Appendix E: Reaching buildings beyond the federal estate
Financing routes for public housing, schools and private buildings.
Supports taking the work beyond federal buildings.
A national building program has to work with the people who can authorize each project. Federal agencies control federal properties; public housing authorities, school districts, private owners and nonprofit owners control theirs. An allocating agency or utility can organize access to many properties without becoming their landlord. The financing must follow those distinctions.
Public housing
Public housing offers a large portfolio and some of the fastest work available. It is one place where this instrument has already been used at something like the right scale.
The federal government helps pay for this housing, but local and state public housing authorities generally own it. These authorities are separate from the Department of Housing and Urban Development, the federal department that funds and oversees the program. Under the existing energy performance contract program, the housing authority procures and signs the contract, and HUD reviews and approves the solicitation and the contract. The federal team can help authorities prepare projects and use common tools, while the authorities remain responsible for their own contracts.1
The repayment mechanism sits in a rule. For an approved project, HUD freezes the relevant utility-consumption baseline used to calculate the authority's operating subsidy. It values that baseline using current utility rates, so the subsidy calculation continues to recognize the old level of consumption while the buildings use less. The authority retains the resulting savings under the program's rules and uses them to repay the contractor or lender. Same logic as the federal estate, different landlord.2
| Public housing units | about 848,000, across some 3,300 housing agencies |
| Units already covered by a performance contract | about 250,000 |
| Contracts approved since the 1980s | about 315 |
| Private capital invested through them | about $1.5bn |
| Documented capital needs backlog across the stock | about $169bn |
Nearly a third of the public housing stock has already been retrofitted through an energy savings performance contract. That leaves roughly 600,000 units outside those contracts, in buildings whose repair backlog is now put at about $169 billion. The households in them are already income qualified for support, so the program can concentrate on the buildings. Each project still has to establish which repairs are eligible and how much work the savings can repay. The backlog measures the need; it does not establish that energy savings can finance every repair.
Affordable housing built with tax credits
Tax-credit housing offers 55,345 projects and about 3.9 million units placed in service since 1987, roughly four times the public housing stock. It is the largest housing portfolio identified for this program.
These properties are generally owned by private businesses or nonprofits, often through partnerships. Tax credits help finance their construction or rehabilitation; the agency administering the credits does not thereby become the landlord. Some properties combine tax credits with public housing financing, but the two programs are distinct.3
The property owner is the counterparty that signs for the retrofit. Ownership also concentrates above the level of the individual building. A single owner often holds many of these properties across many states, so one conversation covers buildings in a dozen states. That is exactly the counterparty this program is looking for.
The other partner is the agency administering the housing credits, usually a state housing finance agency and sometimes a local agency. Its qualified allocation plan sets out what it will fund and how competing applications are scored. Those plans already carry energy criteria, and they govern rehabilitation as much as new construction. An agency that strengthens its energy requirements sets the terms for properties receiving qualifying allocations after the change, in one document, with no new federal dollar. It does not thereby require every existing tax-credit property to be retrofitted; reaching that stock still means working with its owners and arranging eligible financing.
Any willing allocating agency can pursue this change through its required adoption, public hearing and approval process. The pilot-state agreement asks the governor to commit to delivering it as part of the larger state bargain. That is where the national tool becomes a specific commitment by the state chosen for the pilot.4
Schools, hospitals, and public buildings
Every building a local government owns is a candidate for one of these contracts, and together they are the largest reachable pool of public buildings in the country after the federal estate.
The historical school figures used for planning are about 98,000 public schools, averaging roughly 50 years old, spending close to $8 billion annually on energy, described as the second largest budget expense after teacher salaries. A quarter reduction in the energy bill creates room for other school needs after financing payments; the full savings accrue to the owner once the contractor has been repaid.
Estimates of what American school infrastructure needs run to $270 billion of deferred repair, and a great deal of that is roofs, windows, boilers and ventilation, which is the same work.
Hospitals, city halls, courthouses, libraries, transit depots, water treatment plants and community colleges can use the same savings-contract model where their authority permits. Hospitals run continuously, use considerable energy and are accustomed to evaluating long investments, including 20-year paybacks.
Private owners at scale
The owner of an apartment block or a strip of shops is the hardest case this program still takes, because the work has to be paid for before the savings arrive and the owner carries the risk in between.
Their financing comes through the co-ops, community lenders, public guarantees, and apartment-building mortgage insurance described below. The aim is the same: capital up front, repaid from the savings.
Financing the buildings outside the federal estate
Ordinary building-efficiency work does not fit the EDF infrastructure categories described above. The largest instrument in this plan therefore does not pay for ordinary school or apartment retrofits. Those projects need the other financing routes below, including the state-supported route through Section 1703.
The federal government also stands behind the lending, through section 108, a loan guarantee program. The strongest case for a guarantee is outside federal property: a lender relies on the building owner’s ability to repay, and an underfunded school or rural clinic may struggle to borrow for slow-paying improvements such as insulation, windows and roofs. A guarantee can make eligible work financeable. It still carries public credit risk and must satisfy the program’s rules.
City and state guarantees through Section 108
Section 108 is the loan guarantee attached to the Community Development Block Grant, the federal program that funds community development. A city borrows against its future block grant allocations, or a state borrows on behalf of its smaller towns, and the Department of Housing and Urban Development guarantees the notes. The money can go to rehabilitating publicly owned buildings, rehabilitating housing, and building or repairing public facilities. Borrower fees cover the program's estimated credit subsidy cost; in 2026 the fee is 0.58 percent of the principal, paid once. The program has standing enabling legislation, but Congress still sets the amount of guarantee commitments through appropriations acts.5
That annual limit has been $300 million in most recent years and $400 million in 2024 and 2025. Actual commitments have averaged about $150 million, so an administration operating with a comparable limit could roughly double the program's use by bringing enough eligible projects to completion. Doubling it is the win. Section 108 at full stretch is a few hundred million dollars a year, which makes it the right instrument for the first cities and the wrong one for the country.
Its limits decide who this reaches. The borrower has to be a block grant recipient, which means a city, an urban county or a state acting for its smaller towns, not a school district or a hospital borrowing on its own account. A city can borrow for a school inside it, which is how most of this work gets reached, but the school cannot apply for the loan directly. The statute excludes by name buildings used for the general conduct of government, so a city hall, a county administration building or a courthouse has to find its money somewhere else, though the performance contract itself still reaches them.
A recipient can borrow up to five times its annual allocation less whatever it already has outstanding, and has to pledge current and future allocations as security. Anything running 10 years or longer has to put up collateral beyond that pledge, which reaches every retrofit deal worth doing. The notes run to 20 years, short of the 25 a performance contract can run, and that limit is written into the statute, so moving it takes an act of Congress. And the work has to meet one of the block grant's national objectives, which in practice means it principally benefits low and moderate income people or clears blight.
That is a good fit for public housing, for the affordable stock, and for municipal buildings in the places with the worst buildings and the least money, which is where this program wants to start anyway. It is a poor fit for a wealthy suburban district or a large private hospital system, which are left to borrow commercially, as they can.
When a state financing institution participates
The state financing exception inside Section 1703 is the route this plan leans on hardest for ordinary retrofits. The 2021 Bipartisan Infrastructure Law created the expanded authority for projects supported by state energy financing institutions, and the Inflation Reduction Act supplied funding for its implementation. DOE's May 2026 guidance confirms that these projects are exempt from the innovation requirement, allowing the program to reach entirely commercial technology.6
A state energy financing institution is an entity a state, tribal government or Alaska Native corporation has established to provide financing support or credit enhancements and lower barriers to deployment. A qualifying green bank, energy authority or infrastructure bank can fill that role. The project still has to sit within an eligible statutory category, meet the emissions condition, receive meaningful financial support from the institution, be technically ready, and offer a reasonable prospect of repayment.
Efficient end-use energy technologies are an eligible category. That gives ordinary building retrofits a route through the program when a qualifying institution puts real financing or a credit enhancement behind them. Participation opens the route; it does not guarantee approval. And a state can use it whether or not it wins the pilot competition.
The state institution’s support removes the innovation test, but estimated federal credit cost still needs appropriated subsidy or permitted borrower payment. The legislative request would make this route more accessible; commitment authority, eligibility and underwriting still govern approval.
The RFC team helps owners assemble applications and find financing suited to repayments over 20 years or more. A few billion dollars of guarantees can support substantial work because the budget covers estimated net credit cost, not the whole principal. The owner, state institution and agency must still agree on the actual transaction.
Co-ops, community lenders, and apartment owners
The federal lending programs help private owners finance costs that have to be paid before savings arrive.
The Rural Energy Savings Program lets an electric co-op pay for efficiency work on a member's home and recover it through the member's monthly bill, so the household pays nothing up front and the repayment sits exactly where the saving shows up.
Where Section 108 and commercial borrowing do not work, the Community Development Financial Institutions Bond Guarantee Program lends long-term fixed-rate money to community development financial institutions (CDFIs), specialized mission-driven lenders that serve underserved communities, though its floors are high enough ($100 million an issue and $10 million per lender) that it serves only mid-sized community lenders, not small ones. Its borrower charges are designed to cover the estimated credit subsidy cost; this is how the larger community lenders fund the commercial work national banks will not look at.
Section 108 guarantees what a city borrows for the buildings in it, or what a state borrows on behalf of its smaller towns. HUD mortgage insurance can also finance qualifying apartment rehabilitation. The plan seeks to restore an energy-efficiency incentive. HUD leveled multifamily premiums at 25 basis points in 2025, eliminating the separate green category; restoring a label alone would not improve on that general rate. An incentive needs favorable pricing or terms for qualifying work. HUD FY2025 financial report.
The rural programs have different funding conditions. Some receive annual appropriations, some have continuing mandatory funding, and some can use funds that remain available or revolve through repayments. The financing calendar identifies those distinctions; a Farm Bill date does not mean every rural lending power disappears at once.
The gap the full RFC would fill
What is missing is a general-purpose instrument. Section 108 illustrates three limits of the existing guarantees. It is capped at a few hundred million dollars a year by a line in an appropriations bill. It must meet the community development program’s eligibility and national-objective requirements. And it stops five years short of the contracts it is meant to stand behind. A country retrofitting its building stock needs a guarantee that reaches any building on its own merits, whoever owns it and whatever the neighborhood earns, at a scale set by the work, not by an annual rider. The Reconstruction Finance Corporation charter does not have to win that argument in the abstract. Its charter would grant broad authority to provide guarantees at the necessary scale, free of the specific statutory limits of existing programs, and the first two years will have measured the gap it fills.