Making Inroads: Phius 2021 Policy Wrap-up

isaac picIn this week’s blog, Phius Policy Specialist Isaac Elnecave outlines the various incentive programs, QAPs and energy codes that Phius was included in this past year.

The surge of Phius-related policies continued in 2021 with the inclusion of Phius in utility incentive programs, Qualified Allocation Plans and energy codes.

Over the last few years, it has become clear that well-designed policies can significantly spur the construction of projects meeting the Phius standard. In 2021 alone, there have been 47 projects submitted in Massachusetts, 29 projects in New York State and 27 projects in Connecticut (all states with existing Phius-related policies). 

With the calendar turning to 2022, we wanted to take this opportunity to provide a rundown of some of our policy successes from this past year. Below you will find a list of new Phius-related policies (including a number of advancements in Phius’ home state of Illinois).

Utility Incentives

Illinois

ComEd in Illinois has established a pilot incentive program providing money for both pre-construction and upon receiving final certification. ComEd will be taking applications for the program through 2022.  The applications will be reviewed on a competitive basis and will be chosen based on criteria such as size, financial status and timeline. Utilities in Massachusetts (through the MassSave program) and Connecticut (through energizeCT) offer similar programs.

Low-Income Housing Tax Credit

Illinois

The award-winning Finch Cambridge project was funded in part by a Massachusetts incentive program.

The award-winning Finch Cambridge project was funded in part by a Massachusetts incentive program.

The Illinois Housing Development Authority (IHDA) completed the 2022-2023 Qualified Allocation Plan (QAP). The QAP is the document the IHDA uses to evaluate which potential projects will receive tax credits. The evaluation process consists of using a points system (projects with higher point totals are more likely to receive funding). One of the criteria for evaluation is sustainability and/or energy efficiency. In the new QAP, projects receiving a Phius CORE certification will receive 10 points (Phius Zero projects receive an additional three points) out of a possible 100 points. 

Michigan

The Michigan State Housing Development Authority included Phius in its QAP for the first time. Projects meeting the Phius standard will receive four points; most other standards will receive three points or fewer. 

Connecticut

While Phius projects have been included in previous versions of the Connecticut QAP, the updated version gives Phius projects the largest number of points (only projects meeting the Living Futures Standard receive the same number of points). 

Energy Codes

Illinois

The Illinois legislature enacted – and the Governor signed – the Clean Energy Jobs Act (CEJA). Among the requirements included in the 800-page piece of legislation, is that the Illinois Capital Development Board (the agency in charge of developing the state energy code) must include Phius as an alternative compliance path. This means that projects certified by Phius automatically meet code in Illinois.

We at Phius are proud of the inroads we and our community made in the realm of policies, incentives and codes this past year, and we look forward to carrying that momentum into 2022.

What are QAPs and Why are they so Important to Phius?

isaac picIsaac Elnecave, a member of the Phius certification team, breaks down Phius’ involvement in the Qualified Action Plans of various states, specifically Illinois and Michigan.

Over the last few weeks, Illinois and Michigan have proposed (and in the case of Michigan, finalized), the latest version of their Qualified Allocation Plans (QAP).  What is a QAP?

A good working description of the QAP can be found at the Illinois Housing Development Agency website: 

The Qualified Allocation Plan (QAP) sets forth the criteria for evaluating all projects that apply for a tax credit allocation. The QAP sets forth the rules under which the IHDA offers affordable housing development funding in the form of federal Low Income Housing Tax Credits (LIHTC). The QAP describes the selection criteria and application requirements for receiving these federal tax credits and tax-exempt bonds. 

Illinois Housing Development Agency Website

The LIHTC, a federal program administered by states, incentivizes the construction of low income housing.  States determine who receives the tax credit through the evaluation of the QAP. 

7_Harry and Jeanette Weinberg CommonsThe QAP is a points-based system. A developer submits a proposed project to the housing agency. The proposed project then receives points based on whether they achieve criteria set out in the QAP. Points can be awarded under a variety of categories such as (please note that each state has its own characteristics): 

  • Building characteristics, 
  • community characteristics, 
  • development team, 
  • financing and 
  • sustainability. 

For example, under building characteristics, a project can receive points for having an increased number of accessible units and engaging in cost containment. Under community characteristics, a project can receive points for being located near public transit. Under sustainability (the category of most interest to Phius readers), a project can receive points for meeting either energy efficiency or green building standards. 

The QAP presents a great opportunity to incentivize the construction of low-income buildings to the Phius standard. In Pennsylvania, when the Pennsylvania Housing Finance Authority awarded significant points to projects built to the Phius standard, the number of projects built to the Phius standard grew substantially.

Illinois 

In the new Illinois QAP, a project that meets the basic Phius designation — Phius CORE — would receive 10 points. If the project meets the Phius ZERO certification, it would receive an additional 3 points, for a total of 13. Thirteen points represents a significant percentage of the maximum 100 points. 

Moreover, the agency structured the point values so that a developer could meet both a green designation such as Enterprise Green Communities and Phius. This provides an additional pathway as receiving a Phius certification is one way of meeting the EGC energy designation.  

The Illinois QAP can be found here.

Michigan 

In Michigan, projects need to meet a minimum threshold requirement (such as EGC), and can receive an additional four points by achieving a Phius certification. So, much like in Illinois, Phius can work in tandem with green standards such as Enterprise Green Communities.  For example, a project that incorporates a Phius certification as part of the EGC requirements would meet the threshold requirement and receive an additional four points toward the overall score — an approach that leverages the strengths of both standards.  

The Green Standard requirements of the Michigan QAP can be found here.

Ultimately, Phius hopes to get its standard as part of the QAP in every state. Currently, there are about a dozen states, primarily in the Northeast, that incorporate Phius into their QAPs. The work in Michigan and Illinois charts a path to broadening the geographic scope of this important incentive program to help promote the construction of Phius certified low-income housing across the entire country.