Incentives

Paying for building upgrades is often the biggest barrier that property owners face. With building performance standards being implemented across the country, owners are asking how they can afford to upgrade their buildings to comply with these new standards and avoid fines. Luckily, there are many different incentives options that allow owners to afford the capital costs and increase their NOI. 

What are the different types of incentives available?

Incentives come in many forms so you can choose the ones that fit best with your environmental and financial goals in concert with your company’s ability to utilize each program. At a high level, here a few different types: 

Grants

Grants are a certain amount of money that is given to the business for a specific purpose. When you apply for a grant, you will need to be transparent about what it will be used for (in some instances the use may be specified by the granting agency). You may have follow ups from the organization that awarded the grant to ensure the money was used for its intended purpose. Grants do not need to be repaid and can be a great way to cover or partially cover capital costs. 

Loans

Like grants, loans are a certain amount of money given to the business for a specific purpose. However, loans must be repaid over a certain period of time and you will need to prove that you can afford to repay the loan. Many loans for efficient capital expenditures will set the monthly or routine payment amount based on the projected energy or water cost savings and thereby make them cost neutral for ownership when evaluating the NOI of the property.   Loans versus grants may have different tax implications, leading you to choose one over the other. 

Rebates

Rebates are a reduction, return, or refund of money for a specific purchase. Unlike grants and loans, the money is returned after the product has been purchased. Rebates are often for specific items like HVAC systems, light bulbs, appliances, etc and may require either a certain percentage of energy or water saved or specify what equipment qualifies for rebate.The owner must make sure they fulfill all eligibility and preauthorization  requirements before installation and prior to the submission for the rebate. 

Tax Credits

Tax credits are an amount of money subtracted from the taxes that the ownership pays to a city, state or federal agency. Tax credits can be awarded up to a certain amount of money per unit to be used for specific projects such as energy efficiency upgrades like new windows, appliances, and operating systems. Depending on the tax credit, you will be subjected to certain restrictions and eligibility. 

Where do incentives come from?

Incentives can come from public jurisdictions at different levels and private organizations. The money can come from federal sources and is allocated to be distributed by state offices or local jurisdictions. Here are a few examples:

Federal

Federal incentives have been seen through the GRRP and Energy Star rebates. The GRRP is part of the Inflation Reduction Act and offers grants, loans, and other forms of incentives for qualifying HUD properties while Energy Star provides a variety of rebates to increase building efficiency. 

State

State incentives are typically created and/or approved by the Public Utilities Commission Commission for that state.  For example, the state of California’s Low-Income Weatherization Program (LIWP) offers a Multifamily Energy Efficiency and Renewables Component which provides incentives for installing energy efficient measures and solar photovoltaic systems.

Local

These are funding programs specific to a local government agency as part of an initiative by that local government agency.  The city and county of Denver, Colorado offers rebates to electrify buildings. This includes different types of heat pumps to increase building energy efficiency and reduce overall emissions and is related to the overall objective of the city of Denver to reduce its carbon emissions.

Utilities

Local utility providers are also providing a variety of incentives.  These programs are typically funded through fees charged to the ratepayers.  Con Edison in New York State participates in the Affordable Multifamily Efficiency Program (AMEEP) offering up to $2,000 per unit to install energy efficient equipment and technology. AMEEP is an effort by the Joint Utilities of New York (coalition of energy companies in the state) and the New York State Energy Research and Development Authority (NYSERDA).

How do I access incentives and how can they benefit me?

As you can see, there are many different avenues to access incentives and will depend on what your goals and objectives are. Taking advantage of the many incentives offered can provide the money you need to implement your building and energy efficiency upgrades so that you can start cutting emissions, energy usage, and operating costs sooner. Navigating this can be challenging but the environmental and financial outcomes make the effort worth it. 

Need an easier way to understand what incentives your properties may qualify for? Contact us!