A recent case study from the Local Progress Impact Lab reveals lessons for other local governments trying to leverage federal climate dollars for justice and equity.
The City of Saint Paul, MN is breaking ground on a historic project to redevelop a former golf course on the city’s East Side into a large-scale, mixed-use development with 1,000 living wage jobs and 1,000 affordable housing units. The entire development – called “The Heights” – is striving to be net zero thanks to federal funding from the Inflation Reduction Act.
The case study lays out specific IRA funds and strategies the city is using to undertake this ambitious project, including:
- Direct Pay: The Heights Community Energy expects to recoup about half of the total cost of this project through Direct Pay tax credits, a key provision of the IRA. Direct Pay tax credits are available to tax-exempt entities like cities, counties, schools, hospitals, public utilities, houses of worship, and nonprofit organizations. Because these entities are tax-exempt, Direct Pay tax credits function like a direct cash payment from the IRS after an eligible project is placed into service (in other words, once it is generating and distributing thermal energy).
- Green banks: The Heights project is taking advantage of a $4.7 million loan from the Minnesota green bank. The Inflation Reduction Act’s Greenhouse Gas Reduction Fund (GGRF) includes money for states and localities to create green banks to fund local climate projects. If your state has a green bank, they recommend proposing a clean energy project. If your state doesn’t have a green bank, consider urging your state to use the GGRF to create one.
- Partnering with single public owner and developer: The Saint Paul Port Authority served as the single owner and developer of The Heights. This made securing federal funding possible, and ensured a shared vision, values, and goals for the project.
The case study has several other lessons for other localities on how to develop projects that engage communities and maximize federal clean energy investments.
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