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HUD’s Mark-to-Market Green Initiative Pilot Program to Monitor, Collect Data on Green Building Performance

The Department of Housing and Urban Development’s (“HUD”) Mark-to-Market (“M2M”) Program assists private multi-family property owners whose housing subsidy contracts with the federal government are expiring. The purpose of the M2M program is to reduce the amount of subsidies that the federal government distributes, as many of those contracts originally set rents at an amount higher than market rate (for a variety of factors, including the costs of administering the Section 8 program). The owner will generally work with a local housing authority (called a Participating Administrative Entity) to determine current market rate, suggest improvements to the property that would allow the property to command competitive rents, and restructure the property’s finances and operating costs to permit such rents. In order to qualify for the M2M Program, properties must offer four or more units, be backed by one or more FHA-insured or HUD-held mortgages, be party to a Section 8 contract, and be offering rents that exceed those in the local market. Since 1997, over 1,600 projects have been restructured through M2M.

We mention M2M here because, earlier this summer, HUD announced a voluntary Green Initiative Pilot Program, designed to encourage multi-family Section 8 property owners that are participating in M2M to improve and operate their buildings using sustainable principles. Under M2M, HUD will finance ninety-seven percent of all Significant Additions to a participating property; the Green Initiative will include a variety of green products, materials, building systems, and appliances within the definition of “Significant Addition.” What’s particularly interesting is that the Initiative also requires owners to prepare a Green Operating & Maintenance Plan, which must include (among several other items that you can check out in more detail via the link below) a Monitoring Plan, which entails electronic monitoring and remote data collection of the property’s energy use, water consumption, and environmental conditions. According to HUD, it “intends to gather property performance data and make it widely available (respecting privacy concerns) in the hope that the academic community will join with industry and use this data to learn more about the correlation between [g]reen alternatives and cost savings or other benefits.”

Owners, of course, must first agree to cooperate with these monitoring and data collection efforts, but for those of us who have called for increased objectivity about green building benefits through empiric analysis of verifiable property performance data, the M2M Green Initiative could be a particularly critical Pilot Program as it moves forward. Accordingly, it will be one that gbNYC monitors closely through the close of 2007.

2 Responses to HUD’s Mark-to-Market Green Initiative Pilot Program to Monitor, Collect Data on Green Building Performance

  1. Brian September 20, 2007 at 2:17 pm #

    This is a great initiative but I didn’t catch much about it’s reach. Real success hinges on marketing and education. I’m not sure of the true percentage but I would think a majority of Section 8 property owners may fall under the “slum lord” title and might not be interested in greenbuilding b/c of the requisite time, possible bureaucratic red tape, and initial cash outlay, no? Is this a valid presumption?

  2. Stephen September 21, 2007 at 3:27 am #

    Awareness is a huge green issue, particularly when it comes to convincing owners of the business case for green building, so it will be interesting to see exactly what types of owners participate in this pilot program. I’m inclined to agree with your presumption, but let’s see how things play out here first.

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