Closing the Split-Incentive Gap: A Comparative Analysis of Subnational Financing Mechanisms for Deep Energy Retrofits

DOI

10.2991/978-94-6239-783-5_24How to use a DOI?

Keywords

Affordable housing finance; Split-incentive; C-PACE; On-bill financing; Green banks

Abstract

Deep energy retrofits in U.S. affordable multifamily housing face persistent financing barriers despite favorable lifecycle economics, compounded by the owner-tenant split-incentive problem and constrained capital budgets. With federal grant programs disrupted in 2025–2026, durable subnational mechanisms—Commercial Property Assessed Clean Energy (C-PACE), utility on-bill financing, and state green bank programs—become central. This paper develops a comparative analytical framework applied to a 60-unit pre-1980 mid-rise affordable multifamily scenario in U.S. Climate Zone 5, calibrated against Connecticut Green Bank FY2024 portfolio data (405 closed C-PACE deals; 127 multifamily program projects across 7,094 units) and triangulated against New York and federal HUD program benchmarks. A 30-year net-present-value cash-flow model and a five-criterion scoring matrix evaluate each mechanism and two paired-instrument combinations. Three findings emerge. First, mechanism choice and split-incentive resolution are of comparable importance at realistic policy ranges: under typical Sect. 8 Project-Based Voucher (PBV) utility-allowance pass-through (κ ∈ [0.3, 0.7]), mechanism choice moves owner net present value (NPV) by ≈$417K while varying κ moves it by ≈$354K. Second, only 6.7% of Connecticut’s closed C-PACE portfolio is multifamily—empirically confirming HUD/CHFA mortgage-consent friction. Third, NYSERDA on-bill alone is the policy-focused scoring leader and ties Combo B (Green Bank + On-Bill) for the equal-weight lead, but its $5,000/unit cap leaves substantial owner equity to be sourced elsewhere; combinations dominate where that equity gap cannot be closed.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Shuyi Zhang
PY  - 2026
DA  - 2026/09/30
TI  - Closing the Split-Incentive Gap: A Comparative Analysis of Subnational Financing Mechanisms for Deep Energy Retrofits
BT  - Proceedings of the 2026 2nd International Conference on Resilient City and Safety Engineering (ICRCSE 2026)
PB  - Atlantis Press
SP  - 234
EP  - 240
SN  - 2352-5401
UR  - https://doi.org/10.2991/978-94-6239-783-5_24
DO  - 10.2991/978-94-6239-783-5_24
ID  - Zhang2026
ER  -