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HUD Expands Climate-Friendly Incentive Offerings

The U.S. Department of Housing & Urban Development (HUD) has updated guidance on the use and eligibility of the Rate Reduction Incentive (RRI), a climate-friendly incentive program available to Public Housing Agencies (PHAs) that encourages them to reduce their utility rates beyond what is already required by statute and/or regulation.

The program directly supports HUD’s Climate Action Plan which sets forth goals to create climate resiliency, reduce greenhouse emissions, and pursue environmental justice in housing. The RRI helps HUD move towards those goals since energy efficiency solutions made possible through the program reduce a PHAs carbon footprint, promote long-term sustainability, and can improve the lives of residents.

“This updated guidance will help to create more sustainable communities, including by offering increased support for residents,” said HUD Secretary Marcia L. Fudge. “HUD will continue to advance our Climate Action Plan with steps like these–which provide cost savings, benefit hard-working Americans, and looks out for our planet for future generations.”

The updates and changes to the guidance provide clarification on the approval process, additional supplemental direction, and changes to policy. The overarching goal is to provide a more comprehensive understanding of the RRI and serve as a reference guide that offers clear and consistent information. Policy-wise, the changes make it possible for a PHA to retain either 50% or 100% of their savings, depending upon the type of contract entered, and in a multiyear contract the number of documents and the process of administering eligibility requirements is reduced.

Actions that PHAs can take that are allowed under the program include:

  • PHAs can negotiate special rates with a utility company that are specific to the housing agency (this can be for a contract term of up to five years).
  • PHAs can participate in the purchasing of power through a third-party supplier which can result in savings through invoice credits or a fixed utility rate.
  • PHAs can work with utility providers who offer reduced rates for those who make efficiency upgrades to things like boilers, windows, or toilets.

PHAs can take advantage of renewable energy sources, like on-site or community solar development. Here are a few examples that have been executed to date nationwide:

  • Developers in Rhode Island have developed a solar production facility by aggregating the power needs of nine housing authorities that are members of the Public Housing Association of Rhode Island (PHARI). The solar arrays will provide more than 20 million kilowatt hours of electricity to authorities in Providence, North Providence, Newport, Cranston, Smithfield, Warwick, Warren, Bristol, and Lincoln. This renewable solar energy will offset estimated 29 million kilowatt hours per year that these housing authorities use annually.
  • Albany Housing Authority (New York) is able to participate in a Community Solar Project that is producing 3.7 million kilowatt hours of annual solar production. They will receive solar credits through this program from their utility provider. They also are able to benefit from the RRI program to retain a portion of the savings.
  • Ithaca Housing Authority (New York) is able to participate in a Community Solar Project and receive a benefit through the RRI program to retain a portion of the savings.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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