1. District of Columbia Housing Authority Office of Capital Programs and Development Construction Services Administration, LLC Going Green: Intelligent Investments for Public Housing How to Conduct an Energy Performance Contract July 14, 2011 Adrianne Todman, Executive Director Christopher A. Stennett, Interim Director, OCPD Presented by: Michael W. Brown & Denise Everson, OCPD

2. Discussion Topics Program Background Program Background Program Analysis Program Analysis Economic Analysis Economic Analysis Summary and Questions Summary and Questions

3. Energy Capital Improvement Program (ECIP) ECIP is a capital projects program designed to financially leverage the energy and water savings associated with the replacement of aging equipment and infrastructure. ECIP is a capital projects program designed to financially leverage the energy and water savings associated with the replacement of aging equipment and infrastructure. Using established HUD subsidy incentives, DCHA funded the program from energy and water savings. Using established HUD subsidy incentives, DCHA funded the program from energy and water savings.

4. Program Goals  Provide safe, comfortable, and affordable housing that improves the quality of life for the Residents;  Upgrade and Modernize Housing equipment and infrastructure;  Reduce DCHA energy consumption;  Reduce DCHA operations, emergency repair and maintenance costs; and to  Increase DCHA staff capabilities and system monitoring.

5. DCHA’s ECIP Concept to Monitoring OCPD: Project Planning OCPD: Utility Baseline DCHA: Board Approval OCPD: Energy / Facility Audit OCPD: Projects Selected DCHA: Board Resolution DCHA: Submit HUD Application OCPD: Draft Program Documents* * Program documents include: Project Management Plan; Construction Management Plan; Commissioning Plan; M&V Reporting Plan DCHA: Financial Closing** OCPD/CSA: Construction Begins DCHA: Complete Financing Package DCHA: RFP for financing arrangements ** Upon financing can repay DCHA for all study loans, fees, consultants etc. OCPD/CSA: Commissioning & M&V Monitoring Begins DCHA: Loan repayment begins HUD Approval DCHA: Select Bond/Lease/Loan Financing method

6. ECIP Program History FY’00: established the DCHA Energy & Environmental Master Plan FY’00: established the DCHA Energy & Environmental Master Plan FY’01: established DCHA Utility Billing and Administration Database FY’01: established DCHA Utility Billing and Administration Database FY’04: completed the most comprehensive 3-year historical utility consumption baseline by unit/property in HUD history; conducted energy audits for energy conservation measures by property FY’04: completed the most comprehensive 3-year historical utility consumption baseline by unit/property in HUD history; conducted energy audits for energy conservation measures by property

7. ECIP Program History 1QFY’06: submitted application to HUD for approval 1QFY’06: submitted application to HUD for approval 1QFY’07: solicited and chose a lender 1QFY’07: solicited and chose a lender 4QFY’07: received HUD approval 4QFY’07: received HUD approval 1QFY’08: executed agreement with lender and received funding 1QFY’08: executed agreement with lender and received funding 1QFY’11: Over 95% construction completed 1QFY’11: Over 95% construction completed

8. DCHA ECIP Profile  $21.1 million in critical infrastructure & equipment replacements  31 Properties  5,444 Units   28,000 Residents affected  Average $16 million annual utility budget budget  $3.9 million in annual savings ($3.9/$16 = 24% reduction) ($3.9/$16 = 24% reduction)

9. ECIP Scope of Work Energy Conservation Measures (ECM) Energy Conservation Measures (ECM) Boilers Boilers Chillers Chillers Hot Water Systems Hot Water Systems Fan Coils Fan Coils Water Saving Devices Water Saving Devices Lighting Lighting Central Energy Management System Central Energy Management System Automation/New Technologies Automation/New Technologies Metering & Communication Metering & Communication Preventive Maintenance Preventive Maintenance Commissioning Commissioning

10. ECM Scope of Work Heating Systems 24 properties $ 8,866,250 Cooling Systems 12 properties $ 1,079,000 Domestic Hot Water 23 properties $ 2,647,000 System Controls 20 properties $ 1,440,000 Fan Coils 10 properties $ 1,862,000 Lighting 31 properties (5,444 units) $ 163,290 Various HVAC Improvements 12 properties $2,993,650 Water Saving Fixtures 31 properties $ 2,068,340 TOTAL$21,119,530

11. Comparing ECIP Finance Options RateFeesFlexibilityTerm Commercial Bank Loan Mid-levelHighFullShort Bonds (via DC Housing Finance Agency) LowestHighLimitedLong Taxable Master Equipment Lease HighLowFullLong Tax-Exempt Master Equipment Lease LowLowLimitedLong Energy Savings Performance Contract HighestHighestNoneMid-level

12. Comparing ECIP Finance Options RateFeesFlexibilityTerm Commercial Bank Loan Mid-levelHighFullShort Bonds (via DC Housing Finance Agency) LowestHighLimitedLong Taxable Master Equipment Lease HighLowFullLong Tax-Exempt Master Equipment Lease LowLowLimitedLong Energy Savings Performance Contract HighestHighestNoneMid-level

13. Tax-Exempt Master Equipment Lease DCHA acquired all equipment with the funds raised to complete the program DCHA acquired all equipment with the funds raised to complete the program DCHA makes “Rental Payments” pursuant to the terms of the Master Lease Agreement DCHA makes “Rental Payments” pursuant to the terms of the Master Lease Agreement 12 to 15 month Construction period before Debt Service commenced, with Interest During Construction added to Financed Amount 12 to 15 month Construction period before Debt Service commenced, with Interest During Construction added to Financed Amount Debt Service Reserve of 3 to 6 months was added to Amount Financed – repaid at end of Term – this would serve as the “guarantee” Debt Service Reserve of 3 to 6 months was added to Amount Financed – repaid at end of Term – this would serve as the “guarantee” Assets owned by Financier and sold to DCHA for $1.00 at end of Term Assets owned by Financier and sold to DCHA for $1.00 at end of Term

14. Self Performance Economic Analysis Capital Cost - $21.1 million Industry/ HUD Program Soft Costs (ESCO) - 76% $21.1 X 76% = $16.0 M + $21.1 M = $37.1 M (Total Cost) Program Costs - 22% $21.1 X 22% = $4.6 M + $21.1 M = $25.7 M (Total Cost) Project Savings - $11.4 million O&M avoided costs - $2.4 million

15. Proposed Energy & Water Consumption Savings $MCostSavings Electricity$5.2M$550,000 10% Natural Gas$6.0M$1.2M 20% Water$4.1M$0.9M 21% Total$15.3M$2.65M 17%

16. Proposed Energy & Water Consumption Savings $MCostSavings Electricity$5.2M$550,000 10% Natural Gas$6.0M$1.2M 20% Water$4.1M$0.9M 21% Total$15.3M$2.65M 17%

17. Proposed Energy & Water Consumption Savings $MCostSavings Electricity$5.2M$550,000 10% Natural Gas$6.0M$1.2M 20% Water$4.1M$0.9M 21% Total$15.3M$2.65M 17%

18. Proposed Energy & Water Consumption Savings $MCostSavings Electricity$5.2M$550,000 10% Natural Gas$6.0M$1.2M 20% Water$4.1M$0.9M 21% Total$15.3M$2.65M 17%

19. Proposed Energy & Water Consumption Savings $MCostSavings Electricity$5.2M$550,000 10% Natural Gas$6.0M$1.2M 20% Water$4.1M$0.9M 21% Total$15.3M$2.65M 17%

20. Proposed Energy & Water Consumption Savings $MCostSavings Electricity$5.2M$550,000 10% Natural Gas$6.0M$1.2M 20% Water$4.1M$0.9M 21% Total$15.3M$2.65M 17%

21. Reported Energy & Water Consumption Savings During Construction $M3yr CostTotal Savings Electricity$15.1$430,000 3% Natural Gas$14.5$1.78M 12.3% Water$13.8$2.36M 12% TOTAL$43.4$4.57M 6.5% Vs. projected95%$3.53M129%

22. Energy Operations & Maintenance Savings Capital and Operating Budget FY00-FY01 Expenses Projected Expenses Rate Reduction Emergency Repairs/Service $639,632$309,63252% A/E JOC Contracts $569,900$519,9009% Fire and Security $299,856$199,85633% Labor$1,200,000$1,200,0000% Emergency Capital Cost Avoided $9,787,533$7,902,88819% Totals$11,298,121$8,933,47621% TOTAL ESTIMATED SAVINGS $2,364,645 Avoided costs as a direct result of energy capital equipment replacement Savings estimated from DCHA FY00 and FY01 budget analysis Savings are not captured under HUD incentives

23. ECIP IN ACTION

24. Demonstrated Savings Greenleaf Senior / Gardens – Natural Gas Completed boiler retrofit Completed boiler retrofit 14% reduction 14% reduction

25. Demonstrated Savings Kenilworth Courts - Water Completed water fixture replacement Completed water fixture replacement More than 51% reduction More than 51% reduction

26. Demonstrated Savings Kentucky Courts - Electric Completed chiller retrofit Completed chiller retrofit 27% reduction 27% reduction

27. Summary Modernized Infrastructure Modernized Infrastructure New Technology New Technology $4 million/year in cost efficiencies $4 million/year in cost efficiencies Complete in 36 Months Complete in 36 Months Commissioning starting in next 60 days Commissioning starting in next 60 days Establish Energy & Environmental Leadership Establish Energy & Environmental Leadership

28. Our Energy Partner since 1996… Contact Information: Paul Orentas ECIP@thinkboxgroup.com Office: 540-338-8572 GSA Schedule GS-21F-0030U

29. Contact Information Keith A. Kindel R. Denise Everson, LEED AP Michael W. Brown kkindel@dchousing.orgreverson@dchousing.orgkkindel@dchousing.orgreverson@dchousing.org mbrown@dchousing.orgmbrown@dchousing.org (202) 535-2736(202) 535-2566 (202) 535-2741 Office of Capital Programs and Development 1133 North Capitol St. NE, Suite 242 Washington, DC 20002 Fax: (202) 535-1102