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Recognizing the Benefits of Energy Efficiency in Multifamily Underwriting

Deutsche Bank | January 2012

Deutsche Bank Americas Foundation instigated this project to encourage the financial industry to scale up financing of building energy efficiency retrofits. Deutsche Bank has a long history of supporting multifamily / affordable housing through its community development finance capabilities, and throughout the world the Bank has played a leadership role on climate issues. Scaling up building retrofits has become a compelling aspiration for the Bank, because of the alignment between our carbon reduction and community development goals.

Building scientists, auditors, enlightened building owners, and contractors have been retrofitting multifamily buildings in New York City for many decades, but the retrofit industry has largely relied on public subsidies, a limited resource that has constrained the industry’s ability to scale. Private capital, if deployed for retrofits, could prove transformational in achieving significant carbon reductions while upgrading multifamily buildings and stimulating much-needed job creation. This study has tried to address a key bottleneck for private capital: the lack of confidence in energy savings for lenders to underwrite loans against.

New York City proved an exceptional laboratory for commencing the study. A long tradition of public private partnerships enabled the project to be stewarded by hands-on group of practitioners from city and state housing agencies, community development intermediaries, utilities, energy program incentive providers, and other mission-driven nonprofits. (A full list of organizations represented can be found in the Approach section of this report.) A key partner in the effort is Living Cities, a national community development collaborative, which is helping propel the study’s findings to a national audience.

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Quantifying Savings