SEC. 2. UTILITY AND WASTE MANAGEMENT COST SAVINGS. 
Subparagraph (C) of section 9(e)(2) of the United 
States Housing Act of 1937 (42 U.S.C. 1437g(e)(2)(C)) 
is amended— 
(1) by striking the subparagraph designation 
and heading and all that follows through ‘‘Contracts 
described in clause (i)’’ in clause (ii) and inserting 
the following: 
‘‘(C) TREATMENT OF UTILITY AND WASTE 
MANAGEMENT COST SAVINGS.— 
‘‘(i) IN GENERAL.—The treatment of 
utility and waste management costs under 
the formula shall provide that a public 
housing agency shall receive the full finan-
cial benefit from any reduction in the cost 
of utilities or waste management resulting 
from energy conservation improvements in 
one or more of its public housing projects, 
subject to the following: 
‘‘(I) 
THIRD
PARTY
CON-
TRACTS.—In the case of energy con-
servation 
improvements 
in 
public 
housing undertaken pursuant to a 
contract with a third party, such con-
tracts’’; 
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(2) in clauses (iii) and (iv), by striking ‘‘clause 
(i)’’ each place such term appears and inserting 
‘‘subclause (I)’’; 
(3) in clause (iv), by striking ‘‘the date of the 
enactment of this clause’’ and inserting ‘‘December 
26, 2007,’’; 
(4) by redesignating clauses (iii) and (iv) as 
subclauses (II) and (III), respectively, and realigning 
such subclauses, as so redesignated, so as to be in-
dented 8 ems from the left margin; and 
(5) by adding at the end the following new 
clauses: 
‘‘(ii) 
FINANCING
OF
IMPROVE-
MENTS.—Energy 
conservation 
improve-
ments may be undertaken pursuant to a 
contract for the improvements only, and 
the public housing agency may finance 
such improvements for a period of up to 
20 years. A public housing agency may 
pledge operating assistance under this sub-
section as security for such financings in 
an amount not to exceed the lesser of— 
‘‘(I) the amount of the debt serv-
ice, plus such appropriate debt service 
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coverage factor as the Secretary may 
establish; and 
‘‘(II) the amount of the reason-
ably anticipated utility cost savings 
resulting from the improvements, as 
determined by the Secretary. 
The Secretary may also permit the pledg-
ing of the installed equipment related to 
such improvements. 
‘‘(iii) FREEZE OF CONSUMPTION LEV-
ELS.— 
‘‘(I) IN
GENERAL.—A public 
housing agency may elect to be paid 
for its utility costs, including utility 
allowances, under the formula for a 
period, at the discretion of the agency, 
of not longer than 20 years based on 
the agency’s average annual consump-
tion during the 3-year period pre-
ceding the year in which the election 
is made (in this clause referred to as 
the ‘consumption base level’). 
‘‘(II) INITIAL
ADJUSTMENTS
IN 
CONSUMPTION
BASE
LEVEL.—The 
Secretary shall make an initial one- 
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time adjustment in the consumption 
base level to account for differences in 
the heating degree day average over 
the most recent 20-year period com-
pared to the average in the consump-
tion base level. 
‘‘(III) ONGOING
ADJUSTMENTS 
IN CONSUMPTION BASE LEVEL.—The 
Secretary shall make adjustments in 
the consumption base level to account 
for an increase or reduction in units, 
a change in fuel source, a change in 
resident-controlled 
electricity 
con-
sumption, or for such other reasons as 
the Secretary considers appropriate. 
‘‘(IV) THIRD PARTIES.—A public 
housing agency making an election 
under subclause (I) may use, but shall 
not be required to use, the services of 
a third party in its energy conserva-
tion program. The agency shall have 
the sole discretion to determine the 
source, terms, and conditions of any 
financing used for its program.’’. 
Æ 
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