New HUD Utility Allowance Requirements Present an Opportunity for Multifamily Properties to Maximize Rental Income

August 25, 2015 Written by  Comments Print

Washington D.C.— A recent HUD Memo and Notice H-2015-04 is requiring HUD Housing Programs to collect actual utility data from residents to calculate their utility allowances. On June, 22, 2015, HUD issued a notice detailing new sampling methodologies owners and management agents (O/As) are required to use to determine baseline utility allowances for each of their bedroom sizes. The new guidelines order property staff to collect tenant utility data, once every third year. The utility data must then be used to calculate utility allowances per these new regulations, for all O/As whose Contract Anniversary date is on or after December 19, 2015.

greeNEWit, a leader in energy analysis and resource conservation tactics, offers support in implementing the new methodology requirements and, in addition, performing energy profile analysis and retrofit management for O/As affected. greeNEWit is approved to calculate these utility allowances for the Federal Low-Income Housing Tax Credit, Section-8 and Public Housing programs.

Owners may request a one-time release from the property's Reserve for Replacement account of up to $1,000 to fund the acquisition, installation and use of energy data benchmarking and/or reporting services. Over the course of a three-year period, this methodology should decrease the cumulative administrative burden to analyze and request adjustments to utility allowances.

greeNEWit’s calculation methods comply with the utility allowance regulations set forth by the IRS and provide an accurate assessment of tenant consumption. The firm’s methodologies for determining utility allowance calculations include the: Utility Provider Data Method, Engineered Energy Consumption Model and the HUD Utility Scheduled Model for HUD Regulated Properties.

greeNEWit provides professional energy analysis and reporting concurrent with each method and can help multi-family properties identify energy savings between 5% and 15% on average.

Decisions concerning which methodology is used, varies depending on property status, client preference, effectiveness and ease of use.

Over the course of a three-year period, this methodology should decrease the cumulative administrative burden to analyze and request adjustments to utility allowances. Owner financing options regarding the possible acquisition of software to perform the analysis and a one-time management add-on fee during the first year of implementation is also discussed in the Notice.

If your residents receive a utility allowance, these new procedures will impact your contract renewal or rent adjustment submission. If you’re a mutlifamily building owner/agent or an accounting firm and would like to to learn more about our HUD utility allowance services, email Michael Santiago, Director of Multifamily Energy Solutions at

About greeNEWit

greeNEWit is the national leader in sustainable community development and smart grid integration. The firm develops, manages, and implements net-zero trajectory assets to help make communities more resilient, sustainable, and economically prosperous. By working with residential, multifamily, and commercial real estate, greeNEWit has an expansive perspective on how end energy consumers understand, interact, and engage with their energy profile. With clients that include some of the most successful developers and managers of student, military, and multifamily housing, greeNEWit is a tech-enabled service business in the growing clean-tech space. Headquartered in Columbia, Maryland, greeNEWit is expanding nationwide.

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