HUD Publishes Green and Resilient Retrofit Program Supplemental Notice

Owners will find more administrative flexibility within the GRRP rules.

As part of President Biden’s Investing in America agenda, HUD recently announced it’s awarding $173.9 million in new loans and grants under the Green and Resilient Retrofit Program’s (GRRP) Comprehensive and Elements categories. The GRRP came about from a provision of the Inflation Reduction Act (IRA) of 2022, which provides $837.5 million in funding and up to $4 billion in loan authority to HUD for affordable housing properties.

In May 2023, HUD issued Housing Notice H2023-05 to implement the program and provide funding for three goals: (1) reduce energy and water use in HUD-assisted multifamily properties; (2) make HUD-assisted multifamily properties more resilient to extreme weather events and natural disasters; and (3) reduce greenhouse gas emissions from HUD-assisted multifamily properties.

Application Groupings

For a property to be eligible for GRRP funding, the property must be receiving HUD assistance. A site can qualify for GRRP funding under one of three cohorts or groupings available–Elements, Leading Edge, and Comprehensive. Owners can apply for one cohort per property and receive funding by means of a grant or surplus cash loan.

Elements award. A site is eligible for an Elements award if the property is undergoing recapitalization with plans of creating a greener and more climate-resilient property. It can be used for items such as heat pumps, sustainable building materials, and solar panels.

Leading Edge award. A site is eligible for this award if it has ambitious carbon reduction and resilience goals. The site must obtain either a net zero energy certification or net zero carbon certification.

Comprehensive award. A site is eligible for this award if the site is looking to achieve vital green initiatives and utility benchmarks. This award is the broadest in scope and doesn’t require the owner to have construction or greening experience. HUD will be highly involved throughout the process and transaction exchange.

HUD says owners are encouraged to continue to submit applications for grant awards or loans in any of the three categories. HUD is reviewing applications under one category each month for the duration of funding availability. HUD expects to announce awards regularly throughout 2024.

Supplemental Notice

With regard to the GRRP, HUD recently issued a supplemental notice to add administrative flexibility within the GRRP rules for those owners who have already received an award and for owners who are selected in upcoming application packages. You can find the redline version of the changes made to the GRRP Notice by Housing Notice 2024-01 at www.hud.gov/sites/dfiles/Housing/documents/Revised_GRRP_Notice-Jan2024_redline.pdf.

According to HUD, the Notice 2024-01 makes the following changes to the GRRP:

Disbursement of GRRP funds. The notice amends the disbursement requirements for the Elements, Leading Age, and Comprehensive awards by revising the process for submitting draw requests, increasing the maximum amount of award funds that may be disbursed during the construction period, clarifying a condition for when remaining funds may be disbursed, and removing the requirement for an escrow deposit agreement for the disbursement of comprehensive award funds. These changes allow more of the GRRP funds to be available during construction.

Surplus cash loan terms. The supplement updates the terms for surplus cash loans by clarifying when payments begin, allowing for the payment of deferred developer fees prior to calculating the surplus cash for the first 10 years of payments, and extending the term of any surplus cash loan from 15 years to up to 30 years.

Renewable energy credits. The supplement adds guidance about the purchase of renewable energy credits if they are relying on them to achieve a Leading Edge qualifying certification. Owners must continue to purchase credits for the greater of the duration required by the certification or three years.

Davis-Bacon wages and project labor agreements. The notice clarifies when the Davis-Bacon wage rates should be locked in at the issuance of the Leading Edge Commitment (LEC) or Comprehensive Construction Commitment (CCC) and adds guidance for owners that elect to enter into project labor agreement (PLA) with unions.