Written by Milo Chamberlin
On April 26, 2024, the United States Department of Housing & Urban Development (HUD) and the Department of Agriculture (USDA) released a notice to update the minimum energy codes required for future HUD/USDA housing projects. New housing projects covered under this notice will have between six months to two years to comply with the updated requirements. The minimum energy standard requirement was initially set when the George W. Bush Administration signed the Energy Independence and Security Act (EISA) into law in 2007. Until now, HUD and USDA have used the original 2009 International Energy Conservation Code (IECC) as a baseline to enforce EISA’s minimum energy standard.[1]
The new standard consists of two codes. The first updated code is the 2021 IECC which applies to new single-family and low-rise multifamily (MF) constructions that use Federal Housing Approved (FHA-insured) loans. In a given year, HUD estimates that 150,000 units will be covered by 2021 IECC, making FHA-insured single-family and low-rise multifamily constructions the category of housing most affected by these updated standards. The second updated code is the 2019 American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standard 90.1 that applies to FHA-insured high rise MF constructions. HUD estimates that at least 15,000 units will be covered by ASHRAE 90.1.[2]
Other HUD/USDA-covered programs under EISA include Section 202 Supportive Housing for the Elderly, Section 811 Supportive Housing for Persons with Disabilities, Rental Assistance Demonstration (RAD) housing, the Public Housing Capital Fund, Choice Neighborhoods, USDA section 502 loans, and section 523 grants. HUD will provide training and technical assistance through its Community Compass Technical Assistance and Capacity building program to help developers comply with the updated standards. HUD and USDA determined that adopting these codes will not have an adverse impact on the affordability or availability of EISA-covered housing. In fact, adopting minimum energy standards supports housing affordability by significantly lowering energy costs. For example, for EISA-covered housing that falls under the 2021 IECC, the upfront costs associated with meeting these standards can be rolled into a 30-year FHA mortgage and save homeowners roughly $400 per year on energy costs.[3]
HUD updating its minimum energy standards allows the agency to more closely follow stated strategic goals, 4: Advance Sustainable Communities and 4A: Guide Investment in Climate Resilience, by helping to reduce Greenhouse Gas emissions, improve community health, and strengthen household resilience against extreme weather.[4]
Footnotes
[1] “Summary of the Energy Independence and Security Act.” US EPA. Last modified June 18, 2024. https://www.epa.gov/laws-regulations/summary-energy-independence-and-security-act.
[2]Department of Housing and Urban Development and the Department of Agriculture. Final Determination: Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA-Financed Housing. April 26, 2024. https://www.federalregister.gov/documents/2024/04/26/2024-08793/final-determination-adoption-of-energy-efficiency-standards-for-new-construction-of-hud–and#footnotes.
[3] New Update: HUD and USDA Announce Adoption of Minimum Energy Standards That Will Lower Monthly Costs for Homeowners and Renters, (HUD Public Affairs, 2024), https://www.hud.gov/press/press_releases_media_advisories/hud_no_24_089
[4] FY 2022-2026 HUD STRATEGIC PLAN ONE HUD, FOR ALL. 2022. https://www.hud.gov/HUD-FY22-26-Strategic-Plan-Focus-Areas.