New Energy Group Proposes “˜Green Dividend’ for Responsive Owners

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Tax Credit Advisor, March 2009: A new national organization has developed an agenda of proposed federal legislative and policy changes to promote increased energy efficiency in affordable multifamily rental housing projects, and to reward investment for such activities.

The proposals are in a white paper crafted by the Council for Energy Friendly Affordable Housing (CEFHA), a council within the National Housing & Rehabilitation Association, a national trade group for affordable multifamily housing professionals. Some of CEFAH’s proposals are reflected in the pending economic stimulus bill (see article on p. 1); the new Obama Administration has also made energy efficiency and greater use of renewable energy as high priorities.

According to the paper, CEFAH “was formed to help [multifamily housing property] owners and managers identify and implement effective energy savings strategies, and to make sure that the regulatory system for properties assisted by the U.S. Department of Housing and Urban Development (HUD) supports this objective to the maximum extent possible. CEFAH is working to remove regulatory barriers as well as create new funding sources to help owners improve the performance of multifamily projects through low-cost, high-impact energy and utility improvements.”

In the paper, CEFAH proposes public policy changes in five areas. Most would require modification of existing HUD policies. Some probably would require legislative changes. These proposals include to:

  • Decrease energy costs by increasing cash flow to owners, through the authorization of a “green dividend” that could be paid to owners for energy- saving green improvements they make to their HUD-assisted property. This dividend could be paid from project cash flow without regard to the normal HUD ceiling on annual distributions.
  • Modify HUD policies to clarify that monies within the replacement reserves or residual receipts for a HUD-assisted project may be used to pay for green retrofit activities. The paper notes CEFAH anticipates pressing Congress and the White House for approval of a low-cost loan program to fund green retrofits.
  • Revise existing HUD rules to make it easier to raise and use private capital to help fund green retrofits to HUD-assisted developments, especially broader scope improvements.
  • Permit third party ownership of energy-saving improvements (including renewable energy systems) installed in HUD-assisted properties.
  • Allow energy performance contracts with third parties for HUD-assisted projects, where energy cost savings can be used to help fund energy improvements and where owners are also permitted to benefit from the cost savings.

(For details on CEFAH and the white paper, contact Thom Amdur, [email protected], 202-939-1753.)