HUD Creates New Energy Savings Program for Small, Rural PHAs

On October 23, HUD published a notice titled “Implementation of Section 209(b) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act)” (PIH 2020-30). This notice implements an energy savings program for small, rural PHAs that was created by the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act). The National Association of Housing and Redevelopment Officials submitted comments on implementing section 209(b). Our comments stated that this program should be distinct from Energy Performance Contracting, that the program should be easy to apply to and to administer, and that PHAs should have flexibility in how they use the savings. We are pleased that HUD closely followed many of NAHRO’s suggestions. The program—called the Small Rural Frozen Rolling Base (SR-FRB)–would allow eligible PHAs to freeze the cost of their energy consumption levels, improve their energy efficiency, and use any cost savings for any eligible public housing purpose at the PHA’s discretion. This program differs from Energy Performance Contracting (EPC) in that it is much easier to apply to and administer.

The SR-FRB program would allow PHAs to freeze their three-year rolling base consumption level that is used to calculate their operating fund amounts received. Housing agencies will be able to freeze their most recent three-year period for a period of up to 20 years. All cost savings will go to the PHA and the PHA may use them for any eligible public housing purpose.

To apply for the SR-FRB program, a PHA must be eligible and must notify HUD. To be eligible, an agency must be a small, rural agency. The list of agencies that meet that criteria can be found on HUD’s website. To apply, the PHA must notify HUD at PIH_Energy@hud.gov. The PHA must notify HUD no later than July 1 of the year before they want to start the program. To start the program in 2022, the notification must be given to HUD by July 1, 2021. The PHA must identify both the project and the utilities to freeze. The SR-FRB time period is the three-year rolling base consumption level (RBCL). It is the consumption level for the 36-month period ending on June 30 which is 18 months prior to the first day of the first funding period.

For each utility included, the PHA must identify whether the utility is the primary source of heat. The PHA must also identify if the PHA will make an adjustment to the historical consumption for Heating Degree Days (HDD). Heating Degree Day adjustments are adjustments made once to the utility that supplies heat to account for weather variations.

Housing agencies may use savings from the SF-FRF program for any public housing purpose. Any public housing purpose includes any eligible Capital Fund or Operating Fund expense. The notice defines savings as “the amount of additional Operating Funds a PHA may receive in any given year as a result of participating in the SR-FRB program.” If a PHA uses savings for Capital Fund expenses, it must maintain documentation to identify the savings amount and the activities those funds were spent on.

Housing agencies may undertake financing for energy or water conservation improvements, but if the financing includes a security interest or other encumbrance on the public housing property, the PHA must obtain HUD approval.

The notice also provides additional information on removing units from inventory, changes in resident responsibility, and changes in the heating fuel source.

The full notice can be found here.

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