FINANCING GREEN UPGRADES IN MULTIFAMILY AFFORDABLE HOUSING

FINANCING GREEN UPGRADES IN MULTIFAMILY AFFORDABLE HOUSING

Management Structure One-Stop-Shop for Green Rehab CDFI for Financing Green Rehab

Affordable Housing A = R + U + T + H Affordability = Rent + Utilities + Transportation + Health

Affordable Housing 1. Subsidized Affordable a) HUD, USDA or Tax Credit b) For Most: Regulatory issues prevent taking on debt c) Typical: Low Reserves / Low Cash Flows 2. Non-Subsidized Affordable / Market Rate a) Need to income qualify property for affordable incentives b) Typical: Better Cash Flows and Reserves c) Owner(s) decide and can sign as collateral

Why Go Green? Reduce operating costs Energy, Water, O&M costs Increase value of property Increase comfort, health and safety Benefit your mission Savings for next 20 years are spent furthering mission Create opportunities and jobs for local contractors Reduce waste Environmental benefits Reduced GHG, Hg, SOx, NOx, Whole is Greater than Sum of Parts

Basics of Energy Financing Financing allows someone else to pay for capital expenses Boilers, lighting, insulation, solar, etc. Requires re-payment from future sources with agreed upon terms Future energy savings Requires evaluation of Risks, Liability and Security Complex risk management

Complexities of Energy Financing How to accurately forecast savings? What % of savings will be underwritten? Who benefits from the % savings? Is there a need to guarantee the savings? Unique O&M and tenant responsibilities to ensure savings persist over time! Qualifications of owners, financer, and vendors? Impact of utility rates changes?

Funding Sources 1. Owner Reserves 2. Off-Balance Sheet a) Leasing companies b) Energy Performance Contracts (EPC) c) Power Purchase Agreement (PPA) for Renewables d) Property Assessed Clean Energy (PACE) e) On-Bill Financing (Utilities)

Funding Sources 3. Incentives 4. Debt Tax Credits/Deductions ITC, PTC, 179-D, LIHTC Grants Acc. Depreciation (MACRS) Utility Rebates Bank/Credit Unions Agencies (HUD/FHA/State HFAs) CDFIs On-bill payments with Utilities

EERE: What Does it Save? Current Annual Utility Cost $100,000 25% Savings due to Going Green $25,000 Reduction in O&M Costs from Green Rehab $7,500 Increase in Profits due to higher Occupancy and Lower Turn-Over due to Greener Property $7,500 Total Savings/Year i.e. Increase in Cash Flow $40,000 Cost of Capital 10% Increase in Value of Property (Annual Inc. in Cash- Flow/Cost of Capital) $400,000 Life-Cycle of Green Rehab (in years) 15 Total Savings from Green Rehab $600,000

Triple Bottom Line Foundation 1. Community Development Financial Institution Certified by US Treasury Dept. 2. Target Market: Multifamily: Financial Ally to DOE s Better Building Challenge Emphasis on Affordable Housing 3. TX, CO and NM focus

Products and Services Off-Balance Sheet o o EPC / PFS PACE Conventional Debt o o Fixed L/T loans 1 st position on lien NOT required Renewables o PPA / Lease

ResourceSmart Portfolio to Property Assessments GPNA, Portfolio Analysis, TA Property Rehab Green Retrofit: EERE, DSM, Water, IAQ O&M services Training and Technical Assistance Access to financing Debt, Off-Balance Sheet, Grants and Rebates, etc. TBL Fund a CDFI focused on preservation of affordable housing

Greenleaf Apartments Scope of Work Building envelope and windows HVAC and thermostats Lighting upgrades Water management and appliances ASHRAE Climate Zone 5 Financial Details Total Project Cost: $1M + EE Retrofit Cost: $380,000 Grants and Rebates: $180,000 Energy Savings: 27% Energy Cost Savings: 24% Water Savings: 53% Water Cost Savings: 46%

Shandoka Apartments Scope of Work Boiler Replacement Insulation of piping in crawlspaces Lighting ASHRAE Climate Zone 6 Financial Details Grants and Rebates: $30,000 Customer Investment: $87,808 Total Project Cost: $117,808 Energy Savings: 20% Energy Cost Savings: 21% Payback: 7 years

THANK YOU! RAVI MALHOTRA RAVIM@TBLFUND.ORG WWW.TBLFUND.ORG

ResourceSmart Portfolio to Property Assessments GPNA, Portfolio Analysis, TA Property Rehab Green Retrofit: EERE, DSM, Water, IAQ O&M services Training and Technical Assistance Access to financing Debt, Off-Balance Sheet, Grants and Rebates, etc. TBL Fund a CDFI focused on preservation of affordable housing