Housing Groups Critique Proposed Energy Efficiency Bill

Proposed legislation known as the Energy Efficiency Modernization Act of 2009 (H.R. 4099, S. 2897), currently pending in the House Financial Services Committee and Senate Banking Committee, contains language and some requirements that concern housing organizations, including the National Affordable Housing Management Association (NAHMA) and the National Leased Housing Association (NLHA).

Both the House and Senate versions of the bill would create a “green dividend” program to help improve energy efficiency in federally subsidized housing and allow the use of residual receipts as loans to make energy-efficient improvements/retrofits. The green dividend program in the legislation is designed as a market-based incentive, whereby HUD owners can share the cost savings created by reducing the energy costs of their respective sites under the terms of the program.

A “green dividend” is defined in the proposed legislation as:

• An annual distribution equal to 50 percent of the annual energy cost savings resulting from the energy-saving measures conducted for the project;

• Any reasonable costs incurred by the owner in carrying out the energy-saving measures; and

• An addition to the standard distribution that the owner of the project is authorized to receive from the project pursuant to HUD regulations.

Owners who receive green dividends must also meet reporting requirements regarding the project, the utility cost-saving measures undertaken for the project, and the utility cost savings of the project.

NAHMA, NLHA Weigh In

The housing organizations generally support the proposed incentive-based approach, but are concerned whether the benefits of receiving a green dividend would outweigh the associated application and compliance costs.

Section 4 of the House bill creates a complicated program that would allow HUD to make loans, funded from residual receipts, to owners of federally assisted housing projects for undertaking green retrofit measures. In its analysis of the bill, NAHMA notes that the language appears to give HUD authority to redistribute residual receipts from one site to another and does not reverse the existing policy, which requires residual receipts in “new regulation” properties to revert back to HUD when the rental assistance contract is terminated.

NAHMA points out that it supports the goal of Section 4, but recommends a more direct, streamlined approach to achieving that goal. NLHA has previously said it supports striking Section 4 and replacing it with language that would direct HUD to review its regulations and agreements concerning residual receipts and reserve for replacements to encourage energy efficiency. Section 4 of the Senate bill adopts the NLHA proposal and requires HUD to also revise its policy to encourage the use of reserve for replacement funds for energy-efficient items.

Section 6 of both bills would require all HUD-subsidized multifamily sites, regardless of their participation in the green retrofit programs, to report regularly to HUD regarding project consumption of electricity, water, gas, and other utilities for a larger annual report. NAHMA has taken a stand in opposition to this section, stating that it does not believe “the energy efficiency improvement in the federally-subsidized portfolio should come at the cost of unfunded and burdensome administrative reporting requirements on the owners and agents of affordable properties.”

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