Energy Efficiency Standards Adopted for HUD- and USDA-Financed Housing

On April 26, 2024, HUD published their final energy standards determination in the Federal Register as required by the Energy Independence and Security Act of 2007 (EISA). EISA requires HUD and the USDA to set minimum energy standards for certain categories of housing financed or assisted by HUD and USDA.

The NGBS Green Team will hold a webinar for Verifiers and Clients on Thursday, May 30th at 2 pm ET. Register here.

With this Notice, HUD and USDA adopt the 2021 IECC and ASHRAE 90.1-2019 as the minimum energy efficiency standards for EISA covered programs. The current energy baseline is the 2009 IECC. The Notice extends these minimum energy efficiency standards to programs not covered by EISA. The chart below is not comprehensive; it shows the programs used the most by our clients.

The Notice covers new construction only. Existing housing is not covered by the statute.

(click to enlarge)

Covered Housing

The 2021 IECC applies to new single family and low-rise multifamily housing and ASHRAE 90.1-2019 applies to mid- or high-rise multifamily (4+ stories).
The largest single category of new housing likely to be impacted by the Notice is FHA-insured homes. Additional programs impacted by this Notice are FHA-insured multifamily programs; the HOME Investment Partnerships Program and Housing Trust Fund program; Section 202 and 811 Supportive Housing competitive grants, Rental Assistance Demonstration (RAD) housing; Public Housing Capital Fund, Choice Neighborhoods; USDA Section 502 direct or guaranteed loans and Section 523 grants.
Excluded from the standards set in this Notice are programs not specified in the EISA statute (e.g., CDBG, CDBG-DR, CDBG-MIT, Indian Housing programs, Housing Choice Vouchers, Continuum of Care); and programs specified in the statute that no longer provide capital advances for construction (e.g., HOPE VI).

Compliance Cost & Benefits

The Notice contained extensive public comments and HUD analysis regarding estimated costs and benefits of compliance. This information is available in the Notice link above.

Good to Know

2024 IECC. HUD will accept the 2024 IECC or future editions of IECC, as an alternative compliance path for the 2021 IECC, contingent on a final determination from DOE that the 2024 IECC meets or exceeds the performance of the 2021 IECC.
HUD accepted ENERGY STAR for Homes version 3.2 and DOE ZERH SF Version 2 as a pathway for compliance. For multifamily, HUD accepted ENERGY STAR Multifamily New Construction version 1.2 and DOE ZER Multifamily 2.0 for compliance.
HUD rejected the HERS rating as an alternative to 2021 IECC compliance.
HUD stated that they would “accept a green building standard certification as a compliance pathway upon submission and approval by the agencies of evidence that the 2021 IECC and ASHRAE 90.1-2019; ENERGY STAR SF New Construction Version 3.2 certification or Version 1.2 for Multifamily New Construction certification; or DOE Zero Energy Ready Homes Single Family Version 2 or Multifamily Version 2 have been established as minimum requirements.”

Obviously, the last bullet is key for NGBS Green certification, but the HUD wording appears incomplete. I believe HUD was trying to state that a green building certification, such as NGBS Green, would be accepted as an alternative compliance if it is equivalent or equal to the 2021 IECC [my words, not HUD’s]. The NGBS Green team has asked HUD to confirm our interpretation and to understand what process is required for HUD to make a formal determination. Our analysis demonstrates that NGBS Green at the Silver certification level is equivalent to the 2021 IECC. Below is a list of resources that detail how the 2020 NGBS is equivalent to the 2021 IECC.

When Maryland recently adopted the 2021 IECC with NGBS Green at the Silver level, DOE accepted this as an equivalent for purposes of inflation Reduction Act (IRA) funding. Our goal is for HUD to do the same.

HUD Green MIP

The Notice applies the new minimum energy efficiency standards to programs not covered by EISA, such as the Green MIP. This program offers an incentive of the reduced mortgage insurance premium for buildings that earn a green certification such as NGBS Green, which currently requires a performance level above the current HUD minimum energy requirements – HUD has not stated if they will revise the minimum energy efficiency requirements above the new 2021 IECC baseline.

What is the Bottom Line

Verifiers and clients should review all projects pre-drywall that set their initial 2020 NGBS Green certification goal at Bronze to perform a gap analysis to see if a Silver level certification is possible and at what cost. The design team may elect to not change the certification level they are seeking, but we know it is always more cost effective to consider these changes earlier than later. As shown above. multifamily buildings are expected to comply with the new energy baseline starting roughly May 25, 2025.