HUD AWARDS $23 MILLION TO TEST NEW ENERGY-SAVING APPROACHES IN OLDER MULTI-FAMILY HOUSING DEVELOPMENTS

12 organizations selected to help drive innovative energy-saving approaches

WASHINGTON, DC – March 9, 2012 – (RealEstateRama) — All across the country, owners of aging apartment complexes are looking for ways to reduce their energy consumption and save money. In order to test new and innovative ways to cut energy bills and to finance energy efficiency upgrades in existing multi-family residential properties, the U.S. Department of Housing and Urban Development (HUD) today awarded nearly $23 million to a dozen organizations on the cutting edge of bringing energy-saving solutions to the housing market.

These affordable housing providers, technology firms, academic institutions and philanthropic organizations were selected to receive grant funding to test new approaches to implement and to pay for these energy-saving upgrades that may become the model for financing these ‘retrofits’ on a wider scale in the future (see grant summaries below). The federal grants are directly leveraging an additional $60 million in philanthropic, local and private capital.

“These grants are being awarded to a diverse collection of organizations that will help us find new ways to cut energy, save money and generate jobs!” said Acting Federal Housing Commissioner Carol Galante. “This is more than just ‘going green,’ it’s about bringing real dollars and cents solutions to a sector of the market that is currently wasting money heating and cooling buildings, some of which were built more than a generation ago.”

Theodore Toon, Associate Deputy Assistant Secretary for HUD’s Office of Affordable Housing Preservation, added, “These energy-saving innovations will be driven by the private sector who will help lead the way in bringing down the costs in our older multi-family housing stock. HUD’s new Energy Innovation Fund will become the model for others to follow in the national effort to bring a new generation of energy efficiency to older residential properties.”

The goal of HUD’s pilot program is to develop ideas and mechanisms that could potentially be replicated nationally, as well as help create industry standards in the home energy efficiency retrofit market. In addition, the pilot program will create public/private partnerships as a result of capital investments from private industries and create green jobs in construction, property management, and technical analysis (e.g. energy audits and building commissioning), including opportunities for low income residents.

HUD is awarding Energy Innovation Funds to the following organizations:

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HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and  transform the way HUD does business. More information about HUD and its programs is available on the Internet at www.hud.gov and http://espanol.hud.gov.  You can also follow HUD on twitter @HUDnews, on facebook at www.facebook.com/HUD, or sign up for news alerts on HUD’s News Listserv.

Energy Innovation Fund Awardees

New Ecology Inc., Boston
$989,275 (Applied Research Demonstration)

New Ecology Inc. will implement the Massachusetts Green Energy Retrofit program, a shared energy manager program that will identify and implement energy efficiency interventions in low income rental housing owned and operated by Massachusetts community development corporations and other for-profit and non-profit owners throughout Massachusetts. New Ecology expects to evaluate approximately 10,000 affordable housing units using a shared energy manager system, selecting a subset of units most likely to benefit from energy-conservation measures. Projections anticipate an average of 20 percent utility reduction for the (estimated) 2,667 units of affordable housing that will receive energy conservations measures.

The total budget for Massachusetts Green Energy Retrofit program is $1,978,550, with $989,275 from the HUD grant and $989,275 from matching funds. Additionally, it is expected that the program will leverage an additional $7,914,200 in utility, local and state government incentives, loans funds and property owner contributions. Most importantly, the program is specifically focused on cost-effective interventions and on developing a financially self-sustaining model of operation, so that the program might sustain and grow operations after the grant period, and that other organizations can adopt a similar model to improve the energy performance of their portfolios.

Stewards of Affordable Housing for the Future, Washington, DC
$1,500,000 (Applied Research Demonstration)

Stewards of Affordable Housing for the Future (SAHF) is a consortium of eleven of the largest not-for-profit owners of affordable multifamily properties in the country. SAHF will develop and implement a simplified approach to energy retrofits of low-income multifamily housing, using an analytic tool to be developed under the program (“EZ Retrofit”), and a one-stop shop approach to energy retrofits that will include access to low-cost capital via a loan fund to be established. The tool will focus on a limited number of energy conservation measures (ECMs) which have been demonstrated to be particularly cost-effective in the low-income multifamily housing. As an alternative to an expensive 3^rd party industrial grade audit, the EZ Retrofit tool will allow property owners to identify which measures are most likely to be cost-effective at their sites. The set of measures to be evaluated are intended to achieve over 25 percent utility savings. EZ Retrofit will provide an option to owners who would like to make their properties more energy efficient but lack the staff, know-how, or financial resources to do so.

EIF grant funds of $1.5 million will be matched with $1.5 million from a private lending source, which together will fund program development, and create a loan fund to finance the selected ECM’s at five to ten properties serving approximately 500 low-income households. SAHF will select target properties from the portfolios of properties owned by SAHF’s members. By providing owners with 100 percent of the necessary financing as well as assistance with selection and implementation of the ECMs, the EZ Retrofit program will establish a “one-stop shop” and greatly reduce the burden on owners, while demonstrating that the costs of effective energy retrofits can be repaid from the energy savings they create.

iCast, Lakewood, CO
$590,118 (Applied Research Demonstration)

iCAST, a non-profit organization specializing in assisting multifamily properties with sustainable energy solutions, will use grant funding to implement a multi-faceted approach to increasing energy efficiency within the multi-family housing sector. This approach will combine structural changes to equipment and facilities at selected properties with behavior change and education strategies for the owners, maintenance staff, and residents of these properties. The approach will be tested in various properties across the state of Colorado, including properties that will receive physical retrofits under this program, and others that have already been retrofitted but will implement behavioral changes. The project will be supported by matching funds of $590,657 from various local sources.

iCAST’s approach combines elements of physical, behavioral, and educational change along with the implementation of new and innovative technological solutions. The execution methodology proposed for this project is particularly innovative: iCAST will partner with local and state government, NGO’s, universities, businesses, and other organizations to support the grant activities. iCAST’s Service Learning model for university students offers academic credit to students who work on these real-world projects. Through participation in Service Learning projects, students enhance their technical and business skills while learning valuable lessons in teamwork, communications, and ethics that help create a more valuable workforce for the future, while contributing to a project that is expected to achieve at least 20 percent reductions in energy usage at the targeted properties.

Maryland Dept. of Housing and Community Development, Crownsville, Maryland
$1,250,000 (Financing Demonstration)

The Maryland Department of Housing and Community Development (MDHCD), will support the Maryland Multifamily Portfolio Energy Innovation Fund (the “Fund”). MDHCD anticipates that approximately 10 properties with a total of 625 units, located across the state, will be assisted through the Fund. HUD grant funds will be matched 2:1, for a total of $3.75 million in program funding, which will be used to make grants to selected multifamily properties to cover soft costs such as for energy assessments, and make project-level loans to finance energy conservation measures (ECM’s) at those properties. MDHCD will subordinate its current junior debt on those properties to the new, energy efficiency loan.

Properties assisted by the Fund will be expected to achieve at least a 20 percent reduction of overall utility consumption, with the loan to the property from the Fund expected to be repaid from the utility savings. This Financing Demonstration is intended to show that Housing Finance Agencies (HFA) can combine the technical expertise necessary to implement large-scale energy efficient lending programs with the access to critically-needed private capital to finance such improvements and that by undertaking a targeted, strategic approach to energy efficiency improvements, an HFA can improve the overall financial strength and physical condition of the properties within their portfolio. By improving the energy efficiency of units within these portfolios, MDHCD will increase the economic independence of some of the country’s neediest households, while simultaneously improving quality of life of these residents.

Enterprise Community Partners, Inc. New York, NY
$2,795,071 (Applied Research Demonstration)

Enterprise Community Partners will develop an initiative called the National Multifamily Energy Services Collaborative (NMESC), a collaborative service delivery model that can be replicated and taken to scale across the affordable housing field, which will enable community development corporations to participate in the energy-efficiency marketplace so that energy efficiency practices become an integral part of developing, preserving and managing affordable housing. The NMESC will offer affordable housing owners a comprehensive and standardized package of services to improve energy efficiency along a continuum of need, from improvements to operations and property maintenance practices, to complete retrofits of multifamily properties that will reduce energy consumption of at least 20 percent on average.

EIF funds will be combined with multiple matching and leveraged funding sources for a total program of $ 12,166,997. In partnership with LINC Housing, Hispanic Housing Development Corporation, and CNT Energy, Enterprise anticipates including dozens of properties and several thousand units of affordable housing in the NMESC program. Initial properties will be located in New York City, the Chicago area, and Southern California. Starting with this widely located portfolio, the NMESC will create a national framework to significantly improve energy efficiency in existing buildings that can be taken to scale and replicated in local markets around the country. This approach will offer standardized processes, tools and resources that can be easily customized by community development corporations and supplemented with regional and local resources. Enterprise will also oversee a national data collection and best practice effort that will share what is working and not working in the field of multifamily residential energy efficiency, from installation, to operations and property maintenance, to resident engagement.

Heat Watch, LLC, Glen Head, New York
$356,300 (Applied Research Demonstration)

This activity will utilize advanced, internet-based technology to monitor and control boilers based on outdoor reset and apartment temperatures. The use of such controls helps boilers operate at maximum efficiency and helps ensure tenant comfort and safety. Less than 10 percent of buildings in New York City have these controls installed and the percentage for affordable housing is much lower.

Heat Watch in partnership with a large affordable housing management/ownership organization, Lemle and Wolfe, will use the grant funds to install Platinum Heat-Timer boiler controls, and monitor the panels twenty-four hours per day for three years. The primary types of properties to be served are multi-family housing complexes with a majority of tenants receiving Section 8 housing subsidies through the New York City Housing Authority (NYCHA) or the Housing Preservation Department. The properties are located in low-income neighborhoods in Bronx County, NY. Heat Watch estimates at least a 20 percent savings on fuel expenses resulting in greater cost effectiveness of affordable housing operation and a cleaner environment for low-income residents. Such a savings would provide the available funds necessary to the owner to install these controls in other buildings of theirs making this project replicable for property owners.

Community Environmental Center, Inc, Long Island City, New York
$3,000,000 (Applied Research Demonstration)

Community Environmental Centers, Inc. (CEC) and its partners will demonstrate the importance of innovative delivery methods and post-retrofit initiatives derived from their experience with the US Department of Energy’s Weatherization Assistance Program (WAP). Beyond the implementation of cost-effective capital improvement measures (including renewable energy systems and novel in-unit energy monitoring and control devices where appropriate), CEC will pursue strategies targeted toward giving owners and tenants more awareness and control over the energy consumption behaviors; delivering efficiency and sustainability training and education to tenants and building operators; and providing post-construction monitoring and support for owners and operators.

CEC will invest in 950 affordable housing units including units serving developmentally disabled and substance-dependent low-income individuals in single-room occupancy (SRO) units through CEC’s partnership with The Bridge New York.

CEC will demonstrate the importance of environmental education, post-retrofit strategies that safeguard the performance of energy investments, and the deployment and performance of novel energy saving measures at the building-wide and in-unit levels. Further, along with Cornell University, CEC expects to analyze and consolidate the results of this retrofit initiative to provide a template for other consortia of affordable housing stakeholders, environmental education providers, and WAP subgrantees across the country to replicate the success of this project.

Columbus Property Management and Development, Inc., Philadelphia, PA
$3,000,000 (Applied Research Demonstration)

Columbus Property Management & Development, Inc. (CPM) will retrofit 100 units from its stock of scattered site, multifamily housing units, completing a variety of upgrades designed to promote energy efficiency, and outfitting a portion of these units with energy display devices designed to visually display electricity consumption to housing tenants. The research demonstration will test the effect of energy efficient upgrades on energy consumption in a multifamily property, and whether the presence and understanding of an in-unit energy display device will enhance tenant awareness and understanding of energy use and ultimately encourage behavioral changes that will reduce energy consumption. CPM will partner with building systems consultants, Steven Winter Associates (SWA) in this activity.

Ultimately, through the planned energy efficient upgrades, tenant training and use of in-unit energy display devices, CPM projects achieving a 20 percent energy savings.

Network for Oregon Affordable Housing, Portland, Oregon
$3,000,000 (Financing Demonstration)

The Network for Oregon Affordable Housing (NOAH) will use EIF grants funds to capitalize the MPower Fund. The MPower Fund will catalyze use of an on-bill financing retrofit pilot across the Portland metropolitan region and select rural communities in the State of Oregon. On-bill financing allows the costs of energy conservation measures to be paid up front by a utility company, and to be repaid through incremental charges on the users’ utility bills.

The MPower Fund will work collaboratively with Portland General Electric to leverage on-bill financing to directly address the challenges of limited asset collateral, and split incentives (a misalignment of costs and benefits among owners and tenants), which are barriers to energy retrofits of affordable multifamily housing. By matching proven program delivery with on-bill financing, the MPower Fund will unlock stranded energy efficiency potential while delivering a leverage ratio of 3.75 to 1 and demonstrating the viability of energy efficiency backed retrofits in affordable housing finance. Using this strategy NOAH expects to reduce energy consumption with a savings of 24,300 MBTUs annually, save building owners and/or tenants more than $1.7 million over 10 years, reduce CO2 emissions by an average of 1,300 metric tons annually, and deliver $8.1M in investment into the affordable housing stock.

NOAH’s partners include Blue Tree Strategies, Enterprise Community Partners, Craft3, Energy Trust of Oregon, Portland General Electric, the City of Portland and Green For All.

Board of Trustees of the University of Illinois, Champaign
$500,000 (Applied Research Demonstration)

The Smart Energy Design Assistance Center at the University of Illinois will conduct a program to address the needs of small to medium public housing authorities (PHAs). These PHAs have been underserved by existing energy performance contractors (EPCs) and financing options, partly due to higher risks, higher administrative costs, and low profit margins. The inability to attract investors for energy financing at reasonable market rates along with a lack of technical capacity to identify and address energy requirements have traditionally been the key barriers limiting the small to medium size multifamily market from addressing their need for energy efficiency improvements.

This Grantee will work with four PHAs in Illinois (in Champaign, Cook, Lake, and Union Counties). The Grantee will introduce tools to provide property owners and managers with the guidance and information necessary to determine cost-effective utility retrofits for a property. The PHAs will be trained in the use of the tools. Bid specifications and installation terms will be issued based on the “EPC-EZ App” a tool developed to serve this market. The proposal also includes quarterly analysis of utility bills, a satisfaction survey based on seven primary LEED criteria, training and outreach to facilitate proper utilization, and tenant acceptance of installed retrofits, and exploring varied financing methods. This approach will help smaller PHAs and multifamily properties across the country access the energy efficiency retrofit market.

Jonathan Rose Companies, LLC (activity in Newark, NJ)
Grant Requested: $325,732 (Applied Research Demonstration)

HUD EIF grant funds will be used to fund energy use monitoring along with tenant outreach and involvement at a large, elderly-only, Section 8 master-metered building in Newark, NJ. The program will evaluate the effectiveness of different approaches to energy management at this master-metered building. The building ownership and expects to show that providing real-time, tenant-specific information on energy use, along with education and some modest incentives, will lead to awareness of energy use and reductions in energy use, even when tenants do not pay a utility bill. This approach helps address the long-standing “split incentive issue,” and will demonstrate that utility metering and monitoring, along with information, education, and modest incentives can result in behavioral changes that significantly reduce utility consumption.

NRG Solutions LLC, Boston
$5,250,000 (Financing Demonstration)

The Grantee will establish a Multifamily Energy Loan Fund to provide secured private capital to finance utility efficiency projects in low income, multifamily properties. The Grantee will develop a collaborative service delivery mechanism designed to increase transparency, competition, quality, and capacity of the multifamily building energy services industry. There will be innovative credit enhancement provided to the fund, including an energy savings guarantee that will insure against loss if the projected energy savings are not realized, and will help to standardize the methodology used to model future energy savings through energy-specific underwriting.

The multifamily efficiency fund will be integrated with an energy services company (ESCO) to deliver turnkey energy services to selected properties. A qualified contractor network, properly coordinated, should significantly support the effectiveness of the dedicated energy loan fund while delivering job growth benefits to a regional economy. Using energy performance contracting as the bridge to connect capital with the capacity to execute efficiency projects, the ESCO will bring innovation to the energy services industry. The Grantee expects to retrofit approximately 1,200 units in multifamily properties. The EIF grant will be used to overcome the challenges of creating a supplemental energy financing program for multifamily affordable housing.

Contact:
Brian Sullivan
(202) 402-7527