I recently had the pleasure of joining Kent He on the Affordable Housing and Real Estate Investing podcast with my partner Eric Homberger. We talked about something I’ve been living and breathing for over a decade: water. Not water as a utility afterthought, but water as one of the most consequential – yet overlooked – financial levers in affordable housing development.
The conversation got me thinking. I want to share some key takeaways, because the developers who get this right now will have a real advantage over those who don’t.
Can affordable housing developers afford to ignore water or assume it’s a static line item anymore?
No. Here’s why.
Early in my career, when I was a chief development officer looking at hundreds of distressed properties across the country, one line item kept jumping off every pro forma: water. Nobody could tell me what efficient looked like. Nobody could tell me why bills were so high or what to do about it. That uncertainty was expensive then, and for affordable housing developers today, the stakes are even higher:
- Water costs are rising fast. Rates are increasing across the country. What once felt like a manageable bill is now a significant and growing variable expense.
- You can’t manage what you can’t measure. Without real-time visibility into unit-level water use, leaks go undetected for weeks or months, silently draining cash flow.
- Low-flow fixtures are not a solution. They reduce consumption when they work. But when they leak – and they will – because water is a universal solvent that constantly erodes fixtures, they waste just as much as older models. Every new construction building we’ve ever been involved with has leaks on day one.
- 98% of water inefficiency comes from fixtures in disrepair, not tenant behavior. Developers who assume tenants are the problem are missing the real source of loss.
- Water scarcity is real. Freshwater availability is tightening across many regions of the U.S. The cost and availability of water in your market will only become more critical to your underwriting over time.
How does End-to-End Water Management boost NOI and asset value across the lifecycle?
More than most developers realize.
At ION, we use a benchmark of 45 gallons per bedroom per day. Just one leaking toilet can waste 2,000 gallons in a single day, effectively doubling a building’s entire water bill. When you fix that, you’re not just saving water. You’re directly improving your financial performance at every stage of the asset lifecycle:
- Underwriting: ION’s data helps developers more accurately model water costs before acquisition or construction, reducing risk and improving deal confidence.
- New construction: Sensors installed at the single point of water entry per unit give your team real-time intelligence from day one, catching defects before they become months of wasted expense.
- Lease-up and stabilization: Faster identification and resolution of leaks lead to faster stabilization and better numbers heading into permanent financing.
- Operating properties: Every dollar removed from the water bill goes directly to NOI. On a 6% cap rate, reducing annual water costs by $120,000 creates $2 million in asset value.
- LIHTC compliance periods: In a 15-year compliance period, sustained water efficiency compounds meaningfully over time, protecting returns across the full hold.
- Utility allowances: When water is tenant-paid, reducing consumption keeps utility allowances lower, allowing developers to capture more rent within income limits.
- Refinancing and resyndication: Clear, documented water performance data supports better valuations and gives lenders and equity partners confidence in ongoing operating efficiency.
Can affordable housing developers access subsidized water management through volumetric water benefit partnerships?
Yes. And the opportunity is growing.
Companies like Meta are building data centers that consume significant amounts of water to cool their servers. They need to demonstrate that they’re not depleting local water supplies so they’re actively seeking verified water conservation projects in the same watershed to offset their use.
And it’s not just data centers. Food and beverage and manufacturing companies are also looking for water conservation partners across the US.
That’s where affordable housing developers come in. ION has already demonstrated the ability to reduce water consumption by 50–60% on average across properties nationwide. That documented track record makes our developer partners credible, verifiable conservation partners for corporate water users. Here’s what participation in a volumetric water benefit partnership can mean for you:
- Subsidized or fully covered installation costs. The corporate partner funds some or all of the ION system cost, reducing your capital stack burden.
- Lower ongoing service costs. What might otherwise be $10 per unit per month could be significantly reduced – or eliminated – through a corporate subsidy.
- Access to deals you might otherwise pass on. Properties with marginal water performance ROI can become viable with a corporate partner covering the upside.
- Community and regulatory goodwill. Participating in watershed conservation strengthens relationships with municipalities, housing finance agencies, and community stakeholders.
- A true triple win. It’s not a loan or equity; it’s a partnership that funds a conservation outcome that benefits your property, the corporate partner, and the community.
We’re constantly matching corporate water demand with affordable housing supply. Reach out to us – there may be an opportunity in your backyard.
Why I built ION
I didn’t set out to start a water technology company. I set out to figure out one line item on a pro forma that nobody could explain to me. More than a decade ago, when I installed smart sensors in a 42-unit property in Goshen, Kentucky and watched the monthly water bill drop from $14,000 to $1,400, I knew that kind of savings would be meaningful to other affordable housing developers.
Now ION is managing water across more than 100,000 units. Our vision is to end the waste of water in the built world, starting with affordable housing, where the need is greatest and the impact is most direct.
The developers we work with don’t just save money. They gain a new frame of reference: visibility, confidence, and a metric they can rely on across every property in their portfolio, at every stage of the lifecycle.
If you’re an affordable housing developer and water is still a line item you’re guessing at, let’s talk.
Reach out through the Contact Us page on our website or email me directly at jackhowell@ionwater.io. We’ll start by looking at 12 months of your bills and tell you exactly where you stand.
Jack Howell is the Founder and CEO of ION, the leading End-to-End Water Management system for affordable housing.
