The Green Retrofit Program, a new program funded with federal stimulus dollars, was unveiled last month by the Department of Housing and Urban Development. The program will support retrofits for federally-funded multi-unit housing. It’s too early to tell how successful the program will be in reducing energy use and creating jobs but it is an encouraging sign to see stimulus money—$250 million dollars—flowing to the multi-unit sector. Why? Because neither renters nor landlords always have much incentive to green-up apartments.

As I have written a few times, a fix for the problem of split incentives—where tenants pay high energy bills but have few resources for retrofits, and owners resist energy saving improvements because of their costs—is a puzzle that has yet to be solved. It’s hard to say whether this program will find ways to address that wider problem.

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  • But many low-income families and individuals live in multi-unit housing, and this program will focus on energy-saving retrofits for three specific categories of housing: section 202 housing, which is for low—income, elderly people; section 811 housing, a program for housing individuals with disabilities; and the section 8 voucher program that subsidizes rent in market rate apartments.

    The program will fund as much as $15,000 in retrofits per unit. The average improvement will be $10,000 meaning the program will retrofit about 25,000 units at 300-350 properties across the country. All of the work must be completed in two years.

    This money can buy a lot of efficiency. One guide, produced by HUD a few years ago, showed that an investment of as little as $29 to detect and eliminate leaky toilets can save more than 2,000 gallons of water per year. The program does have requirements for auditing, review, and performance of the proposed retrofits. And it does have specific targets for driving employment, but they are optional.

    While many of these units, especially 202 and 811 apartments, are run by non-profits with the capacity to deal with the paperwork to apply and manage these grants, the biggest weakness of the program are barriers to smaller organizations or owners who won’t likely be able to deal with all the paperwork. You can get a rundown of the process here. This is especially true for participants in section 8 housing.

    This brings us back to the heart of the energy efficiency problem in multi-unit housing: the lack of mandates and incentives to push owners of inefficient multi-unit housing to make improvements. The Green Retrofit Program will save energy and possibly create some jobs. The scale of the program is modest considering that there are millions of apartment units in the United States. But that reasonable scale should allow for useful data and lessons to support expansion of the program in the future.