New Federal Green Building Incentives Thank host – Georgia Affordable Housing Coalition for the opportunity to present to the group gathered today. I’m Tim Block, Program Director for the Southeast office of ECP. For those who aren’t familiar with Enterprise, we’re a national nonprofit intermediary that’s working to connect low-income families to opportunity, starting with a safe and stable place to call home. A little bit about my background; I’ve been in the non-profit field for over 20 years now. Before joining Enterprise I worked for the Southeast Energy Efficiency Alliance as Director of Programs, before that The Home Depot Foundation as Affordable Housing Program Manager and prior to that was blessed to serve as the Executive Director of Habitat for Humanity Philadelphia and began my career in Cleveland, Ohio working for two Community Development Corporations. State objective for session – Happy to be hear this afternoon to share with you some information on a relatively new federal green building incentive. New Federal Green Building Incentives Georgia Affordable Housing Coalition Annual Conference March 30, 2017 Tim Block, Program Director Enterprise Community Partners

“We believe, because it is true, that people are affected by their environment, by space and scale, by color and texture, by nature and beauty, that they can be uplifted, made to feel important.” Jim Rouse | Founder Context, who is Enterprise: National nonprofit with local presence; founded by Mr. Jim Rouse; Introduce quote by Jim Rouse—foundational inspiration & commitment by Enterprise to building high quality affordable housing. We’re working in communities across the country to tackle some of the most pressing housing problems facing low-income families. 2015 ENTERPRISE GREEN COMMUNITIES CRITERIA | PHILADELPHIA HOUSING AUTHORITY | FEBRUARY 18 + 19, 2015

ENTERPRISE COMMUNITY PARTNERS $23.2 billion 340,000 units Enterprise Community Partners Enterprise has invested more than $23 billion in equity, grants and loans and helped build and preserve more than 340,000 affordable homes across the country. We do this work through 3 Main Areas: (Capital) Financing and development LIHTC; NMTC and Equity Funds Multifamily Mortgage Finance through Bellwether Enterprise Community Development Financial Institution (CDFI) (Solutions) Programs We offer resources and technical assistance to both for profit and non-profit developers Enterprise Advisory Services & our National Resource Network We utilize best practice & knowledge sharing Transit Oriented Development (give an example later in presentation) Enterprise Green Communities Certification (Policy) and advocacy

Our Solutions – Green Communities Green Policy Enterprise Green Communities is transforming the way America thinks about, designs, builds, and rehabilitates affordable housing. Green building integrates materials and methods that promote environmental quality, economic vitality, and social benefits through design, construction and operations of the built environment. Enterprise Green Communities aligns affordable housing investment strategies with environmentally responsive building practices. Green building focus established in 2004; currently have Enterprise Green Communities certified properties in 39 states + DC + Puerto Rico Enterprise’s Green Communities team works to make green building practices not just “best practice,” but “standard practice” through our Criteria and certification program; TA/trainings with stakeholders; development of tools/resources; and collaboration with national & local stakeholders including housing finance agencies, HUD, EPA, DOE, and Fannie Mae. The more often that green certification programs are built into traditional financing mechanisms, the more likely it will be that sustainability practices are scaled. Would like to share more information about one example where exactly this is occurring: HUD MIP incentive. 4

HUD MIP Incentive Market Rate Housing Broadly Affordable Housing Federal Register 24 CFR Part 266 Docket No. FR-5876-N-03 Market Rate Housing Broadly Affordable Housing Affordable Housing Green and Energy Efficient Housing Incentive includes 4 sections (seen here); will focus on the Green and Energy Efficient Housing component. Context/Rationale for this ruling: Simplify the rate structure Demonstrate HUD’s commitment to promote its mission initiatives. Added specifically to recognize and promote green and energy efficient properties, whether affordable or market rate. Big picture: anticipate 4% greater loan proceeds (cost of building is ~2% higher); win-win. No financial reason not to build sustainably.

HUD MIP Incentive Who’s eligible: Affordable / Market rate Federal Register 24 CFR Part 266 Docket No. FR-5876-N-03 Who’s eligible: Affordable / Market rate When eligible: After April 1, 2016 What’s required: Certify to a green building program, AND Report building performance Tips & Tricks Who’s eligible: New construction, rehab, or refinance. Market rate or affordable. When eligible: Now. (after April 1, 2016) What’s required: Certify to a green building program (can choose between include Enterprise Green Communities, LEED, ENERGY STAR, EarthCraft, National Green Building Standard, Passive House, and Living Building Challenge). Report building performance: must report annual property energy consumption through benchmarking the property’s energy use in EPA’s online Portfolio Manager tool and must at least maintain a score of 75 (avail scores are 1-100, score is based on % of mf building stock). Tips & Tricks: Certifying to a green building standard may not automatically qualify your project to receive a Portfolio Manager score of 75 or better. Must plan with your project team’s energy professional during the design phase to meet both targets.

HUD MIP Incentive How to show compliance? Federal Register 24 CFR Part 266 Docket No. FR-5876-N-03 1. At the time of application for FHA mortgage insurance 2. No more than 15 months after completion How to show compliance? What happens if your project falls out of compliance? Differences between market rate and affordable? How to show compliance? Upon application for FHA mortgage insurance, the property owner must: provide evidence that the project either has achieved, or the owner must certify that it will pursue and achieve, an industry-recognized standard for green building, and certify that the property has achieved, or will pursue, achieve, and maintain a score of 75 or better on the 1-100 ENERGY STAR score, using EPA’s Portfolio Manager. The reasonableness of achieving and maintaining these items must be verified by the independent conclusion of a qualified assessor preparing the physical condition assessment report. The physical condition assessment report submitted with the mortgage insurance application must include a certification from the architect, engineer, or energy auditor that the planned scope of work is reasonably sufficient to achieve and maintain the specified certification. Additionally, no more than 15 months after completion of the project, the owner must submit to HUD evidence that the green building standard has been achieved, and provide a copy of the Portfolio Manager report showing building performance at or above 75. The owner then must report annually to HUD showing that the property has maintained its efficiency performance. **Properties with less than 20 units are exempt from the requirement to achieve a score of 75 or better on the 1-100 ENERGY STAR score, but may qualify for this MIP if they achieve one of the industry-recognized standards for green building. ___ What happens if your project falls out of compliance? Properties that fail to achieve their designated green building standard or the 75+ Portfolio Manager score will be required to submit to HUD a compliance plan and timeline for achieving the required certification and performance, acceptable to HUD. An owner working in good faith and demonstrating progress towards compliance in HUD’s discretion will not be flagged in HUD’s 2530 previous participation system. ____ Differences between market rate and affordable? Rate structure Section B, the “broadly affordable housing” section of this notice, allows annual MIPs to change from the previous rates which were generally between 45-50 basis points, to 25 basis points for all multifamily FHA-insured loan types that meet the broadly affordable housing definition. (Properties with Sec 8 assistance and/or LIHTC do meet that definition). Section C, the “affordable housing” section of this notice, allows annual MIPs to change from the previous rates which were generally between 70-45 basis points, to 35 basis points for all multifamily FHA-insured loan types that meet the affordable housing definition. To qualify, properties must provide a set-aside of affordable units as stipulated in the notice. Section D, the “green and energy efficient housing” section of this notice allows annual MIPs to change from the previous rates which were generally between 45-70 basis points, to 25 basis points for all multifamily FHA-insured loan types. Note that the properties that qualify as “broadly affordable housing” in section B of the notice will already be achieving that 25 basis points rate. However, market rate properties and properties that qualify as “affordable housing” per section C of the notice will be able to reduce their MIP rate to 25 by following through with the green & energy efficient housing guidelines. Green building program eligibility The Enterprise Green Communities certification program, one of the green building programs endorsed by this initiative, is only available for properties with affordable units. There is no certification fee for participating in or receiving certification through the Enterprise Green Communities program, unlike all of the other programs listed in the notice.

Thank You! Tim Block, Program Director Enterprise Community Partners tblock@enterprisecommunity.org (404) 698-4618