HUD Housing Notice § 2023-09
Treatment of Financial Benefits to HUD-Assisted Tenants Resulting from Participation in Solar Programs (HUD Housing Notices)
HUD guidance — not codified law
In Force
Verified 10/6/2026 · Next check 10/13/2026
effective 10/6/2026FederalAffordable Housing ProgramsOperative Text
HUD Housing Notice § 2023-09
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D.C. 20410–8000
ASSISTANT SECRETARY FOR HOUSING —
FEDERAL HOUSING COMMISSIONER
Special Attention of: Notice H 2023–09
Multifamily Asset Management Division Issued: 8/3/2023
Directors
Multifamily Contract Administrators Expires: This Notice remains in effect until
Multifamily Project Owners and Management amended, superseded, or rescinded.
Agents
Multifamily Regional Center Directors
Subject: Treatment of Financial Benefits to HUD-Assisted Tenants Resulting
from Participation in Solar Programs
I. Purpose
This Notice provides guidance on the treatment of financial benefits realized by HUD-
assisted tenants resulting from either participation in a community solar program or the
presence of an on-site solar facility.1 Specifically, it addresses whether and how such
financial benefits are to be factored into utility allowance baseline analyses and income
calculations. It covers the following scenarios:
A. Electricity is individually metered, and the tenant receives a financial benefit (a
virtual net metering credit) that appears as a negative amount on the tenant’s
electricity bill.
B. Electricity is individually metered or sub-metered, but it is administratively
infeasible or not legally possible for the financial benefit to be distributed via
individual discounts on tenants’ electricity bills, so the owner must find another
means of distributing the financial benefits.
C. Electricity is master-metered, such that residents do not receive individual
electricity bills, and the owner must find another means of distributing the
financial benefits.
II. Background
Many community solar programs and on-site solar incentive programs stipulate that
financial benefits must be distributed to tenants as a condition of program eligibility. For
tenants of HUD-assisted properties, whether they receive a direct financial benefit (i.e., a
credit on their electricity bill) or an indirect financial benefit (i.e., a financial benefit
distributed not via an individual meter but by an owner), the question is whether that
financial benefit must be factored into the tenant’s utility allowance or included in the
tenant’s annual adjusted income; either outcome would reduce the value of the financial
1
This guidance could also apply to financial benefits resulting from other, similar programs, such as a qualified
solar and wind facility as defined at 26 U.S.C. § 48(e)(2).
www.hud.gov espanol.hud.gov
benefit. Owners who wish to participate in programs that require the distribution of
financial benefits to tenants must therefore be mindful about existing rules for utility
allowance baseline analyses and income calculations.
Community solar programs provide people residing in properties that may be unsuitable
for solar panels with the opportunity to subscribe to community solar arrays. Subscribers
then receive credits on their utility bills that are directly attributable to the solar project’s
energy generation. These subscribers may be tenants who receive financial benefits
directly, either through individual metering or sub-metering, or owners of master-metered
properties, who must then distribute such financial benefits to tenants. With respect to on-
site solar, where electricity does not pass through a meter, owners must distribute financial
benefits to tenants irrespective of whether tenant units are individually metered.
Many tools made available at the federal level to finance or fund renewable energy
projects at multifamily properties require that energy cost savings (i.e., financial benefits)
be distributed to residents. The Inflation Reduction Act (IRA), for example, expanded or
created several programs to finance solar facilities, including some targeted to affordable
multifamily housing. The IRA amended the investment tax credit for energy property
(ITC),2 by adding the “Low-Income Communities Bonus Program,” an additional
allocated tax credit for certain solar and wind facilities. A facility that is part of “qualified
low-income residential building project” requires that the facility’s financial benefits be
distributed to the participating property’s residents.
III. Terminology
A. “Community Solar” is any solar project or purchasing program within a
geographic area in which the benefits of the project flow to customers such as
individuals, businesses, and not-for-profit organizations. In most cases, customers
benefit from electricity generated by solar panels at an off-site array.3
B. “Individual Metering” is when individual households in a multifamily housing
development have a unique account with their electricity provider and receive an
individual electricity bill reflective of their consumption.
C. “Master Metering” is when a single meter measures the total amount of electricity
consumption for a multifamily housing development. The owner/manager of the
property receives one total bill for each billing period.
D. “Sub-metering” is when a single meter allows for the monitoring of usage on
individual electricity or other costs past a Master Meter.
2
See 26 U.S.C. § 48.
3
For more information, visit the “Community Solar Basics” web page at https://www.energy.gov/eere/
solar/community-solar-basics.
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E. “Net Metering” is when community solar participants receive a credit on their
electricity bill. “Virtual net metering” is when the solar array is located off-site
and not directly connected to the participant’s home electrical system.
IV. Applicability
This notice applies to the following Office of Multifamily Housing Programs:
A. Project-based Section 8
1. New Construction
2. State Agency Financed
3. Substantial Rehabilitation
4. Section 202/8
5. Rural Housing Services (RHS) Section 515/8
6. Loan Management Set-Aside (LMSA)
7. Property Disposition Set-Aside (PDSA)
8. Rental Assistance Demonstration Project-Based Rental Assistance
(RAD/PBRA)
B. Section 202/162 Project Assistance Contracts (PAC)
C. Section 202 Project Rental Assistance Contracts (PRAC)
D. Section 202 Senior Preservation Rental Assistance Contracts (SPRAC)
E. Section 811 PRACs
F. Section 811 Project Rental Assistance (PRA)
G. Non-insured Section 236 Interest Reduction Payment projects
V. How to Determine Whether Direct Benefits to Tenants Must be
Factored into Utility Allowance and/or Annual Income Calculations
This section of the Notice applies where electricity is individually metered or sub-
metered, and the tenant receives a virtual net energy metering credit as part of community
solar or on-site solar facility. Please use the following two-step process to determine
whether the solar credits should be included in/excluded from the utility allowance
baseline analysis or included in/excluded from a family’s annual income for purposes of
rent calculation and/or eligibility determination.
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Step One: Determine if Solar Credits Affect Utility Allowance Calculation
Step One is a test for determining the solar credit’s relationship to the utility allowance
calculation. To understand the effect of a community solar credit on a unit’s utility
allowance calculation, you will need a copy of the tenant’s electricity bill (this can be
accessed by the utility company if it is not already available). Per this guidance, you will
not need any additional information as the solar credit will appear as a negative amount
on the tenant’s electricity bill.
If the credit reduces the cost of energy consumption by lowering actual utility rates, then
the owner is required to submit a new baseline analysis in accordance with Housing
Notice 2015-04, regardless of when the last analysis was submitted to HUD/Contract
Administrator for approval.
Factors for determining whether the credit is tied to the cost of consumption:
A. Is the credit a third-party payment (e.g., not from the electricity provider) on
behalf of the tenant rather than a reduction in the cost of utilities?
If “yes,” then the credit is not considered to reduce the cost of energy
consumption as the cost for the utility provider to provide the consumed energy
does not change. The owner is not required to submit a new utility allowance
baseline analysis (see example bills with solar credits not tied to consumption in
the appendix).
If “no,” then the credit may be tied to the cost of consumption. Proceed to
question B below.
B. Does the credit amount fluctuate every month based on consumption (i.e., not
based on solar output) and/or does the electric bill show a lowered utility rate per
kilowatt-hour?
If “yes,” then the credit is tied to the cost of utility consumption. The owner is
required to submit a new utility allowance baseline analysis.
If “no,” then the credit is not tied to the cost of utility consumption. The owner is
not required to submit a new utility allowance baseline analysis.
Step Two: Determine if Solar Credits Should be Considered Annual Income for Rent
Calculation or Determining Eligibility for HUD-assisted Multifamily Programs
The second step is to determine if the credits fall within HUD’s definition of annual
income. In all foreseeable instances as of the date of this Notice, if the solar credit is tied
to the cost of consumption (i.e., utility allowance is affected) (addressed in Step One),
then the credit will not count toward income.
If a solar benefit appears on a household’s electricity bill as an amount credited from the
total cost of the bill, HUD has determined that the credit should be treated as a discount
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or coupon to achieve a lower energy bill (rather than a cash payment or cash-equivalent
payment being made available to a resident). In this case, the credit will not be counted
toward income, as discounts on items purchased by a tenant are not viewed as “annual
income” to the family. Generally, income is not generated when a family purchases
something at a cheaper rate than it otherwise would.
Note that if the credits are found to be third-party payments based on Step One, there
may be instances when the credits are not mere discounts and must be treated as income.
For instance, a recurring monthly utility payment made on behalf of the family by an
individual outside of the household is not considered a discount but is considered annual
income to the family.
VI. How to Determine Whether Indirect Benefits to Tenants Must be
Factored into Annual Income Calculations
This section of the Notice applies where energy credits from community solar or an on-
site solar facility cannot be provided directly to tenants.
Some multifamily buildings are master-metered, meaning tenants do not receive an
individual electric bill. Solar programs and incentives may allow participants (i.e.,
owners of master-metered properties) to distribute financial benefits to tenants through
alternative delivery models such as providing direct cash benefits or additional building
amenities like a security guard or shuttle bus. HUD has surveyed states that are
considering these alternative models and is providing via the list below an assessment of
whether particular types of benefits should be considered “income” for the purpose of
determining family rent or eligibility for HUD assistance.
In addition to applying in the above-described scenario, this assessment applies when
electricity is individually metered or sub-metered, but it is administratively infeasible or
not legally possible to distribute financial benefits directly (for example, because the
solar facility is powered by rooftop panels and is used without passing through an electric
meter or because the jurisdiction does not allow net-metering, etc.).
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Benefit Description Treated as family income?
Job training and workforce A combination of social This benefit is not annual
development services, community supports, income. Services provided are
job training and/or education not included in the income
that positions an individual for calculation for determining
success in the workforce. family rent or eligibility for
These services exclude any HUD assistance.
cash benefits, reimbursements,
stipends, or gift cards to a
family.
Additional support staff Hiring of additional staff to This benefit is not annual
serve residents and/or building income. Additional staff being
needs. Examples include hired to support the residents
resident services staff, and/or building are not
building security guards, included in the income
leasing specialists, calculation for determining
maintenance staff, etc. family rent or eligibility for
HUD assistance.
Facility upgrades Improvements to the building This benefit is not annual
and/or its grounds. Examples income. Facility upgrades,
include energy efficiency including new building
upgrades, playgrounds, amenities, are not included in
community gardens, the annual income calculation
renovation, bike racks, etc. for determining family rent or
eligibility for HUD assistance.
Free or reduced cost high- Free Wi-Fi provided Free Wi-Fi is an amenity and
speed internet service throughout the building and/or is not included in the family’s
in common areas or the owner annual income. Discounted
negotiates Wi-Fi services for Wi-Fi services would also not
the building and the residents be treated as annual income to
are offered a discounted the family.4
service.
4
The Affordable Connectivity Program discounts up to $30 per month toward broadband service for eligible
households and up to $75 per month for qualifying households on qualifying Tribal lands. The benefit also provides
up to a $100 per household discount toward a one-time purchase of a computer, laptop, or tablet if the household
contributes more than $10 and less than $50 toward the purchase through a participating broadband provider. HUD
has previously determined that the FFC Affordable Connectivity Program (ACP) does not count as annual income,
see: https://www.hud.gov/press/press releases media advisories/HUD No 22 090.
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Financial literacy programs Programs and services aimed at This benefit is not annual
and services developing one’s financial income. Services provided are
literacy to improve personal not included in the income
finances. May include access to calculation for determining
free training, classes, and/or family rent or eligibility for
resources related to budgeting, HUD assistance.
managing, and paying off
debts, and understanding credit
and investment products. These
services exclude any cash
benefits, reimbursements,
stipends, or gift cards to a
family.
Wellness programs and Wellness programs and This benefit is not annual
services services provided to residents income. Items that are an
as a preventive measure to amenity are not included in the
help avoid illness while income calculation for
improving and maintaining determining family rent or
general health. These services eligibility for HUD assistance.
exclude any cash benefits,
reimbursements, stipends, or
gift cards to a family.
Shuttle services Free shuttle services for This benefit is not annual
residents can include a variety income. Items that are an
of paratransit services that use amenity are not included in the
small buses or vans to provide income calculation for
shared mobility services. These determining family rent or
services exclude any cash eligibility for HUD assistance.
benefits, reimbursements,
stipends, or gift cards to a
family.
Community events and/or Hosting events for residents This benefit is not annual
support for resident and/or providing financial income. Items that are an
associations support for resident amenity are not included in the
associations. These services income calculation for
exclude any cash benefits, determining family rent or
reimbursements, stipends, or eligibility for HUD assistance.
gift cards to a family.
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Increased operating or Accounts established by This benefit is not annual
replacement reserves for the property owners to pay for income. Items that are an
property operating and/or large amenity are not included in the
property expenses like long- income calculation for
term major repairs and determining family rent or
unexpected expenses, like eligibility for HUD assistance.
emergencies.
Resilience center Creation or designation of a This benefit is not annual
space to provide critical income. Access to community
services during a power outage facilities is not included in the
and/or a weather- induced income calculation for
extreme event. Examples determining family rent or
include community facilities eligibility for HUD assistance.
for cooling or heating during
periods of extreme heat or cold
and access to refrigeration,
power to charge devices, and
telecommunications during a
power outage.
Non-monetary donations Non-monetary, in-kind HUD cannot definitively say
donations, such as food, whether this benefit would be
clothing, or toiletries. counted as annual income to a
family. A number of factors
must be considered, including
the frequency of the non-
monetary donations.
Gift cards or cash payments Gift cards provided to Generally, gift cards and cash
families, including gift cards payments to a family would be
for gas, groceries, and included in family annual
department stores. income unless an income
exclusion under 24 CFR
5.609(c) applies. For example,
if a family receives one gift
card, it would likely be
excluded as a temporary,
nonrecurring, or sporadic gift
under 24 CFR 5.609(c)(9). Or,
if a family receives one lump
sum cash payment, it would be
excluded as a lump-sum
addition to family assets under
24 CFR 5.609(c)(3).
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VII. Further Information
If you are evaluating the treatment of solar credits or an owners’ distribution of solar
financial benefits outside the program framework outlined above, and you require a
unique determination, or you have general questions about this guidance, please email
John McLaughlin, Program Analyst, at John.C.McLaughlin@hud.gov.
To learn more about rooftop and community solar offerings and programs in your
jurisdiction, visit the U.S. Department of Energy’s website on solar energy resources for
consumers at https://www.energy.gov/eere/solar/solar-energy-resources-consumers. You
can also find more information about GRRP at https://www.hud.gov/grrp.
Julia R. Gordon
Assistant Secretary for Housing — Federal
Housing Commissioner
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Appendix: On-Bill Appearance of Solar Credits
Example 1: Utility Bill with Community Solar Credits not tied to Consumption
*In this sample bill, the customer used 1415 kWh that month and they are being fully charged for
that usage. The two lines of community net metering (CNM) credits are for –100 kWh and –150
kWh that carry their own kWh charge. Those are not at all connected to the 1415 kWh
usage/cost.
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Example 2: Utility Bill with Community Solar Credits not tied to Consumption
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Source: Legislative text reproduced verbatim
Plain English
Housing Notice H 2023-09 establishes how financial benefits from community solar programs or on-site solar facilities are treated for HUD-assisted tenants. It sets out a two-step process to determine whether solar credits affect utility allowance calculations and whether they count as annual income for rent or eligibility purposes. The notice also catalogs a range of indirect benefits—such as facility upgrades, shuttle services, and free Wi-Fi—and specifies which of those count as income and which do not.
Written by anthropic/claude-sonnet-4.6 · Reviewed on October 6, 2026
Plain English — not legal advice.
For Property Managers
Under Housing Notice H 2023-09, compliant operators follow a two-step analysis when tenants receive solar credits: first determining whether credits affect the utility allowance baseline (which may trigger a new submission under Housing Notice 2015-04), then assessing whether credits constitute annual income. Owners distributing indirect benefits—such as amenities, services, or cash—review the notice's benefit table to apply the correct income treatment. Careful documentation of how benefits are structured and delivered supports accurate rent calculations and program eligibility determinations.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
For Tenants
Housing Notice H 2023-09 clarifies that many solar-related financial benefits—including bill credits treated as discounts and amenities like free Wi-Fi or shuttle services—generally do not count as annual income, meaning they should not raise a tenant's rent or affect program eligibility. If a tenant believes solar credits or other benefits have been incorrectly counted as income, that concern can be raised with the property's Contract Administrator or with HUD directly. Tenant-rights organizations can also help residents understand how this notice applies to their housing program.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 6, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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