HUD has introduced a new draft notice regarding solar and rooftop leases for multifamily projects. To gather feedback on the draft notice, HUD will host a virtual stakeholder listening session on October 29, 2024. This document introduces important regulations for multifamily property owners and agents managing HUD-insured or HUD-subsidized properties. Specifically, it applies to those who are considering leases for rooftop solar systems, cell towers, or other commercial uses.

Key Points of the Solar and Rooftop Leases for Multifamily Projects Notice

1. New Lease Requirements. The notice outlines HUD’s requirements for owners who wish to lease rooftop space for solar or install ground-mounted solar systems. Owners must follow a HUD-defined approval process before entering into lease agreements.
2. Utility Benchmarking Requirement. Owners must conduct utility consumption and emissions benchmarking within 18 months of installing solar systems that provide on-site energy. This benchmarking process will help track the project’s energy efficiency and environmental impact.
3. Solar Leases and Power Purchase Agreements (PPAs). Solar leases often include a PPA, which allows owners to purchase electricity generated by solar panels at a lower rate. This arrangement benefits both the project and tenants, reducing overall energy costs.
4. Rider Agreement. HUD requires that all parties sign a HUD Multifamily Solar, Cell Tower, and Rooftop Lease Rider before installation. The rider addresses responsibilities including:
   • equipment removal during roof repairs,
   • roof condition,
   • and insurance coverage, ensuring compliance with HUD’s asset protection.

Why This Notice Matters to Owners and Agents

1. New Revenue Opportunities. Leasing rooftop space for solar and rooftop leases for multifamily projects can generate rental income. As a result, it can also reduce electricity costs, improving properties’ financial stability.
2. Compliance and Risk Management. The notice introduces new compliance steps that owners must follow. Ensuring that a property’s roof can handle new equipment and is adequately insured is crucial for mitigating potential risks.
3. Environmental and Economic Benefits. Solar energy is a renewable resource that can reduce greenhouse gas emissions while reducing energy bills for owners and tenants. As utility costs rise, solar installations can help improve housing affordability.
4. Tenant Impact: Reduced utility bills can make housing more affordable for tenants, directly benefiting HUD-assisted communities. Lower energy consumption costs, especially through solar PPAs, could significantly impact tenants’ quality of life.

How Owners and Agents Can Provide Feedback

HUD encourages multifamily property owners, agents, and vendors to provide feedback on the draft notice. They are particularly focused on benchmarking requirements and the provisions in the lease rider. You can use this Draft Rooftop Leases HN Response worksheet. Participants in the virtual session on October 29, 2024, can share their input directly with HUD representatives. You may register here.

Feedback can also be submitted in writing via email at assetmanagementpolicy@hud.gov by November 10, 2024.