Organization Launches $4B Green Initiative for Affordable Housing
- Oct 27, 2009
The green movement in commercial real estate has caught on like wildfire and even with the recession having left most clutching their pocketbooks, it continues to spread. Now Columbia, Md.-based Enterprise Community Investment Inc. plans to take the trend to new heights with the kicking off its $4 billion Green Communities initiative, which is designed to propel the greening of affordable housing development across the country.
Enterprise, a development capital and solutions provider for affordable housing, leverages low-income housing, new markets and historic rehabilitation tax credits, as well as short and long-term debt to finance development and retrofitting projects. The goal of Enterprise’s new multi-billion initiative is to get public, private and nonprofit sectors to join the organization’s effort to facilitate the greening of the country’s entire affordable housing industry by 2020. Where will Enterprise get the funds? The organization will raise the money from investors–fund managers, banks, corporations and the like–as is its practice. “We typically raise $1 billion a year in various products to put into affordable housing,” Charles R. Werhane, president and CEO of Enterprise, says.
Enterprise has already laid much of the groundwork that will support the new initiative by working with developers over the last few years to highlight the health, economic and environmental benefits of green housing, and by coordinating with state housing agencies to develop programs that will allot higher scores to developers seeking Low-Income Housing Tax Credits (LIHTCs) for projects. “There’s a lot of grassroots work that has taken place across the country,” Werhane said. With the new initiative, “our goal is to get larger lending agencies to create lending product to encourage developers to build green affordable housing.”
The word Enterprise is spreading among affordable housing developers is based on the organization’s study, “Incremental Cost, Measurable Savings: Enterprise Green Communities Criteria.” The study details how, by following Enterprise’s Green Communities Criteria, a mere 2 percent investment in upfront development costs can result in long-term operating cost savings, as well as environmental and health benefits. The list criteria includes addressing energy efficiency, water conservation, indoor air quality and the use of healthy, environmentally friendly materials. Enterprise describes the study, which essentially conveys that the upfront investment in green building is minimal compared to the long-term savings, as the “only comprehensive green building framework for affordable housing.”
Enterprise’s Green Communities Criteria has already become an integral part of affordable housing for several agencies and municipalities. The U.S. Department of Housing and Urban Development has adopted the criteria in association with specified funding for public housing projects, and the states of Iowa, Minnesota and Washington are also on board. At the city level, Cleveland, Denver, the District of Columbia, Miami and San Francisco have incorporated the criteria into their affordable housing efforts. The list of housing finance agencies that at least refer to the guidelines in their scoring process for granting LIHTCs, is even longer, totaling about 40. “A majority of the states use some part of our criteria or similar criteria,” Werhane noted. “We want to make the criteria the minimum standard to get funding.”
Already, Enterprise’s newly launched initiative has attracted significant attention. The Home Depot Foundation, The Kresge Foundation and The Kendeda Fund have provided grants of $1.5 million, $1 million and $1 million, respectively. “It’s not just about the $4 billion. We want to encourage our peers to make the affordable housing industry green in a relatively short period of time.”