Financing Solar for Affordable Housing: Legal Tools and Deal Structures

The economics of solar on affordable housing are driven first by federal tax incentives — the investment tax credit and its bonus adders, plus depreciation — and only then by debt. The One Big Beautiful Bill Act (OBBBA) compressed the runway dramatically: solar projects that did not begin construction by July 4, 2026 must be placed in service by December 31, 2027 to claim the Section 48E credit, and prohibited foreign entity rules now constrain equipment sourcing. The presenter will explain how credit amount, eligibility certainty, and the chosen monetization path (tax equity, credit transfer, or elective/direct pay) dictate the financing structure, and how lenders bridge against those benefits through construction, placed-in-service, and cash realization. This session will also address the ownership models that determine who can use the credits — including how elective pay opened the door for nonprofits and public housing authorities — the principal lending products (ITC bridge facilities, construction financing, equipment safe-harbor loans, and term debt), the collateral package and underwriting considerations unique to these transactions, and the intercreditor issues these structures present.

This session turns to the work of integrating a solar financing onto an already-encumbered property. Our authoritative presenter will compare how the consent, regulatory, and intercreditor landscape differs across property types: LIHTC investors and agency debt; HUD use agreements, HAP contracts, and surplus cash rules; public housing declarations of trust and RAD program requirements; and the lighter but cash-flow-constrained NOAH context. Presentation time will also include discussion of compliance overlays — prevailing wage and apprenticeship, foreign entity sourcing restrictions, Build America Buy America Act (BABA), Davis-Bacon Act (DBA), and federal program flow-downs — that directly affect both credit size and loan terms. Listen as our presenter offers practical drafting and underwriting guidance, organized around a recurring deal example (a multi-property portfolio ITC bridge facility for a nonprofit owner), including beginning-of-construction and sourcing diligence, site control, and leasehold protections, as well as intercreditor and consent issues, completion assurance, recapture risk allocation, and tenant-benefit requirements.