Common use of Operating Subsidy Clause in Contracts

Operating Subsidy. The calculation of operating subsidy for the Initial Year is based on HABC’s funding amount already calculated by HUD for its fiscal year July 1, 2004 – June 30, 2005, in the amount of $58,395,634 ($25,182,725 of which relates to utility costs). There shall be two adjustments allowed to this baseline amount in subsequent years: (1) an inflation factor applied to the utility cost component of the subsidy ($25,182,725 in the initial year) based on an energy index as determined by HUD each year; and (2) the remainder of the annual funding amount ($33,212,909) shall be adjusted by an annual inflation factor pursuant to existing regulations. Funding for operating subsidy in the second and subsequent years of this agreement will be based on initial year funding (the baseline as adjusted) and will be further adjusted annually commensurate with adjustments to annual appropriations for the Operating Subsidy Program. Furthermore, Congress has stipulated that HUD transition all public housing authorities to a calendar year funding cycle for Operating Subsidy. Therefore, HUD funded HABC for six months starting July 1, 2005 and ending December 31, 2005 based on HABC’s frozen level pro-rated for six months. Then, starting on January 1, 2006, HABC receives operating subsidy at the frozen level (including adjustments mentioned above) on a calendar year basis for the duration of the Restated Agreement. No additional funding shall be provided beyond the amount specified above for Operating Subsidy and further that such funds are subject to the availability of appropriations. Eligibility for operating subsidy for calendar 2008, prior to pro-ration, is $75,791,519 ($38,900,649 of which relates to utility costs). For purposes of determining post-MTW project-level utility expense levels where an Energy Performance Contract (EPC) extends beyond the term of this Restated Agreement, the Department will use, for the remaining period of the EPC, the “frozen consumption levels” used to determine the baseline for the EPC.