Financing Passive Houses

Passive House under construction in Brooklyn
Tour of a Passive House under construction in Brooklyn, NY.

While there is a lot of enthusiasm surrounding the Passive House standard, there are also a lot of questions on how to pay for it, especially for multifamily projects. At our February 4th event with New York Passive House, NYSERDA Financial Incentives for Your Passive House Project, attendees had the chance to learn more about this international building standard and the methods to finance these types of projects.

Speakers Manalee Nabar and Tanya Norman (R3 Energy Management Audit & Review LLC) shared examples from two of the Passive Houses their firm is consulting on. One of the ways Passive Houses can take advantage of incentives, they said, is through NYSERDA’s Multifamily Performance Program: New Construction Component. They explained that in order to take advantage of the incentives, buildings must, among other things, team with a Multifamily Performance Partner (sort of an energy savings spirit guide), be between five and 49 units in size, have at least four or more floors, be electrically heated, and have at least 50 percent of the gross heated footage be residential space. The advantage, as NYSERDA puts it, is that by making new construction sustainable, energy savings are built in “from the start.” (Incentives aren’t limited to new construction, however—the Multifamily Performance Program also offers incentives for existing buildings).

There’s a reason some companies seem eager to help finance Passive House projects. As Nabar put it in an anecdote regarding one of the first Passive Houses NYSERDA ever saw (255 Columbia Street, Brooklyn, NY), one of the energy models looked so good, NYSERDA thought there might have been a modeling error. During blower door testing, the 255 Columbia Street apartments had air leakage less than half the ENERGY STAR standard (0.14 vs 0.30 CFM/sf). Duct blaster testing also showed half the allowed air leakage (35 vs 70 CFM). Nabar told the audience that 255 Columbia is anticipated to be 30 percent more efficient than ASHRAE 90.1-2007 code requirements.

Posie Constable, from New York City Energy Efficiency Corporation (NYCEEC), provided an overview of her firm, a financial services non-profit that provides flexible financing solutions to projects that reduce energy consumption. In the past six months, NYCEEC has approved financing for two Passive House projects. “Every day that you don’t do these energy savings measures is a day that you are technically losing money. Forget the [interest] rates and start thinking about how doing these measures will increase the value of the building,” she told the audience. “The savings will pay for themselves, and once the loan is paid off the savings all go to the building.”

About the authors

Lisa Blake
Lisa is an Environmental/Historic Preservation Specialist at the Federal Emergency Management Agency (FEMA).