August 22, 2022

President Biden Signs Inflation Reduction Act Into Law; Briefings Highlight Potential Impact to Affordable Housing Industry

Last Tuesday, President Biden signed the Inflation Reduction Act into law. Last week, the White House and Senate Democrats published a series of fact sheets and background material on the Inflation Reduction Act (see below). NAHMA also participated in a series of briefings, hosted by HUD and the White House.  Members can find affordable housing-related provisions under the Environmental Justice section of the factsheets. Below are a few notable provisions from the factsheets and background information (*Please note that only one is a HUD program. All others are EPA or Dept. of Energy programs or tax credits):

Provisions that Impact Affordable Housing Industry and Broader Underserved Communities

1. The Environmental and Climate Justice Block Grants, funded at $3 billion, invest in community led projects in disadvantaged communities and community capacity building centers to address disproportionate environmental and public health harms related to pollution and climate change.
2. Affordable and Accessible Clean Energy for Disadvantaged Communities
   1. The largest single investments across the climate title of IRA is in the Greenhouse Gas Reduction Fund, a clean energy and sustainability accelerator funded at $27 billion with at least 60 percent of those funds focused on disadvantaged communities. The funding is provided to non-federal governments, as well as state or regional green banks, and is allocated across three buckets:
      1. $7 billion for zero-emission technology deployment – including rooftop and community solar –in low-income and disadvantaged communities.
      2. $8 billion for a general fund making broad investments in reducing greenhouse gas emissions and promoting environmental justice, exclusively allocated to low-income and disadvantaged communities.
      3. $11.97 billion for a similar general fund but available to all Americans and communities.
   2. In the same vein, the IRA creates a new grant program for Improving Energy Efficiency or Water Efficiency or Climate Resilience of Affordable Housing, funded at $1 billion, that helps cover the cost of energy efficiency upgrades – including electrification of systems and appliances – as well as installation of renewable energy, and improvements to property resiliency. (**HUD PBRA Programs Eligible**)
   3. In addition, two new home energy rebate programs help low- and moderate-income households increase their efficiency: the Home Energy Performance-Based, Whole House Rebates and Training Grants, and the High-Efficiency Electric Home Rebate Program. Funded at $9 billion equally split across the two programs, these investments provide single-family and multifamily energy efficiency retrofits and electrification.
3. $1.5 billion to plant trees, establish community and urban forests, and expand green spaces in cities, which combats climate change and provides significant community benefits by increasing recreation opportunities, cooling cities, lowering electric bills, and reducing heat-related death and illness
4. The IRA makes major reforms to the existing tax code to promote clean electricity deployment, so that future investments bring clean energy and good jobs to disadvantaged communities. Within the Investment Tax Credit and Production Tax Credits for renewable energy, there is a new bonus 10% credits for projects built within legacy energy communities. This helps ensure cheap, reliable, clean energy resources are available, and that the economic benefit of these investments will be felt by all Americans.
5. This is further bolstered by the Increase in Energy Credit for Solar and Wind Facilities Placed In Service In Connection With Low-Income Communities which creates a further bonus credit within the Investment Tax Credit that provides either a 10% bonus credit for projects installed in a low-income community or on Indian land, or 20% bonus for projects that are a part of an eligible low-income building or low-income economic benefit project. A low-income economic benefit project is defined as a projected where at least 50% of the financial benefits need to flow to households with less than 200% poverty line income or less than 80% an area’s gross median income. Specifically earmarked for solar, solar plus storage, and wind projects, the credit is limited to 1.8-gigawatts per year, although any unused portions of the allocation can be rolled over into the following year.

FACT SHEETS

1. Fact Sheet: How the Inflation Reduction Act Helps Asian American, Native Hawaiian, and Pacific Islander Communities
2. Fact Sheet: How the Inflation Reduction Act Supports Workers and Families
3. Fact Sheet: How the Inflation Reduction Act Helps Tribal Communities
4. Fact Sheet: Inflation Reduction Act Advances Environmental Justice
5. Fact Sheet: How the Inflation Reduction Act Helps Rural Communities
6. Fact Sheet: How the Inflation Reduction Act Helps Black Communities
7. Fact Sheet: How the Inflation Reduction Act Helps Latino Communities
8. Fact Sheet: How the Inflation Reduction Act Builds a Better Future for Young Americans
9. State Fact Sheets: How the Inflation Reduction Act Lowers Health Care Costs Across America
10. State Fact Sheets: How the Inflation Reduction Act Lowers Energy Costs, Creates Jobs, and Tackles Climate Change Across America
11. By the Numbers: The Inflation Reduction Act
12. Senate Democrats Published Details on Inflation Reduction Act

In the coming weeks and months, it is clear the Administration will move quickly to implement IRA.  Members can expect program updates and new funding opportunities from HUD, EPA, and Dept. of Energy. NAHMA staff continues to participate in briefings, meetings, and will provide members with any information that we obtain in a timely manner.