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Obama Budget Proposes Energy Conservation Pilot in 20,000 Multifamily Assisted Housing Units

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The president’s FY 2016 budget request includes a three-year pilot project to reduce energy and water utility costs in up to 20,000 assisted multifamily housing units. The Multifamily Performance-Based Energy Conservation Demonstration would allow the Department of Housing and Urban Development (HUD) to facilitate financing of energy and water conservation improvements in such housing units, with the intent of reducing utility costs. The demonstration program would run through FY 2018, with the term for payments lasting up to 12 years.

The projects are to be budget-neutral, with the HUD-subsidized utility costs and the performance payments not exceeding the subsidized utility costs in the absence of the energy- and water-saving measures. Payments are to be contingent upon realized utility cost savings.

According to the San Francisco-based National Housing Law Project (NHLP), Project-Based Section 8 Rental Assistance funds could be used to support the demonstration’s energy and water conservation improvements. NHLP notes that by “expressly authorizing subsidy funds to be shared with owners to support energy-saving investments, this proposal should further the process of unlocking the split incentive problem in HUD-supported affordable properties (where owners pay for energy investments but tenants pay the bills and get the benefits).”

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