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

pg g 

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. 2

3 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). 

 Harvard University Graduate School of Design, Public Housing Operating Cost Study, June 2003. 4

 President’s National Energy Policy, May 2001. 5

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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). 6

7 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. 

 Testimony before the House Financial Services Committee in June 2001. 8

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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. 

 

9 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 Private Project-Based 1,213,949 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. 

11 Per-unit month utility expenditures in 2004 total $97.78, a 14.9 percent increase since 2000. 

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 2000 2001 2002 2003 2004 

Total Utilities ($ in millions) $1,202 $1,219 $1,158 $1,252 $1,277 

Total Operating Expenses ($ in 

millions) $5,412 $5,657 $5,754 $5,891 $5,885 

Utilities as a Percentage of 

Operating Expenditures 22% 22% 20% 21% 22% 

Total Utilities Per Unit/Month $85.09 $87.82 $84.09 $93.02 $97.78 

% Change 3.21% –4.25% 10.63% 5.11% 

% Change since 2000 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) 

Total Per Unit 

Month ($) Line Item % of Total ($ million) 

Electricity 402.5 30.82 46 

Natural Gas 311.5 23.85 35 

Fuel Oil 164.8 12.61 19 

Total PHA-Paid Utilities Energy 

Expenditures 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 

Percent Increase of Total Utilities Per Unit From FY00 

to FY05

0

5

10

15

20

25

30

35

40

45

Atlanta

Baltimore

Boston

Buffalo

Chicago

Columbus

Denver

Detroit

Fort Worth

Greensboro

Jacksonville

Kansas

City

Los

Angeles

Minneapolis

New York

Philadelphia

San

Francisco

Seattle

HUD Regional Multifamily Offices

Percent Increase

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

Percent Increase of Gas from FY00 to FY05

0

10

20

30

40

50

60

70

80

90

Atlanta

Baltimore

Boston

Buffalo

Chicago

Columbus

Denver

Detroit

Fort Worth

Greensboro

Jacksonville

Kansas

City

Los Angeles

Minneapolis

New York

Philadelphia

San

Francisco

Seattle

HUD Regional Multifamily Offices

Percent Increase

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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) 

% Units 

With Utility 

Allowances

# Units Subsidized Housing Occupied Annual Spent 

($M) With Utility 

Allowances Units Units 

Public Housing 1,213,949 1,090,579 46 501,666 411.2

Section 8 Housing Choice 

Vouchers 2,138,214 91 1,643,003 2,122.0 1,805,498

Section 8 Moderate Rehabilitation 39,337 37,764 61 23,036 19.8

Section 8 New + Substantial 

Rehabilitation 845,832 811,999 69 560,279 357.1

Section 236 174,175 167,208 54 90,292 65.5

Other 390,442 374,824 59 221,146 163.0

Total 4,801,949 4,287,872 61 3,039,423 3,139.0

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. 

 

13 Goldman, et al., Retrofit Experience in U.S. Multifamily Buildings: Energy Savings, Costs and Economics, 1988. 14 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. 

 12 
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: 

OBJECTIVE 1: 

Strengthen partnerships with federal agencies and local communities to 

promote Energy Star and energy efficiency in the residential sector. 

4 Actions 

OBJECTIVE 2: 

Strengthen incentives and implement new statutory requirements 

 for energy efficiency through HUD programs. 

6 Actions 

OBJECTIVE 3: 

Provide training and technical assistance on energy efficiency to 

homeowners, renters, and property owners. 

9 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. 3 Actions 

B. Planned Actions 

1. Departmentwide 

Provide incentives for energy efficiency in housing financed 

through HUD’s competitive grant programs.

1.1 

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 

 13 
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.

Include energy efficiency performance measures 

in HUD’s Annual Performance Plan and Management Plan. 1.2 

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. 

 15 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

Promote the use of Energy Star products and standards 

through HUD’s new Partnership for Home Energy Efficiency 

with DOE and EPA.

1.3 

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

 

15 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. 

 16 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

Provide training or information on energy efficiency to 

residents or organizations building or rehabilitating 

affordable housing.

1.4 

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. 

 17 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

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) 

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. 

1.5 

2.1 

 18 
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” presentation17 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. 

Identify opportunities and assist with feasibility analysis for 

Combined Heat and Power in public or assisted housing. 2.2 

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. 

 

18 “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. 

 20 
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. 

Base appliance and product purchases in public housing on 

 Energy Star standards, unless the purchases are not cost 

effective. 

3.1 

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 2005-

 

20 FEMP—Federal Energy Management Program. 

21 For a full list of Energy Star-labeled products and appliances, see www.energystar.gov. 

 21 
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. 

Build HOPE VI developments to a 

high level of energy efficiency. 3.2 

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. 

 22 
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. 

Improve tracking and monitoring of 

energy efficiency in public housing. 3.3 

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 

 23 
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. 

Streamline energy performance contracting 

 in public housing. 3.4 

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. 

 24 
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 

PHAs 2000 2002 2004 2006 Percent

Very Small (<250) 2,341 2 2 5 10 0.4

Small (250–499) 433 14 18 20 29 6.7

Medium (500–1,249) 249 6 13 27 35 14.0

Large (1,250–6,599) 133 16 21 28 37 28.0

Very Large (>6,599) 18 4 4 6 6 33.0

Total 3,174 42 58 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. 

 25 
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 2002 2004 2006 ($) ($) ($) ($) 

Very Small (<250) 2.0 2.0 3.0 6.1 

Small (250–499) 6.2 8.9 9.9 20.5 

Medium (500–1,249) 10.7 21.7 45.2 65.0 

Large (1,250–6,599) 53.7 87.8 119.5 191.2 

Very Large (>6,599) 35.2 50.2 68.0 68.0 

Total 107.8 170.6 245.6 350.7 

Note: Includes energy financing and other known sources. 

PHAs = public housing agencies. 

Table 5. Savings Through Energy Performance Contracts by PHAs ($M) 

2000 2002 2004 2006 ($) ($) ($) ($) 

Very Small (<250) 0.2 0.2 0.3 0.6 

Small (250–499) 0.9 1.5 1.6 2.7 

Medium (500–1,249) 0.8 2.1 4.5 6.5 

Large (1,250–6,599) 7.2 10.2 13.6 20.7 

Very Large (>6,599) 4.3 5.7 7.1 7.1 

Total 13.4 19.7 27.1 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 

 26 
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. 

Promote energy conservation in federally assisted housing 

on Indian tribal lands. 3.5 

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 

 27 
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 

Feature the Energy Efficient Mortgage (EEM) 

as a priority loan product. 4.1 

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. 

 28 
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. 

Provide training on how FHA single-family programs can be 

effectively used to promote energy efficiency. 4.2 

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. 

Continue improved tracking and evaluate performance 

 of Energy Efficient Mortgages. 4.3 

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). 

 29 
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 

Promote energy efficiency in assisted multifamily housing 

programs.

5.1 

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. 

Continue HUD-DOE multifamily 

weatherization partnerships.

5.2 

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. 

 

 30 
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. 

Encourage use of Energy Star new home standards in the 

design, construction, and refinancing of Sections 202 and 811 

projects.

5.3 

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. 

 31 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

Develop incentives for energy efficiency through FHA 

multifamily insurance programs. 5.4 

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. 

Explore asset management strategies and guidance for energy 

efficiency in HUD-subsidized multifamily properties. 5.5 

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 

 

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

Servicing. 

 32 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

Support energy efficiency training for multifamily 

managers and maintenance staff. 5.6 

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 

Implement energy efficiency recommendations 

of the Consensus Committee in HUD-code homes.

6.1 

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. 

 

25 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. 

 33 
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. 

 

 

26 See Road map on www.pathnet.org. 27 Manufactured Housing Research Alliance, Manufactured Housing: Saving Energy is Saving Money, August 2005, is 

available at www.huduser.org. 

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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. 

 35 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

7. Field Policy and Management (FPM) 

Partner with local energy efficiency groups, HUD program 

offices, and other agencies to educate HUD customers about 

ways to reduce energy costs.

7.1 

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) 

Conduct energy-related policy analysis and research to 

support Departmental energy efficiency actions. 8.1 

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-

 36 
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) 

Develop computerized assessment tool for integrated 

energy and environmental retrofits.

9.1 

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. 

 37 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

 38 
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. 

 39 
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 Indicator/Activity Goal/ Data Source Outcome 

Community 

Planning and 

Development 

Support of Energy Task Force Reported by 

headquarters (HQ) 100% as co-chair 

Reported by field 

offices Workshop sessions on Energy Star 6 

Number of Combined Heat and Power 

feasibility assessments completed Reported by HQ 6 

Office of Public 

and Indian 

Housing 

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 

Reported by field 

offices 

15 HOPE VI 

projects 

Determine if current audit exists, and 

ensure an audit is completed within 12 

months 

Reported by field 

offices 500 

Federal 

Housing 

Administration 

(FHA) 

Develop training that promotes 

energy efficiency; Reported by HQ None Take other actions to encourage 

Energy Efficient Mortgages Single Family 

Number of applicants encouraged to 

adopt Energy Star; Reported by field 

offices and HQ 

FHA 

Multifamily 100% 

Number of industry presentations 

Number of events conducted with 

program office participation; Office of Field 

Policy and 

Management 

Reported by field 

offices 10 events Number of events conducted with 

interagency participation 

Continue support of Energy Task 

Office of Policy Force; 

Development 

and Research 

Develop measures to track and 

monitor energy savings; 

Reported by HQ 100% 

Provide technical support 

 40 
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 Indicator Data Source 

Office of Public and 

Indian Housing Number of PHSs adopting Energy Star Survey 

Number of energy performance contracts 

and projected savings Survey 

Federal Housing 

Administration 

(FHA) 

Computerized Housing 

Underwriting Management 

System

Number of Energy Efficient Mortgages 

Single Family 

FHA Number of Section 202 and 811 projects 

adopting Energy Star Grant applications Multifamily 

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. 

 41 
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

Energy savings attained in Community Development Block Grant 

(CDBG)- and HOME-funded new construction or substantial rehab 

projects 

Performance 

Measure 

Action Item 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 

Tracking 

Indicator 

Data Source Integrated Disbursement and Information System 

Performance 

Goal To be determined 

Public Housing 

Performance 

Measure 

Energy savings attained by PHAs through energy efficiency and 

conservation

3.1 PHAs will base equipment purchases on Energy Star products 

Action Items 3.2 HOPE VI developments will be built to a high level of energy efficiency 

3.3 Streamline energy performance contracting in public housing 

Tracking 

Indicator 

Per-unit month utility consumption and expenses, adjusted for weather and 

energy rates 

Data Source Consumption data reported on Form HUD-52722 

Performance 

Goal To be determined 

Single-family Housing 

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 

Performance 

Measure 

Action Item 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

Tracking 

Indicator 

Data Source Computerized Housing Underwriting Management System 

Performance 

Goal To be determined 

 42 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

Multifamily Housing 

Performance 

Measure 

Energy savings achieved in assisted multifamily housing participating in 

energy weatherization pilots 

Action Item 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 

Tracking 

Indicator 

Data Source To be determined 

Performance 

Goal To be determined 

Performance 

Measure 

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 Action Item

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 

Tracking 

Indicator 

Data Source Section 202 and 811 grant applications 

Performance 

Goal To be determined 

Performance 

Measure 

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 Action Item

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 

Tracking 

Indicator 

Data Source Possible use of development application processing 

Performance 

Goal To be determined 

Performance 

Measure 

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 Action Item

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) 

Tracking 

Indicator 

Data Source To be determined 

Performance 

Goal To be determined 

 43 
Report to Congress—U.S. Department of Housing and Urban Development—August 8, 2006 

Energy Partnerships 

Performance 

Measure Energy partnerships assisting HUD projects 

Action Item Establish energy partnerships to support HUD energy efficiency actions

Tracking 

Indicator Number of HUD projects assisted through energy partnerships 

Data Source Partnership progress reports and case studies 

Performance 

Goal To be determined 

 44 
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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