Report to Congress

Promoting Energy Efficiency at HUD in a Time of Change

Report to Congress

Submitted Under
Section 154
Energy Policy Act of 2005
Energy Task Force
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
Washington, DC
August 8, 2006

U. S . DEPARTMENT O F

HOUSING A N D U R B A N D E V E L O P M E N T

WASHINGTON, D.C. 204 10-0001

T H E SECRETARY

August 8,2006

I am pleased to present HUD's energy strategy for public and assisted housing.
Promoting Energy Eficiency at HUD in a Time of Change, as required under Section 154
of the Energy Policy Act of 2005, describes a comprehensive, Departmentwide strategy
that HUD is implementing to reduce energy costs in public and assisted housing as well as
through HUD's formula and competitive grant programs.

HUD is committed to implementing the actions outlined in this report. With the
continuing upward trend of oil prices, the Department is especially concerned with the
impact of utility costs on affordable housing. Low- and moderate-income families,
because they spend a disproportionately large share of their incomes on utilities, are
especially vulnerable to spikes in energy costs.
The added cost of lighting, heating, and cooling our homes affects everyone:
homeowners, renters, owners of assisted multifamily properties, public housing agencies
(PHAs), and developers of new affordable housing. The containment of HUD's own
estimated $4 billion "energy bill" will generate savings for the taxpayers and leverage
resources for PHAs and others to address pressing housing needs.
With the historic shiR to asset management in public housing, the Department
believes that new opportunities present themselves for PHAs to address their energy costs.
Under asset management, PHAs will, for the first time, be tracking and reporting financial
data on individual projects rather than on an agency-wide basis. These changes will help
PHAs better manage utility consumption in individual properties and identify those
projects that need priority attention.
The strategy outlined in this report builds on the work that the Department began
4 years ago through its Energy Action Plan to promote energy efficiency through all of
HWD's programs. As a result of the work of HUD's Energy Task Force and under the
guidance of Deputy Secretary Roy A. Bernardi, the Department has made great strides in
increasing awareness of energy efficiency among HUD staff, as well as among HUD's
customers and partners.
Almost 5 years ago when I testified before the House Financial Services
Committee, the Department made a commitment to making energy efficiency a priority
issue. The Department has followed the excellent road map laid out in tlie President's

National Energy Policy-a road map that called for increased energy efficiency and
conservation in homes and especially for increasing the voluntary use of Energy Starlabeled products and homes in the residential sector.
I am pleased to report that HUD has worked closely with the Department of
Energy and the Environmental Protection Agency in carrying out these activities. I look
forward to working with these agencies, the Congress, and the Department's housing
industry partners to implement the many actions described in this report.

fif)b
A phonso Jackson

Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

CONTENTS
EXECUTIVE SUMMARY ....................................................................................................... vii
I.

INTRODUCTION................................................................................................... 1
ENERGY AND HOUSING AFFORDABILITY: KEY DRIVERS ................................... 1
RISING ENERGY PRICES ............................................................................... 2
OLDER HOUSING STOCK .............................................................................. 2
ENERGY BURDEN ......................................................................................... 2
BUDGET OUTLAYS ....................................................................................... 2
HARVARD STUDY AND ASSET MANAGEMENT.............................................. 3
HUD’S ENERGY ACTION PLAN .......................................................................... 3
SCOPE OF THIS REPORT ...................................................................................... 4
VISION FOR THE FUTURE .................................................................................... 5

II.

ENERGY USE IN PUBLIC AND ASSISTED HOUSING .............................................. 7
PUBLIC HOUSING ............................................................................................... 7
ASSISTED HOUSING ............................................................................................ 8
UTILITY ALLOWANCES .................................................................................... 11
OPPORTUNITIES FOR ENERGY SAVINGS............................................................ 11
SINGLE-FAMILY HOUSING .......................................................................... 11
MULTIFAMILY HOUSING ............................................................................ 12

III.

HUD’S ENERGY STRATEGY ............................................................................. 13
A. OBJECTIVES ............................................................................................... 13
B. PLANNED ACTIONS .................................................................................... 13
1. DEPARTMENTWIDE ................................................................................ 13
2. COMMUNITY PLANNING AND DEVELOPMENT (CPD)............................. 18
3. PUBLIC AND INDIAN HOUSING (PIH)..................................................... 19
TRANSITION TO ASSET MANAGEMENT ................................................... 20
ENERGY POLICY ACT PROVISIONS ......................................................... 21
4. HOUSING—FHA SINGLE FAMILY ......................................................... 28
5. HOUSING—FHA MULTIFAMILY............................................................ 30
6. HOUSING—MANUFACTURED HOUSING ................................................ 33
7. FIELD POLICY AND MANAGEMENT (FPM) ............................................ 36
8. POLICY DEVELOPMENT AND RESEARCH (PD&R).................................. 36
9. OFFICE OF HEALTHY HOMES AND LEAD HAZARD
CONTROL (OHHLHC) ........................................................................... 37

IV.

ENERGY REDUCTION GOALS AND INCENTIVES ................................................ 39

APPENDIX .......................................................................................................................... 45

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

LIST OF FIGURES
FIGURE 1. HUD’S RENTAL ASSISTANCE PROGRAMS (2005)
FIGURE 2. INCREASED ENERGY COSTS FOR TOTAL UTILITIES IN ASSISTED MULTIFAMILY
HOUSING
FIGURE 3. INCREASED ENERGY COSTS FOR GAS IN ASSISTED MULTIFAMILY HOUSING
LIST OF TABLES
TABLE 1-A. PHA-PAID UTILITY EXPENDITURES 2000–04
TABLE 1-B. PHA-PAID ENERGY EXPENDITURES 2000–04
TABLE 2. UTILITY ALLOWANCE EXPENDITURES (2005)
TABLE 3. NUMBER OF PHAS WITH ENERGY PERFORMANCE CONTRACTS
TABLE 4. INVESTMENT IN ENERGY PERFORMANCE CONTRACTS BY PHAS
TABLE 5. SAVINGS THROUGH ENERGY PERFORMANCE CONTRACTS BY PHAS
TABLE 6. PERFORMANCE MEASURES INCLUDED IN THE FY 2006 MANAGEMENT PLAN
TABLE 7. ADDITIONAL PERFORMANCE MEASURES BEING TRACKED IN FY 2006

TABLE 8. POSSIBLE PERFORMANCE MEASURES TO BE EVALUATED IN FY 2007 AND
FY 2008

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

EXECUTIVE SUMMARY
Americans spend some $160 billion each year to light, cool, and heat their homes. Of that
amount, the U.S. Department of Housing and Urban Development (HUD) spends
approximately $4 billion—more than 10 percent of its budget—in the form of utility
allowances to renters, through Section 8 contracts in privately owned multifamily buildings or
through operating grants to public housing agencies (PHAs).
HUD’s Energy Strategy identifies actions HUD will take to promote energy efficiency in
public and assisted housing and in housing financed through HUD’s formula and competitive
grant programs. The Department’s Energy Action Plan, adopted in 2002, includes measures
identified by each of the relevant program offices, as well as policy analysis and research
activities. Its goal is to provide information, incentives, and technical assistance to HUD’s
customers and partners to make informed decisions to reduce energy costs in their buildings,
either in the development or design of new housing or in the management, maintenance, or
operation of existing housing stock.
As described in Section I, over the past 4 years, HUD has actively promoted energy efficiency
through the Energy Action Plan. A Departmentwide Energy Task Force made up of
representatives of program offices and regional energy coordinators in each of HUD’s ten
regional offices, is responsible for implementing the plan. HUD’s field offices have also been
active in promoting energy efficiency through workshops, homeownership fairs, and other
events.
Section II of this report to Congress describes energy use in public and assisted housing
and discusses opportunities for energy efficiency in each segment of this housing stock.
PHAs spent more than $1.2 billion on PHA-paid utilities in 2004. HUD spends another $3
billion on utility allowances in public housing, and through the tenant- and project-based
Section 8 programs.
Section III, besides outlining HUD’s planned actions under its Energy Strategy, describes the
Department’s efforts to date. These have included providing priority rating points for energy
efficiency in HUD’s annual competitive grant awards; streamlining energy performance
contracting in public housing; providing successful training for multifamily building
managers on energy-efficient maintenance and operating practices; and strong regional efforts
hosting conferences or workshops for customers and partners.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

The Energy Strategy has five primary objectives:
1. To strengthen partnerships with federal agencies and local communities to promote
adoption of the Energy Star label for products, appliances, and new homes.
2. To strengthen incentives and implement statutory requirements for energy efficiency.
3. To provide training, technical assistance, and information to homeowners, renters, and
property owners.
4. To establish measures to track progress in reducing energy consumption and to ensure
accountability.
5. To support further policy analysis, research, and technology development.
In public housing, this report is being written at a time of change as housing authorities make
the transition to project-based or asset management. This shift will significantly change the
regulatory environment for utility management and reporting. HUD also will implement
several provisions related to public housing in the Energy Policy Act of 2005. HUD has
already issued a notice extending the maximum period for energy performance contracts to 20
years as required by the Act and a notice promoting adoption of Energy Star-labeled products
and appliances by PHAs. In addition, among other actions, HUD will continue to provide
points for energy efficiency in future HOPE VI grant awards, maintain a robust Public
Housing Energy Conservation Clearinghouse, and continue to streamline the energy
performance contracting process.
In assisted housing, the Energy Strategy includes providing incentives through competitive
awards for new energy-efficient Section 202 and 811 projects, exploring possible incentives
for energy efficiency in new mortgage insurance applications, training building managers and
maintenance staff in energy-efficient maintenance and operating practices, and replicating
successful state or local partnerships that have leveraged federal, state, or local resources for
capital investments in energy efficiency.
Finally, Section IV of the report identifies performance measures for public and assisted
housing that are included in HUD’s current Management Plan. It also identifies additional
performance measures that will be considered for future implementation.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

I. INTRODUCTION
This report outlines an integrated Energy Strategy for public and assisted housing, as required
under Section 154 of the Energy Policy Act of 2005. Section 154 of the Act requires that the
U.S. Department of Housing and Urban Development (HUD) develop an “integrated Energy
Strategy,” as follows:
The Secretary of Housing and Urban Development shall develop and implement an
integrated strategy to reduce utility expenses through cost-effective energy
conservation and efficiency measures and energy-efficient design and construction of
public and assisted housing. The Energy Strategy shall include the development of
energy reduction goals and incentives for public housing agencies. The Secretary shall
submit a report to Congress, not later than 1 year after the date of the enactment of this
Act, on the Energy Strategy and the actions taken by the Department of Housing and
Urban Development to monitor the energy usage of public housing agencies and shall
submit an update every 2 years thereafter on progress in implementing the strategy.
The report outlines a number of steps that HUD is already taking and is proposing to take to
address rising energy costs through increased energy efficiency in public and assisted housing
(as well as in housing financed through its formula and competitive grant programs).
A key part of this effort is to increase the use of energy-efficient technologies in housing
through increased procurement of Energy Star products and appliances and the adoption of
the Energy Star label for Energy Star Qualified New Homes for new construction and
substantial rehabilitation projects.1 These and other actions rely primarily on voluntary
actions, sound business practices, incentives and requirements authorized by Congress, and
market-based solutions that leverage private sector resources on the part of PHAs, assisted
property owners, and HUD grantees.
Energy and Housing Affordability: Key Drivers
Over the past 4 years, HUD has initiated a comprehensive, Departmentwide effort to
address the key role that energy plays in housing affordability—and the potential for
energy efficiency to lower the cost of homeownership and rental housing at a time of
rapidly rising housing costs in some areas.
HUD’s commitment to implementing the President’s National Energy Policy in public and
assisted housing has been driven by five key factors: (1) rising energy costs, especially in
the aftermath of Hurricanes Katrina and Rita in 2005; (2) the age of the existing inventory
of public and assisted housing; (3) the disproportionate burden of rising energy prices on
low- and moderate-income families; (4) the impact of energy costs on HUD’s own budget;
1 Energy Star is a voluntary product and new home labeling program run by the Department of Energy and the
Environmental Protection Agency.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

and (5) new opportunities for increasing energy efficiency in public housing through asset
management.
Rising Energy Prices. Americans spend $161 billion on heating, lighting, and cooling their
homes. According to the Energy Information Administration, over the past 5 years the cost of
home heating has more than doubled in some parts of the country; natural gas users spent 115
percent more in winter heating costs in 2005–06 than they did in 2001–02, and heating oil
users spent 135 percent more. Post-Katrina energy costs were especially high this past
winter; the cost of home heating increased by 41 percent over the previous year in the
Midwest and by 24 percent in the Northeast. Nationally, the average household paid an
average of $257 more last winter for heating their homes than they did the year before.2
Older Housing Stock. Approximately 65 percent of public housing units were built before
1970. Almost half (47 percent) of these older units are located in climate zone 2, which, with
5,500 to 7,000 Heating Degree Days, is the second coldest climate zone in the country. 3 The
majority of all housing units are located in this climate zone or in zone 5, the warmest climate
zone. The assisted housing stock is also older, built at a time with less attention on energy
efficiency. According to the Harvard University Graduate School of Design’s (GSD) Public
Housing Operating Cost Study, more than 80 percent of HUD-assisted housing stock is 15 to
30 years old. 4
Energy Burden. Low- and moderate-income families are especially vulnerable to rising
energy prices. As noted in the President’s National Energy Policy, “the energy burden on
low-income households, as a proportion of income, is four times greater than for other
American households. Many working households accommodate large increases in energy by
cutting back on other needs. However, low-income households often have more difficult
choices to make.” 5
Budget Outlays. HUD’s own budget is directly affected by utility costs. HUD spends an
estimated $4 billion on energy, more than 10 percent of its budget, either directly in the form
of public housing operating subsidies or indirectly through utility allowances and Section 8
contracts in assisted multifamily housing. This area is where significant cost savings are
possible; such savings would result in generating revenue for other important capital

Energy Information Administration, Energy Forecast, January 2006.
U.S. Department of Housing and Urban Development, Energy Expenditures in Public Housing, Report to the
Senate Committee on Appropriations, June 1999.
For climate zone map see www.eia.doe.gov/emeu/cbecs/climate_zones.html, as defined by the National Oceanic
and Atmospheric Administration (NOAA). Each NOAA climate division is placed into one of five zones based on
its 30-year average heating degree-days (HDD) and cooling degree-days (CDD) for the period 1971 through 2000.
An HDD is a measure of how cold a location was over a period of time, relative to a base temperature (in CBECS, 65
degrees Fahrenheit). Similarly, a CDD is a measure of how hot a location was over a period of time, relative to a base
temperature (65 degrees Fahrenheit).
4 Harvard University Graduate School of Design, Public Housing Operating Cost Study, June 2003.
5 President’s National Energy Policy, May 2001.
2
3

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

investments or rental assistance needs. A modest savings of just 5 percent per year, for
example, could generate a savings of $1 billion over the next 5 years.
Harvard Study and Asset Management. The shift to asset management in public housing
provides an opportunity for housing authorities to more directly address and monitor energy
costs. As documented in the Harvard University GSD’s Public Housing Operating Cost
Study, the Operating Fund system was not effective in encouraging energy conservation.6
The Harvard study observed that the shared savings approach (in which PHAs retained 75
percent of the energy savings for a period of 3 years) did not by itself “make a difference” in
creating incentives for housing authorities to reduce utility use or costs. 7 Under asset
management, tracking and management of energy consumption will be enhanced since PHAs
will report both energy consumption and expenditures for individual projects.

HUD’s Energy Action Plan
In response to these pressing concerns, in 2001 Secretary Alphonso Jackson committed HUD
to supporting the energy efficiency elements of the President’s National Energy Policy in four
key areas: 8
1. Increasing energy efficiency in HUD-assisted or HUD-financed rental housing.
2. Expanding the use of Federal Housing Administration (FHA) Energy Efficient
Mortgages, consistent with sound underwriting principles.
3. Providing technical assistance to nonprofit and faith-based organizations.
4. Continuing HUD’s role in research and development of new technologies.
The President’s National Energy Policy emphasized the central role of energy conservation
and energy efficiency in addressing the nation’s energy needs. The National Energy Policy
report makes it clear that housing is an important part of this effort. The report noted “there
are significant opportunities to improve the energy efficiency of buildings and homes through
technologies and better practices.”
Secretary Jackson established a Departmentwide Energy Task Force to prepare an Action
Plan to implement these initiatives. The Energy Task Force identified a series of actions that
HUD could undertake to address the need for energy conservation and energy efficiency in
HUD’s own programs. Some of these proposed actions were specific to individual programs,
Harvard University Graduate School of Design (GSD), Public Housing Operating Cost Study, Final Report (June 2003).
Harvard University GSD, Public Housing Operating Cost Study, Final Report (June 2003), p. 77. The effect of the 75/25
split is that over 4 years, a PHA that permanently reduced its consumption below the rolling base receives a 225
percent “payback” of the equivalent of retaining the consumption savings for 2-1/4 years. After 4-plus years, the
lower consumption level became the new rolling base, and the PHA no longer benefits financially from the lower
savings. The study observed that none of the PHAs it examined had a current or ongoing process to reduce utility
use or costs and that as a result, the shared savings approach alone under the funding system was not an effective
incentive and did not by itself make a difference in agency behavior.
8 Testimony before the House Financial Services Committee in June 2001.
6
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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

while others were Departmentwide or interagency in scope (in partnership with the
Environmental Protection Agency and the Department of Energy).
The Department subsequently adopted an Energy Action Plan (in April 2002) that contained
21 actions aimed at promoting energy efficiency in public and assisted housing, and in
housing financed through a range of competitive and formula grant programs. Many of these
actions have been successfully implemented, including several Departmentwide actions
aimed at institutionalizing energy efficiency in HUD’s programs and program-specific
measures for each program office. As a result of these activities, awareness of energy
efficiency has steadily increased among HUD’s customers and partners. 9
Key offices represented on the Energy Task Force have included the Office of Policy
Development and Research (co-chair), the Office of Community Planning and Development
(co-chair), the Office of Public and Indian Housing, the Office of Housing (Single Family and
Multifamily), the Office of Healthy Homes and Lead Hazard Control, and the Office of Field
Policy and Management. The Office of Departmental Operations and Coordination has
provided valuable support. The Energy Task Force also includes regional energy
coordinators located in, or who represent, each of HUD’s ten regional offices.
Scope of This Report
Because HUD is addressing energy efficiency comprehensively through a Departmentwide
effort, this report to Congress addresses public and assisted housing as well as related HUD
actions to integrate energy efficiency in its programs. For the purpose of this report, this
includes approximately 1.2 million existing public housing units, HOPE VI new construction,
Housing Choice Vouchers, FHA-insured or FHA-assisted multifamily housing, and Section
202 housing for the elderly. In addition, this report addresses the Office of Native American
Programs’ initiatives to promote energy conservation and housing built or rehabilitated
through the HOME and Community Development Block Grant (CDBG) formula grant
programs.

These efforts are not the first to address energy efficiency at the U.S. Department of Housing and Urban
Development (HUD). For example, in 1990 HUD worked with the Department of Energy (DOE) to undertake the
DOE-HUD Initiative, a 5-year collaboration to demonstrate how energy improvements could be undertaken through
all HUD programs. Some 27 projects were undertaken. The 1990 Affordable Housing Act, Sections 944 and 945,
required HUD to prepare an assessment of its energy activities and a 5-year plan for energy efficiency. Three such
plans were submitted. The plans addressed energy aspects of all HUD programs and activities. In June 1999, HUD
submitted a Report to the Senate Committee on Appropriations, Strategies for Reducing Energy Expenditures and
Consumption in Public Housing.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Vision for the Future
Overall Goal: Significantly reduce energy use in HUD’s inventory of public and assisted housing
and in HUD-financed housing.
Public Housing
• PHAs adopt Energy Star as the standard for purchasing appliances and equipment.
• Newly built HOPE VI projects have an energy performance rating equivalent to the standards
for Energy Star Qualified New Homes.
• Federally assisted housing on Indian lands promotes energy conservation.
Community Planning and Development
• Community Development Block Grant (CDBG) grantees adopt energy efficiency guidelines
for housing rehabilitation that incorporate Energy Star product and construction standards.
• HOME grantees adopt energy efficiency guidelines for new construction or substantial
rehabilitation and incorporate Energy Star product and construction standards.
FHA Single Family
• The Federal Housing Administration (FHA) takes steps to increase consumer awareness of
Energy Efficient Mortgages and energy efficiency in the “Streamlined (k)” Limited Repair
Program.
• FHA-approved housing counseling agencies provide counseling and information on
opportunities for residential energy efficiency.
FHA Multifamily
• Assisted multifamily properties are operated and maintained in an energy-efficient manner.
• Section 202 and 811 projects meet or exceed Energy Star building energy performance
standards.
• Newly insured multifamily properties achieve energy efficiency performance levels
equivalent to the 2003 International Energy Conservation Code or to Energy Star.
Other
• New energy partnerships are formed with cities, states, counties, other federal agencies, and
nonprofit and private-sector stakeholders.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

II. ENERGY USE IN PUBLIC AND ASSISTED HOUSING
Figure 1. HUD’s Rental Assistance Programs (2005)
(Number of Units)

Each year, HUD spends an estimated $4
billion on utilities in direct operating
grants to PHAs and through Section 8
(both project- and tenant-based) utility
allowances. In addition, assisted
multifamily property owners report
$903 million in owner-paid utilities.

Public Housing
1,213,949

Private Project-Based
1,449,786

Public Housing
Public housing consists of
approximately 1.2 million units in
13,000 properties, managed by some
3,100 PHAs. Utility expenditures are
tracked and reported by PHAs in the
Financial Assessment Subsystem for
public housing (FASS-PH).

Total Rental
Assistance
4,801,949

Tenant-Based
2,138,214

The most recent period for which PHAs have submitted audited financial statements is for
2004, covering PHAs whose fiscal years ended between September 30, 2004, and June 30,
2005. 10
As illustrated in Table 1-A, the overall cost of PHA-paid utilities in public housing (including
water and sewer charges) for 2004 totaled $1.277 billion. This cost represents approximately
22 percent of total operating expenses. When combined with the most recent available
estimate of tenant-paid utilities ($411.2 million, see Table 2), total estimated utility
expenditures in public housing are $1.69 billion.
Per-unit month utility expenditures in 2004 total $97.78, a 14.9 percent increase since 2000. 11
Preliminary, unaudited utility expenditures reported in 2005 for approximately 70 percent of
public housing units (covering PHA fiscal years ending between September 30, 2005, and

10 Audited financial statements for PHAs with fiscal years ending on June 30, 2005, were submitted in March 2006.
PHAs submit unaudited financial statements including utility expenditures through the Financial Assessment
Subsystem (FASS) within 60 days of the end of their fiscal year. They submit audited financial statements 9 months
after the end of their fiscal year. The 2004 period covers PHAs with fiscal years ending September 30, 2004,
December 31, 2004, March 31, 2005, and June 30, 2005. Utility expenses reflect expenses incurred 12 months prior
to each PHA’s fiscal year end. The first FASS reporting period was 1999 and is known as FASS Cycle 1; 2004 is
FASS Cycle 6.
11 Note that these figures are not normalized for weather conditions.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

June 30, 2006) show a significant increase in utility costs. Monthly utility expenditures
increased to $119.21 per unit, or a 21.9 percent increase over the previous year.
Table 1-A. PHA-Paid Utility Expenditures 2000–04
(Including Water and Sewer Charges)
Line Item
Total Utilities ($ in millions)
Total Operating Expenses ($ in
millions)
Utilities as a Percentage of
Operating Expenditures
Total Utilities Per Unit/Month
% Change
% Change since 2000

2000

2001

2002

2003

2004

$1,202

$1,219

$1,158

$1,252

$1,277

$5,412

$5,657

$5,754

$5,891

$5,885

22%

22%

20%

21%

22%

$85.09

$87.82
3.21%

$84.09
–4.25%

$93.02
10.63%

$97.78
5.11%
14.9%

Source: 2000–04 Financial Assessment Subsystem for public housing (FASS-PH) financial data (FASS Cycles
2-6). The following line items were used in totaling the data for utilities: water, electricity, gas, fuel, and other
utility expenses.

Table 1-B provides more detailed information on energy-related utilities, excluding water and
sewer charges. Total reported PHA-paid utility costs for electricity, gas, and fuel oil in 2004
were $878.8 million, of which $402.5 million (46 percent) was for electricity, $311.5 million
(35 percent) was for natural gas, and $164.8 million (19 percent) was for fuel oil. Over the
past 5 years, PHA-paid energy-related utilities have generally made up approximately 14 to
15 percent of total operating expenditures.
Table 1-B. PHA-Paid Energy Expenditures 2000–04
(Electricity, Natural Gas, and Fuel Oil)
Line Item

Total
($ million)

Electricity
Natural Gas
Fuel Oil
Total PHA-Paid Utilities Energy
Expenditures

Per Unit
Month ($)

% of Total

402.5
311.5
164.8

30.82
23.85
12.61

46
35
19

878.8

67.28

100

Source: 2004–05 FASS-PH financial data (FASS Cycle 6).

Assisted Housing
HUD’s assisted housing stock consists of approximately 2.3 million units in 31,000
properties, of which approximately 1.4 million receive project-based Section 8 rental
assistance. Each year, HUD insures a significant number of new mortgages or refinances
existing mortgages. In fiscal year (FY) 2005, HUD provided $5.9 billion in insurance for
1,041 multifamily loans with 122,800 units. HUD also provides capital grants and rental

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

assistance for Section 202 and 811 housing for seniors and disabled people, respectively, each
year.
According to data compiled from HUD’s Online Property Integrated Information Suite,
average owner-paid, per-unit utility costs have increased by 28 percent between FY 2000 and
FY 2005 (Figure 2). This increase varies from each region of the country from a high of 39
percent for properties served by the Seattle Multifamily Regional Office and 37 percent for
Detroit to a low of 17 percent in Los Angeles and 12 percent in Fort Worth. As shown in
Figure 3, natural gas costs have increased by an average of 56 percent over the past 5 years.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Figure 2. Increased Energy Costs for Total Utilities in Assisted Multifamily Housing

45
40
35
30
25
20
15
10
5
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Atl
a
Ba nta
ltim
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p
Ne olis
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Yo
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Sa adel k
ph
nF
ran ia
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Se
att
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Percent Increase

Percent Increase of Total Utilities Per Unit From FY00
to FY05

HUD Regional Multifamily Offices

Figure 3. Increased Energy Costs for Gas in Assisted Multifamily Housing

90
80
70
60
50
40
30
20
10
0
Atl
a
Ba nta
ltim
ore
Bo
sto
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Ph
Y
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Sa
e
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a
ran
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att
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Percent Increase

Percent Increase of Gas from FY00 to FY05

HUD Regional Multifamily Offices

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Utility Allowances
As indicated in Table 2, HUD spent an estimated $3.1 billion on project- and tenant-based
utility allowances in 2005, including $411 million in public housing, $2.1 billion in tenantbased Section 8 vouchers, and $586 million in project-based Section 8 assistance in assisted
multifamily housing.

Table 2. Utility Allowance Expenditures (2005)

Public Housing
Section 8 Housing Choice
Vouchers
Section 8 Moderate Rehabilitation
Section 8 New + Substantial
Rehabilitation
Section 236
Other
Total

% Units
# Units
Subsidized Housing Occupied
Annual Spent
With Utility With Utility
Units
Units
($M)
Allowances Allowances
1,213,949 1,090,579
46
501,666
411.2
2,138,214

91

1,643,003

2,122.0

61

23,036

19.8

811,999

69

560,279

357.1

174,175 167,208
390,442 374,824
4,801,949 4,287,872

54
59
61

90,292
221,146
3,039,423

65.5
163.0
3,139.0

1,805,498
39,337
37,764

845,832

Sources: Office of Policy Development and Research, 2005 data from Tenant Rental Assistance System; Real Estate
Management System; Public Housing Information Center—Resident Characteristics Report, HUD-50058 and HUD50059. Occupied/Leased Section 8 Moderate, New, and Substantial Rehabilitation, Section 236 and Other assume 96
percent occupancy rate.

Opportunities for Energy Savings
The opportunities for energy efficiency in public and assisted housing vary widely,
depending on the climate zone where the property is located, the age of the building and
the type of construction, and the requirements and incentives of the HUD program
involved. Nevertheless, because much of HUD-financed housing is pre-1980 housing,
there are greater opportunities for energy savings in HUD-assisted buildings than in the
overall housing stock.
Single-family Housing
A study of energy savings in single-family homes through the Department of Energy’s
(DOE’s) Weatherization Assistance program from 1993 to 2005 found that the program
achieved savings of 23 percent in gas-heated, single-family detached homes. 12 DOE and
12 Schweitzer, Martin, Estimating the National Effects of U.S. DOE’s Weatherization Assistance Program With State Level Data:
A Meta Evaluation 1993–2005, Oak Ridge National Laboratory, September 2005.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

the EPA’s Energy Star “Home Energy Saver” program showed a 16 percent savings as a
result of installing 10 Energy Star upgrades in a single-family home. These levels of
savings can be expected in single-family homes insured or assisted through HUD programs
when similar products or construction techniques are used.
Multifamily Housing
A study conducted by Lawrence Berkeley National Laboratory of energy retrofits in
25,000 units of multifamily housing showed that energy savings ranged from 10 to 22
percent of preretrofit consumption. 13 The median energy savings was 15 percent, equating
to 1,450 kilowatt-hours per unit in electrically heated buildings and 14 million British
thermal units per unit in gas- or oil-heated buildings. Simple payback on energy
conservation measures was 6 years in gas- or oil-heated buildings. Increasing the energy
efficiency of public housing by a similar level would save PHAs as much as $165 million
per year. 14 A significant portion of these savings could be achieved through relatively lowcost measures or through sound operating and management practices.

Goldman, et al., Retrofit Experience in U.S. Multifamily Buildings: Energy Savings, Costs and Economics, 1988.
U.S. Department of Housing and Urban Development, Energy Expenditures in Public Housing: Current Consumption and
Opportunities for Savings, Report to the U.S. Senate Committee on Appropriations, June 1999.
13
14

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

III. HUD’S ENERGY STRATEGY
A. Objectives
The U.S. Department of Housing and Urban Development’s (HUD’s) Energy Strategy
contains 25 actions designed to accomplish the following five objectives:

4 Actions

OBJECTIVE 1:
Strengthen partnerships with federal agencies and local communities to
promote Energy Star and energy efficiency in the residential sector.

6 Actions

OBJECTIVE 2:
Strengthen incentives and implement new statutory requirements
for energy efficiency through HUD programs.

9 Actions

OBJECTIVE 3:
Provide training and technical assistance on energy efficiency to
homeowners, renters, and property owners.

3 Actions

OBJECTIVE 4:
Establish measures to track progress in reducing energy
consumption and ensure accountability.

3 Actions

OBJECTIVE 5:
Support further research and technology development.

B. Planned Actions
1. Departmentwide

1.1

Provide incentives for energy efficiency in housing financed
through HUD’s competitive grant programs.

Progress to Date: Each year, HUD awards more than $2 billion in competitive grant
awards for a wide range of housing and community development initiatives. HUD creates
incentives for energy efficiency in its annual Super Notice of Funding Availability
(SuperNOFA), which announces the availability of these funds. For the past 3 years, HUD
has included Energy Star and energy efficiency as one of seven policy priorities eligible

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

HUD’S ENERGY STRATEGY—SUMMARY OF ACTIONS
Departmentwide
1.1 Provide incentives for energy efficiency in housing financed through HUD’s competitive grant programs.
1.2 Include energy efficiency performance measures in HUD’s Annual Performance Plan (APP) and Management Plan.
1.3 Promote the use of Energy Star products and standards through HUD’s new Partnership for Home Energy Efficiency
with DOE and EPA.
1.4 Provide residents or organizations with training or information on energy efficiency for building or rehabilitating
affordable housing.
1.5 Establish residential energy partnerships with cities, counties, states, and other local partners.

Community Planning and Development
2.1 Encourage energy efficiency in HOME- and CDBG-funded new construction and housing rehabilitation projects.
2.2 Identify opportunities and assist with feasibility analysis for Combined Heat and Power in public or assisted housing.

Public and Indian Housing
3.1 Base appliance and product purchases in public housing on Energy Star standards, unless the purchases are not cost
effective.
3.2 Build HOPE VI developments to a high level of energy efficiency.
3.3 Improve tracking and monitoring of energy efficiency in public housing.
3.4 Streamline energy performance contracting in public housing.
3.5 Promote energy conservation in federally assisted housing on Indian tribal lands.

Housing—Single Family
4.1 Feature the Energy Efficient Mortgage as a priority loan product.
4.2 Provide training on how FHA single-family programs can be effectively used to promote energy efficiency.
4.3 Continue improved tracking and evaluate performance of Energy Efficient Mortgages.

Housing—Multifamily
5.1 Promote energy efficiency in multifamily-assisted housing and multifamily programs.
5.2 Continue HUD-DOE multifamily weatherization partnerships.
5.3 Encourage use of Energy Star new home standards in the design, construction and refinancing of Section 202 and
811 projects.
5.4 Develop incentives for energy efficiency through FHA multifamily insurance programs.
5.5 Explore asset management strategies and guidance for energy efficiency in HUD-subsidized multifamily properties.
5.6 Support energy efficiency training for multifamily managers and maintenance staff.

Housing—Manufactured Homes
6.1 Implement energy efficiency recommendations of the Consensus Committee in HUD-code homes.

Field Policy and Management
7.1 Partner with local energy efficiency groups, HUD program offices, and other agencies to educate HUD customers
about ways to reduce energy costs.

Policy Development and Research
8.1 Conduct energy-related policy analysis and research to support Departmental energy efficiency actions.

Office of Healthy Homes and Lead Hazard Control
9.1 Develop computerized assessment tool for integrated energy and environmental retrofits.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

for additional rating points in the SuperNOFA. Nine programs have provided incentives
for applicants who agreed to make use of the Energy Star label for homes or products in
designing or operating their projects. These included the Section 202 housing program for
seniors, the Section 811 program for people with disabilities, the Brownfields Economic
Development Initiative, the Rural Housing Economic Development Program, Housing
Opportunities for Persons with AIDS, Youthbuild, and University Partnerships.
Separately, HOPE VI provided a point for energy efficiency in its FY 2005 and FY 2006
Notices of Funding Availability (NOFAs). Especially important, from the point of view of
assisted housing, was the rating point for energy efficiency included in the FY 2005 and
FY 2006 Section 202/811 NOFAs.
Planned Action: Energy efficiency will continue to be a policy priority in the FY 2007 and
FY 2008 SuperNOFAs. Individual competitive grant programs will continue to award
rating points for proposals that adopt energy-efficient products and practices in planned
housing projects. To improve the process, HUD’s Energy Task Force will explore with
program offices the feasibility of identifying suggested energy measures in awarding
competitive points for energy efficiency activities and assist applicants in addressing
energy efficiency. In addition, during FY 2007 the Energy Task Force will review its
experience with the previous year’s incentives. The Office of Community Planning and
Development’s NOFA for its technical assistance programs may address energy efficiency
technical assistance activities supportive of HUD’s HOME and Community Development
Block Grant (CDBG) programs.

1.2

Include energy efficiency performance measures
in HUD’s Annual Performance Plan and Management Plan.

Progress to Date: In FY 2005 and FY 2006, energy efficiency was included in HUD’s
Annual Performance Plans (APPs) and the supporting Management Plans. Also, most of
HUD’s field offices included energy efficiency measures in their Management Plans,
resulting in more than 250 energy-related events or activities being reported through the
HUD Integrated Performance Reporting System.
Planned Action: As will be discussed in Section IV of this report to Congress,
performance measures that set energy reduction outcomes or goals and gauge
improvements in energy efficiency will be considered for inclusion in HUD’s future APPs
and, where feasible, in future Management Plans. Performance measures that involve a
change to Indian Housing Plans must be submitted for tribal consultation before adoption.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

1.3

Promote the use of Energy Star products and standards
through HUD’s new Partnership for Home Energy Efficiency
with DOE and EPA.

Energy Star is a voluntary labeling program that identifies and promotes energy-efficient
products in the marketplace. The 31 types of Energy Star-labeled products together can
improve the energy efficiency of an average home by as much as 30 to 40 percent. 15
Energy Star-labeled products include washers and dryers, refrigerators, windows, heating
and cooling equipment, and lighting fixtures and bulbs.
Progress to Date: Information on Energy Star products and standards for new homes has
been placed on HUD’s website at www.hud.gov/energy, and Energy Star brochures were
distributed to HUD field offices for dissemination at homeownership fairs and other
events. In addition, the Office of Public and Indian Housing (PIH) created a Public
Housing Energy Conservation Clearinghouse for PHAs that included information on
Energy Star. Then-HUD Secretary Mel Martinez signed a memorandum of understanding
on Energy Star with the EPA and DOE in September 2002 that resulted in a website that
could be used by public and assisted housing for bulk purchasing of Energy Star products
and other joint activities. In July 2005, HUD Secretary Alphonso Jackson announced a
new Partnership for Home Energy Efficiency with DOE and EPA to promote the use of
Energy Star products in existing housing by homeowners, renters, PHAs, and others.
Planned Action: HUD will work with EPA and DOE to ensure that information on Energy
Star products and appliances, Energy Star Qualified New Homes, and “Home Performance
with Energy Star” (for existing homes) is available for distribution to field staff, PHAs,
formula and competitive grant recipients, property managers, and, where feasible, new
Federal Housing Administration (FHA) homebuyers. 16

U.S. Environmental Protection Agency and U.S. Department of Energy, Saving With Energy Star, EPA 430-F97-037, February 1997. For savings for individual Energy Star-labeled products, see www.energystar.gov.
16 Home Performance with Energy Star is a whole-house Energy Star retrofit initiative aimed at existing homes in
selected U.S. markets.
15

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

1.4

Provide training or information on energy efficiency to
residents or organizations building or rehabilitating
affordable housing.

Progress to Date: A significant effort has been undertaken to coordinate outreach and
information to educate HUD customers and partners on opportunities for energy efficiency.
Actions included: distributing 100,000 Owning Is Just the Beginning booklets to housing
counseling agencies to assist them in counseling homebuyers and homeowners on proper
budgeting for, and management of, utilities as a key cost of homeownership; developing an
Internet-based training curriculum for HOME grantees; developing a new web tool, the
Energy Rehab Advisor, to provide homeowners, multifamily property owners, and PHAs
with guidelines for incorporating energy efficiency in their housing rehabilitation projects;
creating a new website for HUD customers and grantees at www.hud.gov/energy; and
issuing a quarterly e-newsletter to provide information on events and resources of interest
to HUD staff and partners.
Over the past 2 years, regional or statewide energy conferences were held in Birmingham;
Los Angeles; Pittsburgh; Indianapolis; Charlotte; Richmond; Wilmington, Delaware; and
several other locations. In addition, several specialized training workshops were
conducted on energy efficiency operations and energy performance contracting. A
national training workshop and satellite broadcast to HUD field offices was held at HUD
Headquarters, during which Deputy Secretary Roy A. Bernardi delivered the keynote
speech.
Planned Action: HUD’s Energy Task Force will develop standard training program
modules to promote energy efficiency in both new and existing HUD-assisted and financed
housing. The training program and plan will be developed in conjunction with national
intermediaries, including the Local Initiatives Support Corporation, Habitat for Humanity,
Enterprise Community Partners, and the Neighborhood Reinvestment Corporation. The
training will address no-cost or low-cost energy efficiency strategies, best practices in
energy-efficient asset management, energy efficiency financing strategies, HUD program
options for promoting energy efficiency, resource leveraging opportunities, energy
efficiency strategies and techniques for nonprofit and faith-based organizations, and green
building practices. PIH will develop materials for PHAs to disseminate to residents on
ways to improve household energy efficiency.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

1.5

Establish residential energy partnerships with cities, counties,
states, and other local partners.

Planned Action: The Energy Task Force will identify opportunities to implement energy
partnerships with local communities (cities, counties, states, the private sector, and
nonprofit partners) as part of the HUD-DOE-EPA Partnership for Home Energy
Efficiency. These partnerships will facilitate the implementation of HUD activities to
reduce energy consumption in residential buildings. The task force will work with federal
and state agencies to develop regional strategies for providing technical and program
resources and services to external partners (industry, local governments, and nonprofit
agencies) and to promote more extensive use of Energy Star-labeled products and
construction practices. Energy partnerships will be developed by program offices with
their customers and partners or with the Office of Field Policy and Management playing a
facilitating role. Specific partnership goals will be considered for inclusion in the FY 2007
and FY 2008 Management Plans.

2. Community Planning and Development (CPD)

2.1

Encourage energy efficiency in HOME- and CDBG-funded
new construction and housing rehabilitation projects.

High energy costs significantly affect the affordability of housing and may contribute to
housing defaults and homelessness. High energy costs also can have an adverse affect on
local government programs and service and—since a large share of every dollar spent on
energy leaves the communities—can dampen local economic conditions. Conversely,
energy efficiency programs create opportunities for increasing housing affordability,
improving local fiscal conditions, and promoting economic growth.
Progress to Date: The HOME program has developed an Internet-based training module
on energy efficiency. Each Community Planning and Development (CPD) field office
distributed Energy Star information to CDBG and HOME grantees in their areas. One
field office, Boston, followed up with a training workshop and telephone consultations,
resulting in the adoption of Energy Star by 39 grantees and a reported 2,700 affordable
housing units in the region that met the Energy Star Qualified New Home label. In North
Carolina, HOME funds have been used to finance energy-efficient, high-performance new
construction in more than 800 new homes.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Planned Action: Beginning in FY 2007, CPD will track the number of units built with
HOME and CDBG funds to Energy Star standards through the Integrated Disbursement
and Information System (IDIS). A final rule on the IDIS performance measures that was
published in February 2006 will implement the new reporting requirements in FY 2007.
Actions that CPD will take to promote Energy Star will include holding workshop sessions
that present an “Energy Star for Grantees” presentation 17 using knowledge from Energy
Star experts and grantees who have adopted Energy Star for new homes (or its equivalent
for multifamily buildings) as the guideline for construction or major rehabilitation; revising
the basic HOME training course to strengthen Energy Star coverage; and providing Energy
Star guidance in the 15 workshops to be held in rollout sessions on the new IDIS
performance measurement system.

2.2

Identify opportunities and assist with feasibility analysis for
Combined Heat and Power in public or assisted housing.

Combined heat and power (CHP), also known as cogeneration, is a highly efficient form of
electric generation that recycles and uses heat that is normally lost by conventional power
generation methods. The President’s National Energy Policy recommends expanding the
use of this form of energy.
Progress to Date: CPD signed an interagency agreement with the Oak Ridge National
Laboratory (Oak Ridge) to promote CHP in public and assisted housing. Two guides were
developed that answered questions regarding CHP in multifamily housing and included
worksheets to conduct feasibility screening and determine estimated paybacks. Oak Ridge
developed the software for the feasibility analysis worksheets for use by multifamily
owners. DOE’s Regional Application Centers participated in a variety of workshops and
other educational activities, including a congressional briefing on CHP in multifamily
housing in September 2005.
Planned Action: CPD will extend the interagency agreement with Oak Ridge and continue
to work with DOE and EPA to support the use of CHP in public and assisted multifamily
housing.

3. Public and Indian Housing (PIH)
In addition to funding incentives related to conservation, there are four major regulations
on utility conservation in public housing. HUD requires PHAs to conduct energy audits at
least every 5 years (24 CFR 965.302) and to undertake all identified cost-savings measures
17

See http://www.hud.gov/offices/cpd/library/energy/energystargrantees.ppt.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

as funds become available (965.307). PHAs must also purchase equipment that meets
DOE standards for energy efficiency (965.306) and individually meter household utilities
where feasible (965.402).
Transition to Asset Management
HUD’s revised Operating Fund rule at 24 CFR 990 establishes a new formula for
determining operating subsidies for PHAs and introduces asset management as a new
business model for public housing. 18 Implementing asset management will lead to better
management and oversight of public housing by providing improved information about the
operating costs and performance levels of each public housing project. 19
The move to asset management represents a significant change, and is designed to bring
public housing more in line with building operation and management models commonly
found in private housing to increase accountability and reduce expenditures. According to
the new Operating Fund rule, HUD will calculate and obligate operating subsidies on a
property-by-property basis. PHAs will submit annual financial statements for each
property and charge properties for services actually performed.
The revised rule affects all PHAs. PHAs with fewer than 250 units that do not choose to
adopt asset management will still be subject to the new funding formula. One of the rule’s
primary goals is to give greater attention to the financial, physical, and management
performance of each public housing project or property. Under the Operating Fund
system, housing authorities are funded on the basis of agency-wide costs and expenses.
Beginning in FY 2008, they will be funded on a project-by-project basis.
The shift to asset management will take place over the next several years, while the new
funding formula for determining operating subsidies will be implemented in calendar year
2007. In that first year, to assist with the transition, the new formula will be applied at the
agency level, using a weighted-average project expense level. In calendar year 2008, the
new formula will be applied at the project level. The new project-based accounting
budgeting and management requirements will take effect beginning July 1, 2007, and “cost
reasonableness” provisions will take effect beginning July 1, 2008. The new project-based
performance assessment system will be implemented no later than the second year of
project-based accounting.

“Revisions to the Public Housing Operating Fund Program, Final Rule,” published in the Federal Register on
September 19, 2005 (79 FR 54983), and “Revisions to the Public Housing Operating Fund Program; Correction to
Formula Implementation Date,” published in the Federal Register on October 24, 2005 (70 FR 61366).
19 U.S. Department of Housing and Urban Development, Preparing for Asset Management Under the New Public Housing
Operating Fund Rule, p. 1, June 1, 2006.
18

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Implications for energy management
The change to property-level reporting will fill an information gap for utility data.
Reporting utility consumption by property will enable PHAs and HUD to gather data to
more correctly determine utility costs, prove cause and effect in cost and energy reduction,
and apportion funds fairly. The move to asset management will encourage additional
PHAs to take advantage of financial incentives and strategies for reducing utility
consumption, such as energy performance contracts.
Energy Policy Act Provisions
The Energy Policy Act of 2005 (the Act) enacted by Congress in 2005 contains several
provisions that affect public housing. HUD has issued a notice implementing Section 151
of the Act, which increases the allowable term for energy performance contracts to 20
years, to “allow longer payback periods for retrofits, including windows, heating system
replacements, wall insulation, site-based generation, advanced energy savings
technologies, including renewable energy generation, and other such retrofits.”
HUD expects to implement additional provisions of the Act through regulation. In
FY 2007, Section 152 of the Act requires that “in purchasing appliances, a public housing
agency shall purchase energy-efficient appliances that are Energy Star products or FEMPdesignated…unless the purchase of energy-efficient appliances is not cost-effective.” 20
Section 153 of the Act requires HUD to establish the 2003 International Energy
Conservation Code (IECC), a higher standard than the current 1992 Model Energy Code
(MEC), as the standard for new HOPE VI projects.

3.1

Base appliance and product purchases in public housing on
Energy Star standards, unless the purchases are not cost
effective.

As noted above, the Act requires PHAs to adopt Energy Star or Federal Energy
Management Program-designated products as the standard for procuring products and
appliances (unless it is not cost effective to do so). Products purchased by PHAs likely to
be impacted by this provision will include lighting, refrigerators, washers and dryers,
windows, furnaces, and other products receiving the Energy Star label. 21
Progress to Date: In July 2005, PIH issued a notice that encourages PHAs to purchase
Energy Star products. PIH did so after determining that, absent formal rulemaking or
statutory authority, a more prescriptive requirement was not feasible. The notice (PIH 200520
21

FEMP—Federal Energy Management Program.
For a full list of Energy Star-labeled products and appliances, see www.energystar.gov.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

25) encouraged PHAs to buy Energy Star appliances when it is cost effective to do so,
stating that “PHAs should purchase Energy Star equipment (e.g., refrigerators and air
conditioners) unless this results in energy savings to the authority that are insufficient to
repay the initial higher costs over the expected life of the equipment.” 22 The notice also
states that PHAs “should purchase Energy Star-labeled products (e.g., windows), and
ensure that any new buildings are constructed to Energy Star standards (unless the PHA
determines that the incremental cost results in a negative life cycle cost).” In addition, PIH
promoted the use of Energy Star through PHECC.
Planned Action: In FY 2007, PIH will publish a regulation to implement the provision of
the Act establishing Energy Star as the standard for PHA procurements, unless it is not
cost effective. The regulation will establish Energy Star as the standard for purchasing
refrigerators, lighting, furnaces, washers and dryers, and other equipment when such
purchases result in energy savings that, over the expected life of the equipment, meet or
exceed any incremental cost increase of purchasing and maintaining Energy Star products.
Field offices will host events promoting Energy Star and other energy efficiency
opportunities. In addition, PIH will continue to provide information to PHAs through
PHECC, and HUD Headquarters will contract to conduct an analysis of the impact of
Energy Star on PHAs.

3.2

Build HOPE VI developments to a
high level of energy efficiency.

The 2005 Energy Policy Act requires that all HOPE VI projects be built to an energy
standard that meets or exceeds the standards set by the 2003 International Energy
Conservation Code (IECC). This requirement represents a significant increase in energy
efficiency over the existing standard for construction of new housing built with HUD
funds, the 1992 Model Energy Code.
Progress to Date: For the past 3 years, HUD has included language in its NOFAs
encouraging the adoption of Energy Star in new HOPE VI projects, and for the past 2 years
(FY 2005 and FY 2006) has provided a rating point incentive in its NOFA for energy
efficiency. During FY 2005, 10 percent of HOPE VI construction projects were surveyed
to determine implementation of Energy Star initiatives, and best practices were compiled
for distribution to all PHAs. PIH staff provided information on EPA’s Builder Option
Packages and additional Energy Star information during initial site visits for new grantees.
One project, Maverick Gardens in Boston, with support from the State of Massachusetts, is
an outstanding example of energy efficiency and includes a renewable energy component
(photovoltaics), as well as cogeneration. In addition, several HOPE VI projects in
22

PIH Notice 2005-25, Using Energy Star to Promote Energy Efficiency in Public Housing, July 13, 2005.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

New Jersey have adopted the standard for Energy Star Qualified New Homes (using state
rebates) as have additional projects in Milwaukee, Louisville, and other locations.
Planned Action: Pursuant to the Act, PIH will publish a proposed regulation establishing
the 2003 IECC as the minimum standard for HOPE VI housing. At the same time, PIH
will continue to provide a rating point incentive for new HOPE VI grant awards, for
projects meeting the higher standard for Energy Star Qualified New Homes. PIH will also
encourage Energy Star as the standard for previously awarded HOPE VI projects that are
still in the planning stages. PIH will also monitor 15 current HOPE VI construction
projects to assess implementation of energy conservation measures as part of the
construction phase and encourage the use of Energy Star appliances and equipment where
it is cost effective to do so. Best practices compiled in FY 2005 and FY 2006 will be
distributed to PHAs and project sponsors, who will be encouraged to emphasize
implementation of energy conservation in all aspects of HOPE VI construction and
operation.

3.3

Improve tracking and monitoring of
energy efficiency in public housing.

PIH regulations require PHAs to conduct an energy audit every 5 years and incorporate the
most cost-effective energy efficiency measures into their capital plans. PHAs report
agency-wide utility expenditures to HUD in their annual financial reports. The absence of
project level data in the PHA-wide reports on utility expenditures has made it difficult to
set benchmarks for energy efficiency outcomes or goals, to identify top or poor performers,
or to track performance over time.
Progress to Date: PIH has initiated a long-term project to benchmark energy use in public
housing. PIH contracted with a firm to initially benchmark energy use in the Northeast
and, subsequently, in all regions. This long-term project is being developed as part of the
shift to asset management in public housing and will enable PHAs to focus their resources
on those projects and buildings that are high energy users.
In addition, under asset management, PHAs will report project-based utility consumption
and expenditures in an automated system. This system will provide PHAs with data that,
when adjusted for weather conditions, will provide an indicator of the relative efficiency of
individual properties, and their potential for energy savings. It will also provide a baseline
to enable PHAs to measure savings in the future.
Planned Action: PIH will provide guidance through notices on energy auditing standards,
through approaches for leveraging PHA operating and capital resources to implement
energy efficiency programs, and through information on Public Housing Energy

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Conservation Clearinghouse. PIH will continue its benchmarking initiative as part of the
overall shift to asset management.

3.4

Streamline energy performance contracting
in public housing.

Authorized by Congress in 1987, energy performance contracting is an important vehicle
for carrying out energy efficiency in public housing. An energy performance contract is an
agreement with a private energy services company that, after performing an energy audit,
provides financing for energy efficiency measures, oversees the installation of these
measures, and provides long-term services, such as monitoring of energy use, training of
maintenance staff, and energy education of residents. Typically, the company guarantees a
certain level of savings and “shares” the savings with the PHA.
Progress to Date: In response to the call in HUD’s Energy Action Plan for streamlining
the approval process for energy performance contracts, PIH has developed new protocols
and instituted a streamlined review process for energy performance contracts. The new
protocols require field offices to review contract proposals within 45 days of receipt, and
waivers are no longer required for tenant-paid utilities. In addition, PHA and PIH staff
have participated in numerous workshops, providing training on energy performance
contracting for interested PHAs. As a result, the number of requests for proposals from
PHAs for energy performance contracts has increased significantly. Rather than
consolidating the review of performance contracts into one or more field offices, PIH took
steps through training workshops, technical support, and new protocols to strengthen field
office capacity to review proposals.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

A recent survey of energy performance contracts of HUD field offices showed the
following gains between FY 2000 and FY 2006: 23
•
•
•

The number of PHAs with energy performance contracts has increased by an
average of 20.4 percent per year.
The number of energy performance contracts has increased by an average of 22.7
percent per year.
Total energy performance contract investment has increased by an average of 24.2
percent per year.

The number of PHAs with such contracts has doubled since 2002. Table 3 illustrates the
distribution of these contracts. As of 2006, 117 PHAs have undertaken or are implementing
132 performance contracts. Note that only 10 of these, less than 10 percent of all contracts,
are with smaller PHAs of fewer than 250 units, which make up almost two-thirds of all PHAs.
Of the 151 larger PHAs (those with more than 1,250 units), approximately one-third has
initiated energy performance contracts.
Table 3. Number of PHAs With Energy Performance Contracts

Very Small (<250)
Small (250–499)
Medium (500–1,249)
Large (1,250–6,599)
Very Large (>6,599)
Total

PHAs
2,341
433
249
133
18
3,174

2000
2
14
6
16
4
42

2002
2
18
13
21
4
58

2004 2006 Percent
5
10
0.4
20
29
6.7
27
35
14.0
28
37
28.0
6
6
33.0
86 117
3.7

Note: Includes all PHAs with multiphase projects.
PHAs = public housing agencies.

The dollar investment (and accompanying energy savings) has also dramatically increased
since 2002. As shown in Table 4, total investment increased from $170.6 million in 2002 to
$350.7 million in 2006, with a projected guaranteed annual energy savings of $37.6 million,
up from $13.4 million in 2000, as shown in Table 5.

23 Survey

conducted in 2006 by Office of Public and Indian Housing.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Table 4. Investment in Energy Performance Contracts by PHAs
($M)
2000
($)
2.0
6.2
10.7
53.7
35.2
107.8

Very Small (<250)
Small (250–499)
Medium (500–1,249)
Large (1,250–6,599)
Very Large (>6,599)
Total

2002
($)
2.0
8.9
21.7
87.8
50.2
170.6

2004
($)
3.0
9.9
45.2
119.5
68.0
245.6

2006
($)
6.1
20.5
65.0
191.2
68.0
350.7

Note: Includes energy financing and other known sources.
PHAs = public housing agencies.

Table 5. Savings Through Energy Performance Contracts by PHAs ($M)
2000
($)
0.2
0.9
0.8
7.2
4.3
13.4

Very Small (<250)
Small (250–499)
Medium (500–1,249)
Large (1,250–6,599)
Very Large (>6,599)
Total

2002
($)
0.2
1.5
2.1
10.2
5.7
19.7

2004
($)
0.3
1.6
4.5
13.6
7.1
27.1

2006
($)
0.6
2.7
6.5
20.7
7.1
37.6

Note: Includes energy financing and other known sources.
PHAs = public housing agencies.

Planned Action: PIH will continue to support energy performance contracting as a vehicle
for implementing energy efficiency. Field offices will continue to streamline the
procedures for reviewing energy performance contracts so that they are reviewed in a
timely manner. Actions to be taken will include revising regulations at 24 CFR 965 to
address the provisions of the Act, implementing the provisions of the notice extending
performance contracts from 12 to 20 years as required by the Act, implementing new
quality assurance initiatives that will track energy performance contract activity, and
updating regulations to ensure consistency with other regulatory changes. PIH also will
support extending energy performance contracts to smaller PHAs through “aggregated”
contracts involving multiple smaller PHAs.
To further encourage energy and utilities conservation, HUD is working with PHAs
wishing to act as their own agent and serve as their own performance contractor. The PHA

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

is required to use independent professional engineering support before entering into a
performance contract or incurring its own debt for an energy project. PHAs normally
accomplish the work handled by performance contractors, such as conducting energy
audits installing insulation and more efficient heating equipment. The Harvard University
Graduate School of Design’s Public Housing Operating Cost Study recommended that
PHAs be allowed to use the same incentives available under performance contracting.
Expanding opportunities for energy performance contracts have the benefits of serving a
larger number of PHAs, particularly small- to medium-sized PHAs, thereby increasing
competition in the marketplace and job creation in the local economy.

3.5

Promote energy conservation in federally assisted housing
on Indian tribal lands.

Title V, “Indian Energy,” of the Act contains Section 506, “Energy Efficiency in Federally
Assisted Housing.” This section directs the HUD Secretary to promote energy
conservation for federally assisted housing on Indian lands through, among other things,
the use of energy-efficient appliances, technologies, innovations, and the promotion of
shared energy savings contracts.
Progress to Date: HUD’s Office of Native American Programs (ONAP) has undertaken a
wide range of activities, as detailed below, that promote energy efficiency in Indian
housing.
Planned Action: ONAP will continue its ongoing energy-related activities and accomplish
these objectives through a wide range of actions. ONAP will offer a one-point incentive in
its competitive grant programs for applications that address Energy Star goals. In the
FY 2006 Indian Community Development Block Grant NOFA, Rating Factor 3
(Soundness of Approach) will offer a one-point incentive for applications that address
HUD’s Energy Star goal.
The Northern Plains ONAP will work with EPA’s Office of Pollution Prevention and
Toxics on a Green Team training collaboration. The Northwest Plains ONAP will provide
technical assistance to emphasize green/energy-efficient design and construction with a
focus on assessing existing “green housing,” developing a training program, providing
technical assistance, and conducting workshops to share information on innovative projects
that are occurring in the Pacific Northwest. A training manual will be developed for use in
all other ONAP regions.
ONAP’s current Mold Prevention Initiative includes onsite technical assistance and the
physical inspection of housing units. This process includes the use of blower door tests to
monitor the airflow through housing units. Blower door tests help identify air leaks and

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

the need for additional weatherization. In addition, training sessions conducted under the
Mold Prevention Initiative include a thorough discussion of recommendations for tribes
and Tribally Designated Housing Entities (TDHEs) to become more energy efficient
without compromising indoor environmental quality.
To support energy efficiency, the Northern Plains ONAP is establishing relationships with
the DOE Tribal Energy Program, the Department of the Interior’s (DOI) Division of
Energy and Mineral Development, the University of Colorado, the National Renewable
Energy Laboratory, and others.
ONAP has retained a contractor to perform energy surveys at housing entities. As an
adjunct to its study of Indian housing costs, ONAP will expand its onsite work to conduct a
more complete review of housing-related utility costs. The study will include an analysis
of utility costs and recommendations for reducing those costs. The contractor will provide
onsite expertise and submit a written report to the housing entity. On completion of the
surveys, the contractor will provide a more comprehensive report to HUD addressing
common problem areas and recommended solutions. ONAP will forward the report to all
tribes and TDHEs.
ONAP’s Section 184 Indian Housing Loan Guarantee program will explore marketing
Energy Efficient Mortgages (EEMs) as a priority loan product. ONAP will also continue
discussing collaboration and potential partnerships on renewable energy resources and
geothermal energy with DOI’s Office of Indian Energy Resource Development and the
Bureau of Indian Affairs’ Office of Policy and Economic Development.
ONAP’s 2005 National Indian Housing Summit featured a parallel 3-day track on
“Designing and Building Healthy Communities.” It emphasized intertribal and
interagency collaboration and networking on these subjects. The participants could form
the core for future discussions on those topics.

4. Housing—FHA Single Family

4.1

Feature the Energy Efficient Mortgage (EEM)
as a priority loan product.

FHA’s Energy Efficient Mortgage helps homeowners reduce energy costs by providing a
means to finance energy improvements during time-of-sale, refinancing, and rehabilitation
transactions. An EEM enables homebuyers to borrow a minimum of $4,000 and a
maximum of 5 percent (up to $8,000) of the home’s appraised value to finance energy
efficiency improvements. Cost-effective energy improvements result in lower utility bills,
thereby freeing up additional household income for mortgage payments.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Progress to Date: During 2005, FHA issued Mortgagee Letter 2005-21, which
consolidated existing policies and established the 2000 IECC as the standard for energyefficient residential construction. In addition, Mortgagee Letter 2005-50 was issued,
enhancing the “Streamlined (k)” Limited Repair Program. The program encourages
homebuyers and owners to undertake weatherization measures that may help conserve
energy and reduce utility expenses. FHA also provided training to lenders as part of their
regular lender training programs and developed a brochure (HUD 2005–07-FHA) titled
“HUD’s Energy Efficient Mortgage Program.” FHA also improved its reporting
procedures, providing a more accurate count of FHA-insured EEMs. (See Action 4.3
below).
Planned Action: Through HUD’s four Homeownership Centers, FHA will take steps to
increase consumer awareness of EEMs, including promoting the use of the EEM with the
203(k) rehabilitation program, as well as other single-family loan products. FHA will
continue EEM marketing efforts, providing information to industry partners, such as
lenders, housing counseling agencies, and real estate agents.

4.2

Provide training on how FHA single-family programs can be
effectively used to promote energy efficiency.

Planned Action: FHA will conduct outreach and provide guidance and training for
housing professionals (for example, underwriters, realtors, appraisers, home inspectors,
and program support staff) on FHA’s programs promoting energy efficiency. HUD’s
Office of Single Family Housing has developed an effective and comprehensive
presentation on the Energy Efficient Mortgage program that is available for use in
promoting the program at industry events. FHA guidance and training will provide
recommendations for facilitating energy efficiency as part of time-of-sale, rehabilitation,
and refinance transactions.

4.3

Continue improved tracking and evaluate performance
of Energy Efficient Mortgages.

Progress to Date: FHA implemented revised tracking procedures for EEMs and, as a result,
generated much more accurate counts of EEM activity in the Computerized Homes
Underwriting Management System (CHUMS). The new reporting procedures indicate that
441 EEMs were insured in FY 2005 and 470 have been insured in FY 2006 (through June
2006).

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Planned Action: FHA will continue to implement the improved method for tracking EEMs
through CHUMS that was developed in 2004. FHA will generate quarterly reports
documenting the number of EEMs insured each quarter, broken down by region and state.
Subject to funding availability, the Office of Policy Development and Research (PD&R)
and FHA will also assess FHA’s experience with EEMs to determine the relative risk of
default and claims for this mortgage product compared to other types of FHA mortgages.

5. Housing—FHA Multifamily

5.1

Promote energy efficiency in assisted multifamily housing
programs.

Progress to Date: The Office of Multifamily Housing helped organize a number of
energy training workshops for managers and operators of multifamily buildings.
Planned Action: To promote energy efficiency in multifamily housing, the Office of
Multifamily Housing will incorporate the Energy Action Plan in meetings with
industry partners to promote energy efficiency in HUD-assisted properties and
encourage FHA mortgage insurance applicants to utilize Energy Star products and
new construction standards.

5.2

Continue HUD-DOE multifamily
weatherization partnerships.

Many low- to moderate-income recipients of HUD assistance also qualify for DOE’s LowIncome Weatherization Assistance program. Accordingly, HUD has initiated partnerships
with the overall DOE weatherization program to improve the energy efficiency of HUD
properties. The partnerships are modeled on those that successfully leveraged millions of
DOE funds for assisted properties in New York.
Progress to Date: HUD continues to partner with the New York State Energy Research
and Development Authority on retrofits of assisted multifamily buildings in the State of
New York through the Assisted Multifamily Program. In addition, new multifamily pilot
projects were initiated, including one in St. Louis, Missouri. The other was initiated in
Fresno, California, where a local weatherization program funded through utility public
benefit charges was tapped for this purpose.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Planned Action: HUD and DOE will continue to identify additional weatherization
partnership opportunities. The Office of Multifamily Housing will recommend suitable
candidate projects to participate in the Weatherization Pilot Partnership, based on
information provided to the Office of Multifamily Housing by DOE through PD&R. The
Energy Task Force will identify energy partnership opportunities to assist multifamily
properties to undertake energy efficiency improvements. The resources will include, in
addition to DOE-Weatherization Assistance program funds, low-income housing energy
assistance weatherization funds, Clean Energy Funds, utility-sponsored energy efficiency
programs, and other state and local energy efficiency programs and services. To the extent
feasible, the Office of Multifamily Housing will consider options to capitalize energy
efficiency improvements, including flexible use of reserves, rent increases, budget
adjustments, or other suitable asset management strategies.

5.3

Encourage use of Energy Star new home standards in the
design, construction, and refinancing of Sections 202 and 811
projects.

HUD Sections 202 and 811 projects for elderly and disabled people provide housing to
many low-income households on fixed incomes. As a result, many nonprofit providers
cover utility costs as part of tenant rent. Undertaking energy efficiency improvements to
lower operating costs and mitigate risks associated with rising utility costs is an essential
step for ensuring the long-term viability of these properties.
Progress to Date: A rating point was included in the 2005 and 2006 Section 202 and 811
NOFAs to create an incentive to achieve energy efficiency in new housing for seniors and
people with disabilities. As a result, all applicants who propose to promote energy
efficiency in the design and operation of the project (including the adoption of Energy Star
Qualified New Homes as the standard for new construction) receive one point in the rating
of their applications.
Planned Action: HUD will encourage energy efficiency in housing developed under the
Section 202 and 811 programs and will continue to include competitive points for energy
efficiency in the annual NOFAs. The Office of Multifamily Housing will work with the
Energy Task Force in establishing energy efficiency rating criteria for future NOFAs. For
projects undergoing refinancing, the Office of Multifamily Housing will consider
encouraging energy audits in conjunction with physical assessments, by encouraging
property owners to undertake energy efficiency improvements in conjunction with
refinancing transactions. The Energy Task Force will assist the Office of Multifamily
Housing in identifying possible technical resources to help property owners design
effective energy improvement strategies.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

5.4

Develop incentives for energy efficiency through FHA
multifamily insurance programs.

Planned Action: HUD will explore incentives for new applications for mortgage insurance
or projects seeking refinancing to adopt Energy Star (or its equivalent for mid- or low-rise
multifamily buildings). For affordable housing projects developed by nonprofit or faithbased organizations, the Office of Multifamily Housing will examine the feasibility of
providing incentives to capitalize Energy Star new construction requirements.

5.5

Explore asset management strategies and guidance for energy
efficiency in HUD-subsidized multifamily properties.

Planned Action: HUD’s Energy Task Force, with assistance from the Office of
Multifamily Housing, will explore the development of informational guidelines for both
property managers and HUD staff involved in implementing energy efficiency
improvements. The guidelines for property managers will describe “low cost/no cost”
energy efficiency strategies and techniques, including adopting Energy Star product
purchasing policies. Guidelines for staff will discuss approaches HUD staff or contractors
can use to support energy efficiency improvements such as flexible use of reserves for
replacement. The guidelines will also discuss conditions under which project budget
adjustments and project rent increases can be employed to finance improvements that
reduce energy consumption, and conditions under which properties can secure low-interest
financing from outside lending sources for energy-related improvements. The Office of
Multifamily Housing will review these guidelines for possible incorporation in a revised
Chapter 12 (Energy Conservation) of Multifamily Handbook 4350.1. 24

Chapter 12, Energy Conservation, of Multifamily Handbook 4350.1, Rev.1, Multifamily Asset Management and Project
Servicing.

24

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

5.6

Support energy efficiency training for multifamily
managers and maintenance staff.

Because energy expenditures account for as much as 40 percent of total multifamily
building operating costs, significant energy savings can be achieved by improving
monitoring and maintaining existing equipment. A program sponsored by New York State
has successfully trained multifamily building managers and maintenance staff in low- or
no-cost energy management techniques using a workbook developed by HUD in 1998.
Progress to Date: In 2005, four training workshops for property managers and
maintenance staff were held in Pittsburgh, Chicago, Boston, and Denver. In addition,
several multifamily training workshops were conducted in California through a program
approved by the California Public Commission and funded by utility-rate payers.
Planned Action: Subject to available funds, HUD will work with multifamily trade
organizations to offer, promote, and advertise hands-on training on energy-efficient
property management practices for multifamily building managers and operators. The
Office of Multifamily Housing will help the Energy Task Force and trade associations
organize effective training programs. With limited sources of funding to support training
of this kind, the Energy Task Force will explore possible cosponsorships or partnerships
with trade and other organizations to carry out this activity.

6. Housing—Manufactured Housing

6.1

Implement energy efficiency recommendations
of the Consensus Committee in HUD-code homes.

The HUD Code regulates the design and construction, strength and durability,
transportability, fire resistance, energy efficiency, and quality control of manufactured
housing. New rules for manufacturers took effect in October 1994, including upgraded
energy standards. Manufactured homes built after that date must have the following:
higher insulation levels for ceilings, floors, or walls (from R-11 for floors and walls in
Thermal Zone 1 to R22 in Thermal Zone 3); double-pane windows in Thermal Zone 3;
ventilation fans in kitchens and bathrooms; and a whole-house ventilation rate of 0.10 air
changes per hour. 25 HUD also updated the climate zone maps for manufactured housing.
When added to the average natural ventilation rate for new manufactured homes of 0.25 air changes per hour, this
ventilation rate meets the 0.35 air changes per hour rate recommended by the American Society of Heating,
Refrigerating, and Air-Conditioning Engineers for residences.
25

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Under the Manufactured Housing Improvement Act of 2000, recommendations for
additional upgrades to the manufactured housing standards are the responsibility of a
private sector committee, the Manufactured Housing Consensus Committee (Consensus
Committee). The Manufactured Housing Improvement Act also permits the Department to
propose changes to the standards. A growing number of manufactured homes are being
built voluntarily to the standard for Energy Star Qualified New Homes, spurred in part by a
new $1,000 tax credit enacted by Congress in 2005.
Progress to Date: In November 2005, HUD published a final rule implementing the first
group of recommendations of the Consensus Committee, including particular energyefficiency improvements, such as updating whole house ventilation standards; adding an
option for condensation control; and installation of vapor retarders in hot, humid climates.
HUD also updated the reference to the American Society of Heating, Refrigerating, and
Air-Conditioning Engineers Handbook of Fundamentals from the 1989 version to the 1997
version.
Addressing the large number of units built before the adoption of the 1994 energy
standards, the Partnership for Advancing Technology in Housing (PATH) Technology
Roadmap for Factory Built Housing, published in January 2006, identified 6.75 million
manufactured homes that were built before 1994 and that are relatively inefficient. 26 To
address this stock, PATH published a guide to retrofitting older manufactured homes. 27
This practical guide contains energy-saving tips, techniques, and recommendations for
owners of existing manufactured homes.

See Road map on www.pathnet.org.
Manufactured Housing Research Alliance, Manufactured Housing: Saving Energy is Saving Money, August 2005, is
available at www.huduser.org.

26
27

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Planned Action: To improve particular energy efficiency aspects of manufactured home
construction. HUD will issue two proposed rules that revise the Manufactured Home
Construction and Safety Standards and which will include provisions recommended by the
Consensus Committee. 28 In addition, HUD has recently requested that the Consensus
Committee consider comprehensive updates to Subpart F—Thermal Protection and Other
Construction and Safety Standards to improve the energy efficiency of manufactured
homes. To address existing manufactured housing, the HUD’s Energy Task Force will
distribute and publicize the availability of the booklet, Manufactured Homes: Saving
Money by Saving Energy.

28

Proposed Changes to Manufactured Home Construction and Safety Standards (MHCSS).
Second Group
1. §3280.505 Air infiltration has been edited.
2. §3280.707(a)(2) would require gas and oil burning comfort heating appliances meet or exceed the National
Appliance Energy Conservation Act of 1987.
3. §3280.707(d) updates the energy efficiency requirements for water heaters to the National Appliance
Energy Conservation Act of 1987.
4. §§3280.714(a)(i) and (ii) propose changes to energy efficiency requirements for air-conditioners, and heat
pumps must comply with National Appliance Energy Conservation Act of 1987.
5. §3280.715(a)(7) would require R-4 duct insulation for Thermal Zone 1 and 2, and R-8 duct insulation for
Thermal Zone 3. (Note: the proposed changes to the MHCSS in Third Group would require R-8 duct
insulation for all ducts exposed to the outside air).
Third Group
1. §3280.103(a)(3) would require lineal fluorescent fixtures to use T-8 lamps or lamps of equal or greater
efficiency.
2. §3280.508(e) would require U values for glazing to be determined using the values in Table 5 in Chapter 29
of the 1997 American Society of Heating, Refrigerating, and Air-Conditioning Engineers Handbook of
Fundamentals.
3. §3280.715(a)(4)(i) provides air leakage limits for ducts.
4. §3280.715(a)(7) would require R-8 duct insulation for all ducts exposed to the outside air. (Note: the
proposed changes to the MHCSS in Second Group would require R-4 duct insulation for Thermal Zone 1 and
2, and R-8 duct insulation for Thermal Zone 3).
5. §3280.715(c) increases the requirements for sealing joints in ducts and references UL 181A, Closure
Systems for Use with Rigid Air Ducts and Connectors.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

7. Field Policy and Management (FPM)

7.1

Partner with local energy efficiency groups, HUD program
offices, and other agencies to educate HUD customers about
ways to reduce energy costs.

Progress to Date: In FY 2005, the Office of Field Policy and Management (FPM) played
an active role in promoting the Energy Action Plan. In FY 2005, FPM played an active
role in promoting the Energy Action Plan, with field offices conducting more than 250
events in support of it.
Planned Action: In cooperation with program areas and other federal and state agencies,
FPM will develop regional strategies to educate external partners (industry, local
governments, and relevant nonprofit agencies) about Energy Star and HUD’s Energy
Action Plan. To support the energy efficiency objectives and actions of HUD program
offices, FPM will help them develop local energy partnerships that facilitate
implementation of HUD activities to reduce energy consumption.

8. Policy Development and Research (PD&R)

8.1

Conduct energy-related policy analysis and research to
support Departmental energy efficiency actions.

Progress to Date: Through PATH field evaluations and demonstrations, the Office of
Policy Development and Research demonstrated and evaluated energy-efficient
technologies in new housing. Energy-efficient technologies that have been demonstrated
include a package of new technologies that, when combined in a single project, have the
potential for reducing energy consumption by 50 percent or more. These energy efficient
technologies include optimum value engineering framing; tankless domestic hot water
heaters; structural insulated panels; advanced panelized framing; low-emissivity glass
(low-e) windows; construction; insulation-buried ducts; sealed ducts; downsized heating,
ventilation, and air conditioning (HVAC) systems, including proper sizing using Manual J
guidelines; and other technologies.
Examples of PATH demonstrations that featured energy-efficient products or construction
techniques include an affordable, starter home north of Atlanta, Georgia, that achieved a
home energy rating system score of 89 (50 percent more efficient than conventional
construction) with panelized advanced framing, low-e windows, stud cavities with blown-in
cellulose, an inside-the-envelope air handling unit, and foamed and insulation-buried ducts.
Another PATH demonstration in Melbourne, Florida, featured energy efficient, hurricane-

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

resistant construction that included cast-in-place concrete walls, low-e windows, compact
duct design, and location of the air handling unit in conditioned space. In Warwick,
New York, a PATH demonstration project achieved a 50-percent energy savings over
conventional construction by including advanced framing, unvented crawlspaces, optimized
HVAC, tankless gas hot water heaters, and Energy Star appliances.29
Planned Action: Through the PATH program, PD&R will continue to undertake and
promote research into energy efficiency technologies. In the area of affordable housing,
PATH will sponsor research to implement the PATH Roadmap for Energy Efficiency in
Existing Homes, including a 3-year initiative to develop protocols for energy-efficient
remodeling. These protocols could be used in public or assisted housing or in
rehabilitation houses funded through HUD’s competitive or formula grant programs. In
addition, PATH will conduct a study, through an interagency agreement with EPA, of
opportunities for investing in energy efficiency in assisted multifamily housing.

9. Office of Healthy Homes and Lead Hazard Control (OHHLHC)

9.1

Develop computerized assessment tool for integrated
energy and environmental retrofits.

The Office of Healthy Homes and Lead Hazard Control (OHHLHC) will encourage costeffective techniques that jointly address energy efficiency and environmental, health, and
safety hazards in the home.
Progress to Date: OHHLHC published a report on the feasibility of an integrated energyefficient healthy home retrofit initiative to reduce home energy consumption by 30 percent
in 15 million homes, increase awareness of Energy Star products and performance
requirements, and also address a variety of housing-based environmental hazards, such as
lead, carbon-monoxide, residential fires, and allergens (including mold) associated with
asthma. OHHLHC also funded the development of Weatherization Plus Health protocols
for a combined weatherization/environmental Healthy Homes energy audit.
Planned Action: OHHLHC will fund the development of a computerized assessment tool
that combines energy efficiency, safety, and healthy homes measurements (referred to as
the Healthy Homes Energy Efficiency Assessment Tool). The tool will use criteria for
assessing existing healthy homes and integrate energy audit in one computerized program.
It is expected that the work will build on existing inspection, assessment, and energy audit
protocols. OHHLHC will finalize the computerized energy-efficient assessment tool and
pilot this tool in six residences at two locations (Greensboro, North Carolina, and Boston,
Massachusetts).
29

See Tech Practices, www.pathnet.org.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

IV. ENERGY REDUCTION GOALS AND INCENTIVES
Section 154 of the Energy Policy Act of 2005 requires that the U.S. Department of Housing
and Urban Development’s (HUD’s) Energy Strategy include the development of energy
reduction goals and incentives for PHAs.

Reduction Goals in Public Housing Under Asset Management
Energy reduction goals for public housing are meaningful if PHAs have a baseline against
which to measure performance against such goals. Such a baseline must provide
consumption data (for example, therms and kilowatt hours) in order to normalize energy use
for changes in weather conditions and fluctuating energy rates. Under the new asset
management rule at 24 CFR 1990, beginning in FY 2007 PHAs will begin to report utility
consumption data for individual properties in an automated system, the Subsidy and Grants
Information System, which is being tested for operating subsidies in 2007 and will be
implemented in 2008. Actual consumption data reported for individual properties will
provide the baseline information for each PHA to monitor the results of its energy
conservation programs.
HUD is evaluating a benchmarking approach that will enable PHAs to focus their resources
on those projects and buildings that are high-energy users. During FY 2007 and FY 2008,
HUD will use the results of the property consumption data reported under asset management
to consider establishing realistic energy reduction goals.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Tracking Indicators Included in the FY 2006 Management Plan
Table 6 identifies several energy-related performance indicators that are included in the
current (FY 2006) Management Plan.
Table 6. Performance Measures Included in the FY 2006 Management Plan
Office
Community
Planning and
Development

Office of Public
and Indian
Housing

Federal
Housing
Administration
(FHA)
Single Family
FHA
Multifamily
Office of Field
Policy and
Management
Office of Policy
Development
and Research

Indicator/Activity

Data Source

Goal/
Outcome

Support of Energy Task Force
as co-chair

Reported by
headquarters (HQ)

100%

Workshop sessions on Energy Star

Reported by field
offices

6

Number of Combined Heat and Power
feasibility assessments completed

Reported by HQ

6

Review energy performance contracts
within standard time frames

Contractor to
conduct survey

100%

Hold two Energy Star events per field
office

Reported by field
offices

92 events

Monitor 15 HOPE VI construction
projects
Determine if current audit exists, and
ensure an audit is completed within 12
months

Reported by field
offices

15 HOPE VI
projects

Reported by field
offices

500

Reported by HQ

None

Reported by field
offices and HQ

100%

Reported by field
offices

10 events

Reported by HQ

100%

Develop training that promotes
energy efficiency;
Take other actions to encourage
Energy Efficient Mortgages
Number of applicants encouraged to
adopt Energy Star;
Number of industry presentations
Number of events conducted with
program office participation;
Number of events conducted with
interagency participation
Continue support of Energy Task
Force;
Develop measures to track and
monitor energy savings;
Provide technical support

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

In addition to the above activities that are specifically referenced in the FY 2006 Management
Plan, the performance measures in Table 7 are being tracked separately by program offices.
These tracking indicators will provide data for calculating or estimating energy saved.
Table 7. Additional Performance Measures Being Tracked in FY 2006
Office
Office of Public and
Indian Housing

Federal Housing
Administration
(FHA)
Single Family
FHA
Multifamily

Indicator

Data Source

Number of PHSs adopting Energy Star

Survey

Number of energy performance contracts
and projected savings

Survey

Number of Energy Efficient Mortgages

Computerized Housing
Underwriting Management
System

Number of Section 202 and 811 projects
adopting Energy Star

Grant applications

Reduction Goals To Be Explored in FY 2007 and FY 2008
The Energy Task Force has identified possible tracking indicators that would allow
tracking of actual or estimated energy savings. These measures will be explored in
FY 2007 for possible implementation beginning in FY 2007 and FY 2008. A working
group will be established to explore the feasibility of these measures and to determine:
(1) whether there are systems in place (or that can be developed) to gather the information
needed, (2) that they do not impose extensive additional reporting requirements on
grantees, and (3) that they do not establish additional data collection or monitoring
requirements on field office or headquarters staff.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Table 8. Possible Performance Measures To Be Evaluated in FY 2007 and FY 2008
Community Planning and Development
Performance
Measure
Action Item
Tracking
Indicator
Data Source
Performance
Goal

Energy savings attained in Community Development Block Grant
(CDBG)- and HOME-funded new construction or substantial rehab
projects
Encourage energy efficiency through HOME- and CDBG-funded projects
Number of units reported adopting Energy Star for new homes (or its
equivalent for multifamily buildings) as the guideline for substantial
rehabilitation or new construction, multiplied by projected energy savings
Integrated Disbursement and Information System
To be determined
Public Housing

Performance
Measure
Action Items
Tracking
Indicator
Data Source
Performance
Goal

Energy savings attained by PHAs through energy efficiency and
conservation
3.1 PHAs will base equipment purchases on Energy Star products
3.2 HOPE VI developments will be built to a high level of energy efficiency
3.3 Streamline energy performance contracting in public housing
Per-unit month utility consumption and expenses, adjusted for weather and
energy rates
Consumption data reported on Form HUD-52722
To be determined
Single-family Housing

Performance
Measure
Action Item
Tracking
Indicator
Data Source
Performance
Goal

Through HUD’s four Homeownership Centers, the Federal Housing
Administration (FHA) will take steps to increase consumer awareness of
Energy Efficient Mortgages (EEMs), including promoting the use of the
EEM with “Streamlined (k)” Program and other single-family loan
products
Feature EEM as a priority loan product
FHA will generate quarterly reports documenting the number of new
construction and existing property EEMs insured each quarter, broken down
by region or state
Computerized Housing Underwriting Management System
To be determined

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Multifamily Housing
Performance
Measure
Action Item
Tracking
Indicator
Data Source
Performance
Goal
Performance
Measure
Action Item
Tracking
Indicator
Data Source
Performance
Goal

Performance
Measure
Action Item
Tracking
Indicator
Data Source
Performance
Goal
Performance
Measure
Action Item
Tracking
Indicator
Data Source
Performance
Goal

Energy savings achieved in assisted multifamily housing participating in
energy weatherization pilots
Continue HUD-Department of Energy multifamily weatherization partnerships
Savings will be the estimated annual energy consumption reductions or
savings reported for the pilot project as reported by the energy service provider
initiating the energy retrofits or energy audit or assessment conducted before
the retrofit
To be determined
To be determined
Energy savings attained in Section 202 or Section 811 housing for elderly
and disabled people
Encourage use of Energy Star new home standards in the design, construction,
and refinancing of Section 202 and 811 projects
Number of grantees who report adopting Energy Star for new homes (or its
equivalent for multifamily construction), multiplied by a projected average
energy savings associated with Energy Star measures undertaken
Section 202 and 811 grant applications
To be determined

Energy savings attained from projects built to the 2003 International
Energy Conservation Code (IECC) or Energy Star building standards
Explore incentives for energy efficiency through the Federal Housing
Administration (FHA) multifamily insurance programs
Number of properties built to 2003 IECC standards or Energy Star compared
with 1992 Model Energy Code , multiplied by the number of FHA-insured
projects built to a standard that meets or exceed the 2003 IECC
Possible use of development application processing
To be determined
Energy savings based on HUD-assisted housing commitments to adopt
Energy Star purchasing standards
Develop asset management strategies and guidance for energy efficiency in
HUD-subsidized multifamily properties
Number of subsidized multifamily properties that adopt Energy Star as a
procurement guideline for refrigerators and other appliances (multiplied by
estimated savings based on standard equipment replacement rates)
To be determined
To be determined

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Energy Partnerships
Performance
Measure
Action Item
Tracking
Indicator
Data Source
Performance
Goal

Energy partnerships assisting HUD projects
Establish energy partnerships to support HUD energy efficiency actions
Number of HUD projects assisted through energy partnerships
Partnership progress reports and case studies
To be determined

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

APPENDIX
ANNUAL PERFORMANCE PLAN FY 2007
A1.10: Reduce energy costs in building or operating HUD-financed, HUD-assisted,
or HUD-insured housing.
Indicator background and context. This indicator tracks an increasingly important public
outcome: the savings in energy costs achieved through the U.S. Department of Housing’s
(HUD’s) Energy Action Plan (FYs 2002–05) and Phase II Energy Action Plan (FY 2006–07)
in support of the President’s National Energy Policy. HUD spends some $4 billion each year
on energy—more than 10 percent of its budget—primarily through utility allowances to
renters, housing assistance payments to private building owners, and operating grants to PHAs.
Energy efficiency improvements could yield significant cost savings; a 5 percent reduction
could save $2 billion over the next 10 years.
In support of the Energy Action Plan, HUD has signed a memorandum of understanding with
the Environmental Protection Agency (EPA) and the Department of Energy (DOE) to promote
the use of Energy Star products and appliances through HUD programs. HUD’s Energy Task
Force has worked closely with these agencies in developing and implementing the Action Plan.
In addition, in July 2005 Secretary Alphonso Jackson announced a new “Partnership for Home
Energy Efficiency” with EPA and DOE to reduce the cost of utilities by 10 percent in existing
housing by 2010.
HUD’s Action Plan is primarily an operational plan aimed at upgrading the energy efficiency
of new and existing housing using an established inventory of proven energy-efficient products
and appliances. These products are being put to work in existing programs through consumer
education and outreach, interagency cooperation, market-based incentives, public-private
partnerships, and research and development of energy-efficient technologies.
During FYs 2005 and 2006, HUD successfully completed numerous activities under the Action
Plan and initiated the implementation of the Phase II Energy Action Plan. During FY 2007,
HUD will continue to implement the Phase II Energy Action Plan and implement or identify
tracking indicators that will allow HUD to assess actual performance in reducing energy costs
associated with HUD program activities.
Data source. Energy savings will be estimated by the Office of Policy Development and
Research based on the extent to which Energy Star appliance and construction standards are in
place or other energy efficiency practices have been adopted in HUD-assisted, HUD-insured,
or HUD-financed housing, including public housing. Average savings produced through
Energy Star will be based on studies conducted by EPA and DOE. Energy efficiency in public
housing achieved through energy performance contracting will be based on reports from
PHAs. The number of Energy Efficient Mortgages will be tracked through the Federal
Housing Administration’s Computerized Housing Underwriting Management System. The
number of HOME- or Community Development Block Grant-funded units meeting Energy
Star guidelines will be tracked by the Integrated Disbursement and Information System.

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Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006

Limitations and advantages of the data. Actual savings achieved through Energy Star may
vary from estimates developed through EPA and DOE research (that is, the standard for
Energy Star Qualified New Homes is intended to generate savings of 30 percent over the 1993
Model Energy Code, but actual savings may be less, depending on quality of construction,
sound property management, and other factors). Data from energy performance contracting in
public housing will generally reflect activity only in larger PHAs since smaller PHAs generally
have not been able to take advantage of this mechanism.
Validation, verification, and improvement of measure. EPA and DOE continue to conduct
research to verify savings produced through Energy Star. HUD will review baseline reports of
Energy Star application to assess data reliability and will seek to improve reporting
mechanisms based on initial results.

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