Increasing the Supply of Energy Efficient Units in Public Housing

1. Increasing the Supply of Energy Efficient Units in Public Housing Strategies for Underserved PHAs

2. Current Priorities • Preserve the Portfolio of Affordable Units • More than 60,000 units are offline or uninhabitable due to backlog of capital needs • Increase the Number of Families Served • High Priority Performance Goal 2 • Increase the Supply of Energy Efficient PH Units • High Priority Performance Goal 4 • Increase Program Flexibility and Streamlining • Several legislative Initiatives Underway

3. Investing in Energy Efficient Units in FY 2010 & FY 2011 201,000 Achieved by HUD 159,000 HUD’s original goal 119,965 Achieved by PIH 73,957 48,509 PIH’s original goal Achieved through EPCs 15,000 Original goal for EPCs

4. Energy Performance Contracts (EPCs) Financing technique that uses cost savings from reduced energy consumption to repay the cost of adding energy (and water) conservation measures (ECMs). • EPCs permit PHAs to leverage private investment • EPCs generally employ the services of an Energy Services Company (ESCO) or may be undertaken by the PHA as a self-developed (self administered) process; and, • EPCs are financed by an entity other than HUD, i.e., third party • EPCs last 20 years max (Some states time limits varies)

5. EPCs • As of 2011: • >240 EPCs in Public Housing • >240 projects: $885 million in investments

6. Small PHAs Underserved by EPC Program Public Housing Unit Universe 1,163,975 Units Retrofitted via EPCs 255,832 22% of Unit Universe Units in Small PHAs (<500 Units per PHA) 354,192 30% of Unit Universe Units Retrofitted via EPCs in Small PHAs 21,484 2% of Unit Universe 6% of Units in Small PHAs 8% of Units Retrofitted via EPCs

7. Small PHAs and EPCs Small PHAs underserved by the EPC process. • Very small (<250 units): 27 EPCs; 4076 units • Small (<500 units): 63 EPCs; 18,370 units • Very Small PHAs: $4,000 invested/unit during EPCs

8. Small PHA Initiatives • Training/Technical Assistance to Small PHAs • Planned EPC-EZ Pilot • simplify the traditional EPC by using a modeling tool to estimate savings, serve as a financial pro forma, and streamline HUD review • Multifamily Energy Innovation Fund • Public Housing Specific Award - SEDAC (University of Illinois) . 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 guidance and information on energy savings techniques. • PHA Driven Consortia • Several small PHAs have put out Requests for Proposals as consortia for the purposes of an Energy Performance Contract to take advantage of economies of scale. HUD’s Headquarters and Field Offices are working together to assist these projects and evaluate their success over time.

9. EPC-EZ Strategy Address basic energy and utility system replacement needs Provide increased access to long-term incentives • Alternative approach to traditional EPC review process easier for small PHAs to use • Targeted to small PHAs • Simple spreadsheet calculations makes economics easy to assess • Streamlined review process

10. EPC-EZ Tool Savings Estimates • Based on well established Energy Star and EPA Watersense guidance. • Savings projections adjusted by climate when appropriate • When there is uncertainty in savings, projections adjusted to provide conservative projections to ensure that savings projections can be met

11. Tiers of ECMs Tier 1 Improvements: • Upgrade to Energy Star bulbs and lighting fixtures. Install sensors in common areas • Upgrade or replace to Energy Star appliances • Replace thermostats with programmable thermostats for efficient operation. • Upgrade to Water Sense toilets, faucets and showerheads. Repair leaking pipes.

12. Tiers of ECMs Tier 2 Improvements: • Upgrade heating and cooling systems • Upgrade your water heater • Replace your exterior doors, windows and skylights

13. Challenges for Small PHAs • Staff Capacity • Limited full and part time staff • Lack of technical expertise • Financing • Total capital needs for small PHAs is $15,251 per unit; about $3,000-$4,000 is energy backlog • For 12-year contract, $27 per unit per month • Less attractive to Energy Service Companies (although some ESCO have and will work with small PHAs • Limited financing opportunities to pursue energy improvements

14. Considerations for EPCs • Opportunity Assessment of Savings • outstanding energy efficiency work to be done • Self Developed or ESCo partnership? • Financing • Statute and Regulations require third party funding. The savings serve as the funding source to repay the debt. • Savings • Savings require not only well planned improvements but a trained maintenance staff and resident awareness to ensure success.

15. Exploring New Energy Incentive Policy The Department is exploring alternative approaches for incentivizing green and energy investments Seeking input from industry groups and ESCOs Interested in hearing new approaches, policy recommendations from PHA partners