February 02, 2010

On January 25, the US Department of Energy (DOE) published a final rule on the Weatherization Assistance Program (WAP) for Low-Income Persons.  This rule amends the WAP eligibility provisions applicable to multifamily developments, effective February 24, 2010.  For a property to be eligible for WAP, the owner must demonstrate that no less than 66 percent of the building’s households have incomes at 200 percent of poverty or less.  The final rule states that existing income verification procedures for HUD assisted, public housing, and Low Income Housing Tax Credit (Housing Credit) properties are sufficient for determining eligibility for WAP.  As a result, HUD will identify properties that are income-eligible and no further income verification process by the owner will be required.  NCSHA had submitted comments recommending DOE adopt this policy.

Under WAP, a grantee must establish procedures that ensure a tenant is not subject to rent increases for a reasonable period of time after weatherization work has been completed.  In addition, a grantee is required to ensure that WAP expenditures are focused solely on property enhancements that provide weatherization benefits and do not result in undue or excessive enhancement to the value of the property.  According to the final rule, all HUD qualified assisted housing satisfies the requirement to protect against undue or excessive enhancement of the weatherized building, without the need for further evaluation or verification. 

Under the rule, Housing Credit properties will not be included in the list of properties that meet the WAP rent control provisions without a need for additional conditions on the property owner.  For Housing Credit properties, the State, or weatherization grantee, maintains flexibility in establishing the necessary rent control conditions.  DOE based its decision on its understanding that the Housing Credit program does not provide sufficiently uniform protections against rent increases for DOE to determine that Housing Credit buildings would meet the WAP rent control requirement.

Under WAP, property owners must demonstrate that weatherization benefits will accrue primarily to multifamily tenants.  This can be demonstrated through utility cost savings in cases where tenants pay utilities directly.  In the final rule, DOE clarifies that administering state agencies can take into consideration benefits other than reduced utility costs when ensuring that benefits of WAP services accrue primarily to tenants.  Benefits can include a combination of long-term preservation of the property, continued monitoring of protections against rent increases, and a healthier living environment.  States also may consider ways in which energy savings and owner contributions can be structured to provide benefits to tenants, including through property upgrades such as apartment modernization and improved security systems, or improved resident services such as broadband access and job training.

In the final rule, DOE did not amend the WAP regulatory provision requiring multifamily building owners to participate financially in the WAP-assisted work.  DOE reiterated, however, that “a State may require financial participation where feasible from multifamily owners” (DOE’s emphasis).  In fact, many states are reducing or waiving this requirement, or reserving the option to negotiate the contribution requirement with each owner.