Single Parents are Saving Energy and Staying in School at Indiana’s First Net-Zero Affordable Housing Community
Black and White Investments LLC, with help from a $635,000 permanent loan, added a solar array to housing for low-income adults attending college, helping manage the property’s sustainable features and reducing energy costs. The project can be a model for affordable housing everywhere.
Becoming a single father had its challenges for Gary Hobbs, CEO and president of the Indiana-based real estate development and construction company Black and White Investments LLC (BWI). But unlike the one in four U.S. parents who struggle to afford housing, he had a financial safety net to fall back on from his years as a successful engineer. When an opportunity to work with the Indiana Housing Community Development Authority on a sustainable new affordable housing project came about, Hobbs saw a chance to help other single parents on their way to becoming self-sufficient.
“I know the only way to break that cycle of being on section 8 vouchers permanently is through education,” Hobbs said.
Since 2018, the energy-efficient apartment community Posterity Scholar House in Fort Wayne, Indiana has housed single parents enrolled in college and their families. Financing from LISC with support from Wells Fargo, and Lilly Endowment Inc., enabled BWI to add a solar array panel to manage the property’s sustainable features, helping families save on their energy expenses and become more mindful of their consumption.
Residents of the development’s 44 units aren’t only saving on rent, they’re also receiving a range of additional benefits and support, from access to education for their children to shared electric vehicles. Through a partnership with Toyota, residents can use an electric car to get to work and school without the costs of owning and maintaining a personal vehicle. The solar array provides power for transportation and energy use innovations while additional energy produced will be sold back to the community and help decrease the city’s environmental footprint. While Indiana is projected to see an increase in high temperature days in coming years, most Midwestern communities--73%--are ill equipped to address the impacts of climate change.
At Posterity Scholar House, tenants are developing an appreciation for the importance of seeking renewable energy sources, energy security, and reducing greenhouse gas emissions by using a smartphone application to monitor and manage their power consumption in real time.
“Our goal was to do something innovative and creative that will have an impact, and that made economic sense,” Hobbs said. “Hopefully this will be a model that can be utilized in future developments as well, especially here with this smart application that encourages residents to spend less energy.”
Hobbs wanted to create housing opportunities for residents that limited their housing and transportation costs to no more than 45% of their income. People living at the federal poverty line traditionally spend 87.9% of pre-tax and pre-transfer income on housing and transportation, leaving little room to cover additional expenses. BWI is working with Purdue University to conduct research on how to incentivize individuals to become more energy-conscious by experimenting with a lottery system where tenants whose monthly energy bills are below a certain threshold are entered in a cash prize lottery.
Hobbs received a $635,000 permanent loan from LISC Indianapolis to launch BWI Solar, a separate entity within the company which allowed them to own and manage the addition of the development’s 1MW solar array with battery storage.
After partnering with BWI on previous developments in the state, LISC was eager to support the solar array installation project spearheaded by a Black-owned firm and where the LIHTC equity was syndicated by the National Equity Fund, a LISC affiliate dedicated to offering financial solutions to expand and preserve affordable housing. LISC Indianapolis has invested $319 million in the state since 1992 and is working to address the limited affordable housing options for low and middle-income households.
“LISC is committed to supporting the growth of organizations moving the needle on green technology in affordable housing,” Tahirih Ziegler, LISC senior vice president of national field strategies, said. “BWI is a key development partner for us. The solar array technology in this project is anticipated to see additional deployment in other projects and can be a model for innovative affordable housing everywhere.”
Adding the solar array to Posterity Scholar House also qualified BWI for federal housing tax credits, allowing them to continue leading affordable housing developments throughout the state and country. However, without the possibility of collateralizing the real estate, the project’s section 42 tax credit deal made it challenging to secure financing. It was difficult for traditional banks to fully understand the overall concept and its use of United States Department of Housing and Urban Development utility allowances to assist residents with their energy costs, Hobbs explained.
“This is not a traditional project to get financing for,” he said. “LISC was able to understand the business model and had the wherewithal to take on a risk with us on something that really hasn't quite been done before.”
Hobbs has seen Posterity Scholar House residents thrive and hopes the community’s green focus sparks an interest in building a more sustainable future.
“It creates conversation and potential career opportunities for the residents and their kids,” he said. “We've already had people that have graduated with a degree or a certification, some of them [who] have increased their income have moved out, and we're super excited about those stories, we're anticipating more.”