1. MPower Oregon Multifamily Energy Efficiency HUD Region X Going Green/ Energy Conference August 2, 2012 July 19, 2012

2. 2  New energy efficiency (EE) delivery model for affordable multifamily sector  Combines EE services with on-bill payment collection  Designed to provide immediate utility bill savings  Developed through multi-stakeholder collaborative process, with strong organizational partnerships  Phased, incremental, and iterative process  Pilot initiative, testing multiple ambitious goals  Expect course correction and change Overview

3. 3  Designed in response to expressed needs of multifamily affordable housing industry:  Rapidly rising energy and water utility cost  Threat to industry’s long-term viability  Lack of capacity and resources  Difficulty accessing financing (cash flow & covenants)  Split-incentive challenge (who pays, who benefits) Evolution

4. 4 Management Team:  Network for Oregon Affordable Housing – Fund manager  Blue Tree Strategies – Program design and support  Green For All – Social equity standards and national replication Delivery Team:  Enterprise Community Partners – Service delivery  Energy Trust of Oregon – Funder and technical assistance  Craft3 – Utility collection partner  Walsh Construction – General contractor Building Owners: Housing authorities and non-profit CDCs Key Partners

5. 5 EE Retrofit Market Failure:  Energy Services Companies (ESCO) success in:  Industrial/commercial (I/C)  Municipal/university/school/hospital (MUSH) markets  Limited inroads into multifamily market due to cost, scale, and complexity barriers  Uncoordinated and fragmented incentives and technical assistance  Predominantly asset-backed financing models Problem Statement

6. 6  One-stop-shop, EE services model  No owner out-of-pocket costs (MPower fully funds projects)  On-utility bill EE service charge, based on deemed energy savings (no performance guarantee):  Sized to deliver immediate utility bill savings (net-positive cash flow)  Covers ~52% of EE retrofit (48% leveraged investment) Delivery Model

7. 7  Building EE Retrofit Services:  Upfront investment-grade energy and water audits  Coordination and delivery of retrofit improvements from predevelopment through construction  Available retrofit measures – lighting, air sealing, DHW, HVAC upgrades, appliances, controls (≥ 20% energy savings).  Long-term Energy Management Services  Resident Engagement and Education  Operations and maintenance protocols development & support  Measurement & verification of energy savings Service Description

8. 8 Customers:  Pay for EE services through fixed monthly EE service charge on their utility bill  Enter into a 10-year EE services agreement with MPower, and an EE tariff agreement with utility EE Tariff:  Runs with utility meter  Survives change in building ownership or occupancy Leverages long-term, low-cost financing:  Low payment default risk of on-utility bill/tariff structure  Funded cash flow liquidity reserves Payment Stream

9. 9  30+ buildings, 2,500+ units  Timeframe: 24 months – July 2012 to June 2014  Phased strategy:  Phase I: Launch – master-metered  Phase II: Scale Up – master-metered  Phase III: Commercialization – sub -metered  Total EE retrofit investment: $7.9M in projects (~$3K/unit)  Phased introduction of water efficiency and individually metered buildings  Identifying high-potential communities for replication Pilot Overview

10. 10  U.S. Dept. of Housing and Urban Development  Energy Trust of Oregon  Clean Energy Works Oregon  Craft3  Enterprise Community Partners  Green for All  City of Portland Bureau of Planning and Sustainability Key Funders

11. Transaction Structure 11 NOAH 1 HUDFoundationCraft3ETOCEWO 23 4 5 6 2 1 3 4 5 6 Coop agreement Grant agreements Loan agreements Loan agreement Incentive agreement Grant agreement Investment by NOAH Grant, utility sector incentives, and government capital consolidated by NOAH

12. Transaction Structure 12 MPower Building Owners General Contractor Utility - PGE 1 2 3 4 6 2 1 3 4 Investment from NOAH Energy services agreement EE on-bill repayment On-bill operating agreement 5 Payment/High Roads Agreement MPower LLC acts as a revolving energy retrofit fund Craft3 6 Construction contract 5

13. 13 How it works for owners Marketing & Outreach Marketing & Outreach Audits PROJECT APPROVAL Measurement & Verification Final Scope & Design Contract pricing Post Completion Inspection Resident Engagement Operations & Maintenance Draft Project Scope Draft Project Scope EE Charge & Final Project Diligence EE Charge & Final Project Diligence Program Reporting and Evaluation 1 2 3 4 5 Project pre- screen 3 7 7 7 7 1 3 6 6 Construction 6

14. 14 Step 1: Identify potential projects  Owner characteristics:  Strong interest in greening the housing portfolio  Strong organizational track record  Experience with green retrofits  Eligible projects:  Master-metered buildings (to start)  High energy usage and utility costs  Positive project cash flow  Buildings 10 or more years old  In need of $200,000 to $500,000 in energy and water efficiency improvements How it works for owners

15. 15 Step 2: Conduct Audit  Pre-screen for potential projects  If the project passes a pre-screen, it will be scheduled for an energy and water audit  Manage process on behalf of the owners  Audit results are reviewed by the MPower, ECP, Energy Trust, and Walsh Construction  MPower presents final audit results to building owner  Generate draft scope of work and initial cost estimates How it works for owners

16. Typical measures: 16 Measure HVAC improvements Energy management systems Lighting Appliances Domestic hot water Boiler upgrade / conversion Envelope air sealing Window weatherization and sealing Irrigation and Landscaping Generally not Included are new windows, major insulation, structural upgrades, seismic work (these require full rehabilitation and re-capitalization)

17. How it works for owners 17 Step 3: Scoping  Use audit to develop draft scope  Collaborative process  Finalize project scope approved by owner  Identify projected energy savings based on project scope  Conduct design and engineering work as needed  General contractor to price work

18. How it works for owners 18 ENERGY COST Actual pre-retrofit utility bill Step 4: Calculating the Energy Efficiency Tariff (conceptual) TOTAL: $100 RETROFIT Projected post-retrofit utility bill ENERGY COST TOTAL: $97 On-Bill Repmt $100 $80 $17 (fixed) $3 of savings go to utility customer If more energy is saved, utility customer benefits

19. 19  Lowers exposure to future energy cost escalation  After EE tariff ends, all savings benefit customer How it works for owners

20. 20 Step 5: Project Approval, Closing and Funding  Complete due diligence  Execute contracts:  10-year service agreement between owners and MPower  10-year tariff agreement between owners and PGE  Construction contract between owners and Walsh  Approve projects for construction  Finance projects

21. How it works for owners 21 Step 6: Construction  Construction expected to be less than 4 weeks total  Displacement of tenants less than 1 day total  Owner’s representative manages the construction contract  MPower provides standard oversight for construction funding draws  Resident education activities and events commence before construction

22. How it works for owners 22 Step 7: Post-Construction Activities  Final walk-through and close out  Quality control and corrective measures  Long-term energy management services:  Resident education and engagement activities  Development of operations and maintenance protocols  10 years of Measurement and Verification  Goal is exceed projected energy savings  Commitment by fund to work with owners to achieve energy savings  Owners responsible for taking corrective action with support from MPower

23. How it works for owners 23 Owner responsibilities  Maintenance and upkeep of buildings and improvements  Supporting ongoing resident engagement and education  Following operations and maintenance protocols  Reviewing measurement and verification data  Maintain project as affordable housing

24. How it works for owners 24 Community Workforce and Diversity Standards  Committed to family wages and social equity  Developing Community Workforce Agreement  Mirrors MWESB contracting goals and process at City of Portland:  % of labor hours for minorities and women  % of contract dollars to MWESB firms  Apprenticeship hiring requirements  Local labor sourcing requirements

25. Status and Timeline 25  Close funding commitments  Finalize transactional agreements  Gain approval from Oregon Public Utilities Commission  Generate deal pipeline and complete audits  Launch first project in 3rd Quarter, 2012

26. Next Steps  Convene working groups to tackle outstanding questions:  Tenant rights/ green lease agreement templates  Resident engagement and education  Convene national working group  Cross-sector stakeholders  Research & Advocacy  Identify high potential communities  Develop replication manual 26

27. Contact Info 27 Bill Van Vliet, Network for Oregon Affordable Housing billv@noah-housing.org 503.501.5680 Kimberly Pray, Blue Tree Strategies kimberly@bluetreestrategies.com 503.866.0242 Amanda Saul, Enterprise Community Partners asaul@enterprisecommunity.org 503.553.5646