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The Pennsylvania Housing Finance Agency (PHFA) has launched a new program Preservation Through Smart Rehab (Smart Rehab) to provide rental property owners with funding to reduce utility costs and adopt energy conservation measures.
PHFA explained that ongoing maintenance of rental housing is strained by the rising costs of property operation (e.g., utilities, insurance, taxes, and other fixed costs), while tenant rents and incomes are stagnant and declining. In addition, utility deregulation in Pennsylvania in 2010 is expected to increase utility costs by 30 to 50 percent.
Smart Rehab provides grants, loans, or a combination of both, depending on the project’s financial needs and different criteria of the program’s funding sources. The sources include the American Recovery and Reinvestment Act (ARRA) of 2009,1 PHFA’s PennHOMES Program, USDA Rural Development, and the MacArthur Foundation.
Eligible properties have 50 percent or more of the units occupied by people who have incomes equal to or less than 60 percent of area median income.2 The other requirements are that rehabilitation needs cannot exceed the amount of funding available through the program and that rehabilitation costs cannot exceed $500,000 per project. Rehabilitation should have a payback of 10 years or less.
Participating owners must obtain a comprehensive energy audit conducted by a PHFA-approved energy auditor. PHFA and the owner determine the scope of the work and develop plans and specifications with the auditor. PHFA provides project oversight during construction, is the disbursing agent for project funding, and monitors energy consumption and costs after improvements are made.
A predevelopment fund is available for projects owned by nonprofits. The fund provides loans of up to $20,000 for six to 12 months at 4 to 5 percent interest to secure architectural and engineering services for project design and specifications based on recommendations of the energy auditor.
Brian Shull, senior development officer at PHFA, said that since the program started in February 2009, 115 applications involving 8,300 units had been filed and that energy audits had been started on 77 developments involving 5,700 units. He said the program has the potential “to have a significant impact across the state.”