HUD Benchmarking Requirements

Utility benchmarking is required in some programs

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HUD strongly encourages utility benchmarking

HUD recognizes that utility benchmarking is important for all housing providers because it allows them to:

  • Track properties' energy and water performance;
  • Detect malfunctioning equipment and billing errors;
  • Prioritize operational and capital improvements;
  • Verify the return on those investments; and
  • Plan for future budget needs.

Requirements have already been established for utility benchmarking in insured housing and for participants of certain voluntary programs, like the Green MIP Reduction and the Better Buildings Challenge.

Housing providers should read this section, refer to their program guidance, and check back periodically to stay current on the details of HUD’s utility benchmarking requirements as they apply to various programs.

Summary of Utility Benchmarking Requirements in HUD’s Housing Programs

  Public Housing Housing Choice Vouchers Assisted Housing Insured Housing
Requirement Status Encouraged Encouraged Encouraged Required*
Covered Sub-Programs N/A N/A
  • Section 202 Project Rental Assistance
  • Contracts (PRAC)
  • Section 811 Project Rental Assistance (PRA) Contracts
  • Section 202/162 Project Assistance Contracts
  • Section 202 Senior Preservation Rental Assistance Contracts (SPRAC)
  • Section 8 Housing Assistance Payment Contracts (HAP)
  • Section 223(a)7
  • Section 223(f)
  • Section 221(d)(4)
  • Section 220
  • Section 231
  • Section 241(a)
Special Exemptions Small public housing authorities with fewer than 250 housing units N/A Small assisted housing properties with fewer than 20 housing units Small insured housing properties with fewer than 20 housing units
Reporting Frequency Once every 3 years N/A Once every 3 years Once at loan signing and at certain events thereafter
(See policy details)
Sampling Permitted Yes; Tier 1 N/A Yes; Tier 1 Yes; Tier 1
More Information N/A N/A N/A FHA Multifamily Mortgage Insurance Programs MAP Guide 2016

*As of November 1, 2017, applications for multifamily insured mortgages are required to provide verified utility consumption data in compliance with the Multifamily Accelerated Processing (MAP) Guide 2016 if Green MIP Reduction or underwriting utility savings are to be recognized.

Summary of Utility Benchmarking Requirements in HUD’s Voluntary Programs

  Green MIP Reduction Better Buildings Challenge
Requirement Status Required Required
Reporting Frequency Annually Annually
Sampling Permitted** A minimum of 25% sampling may be used to establish a pre-retrofit performance baseline for existing properties with at least 3 years of stabilized operation. Sampling is not permitted for obtaining a Statement of Energy Performance (SEP) score indicating continuing performance. Yes; Tier 1
More Information Green MIP Reduction Overview Better Buildings Challenge

**Sampling protocols can be found in Step 2: Collecting Utility Data, under Method D of this Multifamily Utility Benchmarking Toolkit.


Financial Assistance for Utility Benchmarking

Federal, state and local utility benchmarking assistance

Take advantage of Federal, state and local utility benchmarking assistance

Several HUD programs offer financial and/or technical assistance to support utility benchmarking efforts. While the goal of obtaining financial assistance, in particular, for utility benchmarking should not be the primary motivation for applying to these programs, housing providers should be aware that these opportunities from HUD do exist. The agency is exploring ways to make additional financial and technical assistance available.

Affordable Housing Summer Fellowship Program:
A pilot program that offers on-site technical assistance to jumpstart utility benchmarking

What is it?

In partnership with the Environmental Defense Fund, HUD is placing 12 graduate student fellows on site with affordable housing providers across the country for 10 weeks in Summer 2017. Applications for this opportunity have closed, but HUD hopes to offer the program again in the future.

What is the financial/technical assistance?

In partnership with their host organizations, the fellows’ mission will be to develop utility benchmarking plans, conduct first-time utility benchmarking, and train staff to upkeep the practice after their departure.

The Better Buildings Challenge (BBC):
A voluntary program that offers both financial and technical assistance for utility benchmarking and more

What is it?

The Better Buildings Challenge is a voluntary leadership initiative that asks property owners and managers to make a public commitment to energy and/or water efficiency. All BBC Partners are eligible to receive on-site or off-site technical assistance with utility benchmarking. BBC Partners that own or manage assisted housing are also eligible for a Management Add-On Fee incentive.

What is the financial/technical assistance?

BBC Partners may request technical assistance from their BBC Account Managers to gain support in overcoming obstacles towards their energy and/or water efficiency pledges, including utility benchmarking. HUD establishes a scope of work for the direct technical assistance project in cooperation with the BBC Partner and then hires contractors to provide on-site or off-site support.

Further, owners/managers of assisted housing that are members of the BBC may request up to $4 per unit per month in the form of a Management Add-On Fee to support the efforts associated with participating in the Better Buildings Challenge. This includes the practice of utility benchmarking.

To access this financial assistance, BBC Partners should request the Management Add-On Fee incentive from their local HUD Field Office. The Management Add-On Fee is paid to the owner/manager through the property’s operating account. The cumulative amount received may not exceed $5,000 per year per property.

More information

Green Mortgage Insurance Premium (MIP) Reduction:
A voluntary program that can pay for utility benchmarking and more

What is it?

Mortgage insurance encourages lenders to make loans to private sponsors or owners of rental housing by insuring the lender against losses incurred when borrowers default on their mortgages. If a housing provider owns and/or operates HUD-insured multifamily rental property, the owner must pay a mortgage insurance premium, at a rate of 0.45% to 0.70% of the unpaid balance of the mortgage loan amount, along with the property’s mortgage.

What is the financial/technical assistance?

In early 2016, HUD allowed for a reduced multifamily insurance premium for green housing to encourage owners to adopt higher standards for construction, rehabilitation, repairs, maintenance, and property operations. The lower rate incentivizes owners to implement measures that result in housing with greater energy and water performance, reduced operating costs, and improved indoor air quality and resident comfort.

Through this voluntary program, multifamily property owners may receive a 0.25% reduction in the MIP for properties that are committed to industry-recognized green building standards and achieve and maintain an ENERGY STAR® score of 75 or higher as evidenced by a report from ENERGY STAR Portfolio Manager®. A housing provider may use the savings generated to cover costs associated with achieving these standards, which can include the utility benchmarking efforts necessary to obtain an EUI, WUI, ENERGY STAR 1-100 Score, and EPA 1-100 Water Score from Portfolio Manager.

Public Housing Energy Performance Contract (EPC) Program:
A method to finance green retrofits that can include utility benchmarking

What is it?

An Energy Performance Contract (EPC) is an innovative financing method, available to Public Housing Authorities, that uses utility cost savings from reduced consumption to repay the cost of energy- and water-efficiency retrofits.

What is the financial/technical assistance?

Public Housing Authorities planning an EPC can include the costs of utility benchmarking for participating properties in their EPC cashflow, thereby funding it through the project.

More information

Other National Programs

Targeting owners of multifamily properties that invest in smart, strategic energy and/or water saving improvements, Fannie Mae and Freddie Mac provide green mortgage financing in addition to integrating sustainability considerations into underwriting, asset management, and securitization processes.

For Fannie Mae Multifamily Green Financing programs, access the “Go Green Flowchart” to assess the financing products for each individual owner’s needs. Such financing programs include:

  • Green Rewards: Rewards renovations, retrofits, and repairs.
  • Green Building Certification Pricing Break: Recognizes owner’s initiative to certify to LEED, ENERGY STAR, etc.
  • Green Preservation Plus: Preserves quality affordable properties.

Rewarding borrowers who improve their properties to save energy, or who already have green-certified properties and are looking for new financing, Freddie Mac Multifamily Green AdvantageSM suite of offerings include:

  • Green Assessment and Green Assessment Plus: Reimburses up to $3,500 of the cost of the Green Assessment report (a property analysis demonstrating how properties can save energy and/or water through targeted improvements.)
  • Green UpSM and Green Up PlusSM: Rewards renovations, retrofits, and repairs through better pricing and more available funding.
  • Green Certified: Rewards properties that are already green certified with discounted loan pricing.

State and Local Programs

Numerous state and local government programs encourage utility benchmarking, energy- and water-efficiency retrofits, and renewable energy use in residential, commercial, and public buildings through loans, grants, and rebates.

Of particular note, housing providers with properties in Connecticut and Rhode Island may be eligible to receive free utility benchmarking services through a third-party utility management service provider, as offered by the Connecticut Green Bank and Rhode Island Infrastructure Bank, respectively.

More information

  • More information about various state and local incentives offered, as well as legislation related to energy conservation, is available on the DSIRE website.

Green Retrofit Opportunities

Reduce utility consumption and lower costs

After beginning to practice utility benchmarking, you’ll gain a great deal of insight into your portfolio and be able to immediate take action on low and no-cost fixes, like billing errors and malfunctioning equipment. You’ll also be able to identify the properties that have the greatest potential for improvement through cost-effective green retrofits. In this section, learn more about HUD’s programs that support green retrofits.

 

Better Buildings Challenge (BBC)

The Better Buildings Challenge (BBC) is a voluntary leadership initiative that asks property owners and managers to make a commitment to improving the energy and water efficiency of their portfolios by 20% over 10 years and to share their annual progress and lessons learned with the public.

Owners and managers of housing portfolios that include at least 2 properties, at least 1 of which is a multifamily building of 4 or more units, are eligible to join the Better Buildings Challenge Multifamily Sector. HUD provides support to BBC Partners in overcoming obstacles on their journeys through technical assistance and highlights their good work in events and publications.

Current BBC Multifamily Sector Partners include a diverse range of organizations. No preexisting relationship with HUD is required to join the BBC. However, organizations that are part of HUD's assisted and public housing programs may be eligible for certain incentives through those programs when joining the BBC.

Each BBC Partner commits to:

  • Conduct an energy/water efficiency assessment of their building portfolio and pledge an organization-wide energy/water savings goal of at least 20% within 10 years;
  • Publish two short case studies, showcasing an energy/water efficiency project and an organization-wide implementation model; and
  • Report results annually by sharing energy/water performance data that demonstrates success.

More information

Renew300 Program

The Renew300 program aims to help affordable housing providers save money through the installation of on-site or community-based renewable energy technology. It encourages housing providers to make public commitments toward the federal renewable energy target of 300 megawatts of on-site or community-scale renewable energy capacity.

All federally supported affordable housing providers are eligible to join the Renew300 program, including those involved in HUD’s public and assisted housing programs, USDA’s rural housing programs, and the Low-Income Housing Tax Credit program. HUD provides support to Renew300 Partners in overcoming obstacles on their journeys through technical assistance and highlights their good work in events and publications.

More information

Public Housing Energy Performance Contract Program

An Energy Performance Contract is an innovative financing method, available to Public Housing Authorities, that uses utility cost savings from reduced consumption to repay the cost of energy- and water-efficiency retrofits.

PHAs interested in pursuing an EPC typically work with an Energy Services Company (ESCo) to conduct an investment-grade energy audit (IGEA), identify a mix of energy- and water-conservation measures (ECMs) that are cost effective over a maximum of 20 years, prepare an EPC cashflow and associated documents, and apply to HUD for approval. Meanwhile, the PHA also secures a third-party loan for construction. After completing construction, the PHA receives EPC Incentives from HUD, which are sized in relation to the utility cost savings achieved and allow the PHA to repay its loan. The ESCo typically guarantees a certain amount of savings, thereby reducing risk to the PHA and its lender.

More information

Assisted Housing Energy and Water Conservation Pay for Success (PFS) Program

The Fixing America’s Surface Transportation Act authorizes HUD to establish a demonstration program under which HUD may execute budget-neutral, performance-based agreements that result in a reduction in energy or water costs. The legislation authorizes HUD to implement this pilot in up to 20,000 housing units in multifamily properties participating in the section 8 project-based rental assistance; section 202 supportive housing for the elderly program; and the section 811 supportive housing for persons with disabilities program. HUD is authorized to establish a competitive process for selecting one or more qualified intermediaries who will, per agreements with HUD, be responsible for initiating and managing an energy- and water-efficiency retrofit program.

Intermediaries selected for this program will be responsible for creating and executing their own plan for implementation. This plan will include:

  • Recruiting investors to provide capital and paying them debt service using success payments provided by the government;
  • Engaging and coordinating the retrofit service providers; and
  • Retaining a third-party measurement and verification provider to verify outcomes.

Property-Assessed Clean Energy (PACE)

PACE is an innovative mechanism for financing energy-efficiency, water-efficiency, and renewable energy improvements on private property, allowing a property owner to implement improvements without a large up-front cash payment. Multifamily property owners may access funds for energy- and/or water-efficiency improvements through their local government. The local government adds the loan payments to the owners’ property taxes, and the loan payments are based on an increase in basis.

Property owners that voluntarily choose to participate in a PACE program repay their improvement costs over a set time period—typically 10 to 20 years—through property assessments, which are secured by the property itself and paid as an addition to the owners' property tax bills. A PACE assessment is a debt of property, meaning the debt is tied to the property as opposed to the property owner(s), so the repayment obligation may transfer with property ownership, depending upon state legislation.

Many local governments may have PACE programs in place or underway, which any owner of multifamily housing may explore and consider. Assisted housing providers that wish to participate must be located in areas where the local government has submitted a PACE plan to HUD and had it approved.

More information

  • PACE flyer (coming soon)