1. Kevin J. Han | HUD Technical Specialist
Green MIP
Kevin J. Han | HUD Technical Specialist

2. Past Green MIP Initial Endorsements
FY 2016
FY 2017
FY 2018
# Loans
$ Volume
223a7 Green 9
308,288,000 25
743,724,600 22
433,203,800
223a7 Total
146
1,754,619,400
183
2,552,642,000 63
782,526,700
223f Green 5
174,934,200 40
1,000,048,200 87
2,201,498,000
223f Total
446
4,557,626,470
574
7,292,902,650
483
6,941,033,100
221d4 Green 16
557,191,300 82
2,755,572,300
114
3,719,645,900
221d4 Total
206
3,629,924,300
199
4,403,052,554
251
6,031,026,729
Total Green 30
1,040,413,500
147
4,499,347,117
226*
6,386,302,000*
Total Initial Endorsement
806
9,964,831,670
961
14,298,361,804
797*
13,754,586,529*
- Here are the numbers on Green MIP deals, starting April of 2016 when the MIP Notice went into effect.
- You see the number of deals and the $ volume of those deals, broken down by Fiscal Year and by FHA Mortgage Insurance Programs.
*Does not include 241a. In FY 2018, as of 9/17/2018, there are 3/$31,954,300 Green MIP 241a deals
As of 9/17/2018

3. Green MIP Initial Endorsements
2016
2017
2018
# Loans
$ Volume
Total Green 30
1,040,415,516
147
4,499,347,117
226
6,386,302,000
Total Initial Endorsement
806
9,964,831,670
961
14,298,361,804
797
13,754,586,529
Green %
3.7%
10%
15%
32%
28%
46%
Takeaways:
Observation: FY 2017 represents the first full year’s worth of data.
The Green MIP Notice went into effect on April 1, 2016 halfway through the FY 2016.
In FY 2017 alone, we saw $4.5 Billion dollars worth of transactions. (41% by count, 63% in $ volume of the total for 221d4)
Green MIP initiative has been very successful, to say the least;
Far exceeded HUD’s projection in count and volume (about 45 X the projected amount in $ volume).
Looking at the percentage, the number of Green deals are trending up (look at FY 17, 15% by count – compare with FY 18, only half-way through the year, it’s already at 22% by count).
Sheer volume of Green MIP properties:
1. Does increase risk for HUD in terms of their continual compliance for energy efficiency (I mentioned 45X the projected amount);
2. Increases the oversight and enforcement burdens for HUD Staff and Asset Management should the properties fall out of compliance;
3. that means:… Increased need to ensure upfront (production phase) the property’s ability to stay in compliance.
That’s the lay of the land currently, upon which we want to share HUD’s current perspective on Green MIP to talk about for the rest of the slides.
As of 9/17/2018

4. Present Guidance: Scattered Sites
Need to obtain singular SEP/SEDI Energy Star Score
Scenario: Scattered-sites property qualifying for Green MIP
HUD Response:
The entire property must generate one singular Energy Star Score;
HUD will not be able to process multiple annual SEP reports/scores for a give property;
Owner may attempt to work with EPA to achieve Energy Star ‘Campus’ arrangement to generate one SEP Score for the entire property, but…
No strenuous legal arrangement must be required.

5. Need to obtain singular SEP/SEDI Energy Star Score
Present Guidance: 241(a)
Need to obtain singular SEP/SEDI Energy Star Score
Scenario:
Addition of new building(s) or;
Additional phase(s) to qualify for Green MIP;
Without considering the existing building(s)?
HUD Response:
The entire property must generate one singular Energy Star Score;
Any supplemental loan is secured by the entire real estate.
Entire property need to meet requirements/standards, based on energy performance of entire property.

6. PRESENT Guidance: Annual Energy Performance
Where to submit?
Centralized Mailboxes:
Include: Project Name; Project ID#; HUD Custom SEP
HUD Response:
The Rider currently states the Annual SEP Reports (aka Energy Star Scores) are due on the anniversary of the original SEP.
The information will be inputted into iREMS;
Listing of AE’s:

7. PRESENT Guidance: Annual Energy Performance
Failure to Provide Satisfactory Annual Energy Scores
- Wanting to inform the audience that the EPA’s August Update DOES NOT include residential apartment buildings

8. PRESENT Guidance: Annual Energy Performance
Failure to Provide Satisfactory Annual Energy Scores
Scenario: Updates of EPA’s benchmarked stock properties used for Energy Star Score scale.
HUD Response:
HUD will review the actual energy consumption (Energy Use Intensity in kBtu) figures;
Compare the EUI against the initial/original EUI;
HUD may waive the minimum 75 Score for the year of non-compliance if the EUI remained the same or better, and;
Owner elects energy improvement measures to implement.

9. possible enforcement action: Annual Energy Performance
Failure to Provide Satisfactory Annual Energy Scores
Scenario: Less than 75 Energy Star Score
HUD Response:
Notice of Violation of the Regulatory Agreement;
60 days to respond with corrections or plan for corrections;
REAC / Pursuant of Section 6(e) of the Regulatory Agreement: Owner prohibited from making distributions of surplus cash;
APPS Flag;
Grounds for rejection for future Green MIP applications

10. Best practices recommendation: Energy Data Collection
Ensuring Annual Energy Consumption Data Collection
Scenario:
Individual tenant metered property (no master meter at the property level);
No State or Local Government law/regulation requiring energy benchmarking;
Utility Provider(s) casual agreement to provide aggregate Energy Data at the property;
= No definite guarantee of annual data needed for Energy Star Scores (SEP) submissions.

11. Best practices recommendation: Energy Data Collection
Ensuring Annual Energy Consumption Data Collection
HUD’s Recommendation:
Be cautious about casual agreements (e.g. exchange from a staff from the utility company);
Check to see if the Utility Provider already has the benchmarking system in place for the customers (e.g. benchmarking website for the owners to login, etc.)
Installation of data-logging devices (aka sub-metering) for the entire property (100% data).

12. UPCOMING Guidance: Green Standards for Existing Buildings
Energy Star for Existing Buildings & LEED Existing Buildings Operations and Management (LEED EBOM)
These particular Standards are designed to award based on verified existing performance;
Standards lack evaluation and monitoring of proposed improvements / construction.
Not talking about other standards that may deal with existing buildings but these 2 in particular because these 2 do not have construction standards.
NOT based on prospective performance after retrofit.
By Design, for the Green MIP, HUD wanted to rely on these Standard Keepers to provide Quality Control measures on behalf of HUD.
Intended that we provide MIP Reduction based on purposeful construction aiming for energy efficiency and to incentivize actual improvements to be implemented for existing buildings.

13. UPCOMING Guidance: Green Standards for Existing Buildings
Clarification on Energy Star for Existing Buildings
Certification based on:
Actual energy consumption data;
100% entire property;
Past 12-consecutive months.
No acceptance of anticipated/projected scores (often based on sampled data);
Cannot be prospective on proposed improvements;
Official Certification required at the time of Firm Commitment Application.
Energy Star:
Detail in the $1500 per unit limit.
If the repairs needed to improve results in Total Repairs of $1.5k and above, go for a different Green Standard.

14. Upcoming Guidance: Green Standards for Existing Buildings
Refinancing of Newly Constructed Projects
New construction after September 2016 without the Green Standard Certification (e.g. LEED, NGBS, etc.):
May not refinance to qualify for Green MIP using Green Standards for Existing Buildings (i.e. Energy Star & LEED EBOM);
This restriction applies within the first 3-years from the date of certificate of occupancy.