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Energy Performance Financing. Pittsburgh Energy Conference Duquesne University . August 9, 2005. Overview. Financial Needs . Financial Incentives For Energy . Success Stories . Options for Contracting. How HUD Can Help. The HUD Review Process. Building Condition Assessments.

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Energy performance financing l.jpg

Energy Performance Financing

Pittsburgh Energy Conference

Duquesne University

August 9, 2005


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Overview

Financial Needs

Financial Incentives For Energy

Success Stories

Options for Contracting

How HUD Can Help

The HUD Review Process


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Building Condition Assessments

ELECTRICAL

Power & Distribution

Interior Lighting

Exterior Lighting

Emergency Power

Fire Alarm System

Comm / IT systems

Security Systems

Clock Systems

MECHANICAL

Heating Systems

Ventilation Systems

Air Conditioning

Plumbing/Drainage

Building Controls

Fire Prevention

ARCHITECTURAL/ STRUCTURAL

Roofing, Windows, Ext. Doors

Foundation & Exterior Walls

Flooring & Ceilings

Interior Walls/Doors/Millwork

Painting & Window Coverings

Accessories & Equipment

PROPERTY / SITE

Roadways / Driveways

Paving & Walkways

Retaining Walls

Landscaping

Fencing

Underground utilities

Courtesy – Ameresco Inc.


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Age Profile

Area Constructed (square feet)

Courtesy – Ameresco Inc.

Construction Year


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Unfunded Liability

Cumulative Cost vs. Funding

Courtesy – Ameresco Inc.






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Overview

Financial Needs

Financial Incentives For Energy

Success Stories

Options for Contracting

How HUD Can Help

The HUD Review Process


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24 CFR 85.36 – Procurement Requirements

24 CFR 990 – Annual Contributions for Operating Subsidy:

24 CFR 990.107(f) – Incentives for energy conservation improvements

24 CFR 990.110 – Adjustments

24 CFR 965.308 – Energy Performance Contracts

24 CFR 943 – Consortiums / Collaborations.

Regulations


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HUD Operating Funding System

CFR 990.107(f) imposes two requirements for funding energy conservation improvements.

1. Energy conservation measures MUST be financed by an entity other than the Secretary. [ Private Loan]

  • Energy cost savings MUST be sufficient to pay the loan within 12 years.


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+

2.

1.

Freezing the Rolling Base

Add-on Subsidy

HUD Performance Funding System

Federal Regulations 24 CFR 990.107(f) provide two options for funding energy conservation improvements.


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HUD Performance Funding System

Option 1: Freeze the Rolling Base Incentive

Cost Benefit To PHA

Frozen Base Line

PHA

Energy

Usage

Before

Improvements

Per Year

HUD

Energy

Payment

Energy Savings

Yearly Energy

Usage

After

Improvements

Minimum of 51% (75%) of the savings MUST be used to for loan repayment


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Frozen Baseline - Energy Consumption Before Improvements

+

Current Utility Rate

Cost Savings

Energy Consumption After Improvements

HUD Performance Funding System

Option 1: Freeze the Rolling Base Incentive

Energy Savings


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Add On Subsidy

HUD Performance Funding System

Option 2: Add-On Subsidy Incentive

Energy Cost

Savings- PFS

Base Line – NOT Frozen

PHA

Energy

Usage

Before

Improvements

Per Year

Yearly Energy

Usage

After

Improvements

HUD

Energy

Payment


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HUD Performance Funding System

Option 2: Add-On Subsidy Incentive



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HUD Performance Funding System

Options Available

Energy Service Company (ESCO)

Developed

PHA Developed

PHA functions as their own ESCO


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New Requirements

HUD Field Office Review Procedure

By Statute, the housing authority is required to have a qualified third party to assist in its energy finance program. The authority is required to use a licensed engineer familiar with performance contracting, financing, commissioning, and measurement and verification. Procurement will follow 24 CFR 85.36

PHA Developed

PHA functions as their own ESCO


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HUD Performance Funding System

Options Available

ESCO Developed

Add-On

Subsidy

ESCO Developed

Freezing The

Rolling Base

PHA Developed

Add-On

Subsidy

PHA Developed

Freezing The

Rolling Base


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HUD Performance Funding System

PHA Cost Risk

Both incentives, freezing the rolling base

and the add-on subsidy incentive,

are effected by yearly

Congressional budget cuts.


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Overview

Financial Needs

Financial Incentives For Energy

Success Stories

Options for Contracting

How HUD Can Help

The HUD Review Process


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Rochester Housing Authority

Ithaca Housing Authority

Chattanooga Housing Authority

Binghamton Housing Authority

Batavia Housing Authority {in process}

Lackawanna Housing Authority {in process}

Buffalo Housing Authority – Phase

New Britain Housing Authority

Success Stories


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Batavia Housing Authority

Pending approval

PHA Size: 198 dwelling units.

EPC Approach: PHA Developed – NYSERDA AMP Program

Contract Cost: $868,063 { estimate}

Energy Savings: $77,979 / year; $1935,748 over 12 years.

PHA Cost Benefit:

Energy: $175,452 (PFS cost benefit)

Cost Avoidance: $352,694 (Window Replacement)

PHA Infrastructure Cost Contribution: {currentlyunknown}

HUD Incentive: Add-On Subsidy

Metering / Verification Method: Type C (Actual)

Other Grants: NYSERDA : $ 98,511


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Binghamton Housing Authority

PHA Size: 641 dwelling units.

EPC Approach: PHA Developed – NYSERDA AMP Program

Contract Cost: $2,034,170

Energy Savings: $112,024 / year; $1,344,408 over 12 years.

HUD Incentive: Add-On Subsidy

PHA Cost Benefit:

Energy: $252,054 (PFS cost benefit)

Cost Avoidance: $1,036,095 (Heating System Replacement)

$501,552 (less PHA cost contribution)

Total Cost Benefit$785,472

Metering / Verification Method: Type C (Actual)

Other Grants: NYSERDA : $122,552

Weatherization: $295,000


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Buffalo Housing Authority

Phase I

PHA Size: 3,500 dwelling units.

EPC Approach: ESCO - Siemens

Contract Cost: $16,668,005 + $57,059 yearly monitoring fee.

Energy Savings: $900,516 / year; $10,806,191 over 12 years.

HUD Incentive: Freezing The Rolling Base

PHA Cost Benefit:

Energy: $1,907,560 ( over 12 years )

Cost Avoidance: $18,000,000 (Heating System Replacement)

$6,468,264 (less PHA cost contribution)

Total Cost Benefit:$13,439,296

Metering / Verification Method: Type A & C (Actual)

Other Grants: NYSERDA : $3,329,445


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Chattanooga Housing Authority

PHA Size: 3,109 dwelling units.

EPC Approach: ESCO - Honeywell

Contract Cost: $9,997,234 + $47,478 yearly monitoring fee.

Energy Savings: $1,384,798 / year; $16,617,576 over 12 years.

HUD Incentive: Add-On Subsidy

PHA Cost Benefit:

Energy: $3,115,795 (PFS cost benefit)

Cost Avoidance: $6,539,847 (Heat Pumps)

$0.00 (less PHA cost contribution)

Total Cost Benefit:$9,655,842.

Metering / Verification Method: Type A & C (Actual)


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Ithaca Housing Authority

PHA Size: 341 dwelling units.

EPC Approach: PHA Developed – NYSERDA AMP Program

Contract Cost: $330,069.

Energy Savings: $31,185 / year; $374,220 over 12 years.

HUD Incentive: Add-On Subsidy

PHA Cost Benefit:

Energy: $70,165 (PFS cost benefit)

Cost Avoidance: $0.00

$0.00 (less PHA cost contribution)

Total Cost Benefit:$70,165..

Metering / Verification Method: Type C (Actual)

Other Grants: NYSERDA : $24,020

Weatherization: $79,300


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Rochester Housing Authority

PHA Size: 3,200 dwelling units.

EPC Approach: ESCO – Siemens

Contract Cost: $6,318,657. + $98,388. yearly monitoring fee.

Energy Savings: $631,220. / year; $7,574,640. over 12 years.

HUD Incentive: Freezing The Rolling Base

PHA Cost Benefit:

Energy: $422,000. total + rate escalation

Cost Avoidance: $2,204,000.

Elevator Upgrades & Smoke Detectors.

$0.00 (less PHA cost contribution)

Total Cost Benefit:$2,626,000.

Metering / Verification Method: Type C (Actual)


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New Britain

Housing Authority

PHA Size: 1,300 dwelling units.

EPC Approach: ESCO – Ameresco

Contract Cost: $3,140,983. + 14,000. yearly monitoring fee.

Energy Savings: $333,697. / year; $4,004,364. over 12 years.

HUD Incentive: Freezing The Rolling Base

PHA Cost Benefit:

Energy: $750,828. (PFS cost benefit)

Cost Avoidance: $1,100,000. (Heating System)

$500,000 (less PHA cost contribution)

Total Cost Benefit:$1,350,828.

Metering / Verification Method: Type C (Actual)


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Overview

Financial Needs

Financial Incentives For Energy

Success Stories

Options for Contracting

How HUD Can Help

The HUD Review Process


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HUD Performance Funding System

Options Available

Energy Service Company (ESCO)

Developed

PHA Developed

PHA functions as their own ESCO


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Options for Contracting

ESCOs offer turnkey proposals for all steps in a performance contract and guarantee savings.

Financing

Installation

Construction

Management

Service

and

Maintenance

Energy

Assessment

Annual

Monitoring

and

Certification

ESCOs generally not interested in PHAs < 500 units


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Options for Contracting

PHAs<500 units may be able to contract with an ESCO jointly with another PHA.

HUD allows aggregation of PHAs for a

performance contract


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Monitoring and HUD Certification

PHA

Coordinator

Design

Construction Management

Options for Contracting

PHAs can contract independently for energy assessment, installation, and monitoring.

Energy

Assessment

Thrid Party Licensed Professional Engineer Required

Hire A/E

Bid Process

Contract Award

Financing

HUD Approvals


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Overview

Financial Needs

Financial Incentives For Energy

Success Stories

Options for Contracting

How HUD Can Help

The HUD Review Process


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Explain EPC Process / HUD Requirements

Energy

Assessment

Sample Procurement Documents are Available

Approves the Request for Proposal (RFP)

Reviews the Energy Audit

Approves the Energy Performance Contract

Verifies Yearly Energy Savings

How HUD Can Help

Field Office Assistance


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HUD Field Office Review Procedure

Energy Performance Contracting

July 1, 2004

http://www.hud.gov/offices/pih/programs/ph/phecc/

How HUD Can Help

Resources


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HUD’s Green Book, “Energy Performance Contracting for Public and Indian Housing: A Guide for Participants”, February 1992,http://www.huduser.org/Publications/pdf/energy.pdf

HUD’s Energy Efficient Rehab Advisor, 2003,http://rehabadvisor.pahthnet.org/index.asp

HUD’s “Energy Conservation for Housing - A Workbook”, January 1998,http://www.abtassoc.com/reports/D19980034.pdf

HUD’s “Utility Allowance Guidebook,” 1998

DOE, International Performance Measurement and Verification Protocols (IPMVP), 2001,http://www.ipmvp.org

How HUD Can Help

Resources


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John H. Miller, P.E., Senior Engineer, HUD PIH Public and Indian Housing: A Guide for Participants”, February 1992,

at 202-708-0614 x4237 or John_H._Miller@hud.gov

Ken O’Connor, General Engineer, HUD PIH Buffalo

at 716-551-5755, x5403 or Kenneth_O’Connor@hud.gov

HUD Field Office Review Procedure – Pending

PIH Notice - Pending

How HUD Can Help

Resources


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Public Housing Energy Conservation Clearinghouse Public and Indian Housing: A Guide for Participants”, February 1992,

http://www.hud.gov/offices/pih/programs/ph/phecc/

PHECC Newsletter

http://www.hud.gov/offices/pih/programs/ph/phecc/newsletter/mar05.pdf

Energy Performance Contracting

http://www.hud.gov/offices/pih/programs/ph/phecc/eperformance.cfm

Energy Star

http://www.hud.gov/offices/pih/programs/ph/phecc/federal.cfm

How HUD Can Help

Public Housing Energy Initiatives


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Overview Public and Indian Housing: A Guide for Participants”, February 1992,

Financial Needs

Financial Incentives For Energy

Success Stories

Options for Contracting

How HUD Can Help

The HUD Review Process


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HUD Field Office – Review Process Public and Indian Housing: A Guide for Participants”, February 1992,

ESCO Approach

PHA Approach

Reference –

HUD Field Office Review Procedure,

July 1, 2005


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8 hrs Public and Indian Housing: A Guide for Participants”, February 1992,

80 hrs

8 hrs.

Initial Review

Yearly Review

RFP

Contract

Verification

HUD Field Office – Review Process

ESCO Approach

PHA Approach


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6 month period - Public and Indian Housing: A Guide for Participants”, February 1992,

conference calls every two weeks -

40 hours

Initial Process

Final Approval

A/E Contract

Yearly Review

Prel. Approval

Verification

Audit

HUD Field Office – Review Process

PHA Approach


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24 CFR 85.36 Public and Indian Housing: A Guide for Participants”, February 1992,

Competitive Proposal Method of Procurement

Qualifications & Cost

Factors / Relative Importance

Evaluation Process

Evaluate

Select

Negotiate

Award

RFP

HUD Field Office – Review Process

ESCO Approach

Initial Review


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24 CFR 990 Public and Indian Housing: A Guide for Participants”, February 1992,

Energy Conservation Measures

Baseline Data

Cost Reasonableness

Financial

Resident Paid Utilities

Measurement & Verification Methodology

Contract

HUD Field Office – Review Process

ESCO Approach

Initial Review


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Energy Conservation Measures (ECM) Public and Indian Housing: A Guide for Participants”, February 1992,

A spreadsheet is provided that lists each ECM measure by project including:

Energy savings, consumption and ECM cost,

Current method of metering (master metered, check-metered, retail metered).

Verification Methodology - Reference the International Performance Measurement and Verification Protocol (IPMVP) website at www.IPMVP.org

EPC – HUD Checklist


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Baseline Data Public and Indian Housing: A Guide for Participants”, February 1992,

Baseline utility consumptions are clearly defined by utility, by month, for three years showing utility consumption and utility cost by project.

The PHA has reviewed and verified that the baseline data is correct.

The HUD Field Office has reviewed and verified that the baseline data correlates to the financial data as found on form HUD-52722-A.

Documentation has been provided to support that all “escalated” rates are reasonable.

EPC – HUD Checklist


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Cost Reasonableness Public and Indian Housing: A Guide for Participants”, February 1992,

ECM

The ESCO can demonstrate competitive cost competition of each ECM. Recommend that three costs be obtained for each ECM and that the ESCO document their selection based upon “best value”;

- or -

EPC – HUD Checklist


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Cost Reasonableness Public and Indian Housing: A Guide for Participants”, February 1992,

A detailed cost breakdown is provided for each ECM. The cost breakdown shall comply with Federal Cost principles (similar to RS Means) and shall include:

Direct Costs.

Indirect Costs.

Profit.

The PHA has reviewed and certified that the costs appear reasonable.

EPC – HUD Checklist


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Cost Reasonableness Public and Indian Housing: A Guide for Participants”, February 1992,

Other Costs

All ESCO costs are “full and open”. A cost breakdown has been provided that defines:

Total Direct ECM Costs

Audit Costs

Design & Engineering

Construction Management

Resident Education

Monitoring and Verification

Overhead

Profit

EPC – HUD Checklist


Epc hud checklist54 l.jpg

Financial – Public and Indian Housing: A Guide for Participants”, February 1992,

An amortization schedule has been provided.

A cash flow analysis has been provided to document a positive cash flow.

Documentation has been provided to support that all “escalated” rates are reasonable. Note: If rates are escalated, then the ESCO guarantee should also be escalated.

Any PHA contributing cost has been reviewed and is in compliance with 24 CFR 990 requirements. The HUD Engineer shall provide a written memo justifying the use of these funds as non-energy related components.

EPC – HUD Checklist


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Resident Paid Utilities Public and Indian Housing: A Guide for Participants”, February 1992,

Waiver request has been received from the Authority.

Waiver request has been submitted to HUD Washington. New procedure will allow Field Office to approve.

Existing utility allowances have been reviewed in accordance with 24 CFR 965 and determined accurate.

Does the contract involve the ESCO in the yearly review of the new utility allowances, ref. 24 CFR 965?

EPC – HUD Checklist


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Verification Methodology – Public and Indian Housing: A Guide for Participants”, February 1992,

Any verification methodology other than “actual” (IPMVP, Option C) has been reviewed and approved by HUD.

International Performance Measurement & Verification Protocol (www.IPMVP.org)

Option A – Partially Measured Retrofit Isolation – Requires HUD Approval

Option B – Retrofit Isolation - Required HUD Approval

Option C – Whole Facility – Whole Facility – Recommend Approach

Option D – Calibration Simulation – Not Allowed.

EPC – HUD Checklist


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Heating Degree Day adjustments – Public and Indian Housing: A Guide for Participants”, February 1992,

HUD has approved the heating degree day adjustment methodology. Note: This adjustment is subject to HUD approval.

Regression analysis –

Heating adjustment

Cooling adjustment

Vacancy adjustment

Usage adjustment

EPC – HUD Checklist


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Investment Grade Audit – Required Public and Indian Housing: A Guide for Participants”, February 1992,

Maximum Self Life – 2 years

Contract Term – May go to 20 years in “Energy Bill”

Floor Rate – PHA Risk

Capital Funds –

Non-Energy – Allowed

Energy – Allowed – Savings are subtracted.

Full and Open competition including soft costs.

Measurement & Verification – IPMVP – Option C, Option A & B with HUD Approval.

Third Party Requirement for PHA Managed Contracts.

Required format – Input forms.

Risk - PHA

Highlights - HUD Field Office Review Procedures


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