SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pay For Success Affordable Housing 
Energy Modernization Act of 2014''.

SEC. 2. BUDGET-NEUTRAL DEMONSTRATION PROGRAM FOR ENERGY AND WATER 
              CONSERVATION IMPROVEMENTS AT MULTIFAMILY RESIDENTIAL 
              UNITS.

    (a) Establishment.--The Secretary of Housing and Urban Development 
(referred to in this section as the ``Secretary'') shall establish a 
demonstration program under which, during the period beginning on the 
date of enactment of this Act, and ending on September 30, 2017, the 
Secretary may enter into budget-neutral, performance-based agreements 
that result in a reduction in energy or water costs with such entities 
as the Secretary determines to be appropriate under which the entities 
shall carry out projects for energy or water conservation improvements 
at not more than 20,000 residential units in multifamily buildings 
participating in--
            (1) the project-based rental assistance program under 
        section 8 of the United States Housing Act of 1937 (42 U.S.C. 
        1437f), other than assistance provided under section 8(o) of 
        that Act;
            (2) the supportive housing for the elderly program under 
        section 202 of the Housing Act of 1959 (12 U.S.C. 1701q); or
            (3) the supportive housing for persons with disabilities 
        program under section 811(d)(2) of the Cranston-Gonzalez 
        National Affordable Housing Act (42 U.S.C. 8013(d)(2)).
    (b) Requirements.--
            (1) Payments contingent on savings.--
                    (A) In general.--The Secretary shall provide to an 
                entity a payment under an agreement under this section 
                only during applicable years for which an energy or 
                water cost savings is achieved with respect to the 
                applicable multifamily portfolio of properties, as 
                determined by the Secretary, in accordance with 
                subparagraph (B).
                    (B) Payment methodology.--
                            (i) In general.--Each agreement under this 
                        section shall include a pay-for-success 
                        provision--
                                    (I) that will serve as a payment 
                                threshold for the term of the 
                                agreement; and
                                    (II) pursuant to which the 
                                Department of Housing and Urban 
                                Development shall share a percentage of 
                                the savings at a level determined by 
                                the Secretary that is sufficient to 
                                cover the administrative costs of 
                                carrying out this section.
                            (ii) Limitations.--A payment made by the 
                        Secretary under an agreement under this section 
                        shall--
                                    (I) be contingent on documented 
                                utility savings; and
                                    (II) not exceed the utility savings 
                                achieved by the date of the payment, 
                                and not previously paid, as a result of 
                                the improvements made under the 
                                agreement.
                    (C) Third-party verification.--Savings payments 
                made by the Secretary under this section shall be based 
                on a measurement and verification protocol that 
                includes at least--
                            (i) establishment of a weather-normalized 
                        and occupancy-normalized utility consumption 
                        baseline established pre-retrofit;
                            (ii) annual third-party confirmation of 
                        actual utility consumption and cost for owner-
                        paid utilities;
                            (iii) annual third-party validation of the 
                        tenant utility allowances in effect during the 
                        applicable year and vacancy rates for each unit 
                        type; and
                            (iv) annual third-party determination of 
                        savings to the Secretary.
            (2) Term.--The term of an agreement under this section 
        shall be not longer than 12 years.
            (3) Entity eligibility.--The Secretary shall--
                    (A) establish a competitive process for entering 
                into agreements under this section; and
                    (B) enter into such agreements only with entities 
                that demonstrate significant experience relating to--
                            (i) financing and operating properties 
                        receiving assistance under a program described 
                        in subsection (a);
                            (ii) oversight of energy and water 
                        conservation programs, including oversight of 
                        contractors; and
                            (iii) raising capital for energy and water 
                        conservation improvements from charitable 
                        organizations or private investors.
            (4) Geographical diversity.--Each agreement entered into 
        under this section shall provide for the inclusion of 
        properties with the greatest feasible regional and State 
        variance.
    (c) Plan and Reports.--
            (1) Plan.--Not later than 90 days after the date of 
        enactment of this Act, the Secretary shall submit to the 
        Committees on Appropriations of the House of Representatives 
        and the Senate a detailed plan for the implementation of this 
        section.
            (2) Reports.--Not later than 1 year after the date of 
        enactment of this Act, and annually thereafter, the Secretary 
        shall--
                    (A) conduct an evaluation of the program under this 
                section; and
                    (B) submit to Congress a report describing each 
                evaluation conducted under subparagraph (A).
    (d) Funding.--For each fiscal year during which an agreement under 
this section is in effect, the Secretary may use to carry out this 
section any funds appropriated to the Secretary for the renewal of 
contracts under a program described in subsection (a).
Pay For Success Affordable Housing Energy Modernization Act of 2014 - Directs the Secretary of Housing and Urban Development (HUD) to establish a demonstration program under which, between enactment of this Act and September 30, 2017, the Secretary may enter into budget-neutral, performance-based agreements (for up to 12 years each) that result in a reduction in energy or water costs with appropriate entities to carry out projects for energy or water conservation improvements at up to 20,000 residential units in multifamily buildings participating in:  Section 8 project-based rental assistance programs under the United States Housing Act of 1937, other than Section 8 (voucher program) assistance; supportive housing for the elderly programs under the Housing Act of 1959; or supportive housing for persons with disabilities programs under the Cranston-Gonzalez National Affordable Housing Act.  Specifies requirements for payment under an agreement, which shall be contingent on documented utility savings, as well as for eligibility, geographical diversity, and funding for the program. Requires the Secretary to submit to specified congressional committees a detailed plan for the implementation of this Act.
Pay For Success Affordable Housing Energy Modernization Act of 2014