Greening Affordable HousingShort and Long Term StrategiesPresentation to Office of Affordable Housing PreservationJune 26, 2008

William C. Kelly, Jr.President, Stewards of Affordable Housing for the Future (SAHF)bkelly@sahfnet.org

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

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

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

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

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

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

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

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

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

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

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

State Policy -- Additional Incentives43 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

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

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. 2191 falls short)

Affordable housing owners could sell credits

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

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