Nearly 40 million people live in multifamily rental housing in the United States. Multifamily properties, many of which were built decades ago, are significantly more likely than single-family, owner-occupied homes to be energy inefficient, leading to higher bills and energy cost burdens for residents. Even as multifamily housing starts grow, only a small fraction of units -- approximately 1 in 10 -- would be considered affordable for most U.S. renters. For low-income and minority tenants, the share of their income devoted to energy bills can be as high as 7.2%, which can have negative effects on physical and mental health, housing stability, and productivity. (ACEEE 2016)

Energy efficiency programs tailored for multifamily affordable housing could cut energy usage drastically and reap enormous benefits supporting equitable access to energy efficiency programs, resident health, and the preservation of affordable housing. A 2017 report by the American Council for an Energy-Efficient Economy (ACEEE) estimates that multifamily energy efficiency has the potential to result in $3.4 billion in savings per year.

Despite this enormous opportunity and potential, programs advancing multifamily energy efficiency receives a disproportionately low share of utility ratepayer and state program investment, and lower participation and adoption rates than single family households. Multifamily building owners and tenants face unique challenges that do not align neatly with the preponderance of residential and commercial programs in existence, including:

  • Dispersed and/or complex building ownership

    • Many multifamily buildings have several owners and multiple decision-makers who must be convinced before capital improvements such as energy efficiency measures work can be undertaken: owners, limited partners, managers, building staff, and sometimes tenants. Multifamily buildings may be owned by public housing agencies, nonprofit organizations, and for-profit individuals, partnerships, and housing management corporations. These owners, in turn, can be partnership syndicates, development companies, or institutions such as pension funds and insurance companies. Public housing authorities and nonprofits serve predominantly low-income households, but a great many low-income households live in conventional housing, sometimes called "naturally occurring affordable housing."

  • Split financial incentives between the building owner and building tenants

    • The costs and benefits of energy efficiency improvements are divided between tenants and owners in ways that may cause neither to be fully incentivized to undertake or pay for the work. For instance, WegoWise's 2014 study of 3,000 affordable multifamily housing units in Massachusetts finds that energy bills are 20% higher in buildings where the owner (as opposed to the tenant) pays for utilities.  

  • Lack of awareness of multifamily energy use and retrofit options

    • Building owners and even contractors may lack information about what can be done to improve energy efficiency in multifamily buildings and what the best retrofits might be. In addition, building owners and managers may lack information about the utility and governmental incentives available to them for improving the energy efficiency of their buildings. Building owners and managers lack the data about building energy use needed to make decisions about energy efficiency improvements, in part because utilities often do not provide aggregated tenant data to building owners.

  • Lack of building owner access to funding and financing
    • Even where financing is available, a number of factors may inhibit a multifamily property owner from accessing low-costs loans to implement energy efficiency measures: poor or difficulty-to-determine creditworthiness; existing restrictions on the property; fear or inability to take on additional debt; and limited time frames available to re-finance or renovate a building, among others. While low- and no-cost weatherization programs across the country have been crucial in providing home energy improvements and comfort for eligible low-income families, there is a large portion of the U.S. market that does not have access to these services, either due to insufficient program funding or income level that make households ineligible for weatherization assistance.
To learn more, contact Sandy Fazeli, NASEO Senior Managing Director, at sfazeli@naseo.org.

State Energy Offices and their partners can advance multifamily energy efficiency in a number of important ways, most notably by identifying it as a priority in their comprehensive energy planning, policy-setting, and program design processes. The resources below offer information on how states have 

Multifamily Policy and Program Horizons, and the Implications for Multifamily Energy Efficiency Finance
Date: February 2015
Authors: Sandy Fazeli, Program Director, NASEO and Lauren Ross, Local Policy Manager, ACEEE
Description: Only small pockets of activity around the country have advanced multifamily energy efficiency in a meaningful way. In fact, even where local efforts have been successful, they operate in a policy and regulatory landscape that overwhelmingly caters to commercial properties or single-family homes. Recent developments are signaling a shift in this landscape, powered in large part by innovative partnerships. This article from the State and Local Energy Report details examples of national, state, local, and utility actions and collaborations show promise for furthering efforts to improve building performance, increase available resources, and ultimately help communities and tenants realize the benefits of energy efficiency for multifamily buildings.

Moving on Multifamily Energy Efficiency: Four Tips For and From States
Date: May 2014
Author: Sandy Fazeli, Program Manager, NASEO
Description: Derived from discussions with energy offices and housing agencies that are currently thinking through issues in multifamily energy efficiency, this article from the State and Local Energy Report covers NASEO’s running list of tips and insights for state governments and their partners to move the bar in the multifamily sector.

Multifamily Energy Efficiency: Reported Barriers and Emerging Practices
Date: November 2013
Authors: Elizabeth Bellis, Energy Programs Consortium; Stephen Morgan, Clean Energy Solutions; Sandy Fazeli and David Terry, NASEO
Description: This report identifies commonly-cited barriers to energy efficiency investments in low-income multifamily housing and discusses current efforts to address them. It highlights strategies for deploying public- and private-sector resources, with the goal of increasing the effectiveness of current and future efforts.