How Communities Can Achieve Climate Resilience and Affordable Housing Goals
Housing costs in communities across all income levels in every part of America are skyrocketing. At the same time, there is an increasing need to address climate change and make communities more resilient against heat, storms, flooding, and other climate-related impacts. Recently, Accelerator for America's (AFA) Matt Horton led a discussion for the Accelerator’s Economic and Community Development Practitioners’ Network (ECDPN) that highlighted how local communities are tapping new state and federal initiatives to address both housing affordability and climate change.
Joining Horton in the discussion were Trenton Allen, Managing Director and CEO, Sustainable Capital Advisors; Damon Burns, President and CEO, Finance New Orleans; and Lynn von Koch-Liebert, Executive Director, California Strategic Growth Council (SGC).
Sustainable Capital Advisors’ Allen highlighted how maximizing the impact of the new federal resources on local housing preservation and development will require blending and braiding capital from federal, state, local, and private sector sources. The recent wave of large-scale federal investment has focused primarily on infrastructure, manufacturing, and defense, with only addressing housing supply and cost as a related, secondary goal. As such, multiple agencies from the Department of Energy to Housing and Urban Development to the Environmental Protection Agency are deploying a range of funding resources that localities can pursue to support the production and preservation of more affordable and resilient housing.
In alignment with the greatest needs at the local level, federal agencies are focused on deploying this new capital in ways that address the historic inequities that have long existed in U.S. housing markets through a commitment to invest dollars into Justice 40 communities that have been disproportionately impacted by environmental issues. Allen pointed to how the federal Greenhouse Gas Reduction Fund (GGRF), a component of the Inflation Reduction Act (IRA), can leverage substantial private capital and provide flexible financing for resilient housing projects. GGRF provides $27 billion to reduce emissions and advance clean energy projects with a commitment to ensure that at least 70% of these benefits reach low-income and disadvantaged communities (LIDAC).
The fund has three components: a $14 billion national “green bank” to fund clean energy projects, $6 billion in technical assistance and capacity-building support for community lenders to advance clean and climate lending, and a $7 billion "Solar for All" initiative focused on rooftop solar and energy efficiency. In Allen’s view, it is the GGRF’s Solar For All program that will have the greatest direct impact in local housing markets, with the potential of bringing distributed solar to 900,000 low-income households across the country and saving consumers over $350 million on their utility bills over the first five years. These funds are being distributed as grants and must be invested in LIDACs. Importantly, some of the funds can be used to implement “enabling upgrades,” such as roof repairs, which are critical to making solar feasible for low-income households.
But Allen emphasized that federal funding alone is not enough to address the urgent need for investment in resilient and sustainable housing. To that point, the GGRF is expected to mobilize nearly $7 of private capital for every $1 of federal funds. Allen also noted that the IRA's direct pay provisions allow tax-exempt entities like municipalities and non-profits to directly access clean energy tax credits rather than relying on tax equity investors. This further unlocks new financing pathways for community-owned resilient projects, including affordable housing development. Local governments also have the opportunity to bring additional resources to the table by accessing the municipal bond markets to support affordable and sustainable housing projects, as seen recently in Atlanta, Chicago, and Dallas.
Burns of Finance New Orleans (FNO) argued that his organization’s ability to tap into the financial markets directly impacts the ability of individuals and families in the community to access capital for their housing needs. He explained how FNO shifted its business model after the devastating impacts of Hurricane Katrina to focus on sustainable and resilient development. The organization, which was founded as the city’s local housing finance authority, had a $400 million housing portfolio that saw its value drop by 95% in the wake of Hurricane Katrina. This made clear the critical intersection between affordable housing and other aspects of resilient infrastructure development. FNO now has separate bond indentures for single-family, multifamily, and infrastructure projects, as Burns noted that all three types of projects are needed to create a truly sustainable community.
That is also why Finance New Orleans developed the Resilient New Orleans Finance Plan in alignment with the City’s New Orleans Climate Action Plan, to address the fact that the built environment and overall infrastructure across the city is critical to sustainable and affordable housing for residents. FNO has mandated Enterprise Green Communities standards as well as compliance with strong local requirements related to stormwater management as a starting point in working with private developers and is continuously evaluating opportunities to achieve even higher sustainability benchmarks.
Burns also reiterated the importance of bringing together federal, state, local, and private funding to successfully advance high-impact projects. He advocated for policy innovations at the national level such as incentives for green bonds and single-family housing development that would create more opportunities to bring private capital into under-invested markets and communities.
As a further example of the critical nexus between climate resilience and affordable housing, Burns detailed the Resilient New Orleans Innovation Challenge (“Innovation Challenge”), developed in collaboration with Elemental Excelerator. Through this initiative, Finance New Orleans is seeking to integrate climate technologies directly into affordable housing projects in ways that will lower the overall cost of building components and increase resiliency and affordability for tenants and homeowners. The organization will utilize a $2 million housing fund to deploy the winning technologies from the Innovation Challenge in the construction of resilient and affordable homes in New Orleans. He stressed the importance of ensuring community buy-in for new technologies and developing long-term philanthropic and industry partnerships to sustain the work.
Lynn von Koch-Liebert of the Strategic Growth Council (SGC) in California discussed her organization’s important role in the state's efforts to support resilient housing and community development. SGC was created as a cabinet-level committee responsible for coordinating the activities of state agencies in 2008. Since 2014, SGC has invested just over $4 billion in California through grants and loans – the majority of which has gone toward the state’s most underserved communities. A core focus has been on incentivizing and prioritizing capacity-building within communities to build climate and other types of resiliency.
With respect to facilitating sustainable housing development, SGC starts with the premise that quality housing is a determinant of health, safety, and economic prosperity – as well as a critical component of the state’s climate strategy. Von Koch-Liebert noted that her organization further evaluates housing from two key perspectives – first, where it is built, and second, how it is built. Under the strategic framework that SGC adopted to guide their work in 2023, they apply a climate equity lens to both aspects of the housing puzzle.
von Koch-Liebert also emphasized the points made by Allen and Burns around the importance of leveraging funding for greater and more lasting impact, particularly when it comes to federal, state, and philanthropic dollars. She noted that California has a similar situation to New Orleans in feeling the impact of climate extremely intensely, which has led to aggressive planning and action around how to meet their resilience goals and stretch every available public and private dollar even further.
In terms of specific programs, von Koch-Liebert highlighted the Affordable Housing and Sustainable Communities (AHSC) program, which funds holistic affordable housing developments that encourage walking, biking, and public transit in a state that has historically been auto-centric. The program requires transportation investments, all-electric buildings, and funding for community services that will make it easier for Californians to drive less.
She also discussed the state’s new Community Resiliency Centers program, which provides grants for planning, pre-development, and implementation of resiliency centers in local communities. These centers are designed to withstand climate-induced disasters, strengthen recovery efforts, and provide services and programming that support residents on an ongoing basis, such as through workforce development and job training. SGC recently launched an innovative partnership to incorporate distributed renewable energy and virtual power plant capabilities into these centers.
As the experiences and perspectives of these three local, state, and national leaders make clear, the time is now for practitioners to integrate climate adaptation strategies with housing production and preservation to create resilient and sustainable communities. Leaders must look at new ways of stretching public dollars that attract private investment and create a catalytic spark. The innovative approaches highlighted in this session can not only make communities more resilient but can also help local leaders advance a more equitable future and build the affordable housing we need now.
As AFA previously detailed in “Insuring the Future of Our Communities: How Local Leaders Can Address the Risk of ‘Insurance Deserts," one of the market responses to climate-related disasters has been “insurance deserts” that make it harder to buy housing and that make homeowners and renters alike more vulnerable. “Insuring the Future” also notes that local leaders are closest to experiencing and understanding the local impacts of the dual crises of climate change and housing affordability. They are well-situated to deploy new solutions and incubate patient capital investment strategies tailored to the local resiliency risks and impediments that impact insurability and housing development needs while protecting and growing their tax bases.
A Framework for the Future
As communities confront these dual challenges of climate change and housing affordability, local leaders must adopt comprehensive strategies to build resilience and ensure sustainable development. The following framework outlines key components of a holistic approach to integrating climate resilience with housing initiatives, providing a roadmap for cities to create more robust, equitable, and livable communities in the face of emerging environmental threats. Implementing this framework will also mean reorganizing fossilized governmental structures and creating cross-functional teams. The emergency management leaders need to sit astride the housing and sustainability leaders and all plan together. Community development leaders, land planners, and environmental experts must establish a new collective that shares information, uses data, and de-silos community planning efforts. Common goals and a sense of urgency can bridge these historic divides and lead us to better outcomes – for housing and resiliency.
1. Comprehensive Risk Assessment, Including Housing Impacts
Conduct a comprehensive risk assessment to identify potential natural hazards, both climate-related and not (e.g., earthquakes), particularly those affecting residential areas.
Evaluate the likelihood and potential impact of each hazard on critical infrastructure and public facilities, as well as existing and planned residential properties and specific neighborhoods with a focus on vulnerable populations.
Assess and prioritize housing development opportunities based on their vulnerability and potential consequences of damage.
Conduct an equitable evaluation of Low-Income and Disadvantaged Communities (LIDAC), acknowledging past discriminatory practices and ensuring the risk assessment doesn't reinforce historical inequities in housing locations.
2. Housing Stock Inventory and Condition Assessment
Develop a detailed inventory of all residential properties, including public housing, affordable housing, and market-rate developments.
Conduct regular assessments to evaluate the condition of housing stock and identify vulnerabilities to natural disasters.
3. Resilience Planning and Design Standards
Establish resilience-focused design standards and codes for new housing construction and renovations.
Incorporate strategies to enhance resistance to potential hazards, such as seismic retrofitting, flood mitigation, and fire-resistant materials.
Develop incentives to offset additional costs for housing developers implementing resilience measures.
4. Resilient Community Capital Investment Planning
Prioritize local investment in infrastructure and housing projects based on their potential to enhance community resilience, reduce risk, and improve insurability.
Allocate funding to projects that address identified vulnerabilities with a focus on residential areas and Justice 40 communities, such as upgrading aging infrastructure, implementing flood control measures, or reinforcing critical facilities.
Coordinate with relevant stakeholders, including housing agencies and community-based organizations, to ensure alignment, a comprehensive understanding of local needs and priorities, and efficient resource allocation.
5. Maintenance and Monitoring
Implement a comprehensive maintenance program for publicly owned housing and related assets.
Regularly monitor the condition of housing stock and track any changes or deterioration that could increase their vulnerability to natural disasters.
Utilize data from condition assessments and monitoring to inform future housing development and investment planning.
6. Emergency Preparedness and Response Planning
Develop emergency response plans that outline procedures for protecting residential properties, with a focus on the most vulnerable populations and Justice 40 communities, minimizing damage and facilitating recovery efforts in the event of a natural disaster.
Coordinate with emergency management agencies and ensure that housing asset management strategies align with broader disaster preparedness and response efforts.
7. Community Engagement in Housing Resilience
Involve community residents in the housing and climate resilience planning and implementation process by soliciting input and feedback on priorities and concerns.
Educate homeowners, landlords, and tenants about the importance of resilience in housing and the steps being taken to enhance city preparedness for natural disasters.
Encourage private property owners to adopt resilience measures and promote collaboration between the public and private sectors.
8. Funding for Resilient Housing Development
Identify and pursue local, state, federal, and private funding sources for resilient housing and related infrastructure initiatives, such as grants, bonds, or dedicated tax revenues.
Develop a long-term financial plan that balances the costs of housing and climate resilience measures with other city priorities and budgetary constraints.
Explore opportunities for public-private partnerships or cost-sharing arrangements to leverage additional resources for resilient housing development.
9. Housing Resilience Performance Monitoring
Establish performance metrics and indicators to evaluate the effectiveness of resilient housing and related infrastructure development.
Regularly review and update housing strategy based on lessons learned, emerging best practices, and changes in risk profiles or community needs.
Foster a culture of continuous improvement and adaptability in housing resilience planning.
Adopting these strategic frameworks will take additional funding and technical assistance at the local level to coordinate capital improvements that work together to improve resilience and housing insurability. As the Accelerator’s Matt Horton and Don Howard of The James Irvine Foundation wrote in “Philanthropy’s Role in Ensuring Renewable Power Creates Good Jobs and Community Benefits,” philanthropy is uniquely positioned to “bridge the gap between federal dollars and local impact.” Funders can use their resources to leverage the billions of dollars of federal funding for climate resilience and adaptation in ways that respond directly to community needs, including the growing demand for affordable housing at all income levels.
The convergence of climate change and housing affordability presents both a challenge and an opportunity for local leaders. By leveraging new federal and state resources, and forging strategic partnerships that attract capital investments, while implementing comprehensive resilience strategies, communities can become sustainable, equitable, and thriving. The path forward requires local leaders to assess their community's vulnerabilities, engage residents, and pursue integrated approaches to housing and climate resilience. Such actions will not only protect communities from future risks but build a foundation for lasting prosperity and equity.
For more information, please contact AFA’s Matt Horton: matt@acceleratorforamerica.org.