HUD Revives GRRP—But Ditches Most Grants and Climate Focus
Nixon Peabody’s Affordable Housing practice group releases new guidance on the timely, albiet convoluted, revival of GRRP.
After months of uncertainty, HUD has finally issued updated guidance for the Green and Resilient Retrofit Program (GRRP), providing a path forward for hundreds of stalled preservation projects.
But the changes come with significant strings attached: most awards originally structured as grants must now convert to surplus cash loans, climate-focused requirements have been scrapped in favor of "risk mitigation," and closing timelines have been dramatically compressed.
The Backstory: From Suspension to Revival
GRRP launched in 2023 with fanfare as a major Inflation Reduction Act initiative, offering funding for energy efficiency and climate resilience improvements at affordable housing properties.
By early 2024, HUD had announced hundreds of awards across three cohorts: Elements (smaller-scale improvements), Leading Edge (deeper energy retrofits), and Comprehensive (full property transformations).
Then came the freeze.
In early 2025, the Trump administration suspended GRRP along with other IRA-funded programs for review. After litigation forced HUD to resume processing awards in April 2025, Elements and Leading Edge transactions began moving again. But Comprehensive awards remained frozen—HUD had terminated the Multifamily Assessment Contractors (MACs) who were supposed to guide these complex transactions, and no replacement structure existed.
GRRP launched in 2023 with fanfare as a major Inflation Reduction Act initiative, offering funding for energy efficiency and climate resilience improvements at affordable housing properties.
What Changed: The MAC-Less Path Forward
The updated guidance eliminates MACs entirely and shifts their responsibilities to property owners. Where MACs previously handled assessment coordination, scope development, and closing processes, owners must now:
Procure required project assessments independently
Develop detailed project scopes without third-party support
Cover costs that were previously GRRP-funded (though some may be reimbursed later)
Potentially hire independent construction inspectors at their own expense
The Grant-to-Loan Conversion Mandate
HUD has essentially eliminated grants for all but the most advanced transactions:
All Comprehensive cohort awardees (no exceptions)
Leading Edge awardees who haven't submitted a Transaction Plan
Elements awardees who haven't submitted a Closing Package
Surplus cash loan terms:
Repayment from surplus cash: 25% for Elements, 50% for Leading Edge and Comprehensive
Interest rate: minimum 1% simple annual interest
Term: 30 years from closing OR six months after first mortgage maturity (whichever is longer)
Deferred developer fees now expressly allowed during first 10 years (subject to HUD approval)
Affordability requirement: longer of 15 years or 5 years beyond existing use restriction
For owners who underwrote these transactions expecting grant proceeds, the conversion to repayable loans creates immediate gaps. That "free money" used to fill financing gaps is now a loan requiring surplus cash—which may not materialize for years, if ever, at deeply affordable properties.
What does this mean for the Preservation Pipeline?
GRRP represented one of the few capital sources available for preservation transactions in the current environment. The program's revival keeps hundreds of projects viable.
The 2026 version differs substantially from the 2023 rollout: leaner, faster, less generous, prioritizing disaster resilience over climate adaptation and treating federal capital as repayable financing rather than catalytic grants.
For owners with GRRP awards:
Review your capital stack. If you're converting from grant to loan, identify the gap and determine whether additional LIHTC equity, soft debt, or reserve releases can fill it.
Assess your capacity to manage assessment procurement, scope development, and construction oversight without MAC support
For owners considering future GRRP rounds:
Underwrite surplus cash loans, from day one
Build in consultant costs for scope development and construction monitoring
Focus capital improvement plans on disaster resilience, not just energy efficiency
Plan for compressed timelines—three months, not twelve
A link to Nixon Peabody’s breaking of this story and deep dive can be found here: https://www.nixonpeabody.com/insights/alerts/2026/02/05/hud-releases-updated-grrp-guidance