Clean Energy Initiative

Clean Energy Initiative
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Overview

HCR and NYSERDA are partnering on a pilot initiative designed to create up to 600 energy-efficient, all-electric affordable housing units. The Clean Energy Initiative will allow more New York families to benefit from healthy, clean energy homes, while providing housing developers with streamlined access to technical assistance and affordable housing finance opportunities.

Incorporated into HCR’s Summer 2021 Multifamily Finance 9% and 4% Request for Proposals, the funding will directly support clean energy projects, creating a one-stop process for developers who will no longer have to file a separate application to receive funding. As part of the collaboration, HCR and NYSERDA are working to introduce this integrated and streamlined assistance for affordable housing rehabilitation projects starting in 2022.

Up to $12,500/unit in additional funding is available for a select number of projects that are committed to meeting HCR’s Stretch Sustainability Standards. These projects can be described as highly-efficient and all-electric (Carbon Neutral Ready). The demonstration phase 1A is open to new construction or adaptive reuse projects. Projects with over 200 units will be subject to a per project maximum award of $2,500,000.

Background

HCR is working to put current and future affordable housing projects on the path to meeting New York State’s Climate Leadership and Community Protection Act ("Climate Act”), which mandates an 85% reduction in greenhouse gas emissions by 2050, compared to New York State’s 1990 carbon emission levels. For buildings, this will mean dramatically improving efficiency by increasing the performance of building envelopes and hot water consuming appliances/fixtures and replacing fossil fuel combusting equipment with efficient electric solutions.

To develop this type of affordable housing construction and a model for streamlining access to financial and technical assistance resources from New York State, HCR has partnered with NYSERDA to demonstrate an approach for incorporating clean energy incentives and technical support for highly-efficient, all-electric new construction or adaptive reuse projects. Up to $12,500/unit in clean energy funding will be made available for select projects as a source in the project’s Sources and Uses to enable projects to meet HCR’s Stretch Sustainability Standards: highly-efficient, all-electric buildings (fully defined below).

Funding Description

The clean energy funding available during this demonstration phase will consist of $12,500 per dwelling unit to achieve HCR’s Stretch Sustainability Standards: highly-efficient, all-electric (Carbon Neutral Ready) projects. This funding is broken into two components:

1) $10,000/unit to offset the incremental design and capital costs of pursuing the scope of work outlined below; and

2) $2,500/unit to fund integrated design (defined below).

At HCR’s sole discretion, up to $7.5 million may be made available for this demonstration phase, and projects will be selected from both the 4% Bond Finance and 9% LIHTC programs per the eligibility criteria below. HCR anticipates awarding at least four projects during the demonstration phase. If selected for clean energy funding, 4% projects will be notified through a conditional award letter contingent upon final approval of project financing.

In addition to receiving clean energy funding to offset incremental costs associated with achieving the designed building performance, selected projects will receive support from a designated Technical Assistance Provider and HCR to assist with the enhanced design efforts, where necessary. After the award is made, the Technical Assistance Provider will guide the project’s development team and energy efficiency consultant through an integrated design process to achieve the highly-efficient, all-electric (Carbon Neutral Ready) building standards defined below.

Project Eligibility Criteria

Projects eligible to be considered under Phase 1A will meet the following criteria:

  1. Projects are new construction or adaptive reuse.
  2. Projects must be currently 1) designed to utilize fossil fuel on-site; 2) designed to partial electrification; or 3) demonstrate a gap in financing to reach HCR’s Stretch Sustainability Standards.
  3. The applicant has demonstrated success incorporating energy efficiency or electrification into past projects.
  4. To be eligible for participation, a project must be, or be capable of and intend to be, a New York State electricity distribution customer of a participating utility company that pays into the System Benefits Charge (SBC).
  5. The development team is able to commit to the enhanced design to achieve highly-efficient, all-electric (Carbon Neutral Ready) building performance as defined in this solicitation.
  6. The development team will commit to partner with a designated Technical Assistance Provider, who will assist in: 
    1. Enhanced design development and construction documentation with the current project design team.
    2. Construction oversight.
    3. Measurement and Verification for two years post lease up.
    4. Benchmarking outlined in the regulatory agreement.
  7. The development team will commit to working closely with HCR’s Office of Finance and Development, Design Unit and Sustainability Team through design, construction, measurement and verification.

HCR’s Stretch Sustainability Standards

Highly-Efficient, All-Electric (Carbon Neutral Ready) Buildings:

The goal of the clean energy funding program is to build carbon neutral-ready affordable housing. This means that projects exclude fossil fuels from the building systems and equipment, are designed and constructed with a highly energy efficient building shell, and utilize highly efficient appliances/fixtures. Building systems and equipment include building heating, ventilation, and air conditioning (HVAC), domestic hot water (DHW) (where technically feasible based on today’s technology), and appliances. Projects that rely on a fossil fuel-fired generator for emergency use only, or projects which are served by an off-site fossil fuel-fired central heating plant may qualify as Carbon Neutral Ready if fossil fuel use is excluded from all other building systems and equipment. HCR, as its sole direction, will consider exceptions to the carbon neutral-ready rule for process loads occurring in mixed-use spaces on a case-by-case basis.

Compliance:

To demonstrate compliance as a highly-efficient, all-electric building (carbon neutral ready), participating projects will be required to submit a signed contract with a licensed or certified professional able to certify or confirm compliance and verify to one of the following standards listed below: 

  • All space heating, cooling and domestic hot water appliances and equipment will be high performance electric such as, but not limited to: Air-Source or Water-Source Heat Pumps or Variable Refrigerant Flow (VRF) units AND one of the following project certification programs must be achieved:
  • Passive House:
    • PHI Classic
    • PHIUS+ 2018 Core or PHIUS+ 2021
    • PHIUS Prescriptive 
  • Enterprise Green Communities 2020 Plus
  • Advanced Levels of Energy Star Certification: 
    • ASHRAE pathway: Certified PLUS 30% additional source energy savings (before solar)
    • ERI pathway: Certified PLUS and ERI ≤ (0.75 x MFNC v1.1 ERI Target) (before solar).
      • For townhomes: Certified PLUS ERI of 45 (before solar).

Integrated Design:

Projects must also utilize an integrated design process to achieve HCR’s Stretch Sustainability Standards and minimize costs. Proposals must include a detailed description of how the project will use a collaborative process throughout the design, construction and start-up operations of the facility to achieve project outcomes at high quality and cost effectiveness.  The proposal must include a description of how this multi-disciplinary team approach will be followed.  A detailed scope of work, identifying team members, process, tasks schedule and budget must be included in the proposal.  At least one team member responsible for overseeing this work must have demonstrated prior success leading a project that utilized an integrated design process.

Exceptions and Exemptions for the Use of Funds:

The funds are designed to cover the cost difference between a project that complies with HCR Design Guidelines, including Appendix F requirements, and HCR’s Stretch Sustainability Goals: highly-efficient, all-electric (Carbon Neutral Ready) buildings. The scope does not require the applicant to include ground source heat pumps, solar photovoltaics, embodied carbon reductions (from material selection or design improvements to reduce quantity of material), or other innovative technologies not specifically mentioned above.   While those additional items are not required within in this scope, development teams are strongly encouraged to include those considerations where they can be included cost effectively in the project scope.

Project selection to receive clean energy funds and/or technical support through this demonstration will satisfy the HCR Mandatory Energy Efficiency Strategy required as part of the 4% program and outlined in Appendix F of the HCR Design Guidelines. Applicants should not change their original path for compliance with the HCR Mandatory Energy Efficiency Strategy until the applicant is notified of an award.

Projects selected for clean energy funding and technical support through this demonstration will be prohibited from receiving financial support from other clean energy programs that support highly-efficient, all-electric (Carbon Neutral Ready) housing. If projects have already applied to a NYSERDA program, such as the New Construction – Housing Program or Buildings of Excellence, acceptance of the demonstration funding shall be considered to supersede that previous funding allocation, and HCR, NYSERDA and the awardee shall work together to cancel the New Construction – Housing Award and/or Buildings of Excellence awards and remove its funds from the capital stack post award notification.

Other programs, such as but potentially not limited to the following programs shall be considered to be acceptable to use in conjunction with this award: Real Time Energy Management Program (RTEM), Charge Ready NY, and NY Sun. Projects may also be eligible for  NYS Clean Heat, a utility run program.  Projects may also be eligible to receive federal or state tax credits for some aspects of their project. HCR encourages project teams to research and apply for these supplemental funding programs. 

How to Apply

To be considered for funding:

  1. Submit your financing application for your “base” project that meets the eligibility criteria. Original “base” project proposals should not be amended to address clean energy funding program goals.
  2. Complete tab D-6: Clean Energy Funding Application in HCR’s 4% or 9% Financing Application
  3. Submit a memo not to exceed 5 pages:
    1. Outlining anticipated revisions and/or enhancements to the project’s scope of work to achieve clean energy funding program compliance.
    2. Including anticipated incremental cost for these enhancements per unit,
    3. Providing any assumptions for adjustments to the operating budget as needed.
    4. Describing how the project will achieve integrated design (described above).
  4. Submit a signed contract with a licensed or certified professional who is working on the project’s “base” design PLUS a letter certifying that this professional is able to confirm and verify to the standards outlined in the compliance section of this scope.