Using ecological principles, MILAGRO, a co-housing community located in Tucson, Arizona, at the heart of the Sonoran Desert, is committed to provide the people an earth-friendly neighborhood. Its goal is to demonstrate resource, energy efficiency and passive solar technologies to demonstrate standards for sustainable and environmentally responsive architecture in balance with nature. MILAGRO complies with Tucson Electric Power Company's incentive program "TEP Guarantee" and exceeds the energy code requirements for the Sustainable Energy Standards (SES). During the design phase, the author (project's energy consultant) collaborated with the project's planner and architects to implement all relevant energy conservation and passive solar strategies appropriate to the unique set of climate conditions of the site. All the units were elongated east-west and have a two-story compact design. Surface to Volume Ratio (SVR) is minimized (0.12). The 15" Adobe walls tempers the temperature fluctuation and provide proper thermal storage. Our first phase energy performance prediction for space conditioning load was 31.1 Kbtu/ ft 2 cooling and 12.3 Kbtu/ft2 with a 3.4 Ton demand mechanical system. Through optimized thermal mass, night ventilation, double vented roof (ice-house technology), advanced windows, shading and landscaping, and efficient mechanical systems, the space conditioning load was reduced by 55.7 %, yielding a peak demand which can be met by a 2 ton mechanical unit. Source consumption is reduced by 73.9% to pass and exceeds all local energy code requirements. This paper demonstrates the energy analysis and optimization process and describes the energy conservation and passive solar strategies and their implementation in the final design of Milagro.