Blogs| How to Integrate Sustainable Practices in LIHTC Developments
Written by
Priya Gupta
Published
Jun 24, 2025
Topics
LIHTC
Affordable housing is central to resolving the housing crisis in the United States, and the Low-Income Housing Tax Credit (LIHTC) program is leading the charge. The emphasis on affordability tends to outweigh the importance of sustainability, and as a result, many developments are exposed to high operating costs and environmental degradation.
Incorporating sustainable practices in LIHTC developments can help provide long-term affordability, enhance residents’ quality of life, and lower environmental impact.
This article talks about how LIHTC developments can embrace sustainability without compromising affordability.
But first, let us understand –
Sustainable housing is more than energy efficiency—resource conservation, climate resilience, and better health outcomes for occupants. Research indicates that low-income families allocate a disproportionate budget to utilities, so energy-efficient housing is imperative in mitigating costs. Furthermore, climate disasters disproportionately impact marginalized communities, and thus resilient housing solutions are of utmost importance.
While these advantages exist, the perceived high expense of sustainable building regularly discourages developers from adding green processes. Nonetheless, when done properly, sustainable LIHTC developments can capitalize on existing incentives and policy programs to make green affordable housing a possibility.
Most states are now prioritizing green building standards in their Qualified Allocation Plans (QAPs), which affect the design and construction of LIHTC developments. The development of QAPs from 2015 to 2023 indicates a trend toward sustainability, with increasing numbers of states implementing energy efficiency standards, renewable energy incentives, and resilient construction requirements.
Several sustainability frameworks direct LIHTC projects toward energy efficiency and resilience. A few of the most effective ones are –
LEED promotes sustainable site selection, water and energy efficiency, and material conservation. Several LIHTC projects incorporate LEED standards to promote environmental stewardship and long-term energy savings. Even some states offer LIHTC credits for developments that qualify for LEED Silver or better, making it a popular choice among developers seeking sustainability.
EGC particularly targets the sustainability of affordable housing, striking a balance between cost efficiency and environmental stewardship. The EGC model contains standards for energy efficiency, healthy living conditions, and resource preservation. Several state QAPs have made EGC certification a pre-requisite or scoring incentive, incentivizing developers to adhere to its stringent green building standards.
NGBS offers a tiered certification strategy—Bronze to Emerald—thus making it flexible for affordable housing developments, making it possible for LIHTC developers to incorporate sustainability at different levels while maintaining cost constraints. The NGBS system guarantees water conservation, energy efficiency, and enhanced indoor air quality.
Phius favors extremely well-sealed, deeply insulated buildings with far less energy consumption. LIHTC projects can minimize utility expenditures and interior discomfort by using passive building principles like finer insulation and greater-performing windows. The standards will build housing units that are economical on energy but cheap for low-income families.
ZERH encourages using energy-efficient equipment, insulation, and solar readiness to minimize long-term energy usage. Energy Star certification guarantees that LIHTC developments adhere to high-performance standards, but ZERH goes a step further by insisting that buildings be designed to facilitate future integration of renewable energy. These programs make LIHTC housing cheaper in the long term by reducing operating expenses.
Most state QAPs presently offer points or mandate compliance with these certifications, compelling developers to incorporate sustainability right from the planning stage.
Though improvements have been made, a number of obstacles have prevented sustainable practice from being more widely implemented across LIHTC developments.
These obstacles are the most significant challenge to developers. Using green building methods and materials results in increased initial costs. Studies have demonstrated that long-term utility and maintenance savings more than compensate for these expenses. By considering lifecycle cost analysis, developers can better grasp the long-term cost advantages of incorporating sustainability.
Inconsistencies cause uncertainty for developers. Whereas some states actively promote the use of green building practices in sustainable LIHTC projects, others lack policy guidelines or demands that facilitate the use of green building practices. This variability impedes developers in planning and enacting sustainability adequately. Creating standardized green mandates in all states could speed up the mass adoption of sustainable housing practices.
These limitations create a further challenge in incorporating sustainability in LIHTC developments. Most sustainable building materials are unavailable locally or cost more than conventional ones. Developing local supply chains for green and affordable materials can enhance access and affordability, helping developers include green solutions.
Knowledge of technical updates assists in overlooking hindrances to the adoption of sustainability. A few developers do not have experience with green certification procedures or optimum practices in sustainable construction. Industry leaders and policymakers can close the gap and influence more developers to incorporate sustainable design in LIHTC developments through technical assistance, training initiatives, and monetary rewards.
To effectively incorporate sustainability into LIHTC developments, developers and policymakers can try several innovative approaches. Some of the most credible and efficient ones are listed below –
It is an essential means of subsidizing the upfront costs of green building. Federal and state initiatives offer grants and subsidies that encourage sustainable building techniques. Increasing financial incentives for developers to adopt high-efficiency designs can promote greater use of sustainability features in LIHTC developments.
Partnership has the potential to meaningfully contribute to financing sustainability enhancements. Developers can access extra funding sources through private investors, green finance schemes, and environmental impact funds. Green bonds and impact investment funds are increasingly becoming popular in the affordable housing market to promote environmentally friendly construction.
Green solutions are yet another efficient approach to enhancing sustainability in LIHTC developments. Most LIHTC-funded projects now incorporate solar energy solutions to credit tenant utility expenses. Community solar programs allow tenants to enjoy the advantages of renewable energy without demanding on-site panel installation, which makes clean energy more affordable for low-income residents.
Smart construction assists in achieving energy efficiency and waste minimization in LIHTC properties. Modular and prefabricated construction techniques reduce material waste and shorten the construction period. Furthermore, the use of advanced insulation methods, high-performance windows, and heat recovery systems can greatly enhance energy savings and lower long-term running costs.
These characteristics make LIHTC housing sustainable and ready for climate-related threats. Characteristics like flood-resistant structures, green roofs, and passive cooling systems reduce the vulnerability of extreme weather events. A few states have already begun incentivizing LIHTC projects that use climate-adaptive building methods, acknowledging the value of long-term resilience in affordable housing complexes.
Pennsylvania has progressed extensively in encouraging sustainability in LIHTC developments. The state fosters developers by providing extra QAP points for LEED Silver, Enterprise Green Communities (EGC) projects, or NGBS Silver certified. By incorporating these standards, Pennsylvania ensures that its affordable housing is energy-efficient and gives residents lasting cost benefits.
Ohio has actively mandated that all new LIHTC-financed developments be constructed to EGC, LEED, or NGBS standards. This requirement has produced more environmentally friendly housing developments, improving indoor air quality and reducing energy consumption for low-income families. Ohio’s focus on green construction methods is part of a larger trend toward sustainability in affordable housing policy.
These states have set the bar higher by incorporating QAP incentives for energy-efficient design, on-site renewable energy systems, and disaster resiliency features. These incentives encourage developers to adopt climate-adaptive building practices, and consequently, LIHTC developments in California and Washington are more disaster-resilient without compromising affordability for residents.
These states demonstrate how effective policy environments and financial incentives can successfully blend affordability and sustainability in LIHTC housing developments.
Sustainability in LIHTC projects is no longer a pipe dream but a practical imperative. With states becoming more skilled at tailoring their Qualified Allocation Plans (QAPs) to reward energy efficiency, green building certifications, and climate resiliency, developers more and more have a compelling reason to incorporate sustainable building practices.
With policy innovation, incentives, and green technology, the LIHTC program can reposition affordable housing as a symbol of sustainability—gaining advantages for developers, tenants, and the environment.
Fill in your email address to subscribe to our newsletter. Get expert insights, the latest LIHTC news, and valuable resources delivered directly to your inbox.
No spam—just valuable information.
