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Greening Affordable Housing Short and Long Term Strategies Presentation to Office of Affordable Housing Preservation June 26, 2008 William C. Kelly, Jr.

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Presentation on theme: "Greening Affordable Housing Short and Long Term Strategies Presentation to Office of Affordable Housing Preservation June 26, 2008 William C. Kelly, Jr."— Presentation transcript:

1 Greening Affordable Housing Short and Long Term Strategies Presentation to Office of Affordable Housing Preservation June 26, 2008 William C. Kelly, Jr. President, Stewards of Affordable Housing for the Future (SAHF)

2 Why Energy Conservation in Affordable Housing is Important Utility and energy prices continue to rise HUD’s direct utilities spending is ~$5.3 bn/yr SAHF’s members spend about $70 million annually on energy Green new construction is important, but 50% of buildings we will have in 2030 have already been built Could save 25+% on utilities in existing housing

3 A Snapshot OAHP’s initiative NYSERDA Enterprise Community Partners Green “Weatherization”--a limited delivery model Public housing ESCO program (117 PHAs) Little data collection Largely one project at a time

4 Getting the Field To Scale Develop owner expertise and commitment Gather and analyze data Craft a financing strategy ▫Public resources used to leverage private capital ▫Efficient execution Create a policy framework ▫Incentivize owners and private investors ▫Align incentives among owners, residents, utilities and housing subsidy providers

5 Leverage With Private Capital Much bank posturing, but few investments Need to create a new market Short term: more subsidy to lower risk until results established Long term: lower subsidy level required

6 SAHF—Owner Expertise/Commitment SAHF members are outstanding owners, but ▫No readily accessible/usable data at the home office ▫No material energy expertise on staff ▫Only one had experts review utility bills Now, senior management focus NCR has hired a full-time expert/Mercy consultant/others are in the market

7 SAHF--Owner Expertise/Commitment Mercy Housing: Schiff Residences  Wind turbines generate 10% of building energy  Solar collectors preheat water for sinks and showers  Gray water and rainwater used in landscaping  Energy Star Appliances  22% less energy/16-18 year payback period  National Church Residences: 28-property Ohio porfolio  Lighting retrofit costing $7,000 per property  Energy cost reductions expected at $75,000 per year  Payback period: about 2.5 years

8 SAHF--Owner Expertise/Commitment Preservation of Affordable Housing (POAH): 688 unit Massachusetts portfolio  Assessed for full range of energy efficiency measures  State funded solar at one property in Randolph and potentially wind at another in Salem  Advanced metering to control electric loads and allow resale of excess peak capacity  Randolph property:  Cost of improvements: $58,000  Saves projected: $11,000 annually  Payback period: about 5.3 years

9 SAHF—Data Gathering and Analysis Data Collection and Analysis  SAHF has contracted with energy firm LPB to gather one year of historical consumption and bills and one year going forward  Aid in demonstrating success of conservation improvements  Inform business plan and policy

10 State Policy Framework--LIHTC QAPs Almost every state has a green incentive in their LIHTC program At least 24 states have some type of threshold environmental requirements At least 38 state QAPs grant points for sustainable building practices, which may include energy efficiency At least 4 states grant a non-numeric preference to greener proposals SOURCE: Tracy Kaufman, National Housing Trust

11 State Policy Framework--LIHTC QAPs Some states encourage green preservation by offering separate scoring criteria ▫Examples:  North Dakota’s 2008 QAP includes a weighting system so preservation properties earn more points for each green criterion met  Utah’s 2008 QAP has different thresholds for new construction and preservation  California’s 2007 QAP and Regulations also has dual standards, and includes some point categories that only preservation projects can qualify for SOURCE: Tracy Kaufman, National Housing Trust

12 State Policy Framework--LIHTC QAPs Example: Massachusetts ▫Of 20 design points (12 required), points for:  Energy conservation measures above Code requirements  Compliance with EPA Energy Star standards  Selection of materials endemic to healthy interior  Mechanical ventilation promoting good air quality ▫Other state incentives  Income tax credit, sales tax exemption, and property tax exemption for renewable energy  Renewable Initiatives Grants, Small Renewable Initiatives Rebate, and Green Communities Grants from Massachusetts Technology Collaborative SOURCE: Tracy Kaufman, National Housing Trust

13 State Policy -- Additional Incentives 43 State have other green building incentives:  Net Metering  Income tax credits/deductions  Special property tax assessments  Sales tax exemptions  Green grant programs  Favorable loans for green developments  Renewable energy production incentives  Green rebates  Preference for green building permits  Utility rebates SOURCE: Tracy Kaufman, National Housing Trust

14 Policy Ideas for 2009 and Beyond Use section 8 to cover part of the cost  Existing authority under some programs Rep. Perlmutter’s Bill, HR 6078 (the “GREEN Act”): Energy Difference Demonstration Program  HUD-funded energy increment  Investment repaid over improvement’s lifetime  Short term investment yields long-term financial benefit  Environmental and energy demand benefits accrue quickly  Demonstration up to 50,000 units  Waiver of rules on tenant contribution to encourage solutions to “split incentive” problem

15 More Policy Ideas Energy conservation tax credit—a proposal  30% tax credit for conservation improvements  Equal to renewables credit  Separate class of property, to reduce transaction costs Cimate change (cap & trade) legislation  Federal or state funds could be used to prime energy efficiency lending/current bill (S falls short)  Affordable housing owners could sell credits

16 Still More Policy Ideas Energy Efficiency Loan Guarantee--  Government certifies Energy Conservation Investment Companies (ECICs)  ECICs receive federal guarantee or right to issue guaranteed debentures for loan pools  ECICs make energy efficiency loans at reduced rates and reduced paperwork Other grant or low-cost loan program State public benefit funds and utility programs

17 HUD’s Role Moving Forward Enormous program and financial stake Build on OAHP’s pioneering work Need more early experiences and data in 2008/9 Fast moving policy environment HUD needs a seat at several tables (housing, climate change, tax, transportation) Rapid ramp up in 2010 and beyond Foster a market in which owners, lenders, state agencies, and utilities innovate and do most of the work


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