Energy Conservation
Measures (ECMs) can increase property values and improve the condition of
the public housing stock. HUD incentives allow capital funds and any extra energy
savings from ECMs to be allocated by the housing authority toward needed repairs
and other eligible expenses. The incentives also reduce HUD's payments to public
housing authorities for utility bills.
These incentives do not override
the standard Performance Funding System treatment of savings from conservation
measures but offer additional options for allocating savings.
If you are
considering using these incentives read 24
CFR 990 and 24
CFR 905. Contact the HUD office in your region for approval and implementation.
Three-Year
Rolling Base
Frozen Base
Additional
Subsidy
Rate Reduction
Private
Financing
Other Funding Sources
Learn
More about How to Finance Energy Improvements
Three-Year
Rolling Base
Under the three-year rolling base, utility cost savings
from energy conservation are phased out over a four-year period. A PHA/IHA retains
half of the utility cost savings in the first and second years after the conservation
improvements are completed, one-third of the savings in the third year, and one-sixth
of the savings in the fourth year. Therefore, the PHA/IHA retains 150% of the
value of the first year's cost savings over a four-year period.
Frozen
Base Incentive
This incentive involves freezing the three-year rolling
base utility consumption at the level of consumption before installation of the
energy improvement. This incentive applies when payments by the PHA/IHA to an
ESCO or third party financier are dependent on the amount of energy cost savings
realized. The PHA/IHA retains 100% of the cost savings during the contract period,
and at least 75 percent of these yearly profits are used to pay off the loan until
it is fully amortized. This incentive gives the PHA/IHA additional funds to use
for energy-conservation improvements compared with the three-year rolling base
incentive.
HUD approval of this incentive is based upon a determination
that: (1) payments under the contract can be funded from the reasonably anticipated
energy cost savings; and (2) the contract period does not exceed 12 years.
A
PHA/IHA can implement this incentive with an Energy
Performance Contract, either by itself or through an ESCO. The PHA/IHA could
use conventional financing or other financing agreements with utilities or local
government sources for repayment of the capital costs associated with this incentive.
Additional
Subsidy Incentive
Under this incentive, a PHA/IHA can request an additional
subsidy as an "add-on" to its total operating subsidy eligibility. This additional
subsidy would be applied to amortizing payments for a loan contracted to finance
energy-conservation improvements with a repayment period not to exceed 12 years.
This
incentive applies if the contract sets forth a fixed payment (e.g., a bank loan)
supported through additional subsidy, i.e., the payment is not directly dependent
on the amount of cost savings resulting from the energy-conservation improvements.
Under this incentive, the three-year rolling base remains in place, and the normal
savings occur over a four-year period.
Savings must be greater in each year
than the amount of the "add-on”. The amount saved is the difference between the
actual energy cost and the energy cost expected if the conservation improvement
had not been made.
A PHA/IHA can implement this incentive with an Energy
Performance Contract, either by itself or through an ESCO. The PHA/IHA could
use conventional financing or other financing agreements with utilities or local
government sources for repayment of the capital costs associated with this incentive.
Rate
Reduction Incentive
This incentive permits a PHA/IHA to share equally
with HUD cost savings resulting from action (e.g., well-head purchase of natural
gas, administrative appeals or legal action) taken by the PHA/IHA to reduce the
rate it pays for utilities. Upon HUD approval, the PHA/IHA may retain half the
first year's savings.
Private Financing
Utility
Programs
Some utilities operate demand-side management (DSM) or system
benefit charge (SBC) programs. DSM programs aim to reduce demands on the utility's
generation, transmission, and distribution systems by improving the efficiency
with which their customers use energy. Some utilities have been willing to provide
a free energy audit and/or zero-interest loans to pay for the installation of
conservation measures. SBC programs offer funding to improve energy efficiency.
These funds are allocated in a variety of ways.
Check with your utility
to learn about the programs they offer. Some
of these programs can be found online.
Bonds
Housing authorities
can issue bonds through an affiliate partner. General-purpose bonds, which are
backed financially by the entity issuing the bond, are seldom used because of
the uncertainty of achieving the predicted energy savings over the life of the
bond. Tax-exempt revenue bonds offer attractive interest rates, but a good credit
rating is necessary to obtain them. The high cost of issuing any type of bond
usually dictates that they be issued for large amounts of money - larger than
the amounts typically needed for conservation projects. For this and other reasons,
bonds have rarely been used for funding projects.
Other
Funding Sources
Energy Performance Contracting
Explains the procedure for using energy performance contracts for public housing
and provides a link to Energy Service Companies (ESCOs).
HUD
Grants
HUD offers grants to a wide variety of agencies, organizations,
and companies to create housing opportunities and build communities in America.
HUD
SuperNOFA Funding
Information about the grants available under the
SuperNOFA.
HUD’s
Capital Fund Financing Program (CFFP)
Under the Capital Fund Financing
Program (CFFP), a PHA may borrow private capital to make improvements and pledge,
subject to the availability of appropriations, a portion of its future year annual
Capital Funds to make debt service payments for either a bond or conventional
bank loan transaction.
HUD
CPD Affordable Housing Funding
HUD’s Office of Community Planning
and Development (CPD) administers funding for several programs for affordable
housing, including the HOME program.
HUD
CPD Community Development Block Grants (CDBG)
HUD’s Office of Community
Planning and Development (CPD) administers funding for communities to address
affordable housing and community development needs.
State
Energy Efficiency Index
Sorted by state, the site lists state tax
credits, energy efficiency codes, funds, and energy saving tips. The site is administered
by the Alliance to Save Energy.
Weatherization
Assistance Program
The country's longest running energy efficiency
program. The program is administered by the U.S. Department of Energy.
Energy-Efficiency
Funds and Demand Response Programs
The U.S. Department of Energy lists
incentives offered by utilities, such as energy-efficiency and load management
programs.
DOE
Financial Opportunities
The U.S. Department of Energy has financial
opportunities for businesses, consumers, and tribes.
Low
Income Home Energy Assistance Program (LIHEAP)
A Federally-funded
program to help eligible low income homeowners and renters meet their home heating
and/or cooling needs.
LISC
Grants, Loans, and Equity
The Local Initiatives Support Corporation
(LISC) provides loans, lines of credit, grants and recoverable grants, and equity
investments to help CDCs and other partners revitalize their neighborhoods.
Green
Communities
Green Communities is a five-year, $555 million
initiative to build more than 8,500 environmentally healthy homes for low-income
families. The initiative offers grants to help cover the costs of green components
in affordable housing developments — improvements that increase the profitability,
productivity or usefulness of a property while preserving the quality of the environment.
Public housing authorities and tribally designated housing entities are eligible
for assistance through this program.
Financing can include below-market-rate
acquisition and predevelopment loans and competitively priced tax credit equity.
Enterprise
Foundation
The Enterprise Foundation has invested nearly $6 billion
in affordable housing. They have a number of financing options, including Green
Communities.
Special
Offers and Rebates from ENERGY STAR® Partners
A searchable list
of special offers and rebates available on ENERGY STAR qualified products in your
area.
Database
of State Incentives for Renewable Energy (DSIRE)
DSIRE is a searchable
database of selected federal incentives that promote renewable energy.
MacArthur
Foundation
The John D. and Catherine T. MacArthur Foundation announced
in late 2003 a new initiative aimed at preserving affordable rental housing. The
initiative will provide $50 million in grants and program-related investments
over the next five years to help preserve and improve the nation's stock of affordable
rental housing. Among those eligible for grants are nonprofit rental housing owners
seeking assistance with strengthening and expanding their operations.
Freddie
Mac Multifamily Products & Services
Supports the acquisition, refinance,
rehabilitation ,and construction of apartment buildings.
CEE
Multifamily Housing
Identifies a number of programs that assist multifamily
housing projects through rebates and other assistance.
California Utility
Rebate Programs
The California Public Utilities Commission (CPUC) issued
$2 billion in funding for energy efficiency programs, including installation of
qualifying energy-efficient products in multifamily buildings. This energy efficiency
and conservation campaign is the most ambitious in the history of the U.S. utility
industry. Look to these utilities for a sample of home improvement rebate programs
in the state: Pacific
Gas and Electric, Southern
California Edison, Southern
California Gas Company, and San
Diego Gas and Electric.
Learn More about How to
Finance Energy Improvements
Grants
Management Center
An internal HUD service organization that supports
individual PIH program offices. GMC processes, reviews and awards categorical
and formula grants, determines formula grant allocations, and supports the public
housing operating subsidy.
Financing
Overview of funding sources for energy efficiency projects. This site is administered
by the U.S. Department of Energy (DOE).
How
to Finance Your Energy Program
A publication from Rebuild America
that explains how to perform cost/benefit analyses and options for financing.
Select
Cost Analysis Method
Information from the U.S. Department of Energy
to help select appropriate cost/benefit analyses and help select the actions that
have the best savings potential. Provides instruction on simple payback analysis,
standardized payback equations, life-cycle cost analysis, and selecting the "best"
alternatives. The site also includes a life-cyle cost calculator.