Integrating Green Building Measures into Capital Planning for HUD Assisted and Public Housing Programs

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Meredith Murphy
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1 Building Bridges to Net Zero Integrating Green Building Measures into Capital Planning for HUD Assisted and Public Housing Programs Evolution of HUD's Green Capital Needs Assessment, and the new CNA etool 1

2 Building Bridges to Net Zero Integrating Green Building Measures into Capital Planning for HUD Assisted and Public Housing Programs Public Housing PNAs and Energy Audits 2

3 HUD Public Housing Program In existence since the mid 1930s Low cost loans subsidized original construction 1.1 million residential units in more than 3000 communities Property is owned by Public Housing Authorities (PHAs) Eligibility threshold is less than 30% of AMI Serves the neediest in our country the safety net 60% are elderly or disabled Program serves approximately one quarter of eligible families

4 Public Housing Assistance Model Inattention to the cost of ongoing maintenance First major crisis in mid 1960s Capital Fund and Operating Fund grants subsidize rents Replacement Reserves are prohibited Rents are capped at 30% of tenant household income 2010 Condition Needs Assessment $26B backlog, $6B annual Capital Fund reduced by 23% 2011 through 2015 Inventory loss of 10,000 units annually

5 Utility Funding and Energy Conservation Model Utilities are reimbursed to PHAs through the Operating Fund 3 year Rolling Base payment based upon utility cost Very short term payback for energy conservation Energy Audits required every 5 years though there are no quality standards

6 RESULT Lack of incentive in the Public Housing Program for long term capital planning or for energy conservation Performance and success among PHAs bridges a huge spectrum depending largely upon the motivation, structure of the PHA, local commitment to public housing Even in this environment, net zero or near net zero projects have been completed and high quality low rent housing in good repair is available. Leverage

7 Incremental Evolution to Market Processes Asset Management Program 2005 Energy Policy Act integrate capital and utility planning Capital Fund Financing Program $4.5 Billion since 2000 Energy Performance Contracting $2 Billion + since 2000 American Recovery and Reinvestment Act (ARRA) $6 Billion Rental Assistance Demonstration (RAD) converting 185,000 units to Section 8 housing. $1 Billion invested for first 10% of conversions

8 Progress Physical Needs Assessment Standards proposed Energy Audit Standards proposed (ASHRAE II) GPNA tool and protocol developed and made available for voluntary use Congressional authority for replacement reserves has been requested Congressional authority for broader energy conservation incentives have been requested

9 Change in Public Housing Changing the culture of Public Housing from a charitable model to a business model Risk Assessment Tools and incentives to leverage federal funds and to access opportunities Access the traditional real estate market resources Project based long term strategic planning Position PHAs to survive to continue to provide the safety net

10 HUD LINKS Physical Needs Assessment webpage _housing/programs/ph/capfund/physicalassessment Green Physical Needs Assessment Tool (GPNA) ndian_housing/programs/ph/capfund/gpnatool

11 Building Bridges to Net Zero Integrating Green Building Measures into Capital Planning for HUD Assisted and Public Housing Programs Green Physical Needs Assessment (GPNA): What Is It, Why, and What Can It Do For You? 11

Ameresco Ameresco and the GPNA Public in 2010, NYSE: AMRC One of the largest independent energy services companies $650 million annual revenue Over 1000 employees throughout North America with 64

12 Ameresco Ameresco and the GPNA Public in 2010, NYSE: AMRC One of the largest independent energy services companies $650 million annual revenue Over 1000 employees throughout North America with 64 offices in 36 states HUD Experience led to understanding PHA s challenges and broader facility issues 3 billion sq ft assessed; 50,000 + buildings Capital Planning Expertise Unique link to HUD s GPNA database Smart Investment Decisions Asset Management Sample of GPNAs last 18 Months COLUMBIA SC MUNCIE IN LANSING MI NEW ALBANY IN (PCA) EDGERTON WI AITKIN MN CARLTON MN ELY MN HIBBING MN MINNEAPOLIS MN FORT WAYNE IN MARSHFIELD WI (PCA) NORTH CHICAGO IL ALLEN OH NEW ULM MN INTERNATIONAL FALLS MN ITASCA MN VIRGINIA MN

13 The Need for Portfolio Planning The Need for Portfolio Planning

14 What is Asset Sustainability? I: A PLAN to leave your assets in as good of shape, if not better, than you found them II: Effectively COMMUNICATING the needs, and building winning, defensible BUSINESS CASES

What is the GPNA? GPNA = Green Physical Needs Assessment The GPNA forms the basis for the PHA s strategic planning and the establishment of goals and objectives contained in its PHA Plan.

15 What is the GPNA? GPNA = Green Physical Needs Assessment The GPNA forms the basis for the PHA s strategic planning and the establishment of goals and objectives contained in its PHA Plan. It provides the PHA with an estimates that quantifies the capital requirements for the entire portfolio of the PHA, which can and often will be in excess of current funding from HUD. Using these estimates, PHAs can prioritize their needs and look to leverage their capital funds with other funding, to better preserve their housing stock to meet the mission and goals of the PHA Plan. HUD GPNA FAQs

16 The Sustainable Asset Management Process Sustainable Asset Management Process Know Your Needs Know Your Unfunded Liability Address the Gap Capital Replacements Energy Audit Needs minus Funds Data Analysis Standards and Targets Strategies This is the GPNA! Confidential & Proprietary Copyright 2012

17 Step 1Step 1: Know Your Needs - GPNA Data: PHYSICAL NEEDS ASSESSMENT Visually assess all major building systems: What needs to be fixed/replaced now? What will need to be replaced over the next 20 years? How much will it cost and when? Is it a high priority?

18 Step 1: Basic Asset Details Basic Asset Details Required: Facility Name Facility Age Facility Size Number of Floors Facility Type: Office Administration Parking Structures Etc.

19 Step 1: Component Inventory Electrical Mechanical Heating Systems Ventilation Systems Air Conditioning Plumbing / Drainage Building Controls Fire Prevention Architectural / Structural Roofing, Windows, Exterior Doors Foundation & Exterior Walls Flooring & Ceilings Interior Walls / Doors / Millwork Painting & Window Coverings Accessories & Equipment Power & Distribution Interior Lighting Exterior Lighting Emergency Power Fire Alarm System Comm / IT Systems Security Systems Clock Systems Property / Site Roadways / Driveways Paving & Walkways Retaining Walls Landscaping Fencing Underground Utilities

20 The EA Rule requires evaluation of Core ECM s Building Envelope Heating, Cooling and Mechanical Equipment HVAC Controls Plumbing Systems Power and Lighting Systems Appliances HUD Energy Audit Rule Evaluation of Advanced ECM s (Optional) Fuel conversions (e.g., electric or propane to gas) Energy generating technologies (e.g., solar, geothermal) Conservation technologies (e.g., building energy management systems, xeriscaping) 20

21 Step 1: Validated Condition Report

22 Step 1: Life Cycle Report Component Component : Replacement Value Last Major Action Year Component : Brief Description Overall Condition Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 A10 Foundations $ 5, The foundation walls appear to Good A20 Basement Construction $ 48, Poured concrete basement floor. Good B2010 Exterior Walls $ 20, Aluminum siding. Good B2020 Exterior Windows $ 9, Windows and caulking. Good $ 9,800 B2030 Exterior Doors $ 20, The majority of doors were Good B30 Roofing $ 2, Asphalt shingle roof. Good C1020 Interior Doors $ 23, Doors. Poor $ 23,774 C1030 Fittings $ 15, Kitchen. Good C3010 Wall Finishes $ 19, Wall finishes. Good $ 3,400 $ 3,400 $ 3,400 C3020 Floor Finishes $ 9, Hardwood flooring. Good C3020 Floor Finishes $ 9, Ceramic tile. Good C3020 Floor Finishes $ 9, Carpet. Good $ 245 C3030 Ceiling Finishes $ 13, Paint on plaster ceilings. Good $ 1,720 $ 1,720 $ 1,720 D2010 Plumbing Fixtures $ 44, Plumbing fixtures. Good D2020 Domestic Water Distribution $ 24, Water supply piping. Good D2030 Sanitary Waste $ 22, Sanitary Waste Piping Fair $ 22,968 D2040 Rain Water Drainage $ 2, Eaves troughs, downspouts, soffit, and fascia. Poor $ 1,560 D2095 Domestic Water Heaters $ 2, Gas fired water tank. Fair D3023 Furnaces $ 2, Forced air gas furnace. Good $ 12,400 D3045 Exhaust Ventilation Systems $ 2, Exhaust fans. Good $ 900 D5010 Electrical Service And Distribution $ 11, Electricity is distributed to all Good D5021 Branch Wiring $ 44, Good D5022 Lighting Equipment $ 9, Lighting fixtures. Good D5037 Fire Alarm System $ 2, Smoke detectors and pull stations. Good D5091 Exit & Emergency Light Systems $ 1, Emergency lighting. Poor $ 2,550 D5098 Electric Baseboard Heat 1902 Good E1041 Residential Appliances $ 8, Refrigerators, freezers, and Poor $ 1,200 E1042 Laundry Room Equipment $ 10, Washers and dryers. Good $ 600 G2010 Roadways $ 1, Driveway. Poor $ 1,200 G2020 Parking Lots $ 9, Parking Lot. Poor $ 9,500 G2030 Pedestrian Paving $ 1, Concrete pad. Good G2040 Site Development $ 1, Fencing. Good G2050 Landscaping $ 1, Plantings and landscaping. The Good $ 1,200 G3030 Storm Sewer $ 3, Surface drainage. The property is Good G4020 Site Lighting $ 1, Site Lighting Good $ 29,084 $ 10,700 $ 22,968 $ 0 $ 6,865 $ 5,120 $ 28,520 Cumulative Renewal Requirement = $ 29,384 $ 39,785 $ 62,753 $ 62,753 $ 69,618 $ 74,738 $ 103,258 Funding : Cumulative = $ 3,025 $ 6,050 $ 9,074 $ 12,099 $ 15,124 $ 18,149 $ 21,174 Unfunded Liability = $ 26,359 $ 33,735 $ 53,679 $ 50,654 $ 54,494 $ 56,589 $ 82,085 (Benchmark Cost based on Template) FCI = 7.91% 14.65% 20.74% 21.98% 23.82% 25.37% 30.24% FCI without Funding 8.77% 16.38% 23.32% 25.43% 28.13% 30.54% 36.27%

Step 2: Know your Unfunded Liability - Projected Capital Needs

Step 2: Know your Unfunded Liability Projected

30 Step 3 Addressing the Gap - Facility Condition Index (FCI) Industry Standard Index Used to Track Condition Performance of Facilities / Portfolios Renewal and Repair Costs FCI = Replacement Cost FCI Target GOOD Range: FCI (0% - 5%) FAIR Range: FCI (5% - 10%) POOR Range: FCI (10%-30%) CRITICAL Range: FCI (> 30%) FCI Target

31 Step 3 Addressing the Gap - FCI Analysis FCI (Current Year) FCI (Year 5) FCI (Year 10) FCI (Year 15) FCI (Year 20) FCI (Year 25) Asset A Asset B Asset C Asset D Asset E Asset F Asset G Asset H Asset I Asset J Asset K Asset L 0.0% 10.0% 9.7% 29.0% 49.3% 54.1% 0.3% 7.4% 13.5% 19.9% 48.0% 51.2% 17.5% 31.6% 42.0% 50.9% 53.5% 55.4% 4.5% 8.5% 22.0% 33.8% 45.8% 49.4% 5.3% 5.0% 15.4% 37.1% 42.9% 48.2% 0.0% 0.0% 3.4% 6.3% 9.5% 30.5% 2.9% 7.0% 25.2% 37.0% 42.1% 46.0% 20.6% 29.5% 34.2% 44.5% 64.1% 68.1% 6.6% 14.4% 24.7% 25.6% 44.1% 55.5% 7.0% 8.0% 24.4% 30.6% 38.5% 55.9% 26.1% 30.9% 37.4% 42.8% 47.9% 49.9% 0.0% 0.0% 1.4% 17.9% 33.6% 40.6% Confidential & Proprietary Copyright 2012

Optimization Consolidation Strategies Redevelopment Strategies Real Estate Strategies Optimized

34 Step 3 Addressing the Gap - Capital Creation Strategies Leveraged Capital Creation Strategies: Energy Conservation Renewable Solutions Redevelopment Re-Purposing Strategies Maintenance Optimization Consolidation Strategies Redevelopment Strategies Real Estate Strategies Optimized Capital Creation Strategies Energy Conservation RAD Tax Credits Maintenance Optimization Renewable Solutions

Step 3 Addressing the Gap Set a target Gap to Fill

Capital Creation Strategy Short Term Energy Savings

Capital Creation Strategy Maintenance and Operating Savings

Capital Creation Strategy Longer Term Savings Strategies

Capital Creation Strategy Real Estate & Community Partnership Strategies

41 Sustainable Asset Management Summary and Q&A Know Your Needs Know Your Unfunded Liability Addressing the Gap Questions?

DeKalb County School District/Elementary Schools Dunwoody Elementary Final School Assessment Report May 19, 2016

DeKalb County School District/Elementary Schools Dunwoody Elementary Final School Assessment Report May 19, 2016 PARSONS School Assessment Report Table of Contents School Executive Summary 4 School Condition