Affordable Housing Community Cuts Energy Costs by 20% with Help of Fannie Mae’s Green Program

Image of City Gardens Apartment Homes

 

With a housing property more than four decades old in need of renovation, LINC Housing Corporation realized an opportunity to reach deep into its bag of green retrofits.

The non-profit housing provider, which is no stranger to sustainable living, learned in 2012 how to work with public utilities and government funding to cover much of the costs of a major rehab project and add an eco-friendly twist that is paying dividends. LINC Housing has transformed City Gardens Apartment Homes in Santa Ana, Calif., into a model for how multifamily portfolios can save big on energy and utility costs.

The 274-unit garden-style affordable housing apartment community built in 1969 was in serious need of new roofing, siding, storm water drainage, balcony renovations and general repair. The last renovation was in the early 2000s when a little more than a dozen hot water boilers were upgraded.

While plotting a course of repairs, LINC Housing explored a green refinance program to cover much of a $617,000 renovation. Fannie Mae’s new Green Refinance Plus loan program provided the springboard for installing new energy-efficient fixtures, systems, and insulation.

Now, a year later and the majority of the upgrades completed, the community within 27 two-story apartment buildings in Southern California has cut energy costs by 20 percent and is on track to post a 34 percent return on investment over the next six years.

“Whenever we’re doing improvements to a property that are just basic improvements, we try to layer on the green improvements at the same time,” said Samara Larson, LINC’s director of sustainability.

Fannie Mae Loan Program Helps Low Income Housing Go Green

LINC Housing, which has specialized in affordable housing for 30 years in California, became the first multifamily company to receive a Green Refinance Plus loan, which Fannie Mae introduced in 2011. Green Refinance Plus is intended to refinance expiring mortgages of Low Income Housing Tax Credit and other affordable projects and lower annual operating costs by reducing energy consumption.

LINC received a $19.4 million loan from Fannie Mae’s Lender Partner Bellwether Enterprise that is being used to not only upgrade City Gardens but also to retire tax-exempt bonds and buy out a Low Income Housing Tax Credit equity partner.

By working with Fannie Mae and Bellwether Enterprise, Larson said, City Gardens was able to get more money for the project through a large commitment to sustainability improvements. After the loan was approved, LINC Housing partnered with five groups, including Southern California Gas Co. and Southern California Edison, to cover $397,000 in product cost and labor services that included a laundry list of improvements.

City Gardens got new boilers, energy-efficient lighting in common areas and apartments, a passive solar domestic water heating system, low-flow plumbing fixtures, upgraded forced air units and additional weatherization and insulation.

“It was a pretty good scale renovation, and Fannie Mae had come out with this Green ReFi program, which allowed us to do not only the renovations that we needed to do but also green retrofits,” Larson said. “We’ve got a pretty strong commitment to sustainability within our portfolio. We see the advantage to our residents and the operation of the property in doing green improvements.”

Utility companies helped LINC Housing secure all the possible product rebates and incentives to keep costs down. Because California is very green friendly, finding the best deals didn’t require as much digging as perhaps it would in other parts of the country, but the hunt was nonetheless challenging, Larson said. LINC Housing was able to work with assigned representatives at the utility companies to find the best deals.

City Gardens’ Green Makeover Began with Educating Residents

Before turning the first wrench, however, LINC had to get a buy-in from City Gardens residents. First, because the property is sub-metered, City Gardens had to acquire utility usage history from residents, which required going door to door and requesting the information.

Also, apartment staff had to educate residents on what sort of green retrofits and improvements were being done and how they would be of benefit.

“Anytime you do energy efficiency, there is a certain adaptation with any change, and there is a certain behavioral component in what goes on in a unit,” Larson said. “If you don’t help educate the residents about what you’re doing and why and how they need to use it, you’re not going to get maximum benefit.”

Even the community’s children got in on the action.

Image of children at City Gardens Apartment Homes Promoting LINC Green Cares

Resident Services incorporated green activities into its on-site after-school program, which enabled kids to build small examples of how sustainable energy works. Building solar ovens was one such lesson.

“Sometimes if you can sell kids on things it helps sell their parents on it, because the kids then remind them how to do it,” Larson said. “We saw a lot of that with recycling years back. If you teach a kid to recycle they’ll show their parents how to throw stuff away properly.”

When the dust settled, the entire out-of-pocket expense was $220,000. LINC Housing had projected a 23 percent savings, but some install issues plus delays in remaining projects – new irrigation and PV solar systems – have slowed the return. However, Larson expects City Gardens to reach the projected number in time and is watching progress by tracking the project through the Environmental Protection Agency’s (EPA) ENERGYSTAR Portfolio Manager and Home Energy Score tool.

Success of City Gardens a Model for other Green Refinance projects

In the meantime, other green upgrades are currently being considered for a LINC Housing property in Lancaster, Calif. The company has signed up for the Dept. of Energy’s Better Building Challenge, which now includes multifamily properties, to explore more energy efficient solutions.

“We’ve been real pleased with benefits that we get from our sustainable retrofit,” Larson said. “We’re committed to reducing our portfolio energy use by 20 percent by 2020.”

City Gardens’ success has made an impact at Fannie Mae. Since closing the first Green Refinance Plus loan for City Gardens loan, Fannie Mae has closed four other Green Refinance Plus loans.

“We’re very proud of LINC Housing partnership with us in doing the first Green Refi Plus loan, and it has been a huge success story with the implementation of the money they got through our program, as well as other things that they got through grants and things like that,” said Donna Varner, Fannie Mae’s Senior Project Manager of Multifamily Green Initiatives. “They are a huge success for us.”

 

(All images courtesy of LINC Housing Corporation)

 

 


Contributing Editor, Property Management Insider
President, Ballpark Impressions, LLC

author photo two

Tim Blackwell is a long-time publishing and printing executive in the Dallas/Fort Worth area who writes about the multifamily housing and transportation industries. He has contributed numerous articles to Property Management Insider, and worked as a newspaper reporter in the D/FW area. Blackwell is president of Ballpark Impressions, and publishes the Cowcatcher Magazine. He is a member of the Fort Worth Chapter/Society of Professional Journalists.

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