HUD’s Updated Rules for Incorporating Solar Benefits in PHAs and HUD-Assisted Housing
Participating in community solar programs and on-site solar incentives often comes with a requirement for property owners to allocate financial benefits to tenants. These benefits can take the form of direct credits on tenants’ electricity bills or indirect distribution by property owners, not individual meters.
For tenants residing in public housing or properties receiving assistance from the U.S. Department of Housing and Urban Development’s Office of Housing, this raises important questions. Should the financial benefits of solar be factored into a tenant’s utility allowance or included in their annual adjusted income? In either case, the value of the financial benefit is diminished for the tenant, necessitating awareness of existing rules governing utility allowances and income calculations.
To provide clarity and guidance on this matter, HUD published new guidance in August. This guidance consolidates multiple previously issued policy documents and includes up-to-date instructions for HUD programs that support solar initiatives.
HUD Secretary Marcia Fudge highlighted the importance of this guidance in a press release, stating, “This updated guidance is reinforcing that all communities deserve to participate in America’s growing clean energy economy. Under this guidance, HUD will help more communities build a healthier and cleaner future for all.”
Rich Larsen, CPA and partner at Novogradac, who serves numerous public housing authority (PHA) clients, believes that this HUD guidance can encourage greater participation in solar programs. It addresses uncertainties about how utility allowances and operating subsidies may be affected by solar adoption.
Larsen noted, “The guidance also gives solar companies that are trying to sell products to PHAs a roadmap on how they can structure rebates in a way that will optimize the benefit to the PHA and to tenants.”
For housing authorities like the Cuyahoga Metropolitan Housing Authority (CMHA) in Ohio, the HUD guidance is a welcome step towards supporting PHAs in their clean energy endeavors. CMHA, one of the largest PHAs in the country, manages around 10,500 public housing units across 60 properties.
Jeffery K. Patterson, CEO of CMHA, sees this guidance as instrumental in advancing renewable energy and sustainability goals. CMHA has a history of energy efficiency initiatives and has made strides in incorporating solar energy into its properties.
Patterson shared, “It says something about this housing authority and others that have chosen to take this opportunity to look at [solar] as a way that can be very impactful to their residents and developments. I give HUD credit for going back, looking at this, and seeing how they can provide guidance.”
As housing authorities and property owners embrace solar energy, these guidelines pave the way for a more sustainable and cost-effective future while benefiting residents and the environment alike.
