A growing number of states offer Community Solar Programs. These programs give families, including families receiving HUD subsidy, access to renewable energy, even though the property may not be suitable for solar panels.
Community solar arrays have multiple subscribers who typically receive credits on their utility bills that are directly attributable to solar energy generation.
There are no upfront costs to subscribers, but there may be ongoing costs or fees not to exceed 50% of the credit.
Over the past several months, HUD’s Multifamily Housing division has received several requests from state and local governments about how to treat community solar credits. The MF Community Solar Credits Memo reflects how HUD has approached these requests to date and may be helpful to industry stakeholders.
Please note that HUD’s guidance only applies in the case of tenant-paid electricity when the solar credit appears as a negative amount on the resident's electricity bill. HUD’s guidance does not apply to residents of master-metered multifamily buildings.
This new guidance does not change existing rules for utility allowance baseline analyses or income calculations; rather, it provides specific guidance for how to treat community solar credits.
All staff involved in the utility allowance review process and/or the income calculation should review and understand HUD’s new guidance.
In all cases, where community solar credits are available to residents, owner/agents should obtain a copy of each resident's utility bill to determine:
The HUD memo provides sample utility bills to assist with owner/agent analysis.
Determine if Community Solar Credits Affect Utility Allowance Calculation
If the credit reduces the cost of energy consumption by lowering actual utility rates, then the owner/agent is required to submit a new baseline analysis in accordance with Housing Notice 2015-04 Methodology for Completing a Multifamily Housing Utility Analysis, regardless of when the last analysis was submitted to HUD/Contract Administrator for approval.
Answer the two questions below to determine whether the credit is tied to the cost of consumption:
If yes: The credit does not reduce the cost of energy consumption as the cost for the consumed energy does not change. The owner/agent is not required to submit a new utility allowance baseline (see example bills with solar credits not tied to consumption in the memo).
If no: Credit may be tied to the cost of consumption.
If yes: The credit is tied to the cost of utility consumption. The owner/agent is required to submit a new utility allowance baseline.
If no: The credit is not tied to the cost of utility consumption. The owner/agent is not required to submit a new utility allowance baseline.
Owner/agents should be sure to review guidance provided in Housing Notice 2015-04 Methodology for Completing a Multifamily Housing Utility Analysis when addressing any Utility Allowance Decrease/Tenant Rent Increase.
Determine if Community Solar Credits Should be Considered Annual Income for Rent Calculation or Determining Eligibility for HUD-assisted Multifamily Programs
If a community solar credit on a household’s electricity bill is based on the amount of electricity consumed each month, HUD has determined that the credit should be treated as a discount or coupon rather than a cash payment. The credit will not be counted as income when determining the resident’s assistance payment.
If the credits are found to be third-party payments, there may be instances when the credits are not discounts and must be treated as income. For instance, a recurring monthly utility payment made on behalf of the family through the community solar benefit program is not considered a discount but is considered annual income to the family.
We (RBD) interpret this to mean if the community solar credit is not tied to consumption and the credit amount is the same each month regardless of consumption, then the amount would be counted as income when determining the resident’s assistance payment.
After receiving HUD's memo, we have reviewed and updated the RBD FASTForms Utility Allowance Bundle to include questions related to the Community Solar Credits Program as appropriate.
