HUD Benchmarking Requirements

Utility benchmarking is required in some programs

Table of Contents

HUD requires utility benchmarking for Better Buildings Challenge partners and to qualify for the Green Mortgage Insurance Premium

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.

HUD has established requirements for utility benchmarking by multifamily borrowers wishing to qualify for the Green MIP Reduction and for multifamily owners participating in 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 utility benchmarking requirements for these two programs.


Summary of Utility Benchmarking Requirements in HUD’s Voluntary Programs

  Green MIP Reduction Better Buildings Challenge
Requirement Status Required Required
Reporting Frequency Upfront and Annually Annually
Sampling Permitted** Sampling is not permitted for obtaining a Statement of Energy Performance (SEP) score indicating continuing performance; but can be used to establish a pre-retrofit performance baseline for existing properties with at least 3 years of stabilized operation. 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

Some HUD programs offer a financial incentive and/or technical assistance that may be used to support utility benchmarking efforts. While the goal of obtaining financial assistance for utility benchmarking should not be the primary motivation for applying to these programs, housing providers should be aware that some opportunities from HUD do exist.

The Better Buildings Challenge (BBC):
A voluntary program that supports utility benchmarking with a financial benefit and/or technical assistance

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 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. ($4/unit/month, up to $5,000/year) that can be used to support benchmarking activities.

What is the financial/technical assistance?

BBC Partners may request technical assistance from HUD 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 retains TA providers to provide off-site support.

Further, owners/managers of HUD-assisted multifamily housing that are BBC partners may request up to $4 per unit per month in the form of a Management Add-On Fee to support activities associated with participating in the Better Buildings Challenge. This may include some or all of the cost 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.

FHA Green Mortgage Insurance Premium (MIP):
A voluntary financing program for new construction or preservation of multifamily housing that requires utility benchmarking

What is it?

FHA 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 a HUD-insured multifamily rental property, the owner must pay an upfront and annual mortgage insurance premium, at a rate of 45 to 75 basis points (bps) or 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 introduced a reduced multifamily insurance premium that incentivizes 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 that contributes to resident comfort and health.

Through this voluntary program, multifamily property owners may receive a reduced MIP of 25 bps (0.25%) for properties that commit to industry-recognized green building standards and achieve and maintain an ENERGY STAR® benchmarking 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. Costs can include the utility benchmarking efforts necessary to determine a property’s Energy Use Intensity (EUI) or Water Use Intensity (WUI), and obtain an ENERGY STAR 1-100 Score or EPA 1-100 Water Score from Portfolio Manager.

Public Housing Energy Performance Contract (EPC) Program:
A method to finance green retrofits in public housing that may 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 cash flow, thereby funding it through the project. However, its use in place of actual Measurement and Verification (M&V) or in combination with must first be approved by HUD. Approval is on a case by case basis.

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 their underwriting, asset management, and securitization processes.

Fannie Mae

Fannie Mae requires Green Financing program borrowers to utility benchmark and report their property’s annual Energy Performance Metrics. For Fannie Mae Multifamily Green Financing programs, access the “Go Green Flowchart” to assess the financing products for each individual owner’s needs. Fannie's financing programs include:

Freddie Mac

Rewarding borrowers who improve their properties to save energy, or who already have green-certified properties and are looking for new financing, Freddie Mac's Multifamily Green Advantage® 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 Up® and Green Up Plus®: 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.

Green Up and Green Up Plus loans require borrowers to engage a third-party data collection firm prior to the origination of the loan, and submit benchmarking metrics.

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. Cities including Atlanta, Georgia; Kansas City, Missouri; Portland, Maine; Reno, Nevada; Seattle, Washington; and Washington, D.C. require benchmarking for multifamily properties.

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

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 immediately 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 5 or more units, are eligible to join the BBC 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 a 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.

Public Housing Energy Performance Contract Program

An Energy Performance Contract (EPC) is an innovative financing method, available to Public Housing Authorities (PHA), 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.

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