How Multifamily Developers Can Save Money Through Green Certification
Some multifamily developers forgo seeking green building certification because they believe the costs are too high. It can cost a lot — but not for the reasons they may be thinking.
Ultimately, it's not that the costs are too high to earn the green certification; rather, it is the opportunity cost of leaving thousands of dollars of incentive financing on the table when they don't have a green certification. As these developers finalize their permanent financing, they realize how green certification would more than pay for itself if it had been identified as a design objective prior to construction.
Over the past few months, the NGBS Green team at Home Innovation Research Labs has fielded at least one call a day from either a developer or lender with a project facing one of two scenarios:
- Either the building is ready to close on financing, and the developer or lender just realized the significant financing incentives available for buildings with a green certification, or
- A developer just completed a project and has a potential buyer, but the buyer is only interested in the building if it has earned a green certification.
- The Department of Housing and Urban Development (HUD) provides a significant mortgage insurance premium (MIP) reduction for NGBS Green Certified buildings whose owners commit to reporting use through the Environmental Protection Agency's (EPA's) Portfolio Manager. The MIP reduction is available for almost all HUD Federal Housing Administration (FHA) financing and can be used for new construction or moderate to gut renovations.
- Fannie Mae and Freddie Mac offer financing incentives for NGBS Green Certified buildings.
- The Department of Agriculture (USDA) offers multifamily incentives for energy-efficient and green properties.