A new bank established by the state will provide loans to make affordable housing more climate-friendly, Governor Maura Healey announced Tuesday.
The new Massachusetts Community Climate Bank will be the nation’s first green bank dedicated to affordable housing, according to a statement released by the Healey administration, and it will be seeded with $50 million in funds from the Department of Environmental Protection.
“The Massachusetts Community Climate Bank will be our financial engine for moving forward on our climate goals, relieving the pressure of high housing costs, and creating good jobs and healthier communities,” Healey said in a statement. “This first-of-its kind initiative is going to make our state more competitive, affordable, and equitable — and it’s going to show that in Massachusetts, we can lead the world by leading with our values and leaving no community behind.”
Officials said they hope the bank will attract both private and federal funds, increasing its capital base and helping to expand the bank’s ability to lend to more developers looking to finance climate-friendly housing.
“Some of these projects are so fragile, and they need the kind of financing that you can’t just go out into the commercial marketplace and get capital for,” said Amy Longsworth, executive director of the Boston Green Ribbon Commission, which, along with the city of Boston, developed and incubated the idea for the bank before the state adopted it.
Mayor Michelle Wu said in a statement that the new bank will help “complement our efforts in Boston to retrofit our housing stock and create opportunities for small property owners to build and renovate greener, healthier buildings for residents to thrive.”
The green bank will be part of MassHousing, the state’s affordable housing financing and investment bank, and will work in partnership with the Massachusetts Clean Energy Center and MassDevelopment. Once the bank is established later this year, the state will be able to compete for pieces of federal programs, including the $14 billion National Clean Investment Fund and the $6 billion Clean Communities Investment Accelerator.
Some of the retail and wholesale products that the bank will offer are still being developed, according to Karissa Hand, an administration spokesperson, but on the retail side, she said owners, sponsors, and developers of affordable housing; first-time homebuyers; and low- to moderate-income homeowners could be eligible.
The announcement details a bank that is limited in scope, compared to what Healey pledged on the campaign trail. In a detailed climate plan, she wrote that she aimed to establish a green bank within MassCEC “to facilitate investment in low-carbon, climate-resilient infrastructure and empower it to utilize other economic tools to attract and retain companies that will create new clean energy jobs, particularly in low-income communities.” The bank, her campaign wrote, would help deliver community benefits, jobs, reduced emissions, and climate resilience. The bank announced Tuesday falls short of that by focusing solely on affordable housing.
Over time, the Healey administration still aims to achieve the vision laid out on the campaign trail, but its decision to start with the affordable housing sector is an acknowledgment that as the state addresses the climate crisis, it must also deal with a growing housing crisis as well. “We have great confidence that MassHousing can expand and deploy these funds effectively so more low- and moderate-income families can benefit from living in energy-efficient homes,” said Aaron Gornstein, chief executive of the nonprofit Preservation of Affordable Housing, in a statement.
Other states, such as New York and Connecticut, have led the way with their green banks. Connecticut launched the nation’s first green bank back in 2011. Similar to Massachusetts’ new bank, Connecticut launched with limited state funds, which it used to attract outside capital. Since then, it has been used to finance residential solar and heat pump projects, create a carbon offset program for EV chargers, and invest in climate-friendly tech companies.
While climate advocates applauded Healey’s announcement of the new green bank, some said they hope to see it expand in the direction of Connecticut, too. “I am really proud we are taking this step, but this is just one step on what is going to be a long road,” said Elizabeth Turnbull Henry, president of the Environmental League of Massachusetts.