  • And information on how those decisions will impact building owners and tenants based on local housing market conditions.

 

Upgrades, when implemented, involve a combination of financial and operational propositions for both owners and tenants, who may be impacted differently by upgrades. Given this, creators of building upgrade policies and programs must find a balance of often competing goals, not only between tenants and owners, but between the tradeoffs of various energy outcomes. There is no correct way to achieve building upgrades, as long as teams are multi-disciplinary and prioritize work that creates positive outcomes in their communities.

Atwood Acres is a 50-unit senior housing facility in Massachusetts subsidized by the HUD Section 8 Program that had failing hot water and heating systems after 25 years in operation. The building owners enrolled in the Massachusetts Green Retrofit Initiative (MAGRI), which provided a one-stop-shop for holistic energy management services and performed an energy audit, helped solicit and review bids from contractors, and assisted in rebate coordination. The building was able to use incentives from the Massachusetts low-income utility efficiency program towards building upgrades, by leveraging a portion of the property’s reserves.

 

Photo by: RCAP Solutions

 

[1] HUD Fair Market Rents and Income Limits, 2023 and Historical

[2] Brookings Institute, US Census

[3] HR&A; Elevate, Making Naturally Occurring Affordable Housing More Efficient: Outreach to Upgrade

[4] Moving to the Next Level: Progress Report and Energy Update: Report to Congress – August 2016, Department of Housing and Urban Development; America’s Rental Housing 2022, Joint Center for Housing Studies of Harvard University; Characteristics of HUD-Assisted Renters and their Units in 2013.

 

Introduction to Comprehensive Retrofits and Decarbonization

Building energy upgrades (i.e. retrofits) enhance energy efficiency in existing buildings.  They can reduce building energy use by 20-30%, playing a critical role in addressing climate change and improving the quality of homes and buildings.

This chapter will provide an overview of the many benefits delivered by upgrades—ranging from GHG reductions to lower energy bills and improved health, comfort, and safety.  It will also cover key technologies, approaches to achieving comprehensive savings, and strategies to scale-up these upgrades in your community.

An important place to start is with how upgrades impact people and provide benefits. Upgrades can bring benefits to tenants, owners, and the community at large beyond energy savings. Building upgrades can benefit underserved communities by increasing climate resilience; improving health, comfort, and safety; increasing affordability; strengthening the local economy; and promoting racial equity.

What is a building energy upgrade? Building upgrades include:

  • Adding or updating new technology to an older system. The focus is on the improved performance of the building, rather than aesthetics.
  • The goal of making the building more efficient through the tune up, repair, or replacement of a system or systems.
  • Improving comfort and reducing energy costs, and may include upgrades to envelope, HVAC, plumbing, and/or ventilation—where needed.
  • Typically requiring mechanical/electrical/plumbing engineers, general contractors, and special trades to implement.

Comprehensive building energy upgrades are a whole-building approach to address deficiencies in the building envelope and complete necessary upgrades to major systems.  This includes a suite of measures, across multiple end-uses (i.e., building envelope, HVAC, water heating, lighting, other loads, etc.), undertaken to improve building energy efficiency and achieve savings larger than those possible from the installation of isolated measures.  Measures may also improve indoor air quality, manage moisture and pests, and make buildings more resilient.  Comprehensive upgrades typically achieve 10-20% savings and may reach deeper savings of up to 40%.1

Energy upgrades that reduce total building energy loads and costs are often the basis for “beneficial” or “strategic” electrification2 upgrades to decarbonize.  Decarbonization encompasses strategies for reducing building-related carbon emissions.  Key approaches include energy efficiency, beneficial electrification, distributed generation (e.g., solar), and/or use of carbon-free fuels.  Beyond reduced greenhouse gas emissions, other benefits may include improved indoor air quality, reduced utility bills, and greater ease of maintenance.

There are many key technologies for upgrades to the envelope, heating and/or cooling system, water heating system, lighting, and other energy and electrification upgrades including:

  • Building envelope upgrades 
    • Ensure the building can retain heat in the winter and keep it out in the summer, reducing heating, ventilation, and air conditioning (HVAC) load
    • Measures include air sealing, duct sealing, insulating walls/attic/foundation, replacing windows/doors, installing secondary windows
    • Measures can save a typical home 15% on heating and cooling costs or 11% of all energy costs
  • Heat pumps for heating and cooling
    • Instead of generating heat through electric resistance, these systems transfer heat from one place to another, much like refrigerators and air conditioners do
    • Used for both heating and cooling—mostly with electricity
    • 3-5 times more efficient than standard electric or gas heating systems
  • Heat pump water heaters (HPWHs)
    • Use electricity, refrigerant, and coils to extract heat from the air to efficiently heat water
    • HPWHs have some unique installation considerations including, location, space, and attention to noise from the system
  • Lighting, appliances, and plug loads
    • Lighting upgrades to 100% LED lighting
    • Sensors and controls
    • Upgrading to ENERGY STAR certified home appliances including induction stoves and heat pump/hybrid dryers
    • Smart electrical panels and smart circuit splitters (EV charging and appliances) for load shifting and prioritization to limit simultaneous power draw
    • Upgrade to ENERGY STAR certified consumer electronics

In addition, there are technologies that achieve both energy efficiency and electrification as shown in the graphic below.

Figure 3: Bastian, H., and C. Cohn. 2022. Ready to Upgrade: Barriers and Strategies for Residential Electrification. www.aceee.org/research-report/b2206

Beyond understanding the benefits, details of upgrades, and technologies that can achieve efficient electrification, the next step is determining how to scale-up these upgrades in your community.  Effective strategies for designing programs and initiatives include: understanding community priorities, collaborating with stakeholders, standardizing retrofit packages, incorporating low-cost measures, staging retrofits through prioritization, coupling electrification with comprehensive retrofit projects and low- or no-cost financing and incentives.  While each of these is important, staging retrofits to meet customers where they are is particularly helpful.  Staging (i.e. phasing) comprehensive upgrades can make the process less overwhelming and provide room to address deficiencies.  This allows upgrades to tackle immediate needs first.  In addition, ongoing engagement can support completion of the full retrofit over time. For example, stages can include:

  • Pre-retrofit measures: health and safety measures such as deferred maintenance mold remediation
  • Stage 1: envelope upgrades ideally, but there might be immediate needs while considering a full package
  • Stage 2: equipment upgrades

This allows for a variety of ways to implement comprehensive upgrades as shown in the figure below.

Source: Amann, J., R. Srivastava, and N. Henner. 2021. aceee.org/research-report/b2103.

 

Other strategies for successful programs and initiatives include providing a single point of contact for the upgrades, planning to mitigate potential negative impacts (e.g. increased cost of utilities or rent, displacement, gentrification), and providing post-project follow-up.  There are a number of next steps to scale-up these upgrades in your community including: build your team; engage with tenants and residents in creating and implementing initiatives; establish requirements for energy efficiency; set specific carbon reduction goals; establish collaborations among stakeholders; educate residents, building owners, contractors, and suppliers; secure funding and financing; incorporate strategies to meet community goals; and establish accountability mechanisms.

  • Building upgrade benefits include energy efficiency and decarbonization as well as increasing climate resilience; improving health, comfort, and safety, increasing affordability, strengthening the local economy, and promoting racial equity.
  • Key technologies that help achieve these upgrades include energy upgrades that reduce loads and costs and electrification upgrades for decarbonization that reduce GHG emissions.
  • Some strategies for designing initiatives include understanding community priorities, collaborating with stakeholders, standardizing packages, incorporating low-cost measures, and staging retrofits through prioritization.
  • A few of the next steps to scaling these upgrades in your community include: build your team; engage with tenants and residents; establish requirements for energy efficiency; set specific carbon reduction goals; and establish collaborations among stakeholders.

Engaging Stakeholders in Building Decarbonization Planning

When planners working to establish retrofit programs and policies invest time in a planning process that centers racial and economic equity principles and seeks collaboration from a wide range of stakeholders and community members, the result is better-designed retrofit programs that are more inviting, easier-to-use, target community priorities, and achieve multiple benefits aside from emissions reduction.

The burdens of high energy and housing costs and poor housing quality are not shared equally across different incomes and demographic groups.1 Stakeholder and community engagement are indispensable avenues for incorporating racial equity into the program development process and laying the foundation for positive outcomes.

We define community engagement and stakeholder engagement as distinct activities:

  • Community engagement is designed to specifically reach those who have been historically marginalized from decision-making or have experienced disproportionately high burdens and low benefits from policies and programs.
  • Stakeholder engagement is more targeted and designed to elicit feedback from those with perspectives relevant to one or more aspects of a proposed initiative. It focuses on engaging with people or organizations that have historically been recognized as having a direct stake in a policy or program and its effects. In the rental market context, property owners are a particularly important stakeholder group as they are the principal decision makers in authorizing and funding retrofit projects.

 

This chapter addresses stakeholder engagement. For a discussion of community engagement, its importance, and its relationship to racial equity goals, please see the community engagement chapter.

Including stakeholders from across multiple sectors in program and policy design brings valuable perspectives and leadership that can lead to many benefits:

  • Decrease greenhouse gas emissions
  • Increase housing/energy affordability
  • Advance racial equity
  • Promote economic inclusion and local workforce development
  • Improve health and safety

It can also help planners overcome affordable housing-specific barriers, create alignment with existing programs, and help achieve economies of scale. Collaborators might be from different sectors (e.g. energy and housing) within a state/local government or they might reach across the public, private, and nonprofit sectors (e.g. a city sustainability office working with a state housing finance agency or a state energy office partnering with a community-based organization or a utility).

When planning a retrofit program, there are six key stakeholder groups that can bring valuable insights and play leadership roles in the development of programs to upgrade affordable housing.

  1. Government energy and sustainability offices
  2. Affordable housing owners, providers, agencies, and funders
  3. Health and healthcare entities
  4. Economic inclusion and workforce providers
  5. Energy and building experts and funders
  6. Low-income energy program administrators

Government energy and sustainability offices

Government energy and sustainability offices lead and help set a jurisdiction’s clean energy and climate goals. These offices may carry out many functions, including2:

  1. They may receive federal funding for clean energy initiatives. (Other agencies may also receive such funds.)
  2. They can launch or run or fund retrofit programs using federal or other dollars. They might focus on specific interventions or technologies that complement existing offering by other entities (e.g. other government agencies, utilities). This might come in the form of rebates, grants, or low/no-interest loans. For example, the cities of Chicago, Minneapolis, and Cincinnati fund retrofit programs.
  3. They can refer to or promote programs via existing touchpoints. Housing agencies can also do this, for example, via rental licensing or low-income homeownership programs.
  4. They can require (and fund) upgrades, sometimes as a condition of receiving funding or participating in certain government programs. Building Energy Performance Standards, are an example of a mandatory upgrade policy. (Upgrade requirements can also be attached to voluntary programs that are already funding building rehabilitation—these would generally be run by a housing agency.)

Government agencies have a responsibility to develop and maintain strong relationships with community. They should create accessible processes that bring in community leadership, including by shifting location, times, languages, etc. to accommodate needs—and/or supporting community-led work.

Affordable housing owners, providers, agencies, and funders

“Affordable housing” is an umbrella term that can refer to any housing where people with low and moderate incomes area able to live with financial security, or it can refer to housing that is officially considered affordable by meeting certain criteria. Housing is considered “affordable” when housing and utility costs combined are less than 30% of a household’s income. Households that pay more than 30% of income towards these costs are considered “cost-burdened.” For most affordable housing, households are considered eligible based on how their household income compares to the Area Median Income (AMI), the midpoint income for their region. A household is considered “low-income” if it makes less than 80% AMI.

Only 4% of all housing units (20% of affordable units) are affordable to low- and moderate-income households through subsidies, public housing authorities, deed restrictions, or inclusionary zoning and rent control laws. The rest, 30% of all housing units (and 80% of the affordable units), is unsubsidized but is still affordable to households making under 80% AMI. 3 This is sometimes called Naturally Occurring Affordable Housing (NOAH) and may include owner-occupied housing or unsubsidized and non-restricted rental housing. Regardless of the housing type, utility costs can be a serious burden every month for households on low or restricted incomes.4  Both subsidized affordable housing and NOAH face challenges of building age, deferred maintenance, high utility costs, and high-risk locations for natural disasters.5

Publicly-sponsored affordable housing activities take place across several levels of government: federal, state, and local, including public housing authorities.

  • The federal government provides rules, regulations, and funding for major housing programs like the Low-Income Housing Tax Credit (LIHTC), Section 8, HOME, Community Development Block Grants, USDA Rural Housing, public housing, COVID relief programs like ARPA, and the Inflation Reduction Act’s Green and Resilient Retrofit Program for HUD-assisted housing.
  • Each state has a housing finance agency (HFA) that administers affordable housing policy at the state level and allocates federal LIHTC funding. HFAs can incentivize or mandate energy efficiency in exchange for the financing or subsidies they provide.6 HFAs also allocate other funding for moderate and substantial rehabilitation of affordable housing, homeowner assistance, and more via grants, loans, bonding, etc.
  • Local governments can provide subsidies for building or upgrading affordable housing and administer certain federal housing programs. They implement zoning, issue permits, enforce housing codes, and some mandate energy efficiency, especially for projects that they fund.
  • Public housing authorities (PHA) are a type of local government entity that owns and operates public housing, which is funded by HUD. PHAs administer housing vouchers and utility allowances, which determine appropriate rent levels given local and/or building-specific utility costs.

As end users of building upgrade programs, affordable housing owners, whether for-profit or nonprofit, are a critical stakeholder group to consult. Owners are the entities that pay a building’s mortgage every month or own it outright. Owners must seek financing to develop or rehabilitate properties, coordinate with government agencies to receive government subsidies or accept vouchers, and leverage government programs to minimize construction costs. Energy upgrades can help them recoup the costs of their investment, but some owners are not aware of available decarbonization incentives or are wary of working with another government program. Successful building upgrade programs may also consult property managers, who maintain properties day-to-day and know them inside and out. Property managers can help facilitate participation in retrofit programs and carry out post-upgrade operations and maintenance.

Upgrades to affordable housing will likely need to interact with affordable housing funders, which provide capital for the construction or rehabilitation of housing. Understanding their motivations and the barriers they face will help planners develop programs that can be more easily integrated with the funding sources they offer. Funders include Community Development Financial Institutions (CDFIs), banks, and other lenders.  CDFIs also provide technical assistance directly to owners of affordable housing and deploy capital to low-income communities as part of their mission. Banks hold the loans for housing and have capital to deploy for low-income communities as part of federal Community Reinvestment Act requirements.

Low-income energy program administrators

Low-income energy programs generally have limitations or gaps that present potential opportunities for discussion and partnership. Administrators of the Weatherization Assistance Program (WAP) and the Low-Income Home Energy Assistance Program (LIHEAP) are state agencies—though often not the same state agency–running federally-funded programs.7 Weatherization reduces energy costs for households with low incomes by increasing the energy efficiency of homes and may address health and safety deficiencies on a limited basis. LIHEAP addresses energy bill shortfalls and emergencies through bill assistance. A LIHEAP administrator might be able to refer participants or offer insight into communities experiencing high need. Both WAP and LIHEAP are often implemented by community action agencies, which can have deeper ties to community that can be leveraged.

A third key stakeholder is utility energy efficiency program administrators, which are typically utilities, but can also be a state agency using utility and/or other funds. In the case of WAP and utility programs, there may be an opportunity to achieve economies of scale by piggybacking on existing offerings. These programs may have limitations to what they can or choose to include in their programs, which creates gaps that administrators might be eager for partners to fill.

For example, WAP must spend its entire federal allocation on an annual timeline, including a recent federal cash influx. Despite this influx, federal rules mean that agencies can only spend $8,000 per home: with rising construction costs, this means they still must leverage outside funding for more comprehensive upgrades. WAP also turns away many homes initially, because they are not able to allocate sufficient funding for health and safety needs that must be addressed before weatherization can occur. Lastly, many community action agencies focus their efforts on 1-4-unit properties, even though properties of 5+ units are also eligible.

These three limitations or gaps—comprehensiveness, health and safety, and 5+ multifamily—present potential opportunities for discussion and partnership with your state WAP administrator or local implementer.

Utilities may have state-imposed constraints (such as cost-effectiveness tests) or self-imposed constraints that create gaps in their programs. These might include not serving particular building types (e.g. only single-family homes or only master-metered multifamily buildings), only offering quick payback measures such as light bulbs, or not offering electrification measures. It is worth talking to utility program administrators and their third-party implementers to understand what gaps exist and opportunities for filling these gaps with new offerings.

Community stakeholders and intervenors in public utility commission proceedings (for example, clean energy advocates or even public utility commission staff) can be another good source to learn about utility program gaps and shortcomings.

Health entities

The home environment can have a profound influence on health and well-being. Residential retrofits that improve energy efficiency can also make homes safer and healthier, especially when such measures correct indoor air quality issues. Vulnerable populations are especially susceptible to in-home health and safety hazards. Specifically, building upgrades can reduce exposure to mold and moisture, improve indoor air quality, and reduce the thermal stress of extreme heat and cold.

There are a variety of health entities working to improve public health and reduce healthcare costs who may be interested in partnering on programs to improve energy efficiency in homes in a way that also improves occupant health and reduces costly health problems. These entities include8:

  • Health care providers and hospitals
  • Community health clinics
  • Managed care organizations
  • State and local public health departments

Some of these entities may be running healthy home programs to remove asthma triggers and lead hazards from homes. Specifically, health care providers, hospitals, and managed care organizations are motivated to reduce healthcare costs/unpaid costs and may provide in-home health interventions to that end, though program administrators may be municipal, nonprofit, or private entities. Managed care organizations administer programs using Medicaid funds. State and local public health departments have access to data that could help inform health and safety programming and health care providers and hospitals may refer patients to such programs. Community health clinics provide primary care and often serve as a trusted community partner.

Health initiatives and healthy homes programs may present opportunities to piggyback on existing efforts to install home health upgrades or provide health services. Homes with health hazards are often inefficient as well. And, some key measures, such as replacing failing gas equipment, can improve both health and energy efficiency simultaneously. A repair, such as to a hole in the roof where moisture is intruding, may enable efficiency measures such as the installation of insulation.

There are several federally-funded, locally-administered health programs that conduct in-home lead abatement, modify homes to remove asthma triggers, and work to reduce federal healthcare spending via clean energy upgrades. These represent potential partnership opportunities. As one example, the federal CHIP Health Services Initiative can unlock millions of dollars in money for health services.

It may be worth talking to health entities in your area to understand the types of in-home health and safety hazards they are most concerned about, to access their health data, and to discuss the potential for partnership. Healthy housing program administrators are typically state health and human services agencies or may include county agencies as well. It can be helpful to build a coalition of local governments and other stakeholders in order to approach the relevant state agency.

Economic inclusion and workforce stakeholders

Building retrofits can create community benefits and high-road, equitable opportunities for local workers and for businesses located within or connected to disadvantaged communities. However, without intentionally working to correct for inequities, retrofit programs will tend be part of a larger system that will inadvertently perpetuate inequities, by reinforcing exclusion, low-road jobs, and wealth disparities. Focusing on economic inclusion can help align retrofit work with other priorities within a jurisdiction, including: economic recovery, racial equity, and repairing harm from government actions.

Definitions from Emerald Cities Collaborative:

  • Economic Inclusion includes high-road employment and contracting opportunities and improved access to those opportunities for historically marginalized people and communities, i.e. BIPOC, women, at-risk youth, etc. The “high-road employment” part of this is what is traditionally referred to as workforce development and refers specifically to individuals. There is also a business support ecosystem that works with contractors and businesses.
  • High-road refers to policies that encourage competition based on quality rather than cost, and favor firms that internalize the true costs of business by providing good wages, benefits, growth opportunities, and working conditions; adhering to laws and regulations; and pursuing best practices with respect to community engagement and the environment.

Key stakeholders for workforce and business development include:

  • High schools, community colleges, and universities, which can offer training, supply contractors, or supply students for the workforce. Universities may operate weatherization training centers.
  • City or county workforce development agencies, which may run programs for incumbent workers to upskill or provide services (e.g. career exploration, job placement) to opportunity youth. (“Opportunity youth” are low-income 16-24-year-olds who have left high school or are underemployed.)
  • YouthBuild or JobCorps program administrators, which run programs for opportunity youth funded by the U.S. Department of Labor. YouthBuild programs are run by CBOs or others named above and primarily build homes for low-income households. JobCorps administrators run JobCorps centers.

The business support ecosystem includes:

  • Apprenticeship program administrators such as unions, labor management organizations, business associations, and community colleges.
  • Small Business Development Centers, which are locally-administered centers funded by the Small Business Administration that provide technical assistance, coaching, and access to loans related to business planning.
  • Business associations and chambers of commerce, which include MBE/WBE (Minority Business Enterprise/Woman Business Enterprise) and specific ethnic business associations (e.g. Hispanic Chamber of Commerce).

Partnership with such entities might establish goals and accountability via community benefits agreements with the community. For example, agreements might set targets and require reporting on hiring workers from disadvantaged communities. They can also create opportunities for new workers or those who have been left out of the labor force to receive training (e.g. via apprenticeship programs or community colleges). Or, partners might work to leverage retrofit projects for on-the-job training or other work-based learning opportunities

Energy/decarbonization/building experts and funders

Energy, decarbonization, and building stakeholders often help design and implement retrofit programs. Technical experts can advise on building needs, appropriate technologies, costs, and benefits, including how to ensure that electrification results in stable or lower bills for low-income residents. Energy service companies or ESCOs operate performance-based programs and can manage and finance large upgrade projects: for example, the Boston Housing Authority worked with Ameresco on the largest public housing energy efficiency retrofit project in U.S. history. It reduced natural gas and water use by more than 30% and saved more than $4.8 million in annual utility costs, while following a Project Labor Agreement to create 600 jobs for local union workers, public housing and low-income city residents, and small and minority-owned businesses.9

Clean energy advocacy organizations can provide valuable insight into the gaps and shortcomings of existing programs, emerging program models, and best practices. Green banks, where they exist, can combine public and private funds to speed adoption of commercially available technologies. For example, Montgomery County, MD and Washington, DC both created green banks to finance clean energy projects and the State of Massachusetts recently launched a green bank based within its state housing finance agency. Implementers of on-bill programs can offer energy upgrades to a utility customer at no or reduced up-front cost, with repayment tied to the customer’s utility bill or meter.

Case studies

There are many possible combinations of local stakeholders who could help planners accurately assess the highest priority issues and the most promising solutions to address them. For example, if program planners want to create a program for subsidized affordable housing, then partners like the state housing finance agency, local affordable housing developers, and CDFIs might be key. On the other hand, if the goal is a program that fills health and safety gaps in the Weatherization Assistance Program, then the State Energy Office, local community action agencies, the city health department, environmental justice organizers, and even a local health provider might be the right fit. For a program that seeks to build the local workforce and serve unsubsidized housing, planners might work with the municipal housing department, local affordable housing advocates, tenant organizers, and a local community college.

Here are some examples of collaborative initiatives:

  • Washington, DC hired a local affordable housing nonprofit to engage a roundtable of affordable housing owners for recommendations on how to design Building Energy Performance Standard (BEPS) rules to make compliance feasible.10
  • Minneapolis, MN collaborated across the city’s economic development and sustainability agencies on the 4d Program, a successful strategy to preserve housing and provide energy incentives.
  • Providence, RI founded a Racial and Environmental Justice Committee to integrate the concerns and needs of marginalized communities into the city’s sustainability work and decision-making processes. The REJC surveyed frontline communities and co-developed the city’s Climate Justice Plan.
  • Milwaukee, WI developed a Rental Rehabilitation Loan Program in consultation with CBOs, small neighborhood developers, and lenders. It holds quarterly meetings with vocal residents, neighborhood groups, community development corporations, churches, and local businesses to get feedback, listen to housing concerns, and address code compliance.

Assembling your team

The strongest retrofit programs will be designed not by a single agency, but by a team of partners bringing different knowledge and capabilities to the table. One potential next step to assembling such a team is ecosystem mapping, which would include securing participation from local government agencies (across sectors) and identifying trusted CBOs working on relevant topics. The community engagement chapter includes further discussion of ecosystem mapping, the importance of community engagement early in the planning process and more and less impactful types of community engagement.

One critical activity is stakeholder conversations. The first step is to identify trusted entities that are running, utilizing, or advising on energy, health, workforce, and housing programs in your community. Reach out to the stakeholder types listed in this chapter! Ask your networks to connect you. In conversations, seek to understand and find alignment with stakeholders’ needs, motivations, and current programming: how can all entities’ goals be furthered by collaboration? Different stakeholders will provide different perspectives on what the challenges and promising solutions are for decarbonizing local affordable housing. Both community engagement and stakeholder engagement take time. The best time to start is now!

Embedding Health in Holistic Energy Efficiency Programs

The buildings where people live and work can have a large impact on their health, especially considering that Americans spend about 90% of their time indoors.1 For example, the presence of mold, pests, and bacterial agents inside a home can result in various respiratory illnesses. Asthma is a common respiratory illness that disproportionately affects Black Americans, American Indians, Alaska Natives, and people living 100% below the poverty threshold.2 While most households can benefit from retrofits that simultaneously improve a building’s energy performance and address health hazards, communities of color and low-income households could reap the most benefits from healthy housing retrofits. Compared to white, higher-income households, these households are more likely to live in inefficient, inadequate housing that leads to high energy bills and poor health outcomes.3

This chapter outlines the necessity of incorporating health and safety upgrades into building retrofit programs. Healthy housing is an equity issue due to disparities in housing quality based on race and income level. This chapter identifies energy efficiency measures that can mitigate health issues. It also lists different energy stakeholders, health stakeholders, and health funding sources. Finally, the chapter provides an action plan for embedding health goals within a retrofit program.

Weatherization is the practice of upgrading a home to improve energy efficiency while protecting health and safety. It typically involves improvements to a building’s envelope through insulation, air sealing, or window upgrades. Weatherization can help address health issues like asthma, thermal injury, and indoor air pollution. For example, strengthening a building’s envelope can block pollutants from entering a house and regulate indoor temperatures, thereby reducing exposure to air pollution and extreme heat and cold.4 Updating a building’s ventilation and filtration systems can also mitigate asthma and other respiratory illnesses. Below are some common services offered by weatherization programs.

  • A home energy assessment
  • Recommendations for high-priority energy efficiency upgrades
  • Direct install measures (e.g., LED lightbulbs, low-flow faucet fixtures)
  • Upgrades conducted by a weatherization service provider or contractors
  • Client education services
  • Access to utility rebates for upgrades

Despite the health benefits of weatherization, not all customers can receive services immediately. Often, low-income households and households of color live in buildings that need major structural repairs before weatherization work can begin. Broken roofs, faulty wiring, and lack of a sewer system are common reasons for weatherization deferral.5,6 About 10-30% of income-eligible customers’ homes get deferred from weatherization programs due to health and safety hazards.7 Weatherization deferrals highlight the necessity of setting aside energy efficiency program funding for health and safety repairs.

There are multiple government funding sources that energy efficiency program administrators can access for health and safety repairs. Table 1 lists some potential sources.

Table 1. Health funding sources

Source Applicability Example
Medicaid Potential reimbursement of in-home modifications; 1115 Waivers for nontraditional health care services Impact DC Asthma Clinic
Children’s Health Insurance Program (CHIP) health service initiative (HSI) Mechanism for unlocking federal funding to support state-level, preventive and nontraditional health care services Michigan lead HSI with in-home environmental assessment
Preventive Health and Health Services Block (PHHSBG) grant Grant funds for states for

underserved areas of public

health

Rhode Island Progreso Latino

 

Social Impact Partnerships to Pay for Results Act (SIPPRA)

grants

Funding for “pay-for-results” projects that can advance a social good (like health) while saving federal government spending NYSERDA Pay for Success Clean Energy Training

 

Lead Hazard Control grants Funding for home assessments

and hazard remediation

Rhode Island Green and Healthy Homes Initiative

 

National Asthma Control program Funding can support in-home interventions if they align with the CDC’s EXHALE scheme for addressing asthma Montana Asthma Control Program

 

Adapted from Hayes and Gerbode (2020).8

When integrating energy efficiency and health, it is necessary to partner with various energy and health stakeholders. Energy stakeholders include energy efficiency program administrators who can coordinate the logistics of a program, assessors who can conduct energy audits, and contractors who can install energy upgrades. Health stakeholders include community health clinics who can provide primary care, health care providers who can track program-related outcomes, and managed care organizations who can provide in-home health interventions. State and local public health departments are also beneficial partners who can provide public health services and programs.

Takeaways and Conclusion

  • Low-income households and communities of color who typically live in inefficient, unsafe housing could benefit most from healthy housing interventions.
  • Weatherization is an effective strategy for simultaneously improving a building’s energy performance and protecting residents’ health.
  • Weatherization programs can provide services such as assessing a home’s energy performance, strengthening a building’s envelope, and updating a building’s ventilation and filtration systems.
  • The presence of in-home health and safety hazards can impede weatherization work. Weatherization programs frequently defer such hazardous homes from service, denying energy efficiency benefits to many low-income customers and households of color.
  • To overcome these health and safety hazards, energy efficiency program administrators will need additional funding to prepare a home for weatherization. They can braid together multiple government funding sources such as Medicaid, CHIP, and various grants that address specific health issues.
  • Forming partnerships with different energy and health stakeholders can facilitate delivery of combined energy efficiency and healthy housing services.
  • Energy stakeholders include energy efficiency program administrators, assessors, and contractors. Health stakeholders include community health clinics, health care providers, managed care organizations, and state and local public health departments.

Energy-efficient retrofits present a promising opportunity for making a home safer and healthier. To truly advance equitable energy and health outcomes, retrofit programs must set aside funds and resources to repair homes that need them most. Once homes are ready for weatherization, they can receive upgrades that will improve indoor air quality and keep out harmful pollutants. Residents can then enjoy lower energy bills, more comfortable living conditions, and better respiratory health.

Case Studies

  • IMPACT DC Asthma Clinic – among other services, this program connects asthmatic patients with contractors and assessors who can mitigate in-home asthma triggers. IMPACT DC has received Medicaid reimbursement for some of its services.9
  • Michigan lead HSI with in-home environmental assessment – this was a six-year initiative to mitigate in-home health risks for CHIP-eligible children. The initiative removed lead hazards from paint, dust, plumbing fixtures, and soil.10
  • Rhode Island Progreso Latino – this is an advocacy group that seeks to improve health and socio-economic progress for Latino and immigrant communities in Rhode Island.11 The organization has used funding from a Preventive Health and Health Services Block grant to operate a wellness clinic for underserved residents.12
  • NYSERDA Pay for Success Clean Energy Training – this energy efficiency job training program targeted low-wage workers, youth, and unemployed individuals. Funding came from the Social Impact Partnerships to Pay for Results Act.13
  • Rhode Island Green and Healthy Homes Initiative – in Rhode Island, the Green and Healthy Homes Initiative has used Lead Hazard Control grant funding to provide a range of healthy housing services. Funds have helped repair homes to reduce weatherization deferrals.14
  • Montana Asthma Control Program – funds from the National Asthma Control Program have gone toward the Montana Asthma Home Visiting Program for patients with uncontrolled asthma. Eligible households receive home environmental assessments, incentives to reduce triggers, and education on asthma prevention.15

 

Community Driven Planning/Equity and Buildings

Gathering input from communities to drive the design of programs and policies is critical to ensuring equitable outcomes. However, not all ways to gather input from communities are equally impactful. There are a range of strategies to gather input from communities that do not delegate power, decision making, or foster collaboration to center community priorities in programs or policies. Often, community engagement is conflated with stakeholder engagement or public outreach.

We define community engagement, public outreach, and stakeholder engagement as distinct activities as:

  • Community engagement is designed to specifically reach those who have been historically marginalized from decision-making or have experienced disproportionately high burdens and low benefits from policies and programs.
  • Public outreach is primarily meant to be informative and to broadly appeal to the public, typically without targeting specific populations. It is most often limited to one-way communication between a local government and its residents, and leads to minimal, if any, public input.
  • Stakeholder engagement is more targeted and designed to elicit feedback from those with perspectives relevant to one or more aspects of a proposed initiative. It focuses on engaging with people or organizations that have historically been recognized as having a direct stake in a policy or program and its effects.

Community engagement can help program planners collaboratively incorporate valuable perspectives and leadership from groups that are traditionally excluded, such as community members, under-resourced households, and renters.

Stakeholder and community engagement can be important avenues for incorporating racial equity into the program development process and outcomes. There is a critical role played by having authentic leadership roles for frontline community-based organizations (CBOs) and leaders. Engaging and funding entities that are closest to frontline communities brings invaluable perspectives and insights into this work.

To understand how to achieve a more equitable energy system, ACEEE has used a framework adapted by the USDN. This framework, which includes four dimensions of equity among others, emphasizes the important role that community engagement plays in creating equitable outcomes.1

The four dimensions of equity within the framework includes:

    • Structural Equity – Decision makers recognize the historical, cultural, and institutional dynamics that have led to clean energy inequities.
    • Procedural Equity – Decision makers create inclusive and accessible processes for developing and implementing clean energy initiatives.
    • Distributional Equity – Clean energy initiatives fairly distribute the benefits and burdens across all segments of communities.
    • Transgenerational Equity – Decision makers consider the impact on future generations of the clean energy initiatives they develop.

When thinking about community engagement, we are specifically thinking about frontline, marginalized, and underserved communities. This includes:

  • Community-based organizations
  • Community leaders
  • Local business owners, faith leaders, elders, organizers, volunteers, school officials, nonprofit leaders
  • Community members
  • Homeowners & renters with low incomes

Accountability and transparency are especially important for governments and others to consider when collaborating with communities to overcome challenging power dynamics and mistrust. This means setting up structures to ensure that:

    • There is follow-through on commitments.
    • Clear communication about roles in the partnership and about how community feedback will be used.
    • Transparent reporting back on progress no matter the degree of success.

As seen below, the Spectrum of Community Engagement to Ownership is a self-assessment and planning tool created by Facilitating Power; you might need it as one or both. The more impactful community engagement starts to happen toward 3-4-5 on the spectrum. You might be at 3 and want to improve, but not be able to move up to a 5 until you have more things in place: resources, conditions, staff support, build the capacity of community, etc. It can be helpful to begin by considering the ways in which you are currently engaging (or being engaged by) state and local government actors and other decision-makers. What are potential roles your partners can play to support moving toward authentic community engagement along the spectrum?

The following section introduces the Community-Driven Climate Resilience Planning tool principles and frameworks created by the People’s Climate Innovation Center and the Spectrum of Community Engagement to Ownership created by Facilitating Power. It seeks to help readers identify ways to build stronger connections among agencies, the local government, community organizations, and community members.

Community-Driven Climate Resilience Planning tool principles and frameworks

Communities have the right to define their priorities and needs. Using climate resilience to illustrate community driven planning in action, People’s Climate Innovation Center Kresge Foundation and Movement Generation define climate resiliency as:

    • Social cohesion + equity + mitigation + adaptation
    • Resiliency as the opposite of vulnerability.

In general, vulnerability is the dependency on systems and structures that inequitably dictate how, when, where, and who has access to essential life resources like water, food, shelter, and energy. Vulnerability and dependency are maintained by typical community engagement approaches that do not provide communities the ability to influence policy or program design. To achieve true resiliency, we must shift from the current status quo engagement to community collaboration and community ownership over climate resilience planning and implementation.

The reality is that communities that are most vulnerable to climate change are the communities that have the least control over essential resources and the least access to decision-making structures that have the most impact on our well-being.  True resilience is ultimately about reducing dependency and vulnerability through community control and community governance. Community-Driven Climate Resilience Planning builds leadership outside of local government agencies, increases collaboration and capacity and advances a multi-sectoral approach for more holistic and effective solutions.

Community-Driven Climate Resilience Planning Framework example

Co-launched with NACRP members and grassroots partners via the NACRP in the summer of 2017.  It was created through convening community driven planners from base-building and base-building support organizations. It includes principles, practices, and key capacities for community-driven planning.

Choosing Your Building Upgrade Zone

Introduction

Inequities within our energy systems are the result of intentional policies and choices made by decision makers at all levels of government. These policies reinforce long-standing power structures that lead to the disinvestment and disenfranchisement of low-income communities and communities of color. Recognizing these historical policies, understanding their effects on our communities today, and creating pathways to repair the harm to these communities is critically important. As our energy systems continue to transform, we have an opportunity to address these inequities and create a more equitable energy system.

Using data to understand how complex inequities shape the realities of communities can be a powerful tool for informing programs or policies that seek to address and repair harm. There are ample data sources that can be used to understand trends or conditions in a geographic area. However, these data often fall short of accurately reflecting the ground conditions of communities. They often do not inspire decision makers to consider how decisions might impact communities in the future. Using datasets alongside community input to design and inform policies and programs is essential to eradicating inequities in our energy systems.

This chapter will give readers an introduction to structural equity considerations and provides suggestions on how to use both quantitative and qualitative data to design equitable policies or programs.

To better understand how we can achieve a more equitable energy system, the American Council for an Energy Efficiency Economy (ACEEE) has used a framework adapted from the Urban Sustainability Directors Network (USDN).1 The framework is composed of four pillars: structural, procedural, distributional, and transgenerational. This chapter is concerned primarily with the structural pillar.

Source: ACEEE, Leading with Equity Initiative

 

 

Structural equity often involves decision makers recognizing the historical, cultural, and institutional dynamics that have led to clean energy inequities. In practice, this should go beyond recognition of past harms, to creating forms accountability to communities, transparency in decision making, and intentional pathways to repair and prevent future harm to communities.

Let’s use the example of redlining and racial covenants in real estate to illustrate the implications of structural inequities and how they impact housing for low-income communities and communities of color today. Redlining is a particularly relevant example of how racist policies led to divestment and reduced opportunity for wealth generation for communities of color. Redlining was a practice endorsed by the U.S. government to designate areas on maps as good or bad investments.23 Areas that had high concentrations of communities of color were labeled as areas of bad investment- effectively leading to the continued disinvestment of entire neighborhoods.4

Source: ‘Mapping Inequality’, University of Richmond. Red color indicates areas of bad investments

 

The map pictured above is a redlining map that was used to make housing investment decisions. These maps are a testament of how entire neighborhoods were deemed unworthy of investment by people in positions of power, leading to devastating impacts of disinvestment. Community disinvestment can lead to:

  • Reduction in tax revenue
  • Reduced opportunities for wealth generation
  • Lack of access to public & essential services
  • Departure of essential community businesses
  • Loss of jobs and economic opportunity
  • Mass incarceration and generational trauma

In recent years, governments at all levels have created data tools to help make decisions and direct investments to underserved communities. For example, to help achieve the goals of Justice40, the federal government has created tools such as the Climate & Economic Justice Screening tool (CEJST), which includes visual data layers in a map to highlight communities that face significant environmental and housing burdens.6 Many state and local governments have also created similar tools using local data. However, these data sources do not always capture local realities, community priorities, fluid conditions, and other compounding inequities that could impact the success of equitable policies or programs. For example, CEJST currently does not use race as an indicator in the tool to identify disadvantaged communities, despite race being an important correlator with many of the indicators in the tool. 78  Using existing data sources alongside authentic community engagement can help challenge assumptions, center community voices, and ensure that programs and policies are designed to benefit underserved communities.910

Developing an effective retrofit program requires both quantitative and qualitative data. The program developers should collaborate to create an aligned vision of goals and ways to accomplish goals that address all pillars necessary to create an equitable energy system. Community based organizations are often well-suited to help gather and analyze information that comes directly from community members themselves. Working with CBOs to help identify and understand the priorities of disinvested communities can help collaboratively make decisions about the kinds of programs and actions most needed to address inequities.

While it is important to understand larger-scale issues that affect communities, using local data can help drill down to a hyper local level to begin understanding things such as the conditions of buildings, energy issues affecting such as energy burdens, and other pressing issues such as displacement. Depending on the availability of data, this could be examined using a combination of national data sets and/or input gathered from community engagement. Collaborating with local agencies or organizations that have data relevant to specific communities can help combine data and design strong equitable programs.

Greenlink Analytics, a non-profit focused on energy data analytics, used their data vitalization tool (GEM) to explore the potential relationship between historical redlining and current energy-related issues facing residents of Atlanta, GA. They found that the predominantly black communities of Pittsburgh and Roseland, both of which are areas that experienced redlining – face issues today such as severe energy and housing burdens, blight, and have high presence of food deserts.11 These patterns can help historic and current patterns of disinvestment in communities of color.

The city of Philadelphia has also used Greenlink’s mapping tool in addition to focus groups to understand energy burdens in the city. The city used the spatial data and focus groups with residents/CBOs to confirm whether the data they had accurately reflected the ways communities are impacted. Using both types of data allowed the city to work with CBOs and residents directly to inform programs focused on energy burdens and energy poverty reduction. 12

 

 

 

Workforce Development and Economic Inclusion

Building upgrade projects (i.e. retrofits) can engage workers and contractors from communities impacted by the worst effects of climate change while also yielding economic benefits for residents. It is considered a tangible way to address issues related to equitable access to opportunity, workforce diversity, and economic inclusion. Economic inclusion refers to quality employment and contracting opportunities and improved access to those opportunities for historically marginalized people and communities. Building upgrades can also bring a variety of benefits to not only tenants, but to owners and the community at large. These upgrades can address frontline community priorities such as pollution reduction, gentrification concerns, strengthening the local economy, and promoting racial equity.

Retrofits and building upgrades can be an opportunity to engage a local workforce and promote economic inclusion in your community.

This chapter focuses on how retrofits can strengthen the local economy, create local jobs through job training, and promote equity via women-and minority-owned business development and inclusive procurement.

Currently, there is a growing demand for workers who can carry out building retrofit upgrades. Partly driven by private investment, but also by the federal government’s Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA). Through these provisions, there will be direct federal investments and tax incentives to drive private investments in clean energy, energy efficiency, and workforce development.

  • The BIL provides: $3.5 billion for the Weatherization Assistance Program, $250 million for Energy Efficiency Revolving Loan Funds, $550 million for Energy Efficiency Block Grants, and $40 million for Energy Auditor Training.
  • The IRA provides: $27.5 billion in tax credits, grants and loans for energy upgrades for housing, $27 billion in competitive grants for clean energy and climate projects (GHG Reduction Fund), and $200 million for energy efficiency contractor training.

As the funding becomes available there will be a demand for building upgrades which will lead to a widespread need for a skilled workforce to complete these projects. Teams may need to include a wide variety of professionals to complete their project and through the legislation funding will be available for four types of energy efficient workforce development programs:

  • State Based Home Energy Efficiency Contractor Training Grants reduce the cost of training contractor employees and provide testing and certification support
  • Energy Auditor training grant programs train individuals to conduct energy audits or survey of commercial and residential buildings
  • Building training and assessment centers programs establish training and assessment centers to identify opportunities for optimizing energy efficiency and environmental performance in buildings
  • Career Skills Training Programs can create career skills training programs

Different workforce opportunities will require different types of workers, and successfully engaging them in building upgrades projects will require an understanding of Labor Market Supply Segments and what is needed to participate in projects. One must question, what are the opportunities these workers are looking for and what additional support will need to be leveraged to ensure they stay on with the project until completion?  Think of this in terms of three segments: New Entrants, Incumbent workers and diverse suppliers. Engaging a diverse workforce requires project developers and implementers to have an understanding of the Opportunities and Supports if they want to retain workers.

 

Table xxx

Labor Market Supply Segment Defined as Opportunities Supports
New Entrants
  • High school students
  • Returning citizens
  • Youth with little experience
?Career awareness

?short-term credentialing opportunities

?Work-based learning

?Mentoring

?Cohort engagement in teams or groups

?Transportation

?Stipends

Incumbent Workers
  • Experienced workers changing careers
?Low-cost/ no-cost training opportunities

?Networking

?Increases in pay commensurate with skills development

?Access to work with benefits (healthcare, etc)

?Access to employers who need workers

Suppliers
  • Minority business enterprises/ Disadvantaged business enterprises
?Training connecting directly to project opportunities

?Networking

?Access to capital

?Prompt payment

?Supports with bonding insurance

?Orientation to procurement processes

 

Unfortunately, disparities have created a lack of diversity in the workforce. According to an ACEEE study, there are 50% fewer Black workers, 90% fewer women, and 20% fewer Hispanic workers within the energy efficiency workforce. Due to the lack of diversity in the labor market and the increasing demand for workers, there will be a need for greater intentionality when it comes to attracting, hiring and retaining non-white, non-male workers. This emphasizes the need for a strategy that works with partners and leverages tools to successfully engage and incentivize workforce development and economic inclusion.

It’s important to understand what successful workforce development and economic inclusion looks like and the strategies needed for implantation. For workforce development, its means placing new entrants and incumbent workers into good-paying, quality jobs and investing in various activities such as upskilling, credentials and certifications, Work and Learn opportunities, pre-apprenticeships programs, and partnerships with community organizations such as community colleges, YouthBuild/ Job Corps, unions, and community-based training organizations. There are even programs to enhance proficiencies in specific areas such as weatherization, like the U.S. Department of Energy’s Weatherization Assistance Program (WAP), weatherization training centers and Interstate Renewable Energy Council (IREC) training centers. In addition to local resources, there are also nationally recognized credentials from accredited organizations such as the Department of Labor’s Workforce Innovation and Opportunity Act On-the-Job Training, Building Performance Institute (BPI Energy auditor), OSHA-10 and OSHA-30 Occupational Safety and Health Administration worker safety training, and CEE program for heat pump installation.

To promote economic inclusion, it is vital to target specific, marginalized populations to ensure everyone can access economic opportunity, increase economic power, and build intergenerational wealth. There are several strategies that can used to further advance economic inclusion efforts, such as disparity studies to provide legal basis for creating local policies, enabling authority through executive orders of policies promoting economic inclusion, real-time accountability methods, project labor agreements and workforce/benefit agreements, supplier diversity plans, supplier development approach/right-sizing contracts to develop capacity, and targeted workforce development programs. Supplier diversity is a business strategy that focuses on creating a more inclusive base of minority business enterprises that are owned, operated, and controlled by one or more members of a minority race or disadvantaged business enterprise contractors. There are several resources that can help identify such businesses, such as labor management organizations, state or jurisdiction supplier diversity listings, minority or ethnic business contractor business associations or chambers of commerce, and community action agency weatherization assistance program administrators. Another successful strategy are Community Benefits Agreements which have been both used and promoted by DOE. These are legal agreements that are typically negotiated with the project developer who agrees to fund specific benefits for local communities which can include workforce training and metrics on economic inclusion.

Takeaways and conclusion

Retrofits Building Upgrades can pose a variety of benefits for a community beyond climate resilience and increased affordability. It can also serve as a method to boost the local economy, create local jobs, and support women-and minority-owned businesses. Hopefully, this chapter acts as a guide to help teams:

  • Define and describe economic inclusion and workforce development/diversity
  • Identify the barriers to a diverse workforce and economic inclusion
  • Describe community benefits as a strategy to create projects with workforce diversity and economic inclusion goals
  • Identify programs and partners who can help teams achieve their workforce goals

Case Studies

Red Cloud Renewables is an Oglala Lakota-led organization on the Pine Ridge Reservation that provides free, place-based workforce development opportunities for Native Americans. It is a pre-apprenticeship readiness program that includes training on how to perform energy assessments, complete retrofit projects, while focusing on home safety and occupant health measures. It has successfully worked with over 70 tribes since 2002 and has created more than 600 jobs in weatherization, solar installation, and sustainable home building

The RENEW program was Community Benefits Agreement in Chinatown in San Francisco. It was led by Emerald Cities who brought together the community, representatives from organized labor, and the City of San Francisco to build retrofits. These stakeholders crafted a community workforce agreement which included requirements around apprenticeship utilization and the employment of minority and women owned business enterprises. The program also provided energy savings to residents of affordable housing units and good-paying union jobs. Through this program we can further understand the importance of authentic community engagement. There are several actionable ways to engage residents, such as having representatives of the community at the negotiating table, using a facilitator to effectively communicate the needs of a community is key to getting to mutually beneficial agreement, and Supplier diversity can be achieved through an intentional strategy and the engagement of partners.

Accessing Funding Sources for Affordable Housing

Finding and properly leveraging funding sources for affordable housing and commercial building upgrades is a prerequisite for successful implementation. There are many sources of funding available, ranging from federal, state, and local governments to philanthropies and nonprofits to utilities and private entities. However, the complexity of acquiring and using this funding poses a significant barrier.

Each source has its own particular benefits and drawbacks, and each comes with its own conditions and requirements. Therefore, it is crucial to use fund blending and fund braiding tactics to maximize the available funding for a given program while still meeting each funding source’s requirements and expectations. In addition to general skills in leveraging funding, program designers and managers should have a handle on the particulars; for example, for federal funding sources, it is useful to be aware of recent federal legislation, relevant federal agencies, and the array of associated grant types. It is also useful to have models and case studies to provide inspiration for how to implement the skills and knowledge covered in the chapter. For this purpose, the chapter provides an overview of the Madison, WI Efficiency Navigator Program as a case study for fund-braiding.

A lack of sufficient funding, or an inability to properly use available resources, is a major barrier to widespread success in efficiency upgrades for affordable housing. This is a problem worth solving, especially considering the high potential for energy savings and emissions reductions offered by efficiency upgrades. Through a combination of general information and specific applied examples, this chapter provides program managers with tools to overcome the funding and financing barriers that so often hinder efficiency and equity goals.

First, it is important to define and distinguish between the methods of braiding and blending funds; while braiding preserves the individual identities and requirements associated with the various funding sources, blending combines sources into one pot. Braiding is the dominant strategy because, although it can involve more complex reporting, it is often easier to do due to statutory requirements on funding sources. The process of braiding funds can be described in a few simple steps (although there is no one-size-fits-all model):

  1. Identify funding streams
  2. Identify eligible populations and compare requirements
  3. Align requirements of funding streams
  4. Develop shared goals and a plan for collaboration
  5. Develop governance structures to support collaboration
  6. Identify and fill gaps and barriers to participation in program implementation

Funding can come in many forms: incentives, discounts, rebates, loans, grants, prizes, and in-kind services. Incentives, discounts, and rebates can help offset project implementation costs but do not cover full costs. While loans expect repayment, grants and prizes do not need to be paid back. Grants may have strict requirements for eligibility and reporting. In-kind services are like technical assistance services that can be utilized to help run and implement a program.

Funding can come from many sources: government (federal, state, and local), utilities, philanthropic foundations, nonprofit organizations, and commercial financing. Using the braiding and blending techniques described above, program managers can effectively combine these sources to fund upgrade initiatives.

The federal government is one of the most important funding sources for efficiency upgrades, but it is also one of the most complex and difficult to navigate. Upgrade initiatives are typically supported by several key federal agencies: the Department of Energy (DOE), the Environmental Protection Agency (EPA), Housing and Urban Development (HUD), the U.S. Department of Agriculture (USDA), and the Internal Revenue Service (IRS). These agencies issue two main types of grants: discretionary and federal “formula” grants. Discretionary grants are issued on a competitive basis to those the government deems eligible, while formula grants are allocated to local governments by way of a pre-determined eligibility formula. Recent federal legislation including the IRA (Inflation Reduction Act) and the 2021 Infrastructure Investment and Jobs Act (IIJA) has increased the role of federal sources for funding upgrade initiatives, offering rebates and incentives in addition to creating funds for grants and prizes.1 State and local government funding opportunities are also available for various building types, including commercial and affordable housing. These opportunities vary more by geography, so it is incumbent on program managers to explore funding opportunities specific to their state or locality.

There are benefits and drawbacks to each non-governmental funding source, each exhibiting different levels of flexibility, availability, and longevity. Utility programs are useful for lowering up-front costs and service costs for assessments and audits, but they have limited availability and may have restrictions on incentivizing fuel switching from gas to electricity. Within the nonprofit sector, CDFIs (Community Development Financial Institutions) and subject-based organizations (mostly energy efficiency-oriented nonprofits) serve as the two primary funding sources. These sources provide flexibility and low-interest investments, but also have limited availability and are often subject to changing funding priorities. Private funding helps to fill funding gaps and is readily available for qualified borrowers, but it does pose higher interest costs and sometimes sets unreasonable qualification standards. Braiding various funding sources (both governmental and non-governmental) helps maximize the benefits, and minimize the drawbacks, of each individual source.

Commercial upgrades and health-oriented programs have additional specific funding opportunities. Commercial buildings have access to a set of specific funding opportunities including Energy Savings Agreements (ESA) or Energy Efficiency Performance Contracts, Energy Efficiency-as-a-Service, Equipment Leasing Arrangements, Power Purchase Agreements, and Tenant Green Leases.2 Health funding can come from the CDC, CHIP, and environmental health grants.3

Those seeking to fund energy efficiency upgrade projects for affordable housing and commercial buildings must first understand available funding sources and the best practices for leveraging these sources. Key takeaways and possible next steps include:

  • Utilize online federal and non-federal resources to gain familiarity with funding terminology and processes
  • Follow various funding tracking opportunities
  • Identify project scope prior to searching for a funding opportunity
  • Ensure your organization meets the minimum requirements to apply for funding sources
  • Look to case studies for fund braiding and blending tactics to maximize the benefits, and limit the drawbacks, of each individual funding source

 

Case Study:

The Wisconsin Efficiency Navigator Program in Madison, WI focuses on small- and medium-sized multifamily housing, seeking to promote affordability, equity, resilience, and efficiency. This program provides a strong example of an equity- and climate-focused fund braiding strategy for affordable multifamily housing. The program’s success is a function of its effective fund-braiding strategy; the WENP used a combination of philanthropic, federal, state, nonprofit, and utility funding (a total of 9 discrete funding sources) to cover research, administrative, and improvement costs. By leveraging an array of funding sources, program designers were able to maximize reach and effectiveness, funding over $195,000 in building improvements and saving an average of $300-500 in energy costs per building annually.

Federal Guidance on GRRP Program