HUD Flips Switch on Utility Benchmarking for Assisted Properties

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On October 4, HUD announced a proposal that would require multifamily property owners of certain HUD financed properties and Public Housing Authorities (PHAs) to submit information on energy and water consumption that would be used for benchmarking their portfolio of properties. The proposal seeks to establish procedures for building owners to input utility and energy data into the U.S. Environmental Protection Agency’s free, web-based ENERGY STAR Portfolio Manager®. The benchmarking would help owners and PHAs make informed decisions, reduce operating costs and improve building performance.

Properties would be scored in comparison to a dataset compiled by EPA for the Multifamily Energy Star label. Those properties that receive a score of 75+ receive ENERGY STAR recognition.

The proposal covers the following property types:

Section 202 Project Rental Assistance Contracts (PRAC);

Section 811 PRAC and Project Rental Assistance (PRA) Contracts;

Section 202/162 Project Assistance Contracts (PAC);

Section 202 Senior Preservation Rental Assistance Contracts (SPRAC);

Section 8 Housing Assistance Payment (HAP) Contracts; and

Multifamily housing properties insured under Sections 223(a)(7), 223(f), 221(d)(3), 221(d)(4), 220, 231, 236 and 241(a).

HUD will also evaluate properties insured under the FHA Risk Share programs, including Section 542(b), 542(c), Housing Finance Agencies, as well as Fannie Mae, Freddie Mac and Small Building Risk Share. The goal is to determine feasibility and timeframes for applying energy benchmarking requirements to those properties in the future.

NMHC/NAA are sorting through the proposed sampling and related details, including the time involved to complete the data collection request. We will submit comments on the proposed information request by the December 5 due date.

The data collection requirements for a range of covered transactions will take effect next year on April 15. Then, the first scheduled submission date for the majority of respondents will be in 2019. Updates on timing and procedures will be provided by HUD’s Office of Housing Notice.

Background on Multifamily Benchmarking

HUD currently collects utility cost data through its utility allowance and annual project financial statement requirements. Earlier this year, HUD announced changes to the Multifamily Accelerated Processing Guide (MAP) and a green mortgage insurance premium (MIP) program that include requirements for properties to benchmark utility consumption in return for financing terms concessions.

While utility benchmarking mandates are in place in more than a dozen areas, on a national level, access to whole building energy and water consumption data presents a challenge. HUD finds that “some owners may need to or choose to use a combination of whole owner-paid utility data and a sample of tenant-paid utility data” if they are unable to obtain aggregated consumption data from the utility provider.