Energy Efficiency

Recent Updates and Highlights

Prepared by Eileen Hearty, Project Manager Office of Asset Management – Denver Multifamily Hub

2

Long-term sustainability sustainability requires

continued partnership between HUD and

the sponsors and owners of federally

supported affordable housing. We

encourage continued efforts to make

these projects greenergreener, healthier, and

more energyenergy efficient. Through our

collective efforts we can benefit

America’s low-income households,

improve communities, and have a greater

impact with our federal investment. http://www.huduser.org/Publications/pdf/EnhancingEnergyEff_GreenBuildingV2.pdf

MF Energy Efficiency Initiatives MF Energy Efficiency Initiatives - Implemented

3

MF Energy Efficiency Initiatives MF Energy Efficiency Initiatives – – Planned

4

MF Energy Efficiency Initiatives – MF Energy Efficiency Initiatives – Planned

5

6

• As part of President Obama's Climate Action Plan, in 2013 HUD and DOE extended the Better Buildings Challenge to include multifamily housing.

• The BBC asks building owners to commit to a 20% portfolio-wide energy reduction over 10 years.

• 59 multifamily residential partners (+ 29 housing authority partners) have joined the Challenge.

7

Current MF BBC IncentivesCurrent MF BBC IncentivesManagement Fee Incentive: Access to Add-on Fees for eligible energyenergy and water efficiency activities.

Reserve for Replacement Incentive: Expedited approval for energyenergy and water efficiency capital improvements.

Mark to Market Incentive: Incentive Performance Fee increase for meeting specific energyenergy and water efficiency requirements.

PRAC Shared Savings Incentive: Allow 202/811 PRAC properties to include energyenergy savings associated with energenergy improvements as an eligible expense in the property budget.

MF BBC Incentives to comeMF BBC Incentives to come

Increased distributions: Up to 100 percent for non-profit Section 8 owners, based upon properties meeting

annual energyenergy reduction targets.

On-Bill Financing and Repayment Incentive: Memo on participation in on-bill repayment program in California to support energyenergy efficiency improvements.

8

More about BBCMore about BBC

• www4.eere.energy.gov• Several multifamily owners have posted showcase

projects (case studies) on the BBC website. All owners are expected to post their showcase projects up this year.

• May 27-29 will be the annual Summit of the BBC partners in DC. Gatherings of BBC partners for later this year.

• Send questions to MFBBC@hud.gov

9

MF PACE – UpdateMF PACE – Update• January 2015 Governor Brown and Secretary Castro announced

a California Multifamily PACE Pilot in partnership with the MacArthur Foundation.

• The Pilot enables commercial PACE financing for certain MF properties, including specific properties within HUD, the California Department of Housing and Community Development, and the California Housing Finance Agency’s portfolios.

• Policy memo to explain underwriting of PACE assessments for properties with FHA insured mortgages and/or HUD rental assistance.

• portal.hud.gov/hudportal/documents/huddoc?id=MF_PACE_CA_Memo.pdf

10

Upcoming PublicationsUpcoming Publications

MAP Guide MAP Guide - Updating the methodology by which energyenergy savings are underwritten for FHA insured loans. Draft available and public comments can be submitted until 4/30/15.Proposed: increased per unit improvements limit; use estimated energyenergy efficiency savings in underwriting; minimum standard for energyenergy efficiency for investments; requirements for use of CNA E-tool for FHA loan underwriting.

11

Upcoming Publications Upcoming Publications

CNA-e Tool CNA-e Tool - A Notice on required use of a new electronic Capital Needs Assessment, which includes a required energyenergy audit and energyenergy use benchmarking.Applications for insured mortgages and 10-year updates must include calculation of annual utility consumption.Allows evaluation of the potential for achieving cost savings and reduced carbon emissions.

12

Upcoming PublicationsUpcoming Publications

Utility Allowance AnalysisUtility Allowance Analysis - Housing Notice on utility analysis methodology. Multifamily Housing staff have analyzed the current practices for determining utility allowances and have developed recommendations for improving the analysis methodology in order to more accurately determine allowances and to minimize costs to HUD .RAD RAD – Updated Notice later this month. Updates the methodology by which energyenergy savings are underwritten for RAD deals with new PBRA contracts .

13

Upcoming PublicationsUpcoming Publications

Utility Use Data Collection/Benchmarking Utility Use Data Collection/Benchmarking - - Collecting energy use data from existing assisted and insured properties (properties not covered by the CNA e-tool guidance) and also setting a minimum standard for energyenergy efficiency for existing properties. This connects to the newly available EnergyEnergy Star Score for Multifamily from the EPA’s Portfolio Manager.

14

Looking ForwardLooking Forward

Minimum Energy Efficiency Standards Minimum Energy Efficiency Standards – Federal Register Notices: Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA-Assisted Housing (2009 energy standards, affects 9 states for MF) and Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA-Assisted Housing and Solicitation of Comment (2013 standards, affects 41 states for MF).

Pay-for-SuccessPay-for-Success FY16 Budget Proposal for 20,000 PBRA units in energy performance contracting.

15