HomeMy WebLinkAboutMINUTES - 07262005 - HA1 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
TO: BOARD OF COMMISSIONERS
FROM: Robert McEwan, Executive Director
DATE: July 26, 2005
SUBJECT: APPROVE THE ENERGY EFFICIENCY-BASED UTILITY ALLOWANCE SCHEDULE—
EEBUA FOR NEW CONSTRUCTION AND REHABILITATION PROJECTS UNDER THE
SECTION 8 HOUSING CHOICE VOUCHER PROGRAM
SPECIFIC REQUESTS) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
I. RECOMMENDED ACTION:
APPROVE the Energy Efficiency-Based Utility Allowance Schedule (EEBUA) for new
construction and rehabilitation projects under the Section 8 Housing Choice Voucher Program, and
AUTHORIZE the Executive Director to implement changes to the Standard Utility Allowance
Schedule currently utilized by the Section 8 Housing Choice Voucher Program using the Energy
Efficiency-Based Utility Allowance Schedule (EEBUA).
II. FINANCIAL IMPACT:
None
III. REASONS FOR RECOMMENDATION/BACKGROUND:
Several projects in the Housing Authority's jurisdiction are funded by Tax Credits and receive
additional credits and funding for energy efficiency. The Housing Authority proposes to further support
affordable housing owners and developer in investing in energy efficiency through adopting and
implementing Energy Efficiency-Based Schedules.
This program seeks to achieve a transformation in the way public housing authorities establish
and administer their utility allowance schedule (UAS). The UAS plays a key role in bridging the "split
incentive gap" between building owners who must pay for the energy efficiency improvements and the
income-qualified tenants who reap all of the benefits of the energy cost savings (or lack thereof).
Successful participation in the program involves adoption of a modified, energy efficiency-based utility
allowance schedule and the accompanying materials and minimal administrative infrastructure to
support the program goals.
CONTINUED ON ATTACHMENT: X YES SIGNATURE `
RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON APPROVED AS RECOMMENDED OT ER
VOTE OF COMMISSIONIUS
I HEREBY CERTIFY THAT THIS IS A
UNANIMOUS (ABSENT TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
COMMISSIONERS ON THE DATE SHOWN.
ATTESTED C%�W6,6
"THeBOARD
SWEETE ,CLERK OF
OF COMMISSIONERS
AND COUNTY ADMINISTRATOR
4
•
BY ,DEPUTY
Maryf ntz\H:\JudyHayes\MSOFFICE\WINWORD\BOARD\BO-Energy Efficiency Schedule.doc
Optional 11premiump) services are available that would allow the consultancy group of
Heschong Mahone Group, Inc., funded by the California Public Utilities Commission to market and
implement the program on behalf of the Housing Authority, also at no charge. A limited amount of
cash incentives is available to the owners of income-qualified housing within the jurisdiction of the
Housing Authority once the Energy Efficiency-Based Utility Allowance schedule has been adopted.
This combined effort sends a clear message that, along with helping to lower energy bills,
saving energy, and providing a long-term mechanism for owner-developers to recover their
investment in energy efficiency and on-site generation, the Housing Authority fully supports saving
energy and understands the correlation between energy savings and home affordability and
comfort. In essence, the Housing Authority would also be advocating an environmentally friendly
and energy-efficient Contra Costa County.
CONSEQUENCES OF NEGATIVE ACTION:
Should the Board of Commissioners elect not to approve these actions, the Housing
Authority would not be supporting a public-purpose program sponsored by the California Public
Utilities Commission, that promotes the construction and rehabilitation of energy efficiency in
affordable multifamily housing. The program is called "Designed for Comfort: Energy-Efficient
Affordable Housing" and is administered by the Heschong Mahone Group, Inc., of Fair Oaks,
California. All costs of participation in this program are covered through the "Public Good Charge
found on California ratepayer's utility bills.
Page 2 of 2
Maryfintz\H:\JudyHayes\N4SOFFICE\WINWORD\BOARD\BO-Energy Efficiency Schedule.doc
An Energy Efficiency-Based
Utility Allowance Schedule
Encouraging Energy Efficient Affordable Housing
Construction and Retrofits in
Contra Costa County
August 5, 2004
HMG Project # 0401
Designed for Comfort: EFFICIENT AFFORDABLE HOUSING
Submitted to:
HOUSING AUTHORITY
OF THE
COUNTY OF CONTRA COSTA
HESCHONG MAHONE GROUP, INC.
11626 Fair Oaks Blvd. #302
Fair Oaks, CA 95628
Phone:(916) 962-7001
Fax: (916) 962-0101
e-mail:info@h-m-g-com
website: www.h-m-g.com
r
HOUSING AUTHORITY OF THE COUNTY of CONTRA COSTA
TABLE OF CONTENTS
EXECUTIVE SUMMARY _ _ 1
INTRODUCTION 2
1. UTILITY ALLOWANCE SCHEDULES —2
2. IMPACT OF AN ENERGY EFFICIENCY-BASED UTILITY ALLOWANCE ON
THE TENANT 7
3. CONCLUSIONS_ 8
APPENDIX A—A CASE STUDY 9
Benefits to Tenants and Owner-Developers _ _ 10
APPENDIX B— ENERGY EFFICIENCY-BASED UTILITY ALLOWANCE
SCHEDULE METHODOLOGY 12
Introduction 12
Energy Efficiency-Based Utility Allowance for Retrofit 12
Energy Efficiency-Based Utility Allowance for New Construction _ _ 12
The Energy Efficiency-Based Utility Allowance Schedule Tool 15
HESCHONG MAHONE GROUP, INC. Page i August 3, 2004
HOUSING A U THORI TY OF THE COUNTY OF CONTRA Cos TA
TABLE OF FIGURES
Figure 1: Current Contra Costa County Standard Utility Allowance Schedule -4
Figure 2: Proposed Energy Efficiency-Based Utility Allowance Schedule for
Retrofit - 5
Figure 3: Proposed Energy Efficiency-Based Utility Allowance schedule for New
Construction 6
Figure 4: Impact on Estimated Tenant Energy Costs 7
Figure 5: Hypothetical Project Rental Income 9
Figure 6: Energy Efficiency-Based Utility Allowance Schedule Tool 16
HESCHONG MAHONE GROUP, INC. Page it August 3, 2004
1-76USING AUTHOR/TY OF THE CouNTy OF CoNTRA COSTA
National Housing Goal
"The Congress affirms the national goal that every American family be able to
afford a decent home in a suitable environment."
US Title 42, Chapter 130, SubChapter/, Sec. 12701.
State Energy Goal
"Light and heat are basic human rights and must be made available to all the
people at low cost for basic minimum quantities."
CA Statutes Chapter 1010, 1975, Miller-Warren Energy Lifeline Act., Sec. 1(a)
EXECUTIVE SUMMARY
This document is the first deliverable of a public-purpose program sponsored by
the California Public Utilities Commission which promotes the construction and
rehabilitation of energy efficiency in affordable multifamily housing. The program
is called Designed for Comfort: Efficient Affordable Housing and is administered
by the Heschong Mahone Group, Inc., of Fair Oaks, California. All costs of
participation in this program are covered through the "public goods chargell on
California ratepayer's utility bills.
The program seeks to achieve a transformation in the way public housing
authorities establish and administer the utility allowance schedule (UAS). The
UAS plays a key role in bridging the "split incentive gap" between building
owners who must pay for the energy efficiency improvements and the income-
qualified tenants who reap all of the benefits of the energy cost savings (or lack
thereof).
Initial participation in the program involves a commitment from housing authority
staff to investigate the advantages of the program and,to allow Designed for
Comfort staff to highlight the features and benefits of the program during a short
presentation. No commitment of funds is required. The initial deliverable is this
report followed by staff training and assistance in developing an implementation
report. Successful participation in the program involves adoption of a modified,
energy efficiency-based utility allowance schedule and the accompanying
materials and minimal administrative infrastructure to support the program goals.
Optional 14premiumly services are available that allow Designed for Comfort staff
to market and implement the program on behalf of the Housing Authority, also at
no charge. A limited amount of cash incentives is available to the owners of
income-qualified housing within the jurisdiction of the housing authority once the
Energy Efficiency-Based Utility Allowance schedule has been adopted.
HESCHONG MAHONE GROUP, INC. Page I August 3, 2004
A
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
INTRODUCTION
An affordable home must not impose undue burdens upon its tenants. By far,
the two largest components of the typical housing burden are rent and utility bills.
Therefore, the role of utility bills in determining whether or not housing is actually
affordable should not be underestimated. Inability to pay utility bills has been
noted as the second leading economic cause of homelessness.' The recent
increase in energy rates in California and the potential for future, possibly volatile
fluctuations in energy rates only makes this a more important issue in California.
More energy efficiency in housing not only benefits the tenants in keeping their
present utility bills down, it also helps to insulate them from potential future
fluctuations; fluctuations due to dynamic variables such as weather, or fuel price
volatility.
Investments in the energy efficiency of housing can help to reduce the costs
associated with utility bills but can also result in a higher cost to the developer. In
market rate housing, developers can pass any potential first costs from improved
energy efficiency on to the tenants. However, when rents are constrained by
affordable housing programs, developers simply have to absorb the cost
increment, reducing their potential profit. Neither of these two alternatives
provides sufficient incentive for them to increase the stock of energy efficient
affordable housing; the former decreases affordability, and the latter decreases
the chances of having the measures installed.
Residential property for rent, when the rents are constrained by public purpose
regulations, is the classic example of what is known as "split incentives." The
owner is required to pay any costs of making the building more energy efficient,
and yet none of the direct benefits of those investments flow to the owner. The
tenant is the one who will reap most of the benefits of the upgrades, and yet the
tenant has no say in the level of investment in energy efficiency.
However, the utility allowance affords an opportunity to "transfer" some of the
benefit reaped from lower utility bills from the tenant to the developer. With a
reduction in real utility costs to the tenant, the utility allowance can be reduced to
reflect these savings. This reduction in turn frees up a portion of the tenant's
housing burden so that it can be applied toward rent, and this can be done
without adversely affecting the tenant.
1. UTILITY ALLOWANCE SCHEDULES
We propose that the Housing Authority of the County of Contra Costa adopt a
utility allowance schedule with the express purpose of providing developers a
greater stimulus for including energy efficiency, and thereby increasing the stock
Karen Brown, Ex Dir,Colorado Energy Assistance Foundation. James Benfield, Ex Dir,Campaign for
Home Energy Assistance.
HESCHONG MAHONE GROUP, INC. Page 2 August 3, 2004
HOUSING A UTHORI TY OF THE CouNTy OF C01VTRA COSTA
of truly affordable housing in Contra Costa County. We don't propose
abandoning the current schedule, nor even starting from a different premise for
creating the Energy Efficiency-Based Utility Allowance schedule. We propose a
new schedule in addition to the existing Standard Utility Allowance schedule. The
new Energy Efficiency-Based Utility Allowance schedule (EEBUA) would include
two paths, one for new construction housing verified to be at least 15% better
than the current state minimum standards (2001 Title 24 Energy Efficiency
Standards) and one for existing housing that has been retrofitted to improve its
energy efficiency by 20%. (The Housing Authority may decide that they want to
set a higher standard than 20% improvement for retrofit projects). Through the
use of an Energy Efficiency-Based Utility Allowance, developers and owners of
both new construction and existing properties can recoup some or all of the utility
cost of energy efficiency upgrades in the form of increased rent. However, this
can be done without increasing the total housing burden on those tenants since
tenants reap the energy and utility cost savings from those upgrades. Figure 1
shows the Standard Utility Allowance of Contra Costa County for
`apartment/Duplex/Condo' unit types as an illustration. Based on this Utility
Allowance schedule, the proposed EEBUA for retrofit buildings (Figure 2) and
new construction (Figure 3) are calculated. Following this same methodology, we
can develop the EEBUA for single family units and for other areas in Contra
Costa County.
HESCHONG MAHONE GROUP, INC. Page 3 August 3, 2004
1
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
Standard Schedule
Monthly Dollar Allowances Utility or Service 0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating a. Natural Gas $10 $12 $14 $16 $17 $19
b. Bottle Gas $20 $25 $28 $33 $36 $39
c.Oil/Electric $10 $12 $17 $20 $22 $27
d.Heat Pump $11 $14 $21 $23 $22 $29
Cooking a. Natural Gas $3 $4 $5 $7 $9 $10
b. Bottle Gas $3 $4 $6 $7 $9 $10
c.Oil/Electric $2 $3 $4 $4 $4 $4
d.Microwave $1 $2 $2 $2 $3 $3
Other Electric $18 $22 $30 $37 $43 $46
Air Conditioning
Water Heating a. Natural Gas $7 $8 $11 $14 $16 $17
b. Bottle Gas $14 $17 $22 $28 $33 $36
c.Oil/Electric $14 $17 $27 $34 $35 $34
d.Coal/Other
Water $24 $31 $45 $52 $59 $66
Sewer
Trash Collection $20 $20 $20 $20 $20 $20
Range/Microwave $2 $2 $2 $2 $2 $2
Refrigerator $3 $3 $4 $4 $5 $5
Figure 1: Current Contra Costa County Standard Utility Allowance Schedule
HESCHONG MAHONE GROUP, INC. Page 4 August 3, 2004
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
Energy Efficiency Based Retrofit Schedule
Utility or Service 0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Monthly Dollar Allowances
Heating a. Natural Gas $9 $10 $12 $14 $14 $16
b. Bottle Gas $17 $21 $24 $28 $31 $33
c.Oil/Electric $9 $10 $14 $17 $19 $23
d.Heat Pump $9 $12 $18 $20 $19 $25
Cooking a. Natural Gas $3 $4 $5 $7 $9 $10
b. Bottle Gas $3 $4 $6 $7 $9 $10
c.Oil/Electric $2 $3 $4 $4 $4 $4
d.Microwave $1 $2 $2 $2 $3 $3
Other Electric $18 $22 $30 $37 $43 $46
Air Conditioning
Water Heating a. Natural Gas $6 $7 $9 $12 $14 $14
b. Bottle Gas $12 $14 $19 $24 $28 $31
c.Oil/Electric $12 $14 $23 $29 $30 $29
d.Coal/Other
Water $24 $31 $45 $52 $59 $66
Sewer
Trash Collection $20 $20 $20 $20 $20 $20
Range/Microwave $2 $2 $2 $2 $2 $2
Refrigerator 1 $3 1 $3 1 $4 1 $4 $5 1 $5
Figure 2: Proposed Energy Efficiency-Based Utility Allowance Schedule for
Retrofit
HESCHONG MAHONE GROUP, INC. Page 5 August 3, 2004
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
Energy Efficiency Based New Construction Schedule
Utility or Service 0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Monthly Dollar Allowances
Heating a. Natural Gas $6 $8 $9 $10 $11 $12
b. Bottle Gas $13 $16 $18 $21 $23 $25
c.Oil/Electric $6 $7 $10 $12 $13 $16
d.Heat Pump $6 $8 $12 $13 $13 $17
Cooking a. Natural Gas $3 $4 $5 $7 $9 $10
b. Bottle Gas $3 $4 $6 $7 $9 $10
c.Oil/Electric $2 $3 $4 $4 $4 $4
d.Microwave $1 $2 $2 $2 $3 $3
Other Electric $18 $22 $30 $37 $43 $46
Air Conditioning
Water Heating a. Natural Gas $6 $7 $9 $12 $13 $14
b. Bottle Gas $11 $14 $18 $23 $27 $29
c.Oil/Electric $14 $17 $27 $34 $35 $34
d.Coal/Other
Water $24 $31 $45 $52 $59 $66
Sewer
Trash Collection $20 $20 $20 $20 $20 $20
Range/Microwave $2 $2 $2 $2 $2 $2
Refrigerator $3 $3 $4 $4 1 $5 1 $5
Figure 3: Proposed Energy Efficiency-Based Utility Allowance schedule for New
Construction
HESCHONG MAHONE GROUP, INC. Page 6 August 3, 2004
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
2. IMPACT OF AN ENERGY EFFICIENCY-BASED UTILITY
ALLOWANCE ON THE TENANT
When dealing with affordable housing, there is a legitimate concern about the
affordability impact effect of reducing the utility allowance for the tenant. On the
most basic level, any increase in rent should be completely offset by the
decrease in the tenant's utility bills. However, as a safeguard, we have
formulated the Energy Efficiency-Based Utility Allowance schedule so that some
of the energy cost savings from the improved energy efficiency of the unit flow
directly to the tenant. Simply put, the Utility Allowance is not reduced as much as
the projected reduction in utility costs. The result is that the tenant actually ends
up paying less each month in utilities than s/he receives from the reduced utility
allowance. The following table compares the actual energy costs for a tenant in
a standard dwelling unit to the actual energy costs for a tenant in an unit that is
15% more energy efficient than the current energy standards. It demonstrates
that the even though the utility allowance for the energy efficient unit is less than
that for the standard unit, the estimated energy cost is actually even lower than
that. The table assumes that the Standard Utility Allowance accurately reflects
tenants' utility costs, and also assumes energy rates of$0.15/kWh for electricity
and $0.70/therm for gas.
UTILITY OR SERVICE 2-BR 2-BR
Energy
Standard Actual Efficient Actual
Schedule Energy Cost Schedule Energy Cost
Gas Space Heating $14 $14.00 $9 $7.36
Space Cooling $0 $0.00 $0 $0.00
Gas Water Heating $11 $11.00 $9 $8.39
Cooking(gas) $5 $5.00 $5 $5.00
Water $45 $45.00 $45 $45.00
Sewer
Trash Collection $20 $20.00 $20 $20.00
Range/Microwave $2 $2.00 $2 $2.00
Refrigerator $4 $4.00 $4 $4.00
TOTAL L $101 $101.00 $94 $91.75
Figure 4: Impact on Estimated Tenant Energy Costs
HESCHONG MAHONE GROUP, INC. Page 7 August 3, 2004
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
3. CONCLUSIONS
This report is provided to the Housing Authority of the County of Contra Costa as
a proposal to restructure the utility allowance schedule in such a way as to
promote the improvement of energy efficiency of affordable housing. The next
step is for the Housing Authority to adopt the revised utility allowance in its next
general meeting. HMG does not have any estimates of the number of units that
are likely to be improved because of this program. What is clear is that the
affordable housing crisis is exacerbated by unstable energy prices. Several
developers we have dealt with say this type of program can make a significant
improvement in their profitability and therefore their willingness to build in a
specific community. The pace, type and potential impact of efficiency upgrades
will depend upon the age of the home, the type of heating and cooling equipment
currently installed, and the number of complaints the building owner currently
receives from tenants. The Housing Authority plays a key role in communicating
the various options available to owners in order to minimize the loss of"at risk"
housing units. The Energy Efficiency-Based Utility Allowance is one tool at the
disposal of the Housing Authority of the County of Contra Costa to bridge the
split-incentive gap between owners and tenants.
The HESCHONG MAHONE GROUP, INC. stands behind the recommendations of this
report and makes services available to the Housing Authority to help resolve any
issues which may arise.
HESCHONG MAHONE GROUP, INC. Page 8 August 3, 2004
HOUSING AUTHOR/TY of THE CouNTY of CONTRA COSTA
APPENDIX A-A CASE STUDY
The following is a case study to illustrate the impact that an Energy Efficiency-
Based Utility Allowance schedule would have on a hypothetical new construction
project. We use a project with 40 two-bedroom units and 12 three-bedroom
units. Some of the assumptions (e.g, rents, allowable housing burdens for
tenants, "other" laundry income associated with the property, etc.) were drawn
from a 53-unit apartment complex in Southern California called, "Vista Verde
Apartments." All but one of the units were designed to be affordable to low and
very low-income families (41%-47% of median area income). Figure 5 excerpts
information from a table in the Development Form - Rental Income, in the
application submitted to the local Housing Authority by the developer. Figure 5
shows what the rents and income figures would have been had a New
Construction Energy Efficiency-Based Utility Allowance schedule been in place
and utilized for this project. Figure 5 also shows the difference between the
rental income using the two schedules. Notice that the developer receives an
additional $4,512 in rents per year over the term of eligibility for the Energy
Efficiency-Based Utility Allowance schedule without impacting the tenants' total
housing burden.
Standard Schedule
Total Cost Monthly
of Utility Monthly Yearly
Bedrooms Number of Housing Allowance Net Rent Gross All
Unit Type per Unit Units per Unit per Unit per Unit Units
2-BR 2 40 $716 $101 $615 $295,365
3-BR 3 12 $716 $115 $601 $869594
Total Rent per Year $381,959
Energy Efficiency Based New Construction Schedule
Total Cost Monthly
of Utility Monthly Yearly
Bedrooms Number of Housing Allowance Net Rent Gross All
Unit Type per Unit Units per Unit per Unit per Unit Units
2-BR 2 40 $716 $94 $622 $298,725
3-BR 3 12 $716 $107 $609 $879746
Total Rent per Year $386,471
Total Rent per Year(w/o Energy Efficient Utility Allowance Tier 2 $381,959
Difference $4,512
Figure 5: Hypothetical Project Rental Income
HESCHONG MAHONE GROUP, INC. Page 9 August 3, 2004
HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
Benefits to Tenants and Owner-Developers
The benefits of this utility allowance to owner-developers and tenants can be
explained using an example as shown in Figure 6: In case 1 (image on left), if the
total allowable housing burden for a particular low-income two bedroom dwelling
unit in Contra Costa is $500, with a utility allowance of$101, using the standard
utility allowance schedule, (see Figure 4), then the rent that goes to the building
owner is $399 per unit per month.
In case 2, if the building owner installs energy efficiency upgrades qualifying the
project for the energy efficiency based utility allowance schedule, the utility
allowance is reduced to $94 (see Figure 4). The remaining $406 (housing burden
of$500 minus new utility allowance of$94) goes as rent to the owner-developer.
Case 2 creates a benefit to the owner (a repayment of his/her investment in
energy efficiency) with the rent increase from $399 to $406 for each dwelling unit
per month. The net housing burden of the tenant still remains at $500. Since the
dwelling unit is energy efficient, the tenant may pay $92 for his/her bills and
hence saving $2 on his/her monthly utility bills.
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ui 501
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400 $4.06
.'Renftb Owner Rent t6 01"er.
Standard Utility Allowance Energy Efficiency-Based
Utility Alloi-owance
Figure 6: Pie Chart Indicating the distribution of Standard Utility Allowance (left)
and Energy Efficiency Based Utility Allowance (right)
Table 1 below shows the fifteen-year annual net income for our hypothetical
project comparing the Standard Utility Allowance schedule with the
recommended Energy Efficiency-Based Utility Allowance schedule. The top half
of the table shows the income and expense estimates from the application for the
project. The bottom half shows what the income and expenses would have been
in the estimate given the following assumptions:
♦ $5000 additional first costs (52 units X $96/unit)
♦ Rents from the table in Figure 5 above
♦ Repayment (to the lender) of the $5000 upgrade cost
HESCHONG MAHONE GROUP, INC. Page 10 August 3, 2004
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HOUSING AUTHORITY of THE COUNTY of CONTRA COSTA
♦ No additional "Other" income or additional operating expense (the
laundry facilities are assumed to be unchanged)
Mortgage Amount $963,000 Rental Income(Tier 1) $381,959 Other Income $4,800
Upgrade Cost $5,000 Rental Income(Tier 2) $386,471 Operating Expense $105,000
Mortgage Rate 4.50% Vacancy Rate 5.00% Expenses 3.50% Rent and other Rates 2.50%
Standard Schedule
Year 1 1 2 3 4 5 1 6 7 13 14 15
Rental Income $381,959 $391,507 $401,295 $411,328 $421,611 $432,151 $442,955 $513,692 $526,534 $539,697
Cher Income $4,800 $4,920 $5,043 $5,169 $5,298 $5,431 $5,567 $6,455 $6,617 $6,782
Gross Income _ $386,759 $396,427 $406,338 $416,497 $426,909 $437,582 $448,521 $520,147 $533,151 $546,480
Vacancy $19,338 $19,821 $20,317 $20,825 $21,345 $21,879 $22,426 $26,007 $26,658 $27,324
Effective Gross Income $367,421 $376,606 $386,021 $395,672 $405,564 $415,703 $426,095 $494,140 $506,493 $519,156
Operating Expense $105,000 $107,625 $110,316 $113,074 $115,900 $118,798 $121,768 $141,213 $144,744 $148,362
Net Operating Income $262,421 $268,981 $275,706 $282,598 $289,663 $296,905 $304,327 $352,926 $361,750 $370,793
Debt Service $89,669 $89,669 $89,669 $89,669 $89,669 $89,669 $89,669 $89,669 $89,669 $89,669
Residual Cash_ $172,752 $179,312 $186,037 1 $192,930 $199,995 $207,236 $214,659 $263,258 $272,081 $281,125
Cumulative Residual y $172,752 $352,064 $538,101 $731,031 $931,026 $1,138,262 $1,352,921 $2,807,472 $3,079,553 $3,360,678
Energy Efficient New Construction Schedule
Year __ 1 2 3 4 5 6 7 13 14 15
Rental Income $386,471 $396,132 $406,036 $416,186 $426,591 $437,256 $448,187 $519,760 $532,754 $546,073
Other Income $4,800 $4,920 $5,043 $5,169 $5,298 $5,431 $5,567 $6,455 $6,617 $6,782
Gross Income _ $391,271 $401,052 $411,079 $421,356 $431,889 $442,687 $453,754 $526,215 $539,371 $552,855
Vacancy $19,564 $20,053 $20,554 $21,068 $21,594 $22,134 $22,688 $26,311 $26,969 $27,643
371,707 $381,000 $390,525 $400,288 $410,295 $420,552 $431,066 $499,905 $512,402 $525,212
Effective Gross Income=:=$
Operating Expense $105,000 $107,625 $110,316 $113,074 $115,900 $118,798 $121,768 $141,213 $144,744 $148,362
Net Operating Income $266,707 $273,375 $280,209 $287,214 $294,395 $301,754 $309,298 $358,691 $367,659 $376,850
Debt Service $90,134 $90,134 $90,134 $90,134 1 $90,134 $90,134 $90,134 _$90,134 $90,134 $90,134
Residual Cash $176,573 1 $183,240 1 $190,075 $197,080 1 $204,260 $211,620 $219,164 $268,557 $277,524 $286,716
Cumulative Residual 1 $176,573 1 $359,813 1 $549,888 $746,968 1 $951,229 $1,162,849 $1,382,013 $2,866,317 $3,143,842,$3,430,557
Yearly Difference $3,821 1 $7,749 1 $11,787 1 $15,937 1 $20,203 1 $24,587 1 $29,092 1 $58,846 1 $64,289 $69,880
Table 1: Income and Expense Comparison
Note that in both sections of the table, years 8-12 are present in the calculations
but collapsed (not shown) in the table since these columns add little additional
information. The most notable lesson of the table is that even with a larger debt
service payment for the initial four years (more than enough to cover the
additional cost of measures even WITHOUT a utility program incentive) the
residual cash is significantly larger. The cumulative residual cash by the 7th year
is about $29,000 larger, and about $69,880 after 15 years. The developer is able
to make more return on his/her investment while the tenants' total housing
burden is not increased but rather slightly decreased while they also realize the
value of increased comfort.
HESCHONG MAHONE GROUP, INC. Page 11 August 3, 2004
HOUSING AUTHOR/TY Of THE COUNTY OF CONTRA COSTA
APPENDIX B — ENERGY EFFICIENCY BASED UTILITY
ALLOWANCE SCHEDULE METHODOLOGY
Introduction
The methodology used to develop an Energy Efficiency-Based Utility Allowance
(EEBUA) schedule is not a substitute for the Housing Authority's current method
of creating a utility allowance schedule, but rather builds upon it. The Energy
Efficiency-Based Utility Allowance involves two paths, one for new construction
built to 15% better than the current standards, and one for existing construction
that has been retrofit to improve energy performance by 20%. In both cases, the
existing utility allowance schedule is used as the representation for energy use of
the average of the units in the jurisdiction. With this as the baseline, the Energy
Efficiency-Based Utility Allowance schedules were produced by adjusting the
numbers in the Standard Utility Allowance schedule to represent energy efficient
versions. The following sections of this report present the methodologies used to
develop both the Energy Efficiency-Based Utility Allowance schedules for retrofit
and new construction.
Energy Efficiency-Based Utility Allowance for Retrofit
Adjusting the Standard Utility Allowance schedule for energy efficient retrofit
projects is very straightforward. A 20 percent improvement in energy efficiency
will correspond to at least 20 percent reduction in energy costs. However, a
"cushion" is built into the adjustment to ensure that the tenant benefits by
reducing the utility allowance benefit by only 15 percent. The Standard Utility
Allowance schedule is proportionately reduced to produce the Energy Efficiency-
Based Utility Allowance schedules for retrofit buildings.
Energy Efficiency-Based Utility Allowance for New Construction
The process for adjusting the standard utility schedule for energy efficient new
construction is more complex. We used computer modeling to develop a ratio of
energy use in efficient new construction compared to typical existing
construction. We analyzed the performance of a set of typical buildings with a
set of features representing an average of building vintages (e.g., 1980 building
practices). We then used these results to create a ratio between the energy
performance of the "existing construction" models and the performance of those
same buildings as if they were built to a standard 15 percent better than the
current energy standards. That resulting ratio is then applied to the existing utility
allowance schedule to generate the Energy Efficiency-Based Utility Allowance
schedule for new construction.
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HOUSING AUTHOR/TY of THE COUNTY of CONTRA COSTA
The Building Models
The basis for the set of building models is a standard two-story, 16 unit
multifamily building developed by the California Energy Commission. The
sixteen units are arranged linearly with a central common wall and eight units
opening on each long wall. A version of this model was then developed with all
units of one unit type; a type found in the Contra Costa Utility Allowance
schedules studio apartments, one-bedroom units, etc. This resulted in six
building models; one with 16 studio apartments, one with 16 one bedroom
apartments, one with 16 two bedroom apartments, etc. We also developed
versions of the model for representing gas and electric space heating. The
conditioned volume and envelope areas were increased to match the unit type
(number of bedrooms per apartment). The ratio of window area to floor area was
kept constant across all the models.
The building features (wall insulation, furnace efficiency, window specifications,
etc.) for models representing the existing condition were taken from the California
Residential Manual's section on default assumptions for modeling existing
buildings2 and can be found in Table 2 of this report. The features used for the
"existing" models are what the Commission considers to be typical for 1978
vintage homes, but may actually be better (more efficient) than what is likely to
be found as an average of conditions for a population of existing buildings in
California.
Feature Existing Model (Standard Model)
2001 Prescriptive Min.
Roof R-value R-19 .047 U-factor R-30—R-38
Wall R-value R-11 .098 U-factor R-13—R-19
Slab Ede .76 U-factor .76 U-factor
Duct Insulation R-2.1 R-4.2
Building Leakage SLA 4.9 4.9
Duct Leakage 28% 6%
Window U-factor 1.02 .60- .75
Window SHGC .64 .40—No Reg.
Gas Furnace .78 .78
Electric Heat Pump 5.6 6.8
Space Cooling 8 SEER 10 SEER
Domestic Water Heating .53 .58(or.53 with R-12
blanket
Table 2: Assumed Features for"Existing"Models and Current Standards
2"CEC Residential Manual for Compliance with the Energy Efficiency Standards(for Low-Rise Residential
Buildings)."2001. 7-22,Table 7-6.
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HOUSING A UTHORI TY OF THE COUNTY OF CONTRA COSTA
The Analysis
We performed the analysis using MICROPAS (v6.01), a program certified by the
California Energy Commission to analyze low-rise residential buildings for code
compliance. Each of the building models was analyzed in all of California's 16
climate zones.3 MICROPAS generates results in the form of an energy budget et for
Space Heating, Space Cooling and Water Heating for the proposed building and
an energy budget for a standard building, in kbtu/sf/yr.4 The standard building is
the same building as the proposed, but with features (insulation, equipment
efficiency, etc.) that allow it to just meet the minimum requirements of the current
building code. We added features to generate a proposed budget that was 15%
lower (better) than the standard budget.
We used a separate building model for each unit type (e.g., studio, one bedroom,
etc.) to get more accurate results. The increase in square footage from one unit
type to the next is not linear and neither is the performance. For example, just if
a two bedroom unit is x% larger than a one bedroom unit, it doesn't mean that it
will also consume x% more energy, or that the energy it consumes per square
foot will be the same. Nor is a three bedroom unit the same percentage or
amount (square footage) larger than a two bedroom as a two bedroom is over a
one bedroom.
By dividing the components (heating, cooling or water heating energy) of the
energy budget from the "Energy Efficiency-Based" models by the corresponding
components from the "existing" models, we created a ratio between the two
budgets. Those are the adjustment factors we used for reducing the existing
utility allowance.
The "Safety" Factor
For both of the methods used to develop the Energy Efficiency-Based Utility
Allowance schedules, further"safety factor"was applied to the adjustment
factors. Within our tool, only 75% of the savings from energy efficiency actually
goes to reducing the utility allowance. This serves the dual process of providing
a built-in cushion to protect the tenants and passes some of the economic benefit
directly to the tenants. For example, the gas space heating budget for the
"existing" version of the two bedroom model in Climate Zone 3 is 16.63 kbtu/sf/yr
and the same budget from the Energy Efficiency-Based Utility Allowance
schedule for new construction is 10.29 kbtu/sf/yr. This results in a ratio of 0.62.
After '/ of the savings are "given" to the tenant, the resulting adjustment factor is
0.71. This means that though the tenant's heating energy consumption (and
therefore bill for space heating) is reduced by 38%, but their space heating utility
allowance is only reduced by 29%.
3 Although only the Climate Zones within Contra Costa are relevant to the analysis in this report,we use the
tool to perform similar analysis for public housing authorities in the rest of the state.
4 Thousands of British Thermal Units per square foot per year.
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HAUS/NG A U THORI TY OF THE COUNTY OF CONTRA COSTA
The Energy Efficiency-Based Utility Allowance Schedule Tool
Using a Microsoft Excel spreadsheet, we built this methodology into a simple tool
(Figure 7) that the Housing Authority of the County of Contra Costa can use in
future years to update it's Energy Efficiency-Based Utility Allowance schedules
on it's own. The tool requires the user to input the following information:
• Standard allowances for space heating, space cooling, and water heating
for each unit type,
Percentage of housing stock that exists in this jurisdiction (for example,
the housing stock could be 50% of 16 unit multifamily, 20% high rise and
20% single family). To calculate the EEBUA for this report, the
assumption is made that the housing stock for apts/condo/duplex is 100%
of 16 units multifamily buildings.
• What percentage of the jurisdiction is in what climate zones. We expect
that this input (percentage of jurisdiction in each climate zone) should
remain the same as when the EAH staff originally created the Energy
Efficiency-Based Utility Allowance schedule for the Housing Authority.
The tool's output is the adjusted set of allowances for an Energy Efficiency-
Based Utility Allowance schedule for new construction and retrofit buildings
based on the updated Standard Utility Allowance schedule.
5 Climate Zone maps are available from the California Energy Commission.
HESCHONG MAHONE GROUP, INC. Page 15 August 3, 2004
AW
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HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA
Jurisdiction: [Housing Authority of the County of Contra Costa
%Multifamily(04): %Multifamily(16): 1 1007%
%High Rise(4-Story): %High Rise(10-Story):
%Single Family:
Select Climate Zone: Climate Zone 12 `Comate Zone 01 EV Climate Zone 01VIP
Enter%of Area: 100%
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
ass ace heating $10.00 $12.00 $14.00 $16.00 $17.00 $1
bottle ass ace heating $20.00 $25.00 $28.00 $33.00 $36.00 $399
..00
.00heatum $11.00 $14.00 $21.00 $23.00 $22.00 $29
as water heating $7.00 $8.00 $11.00 $14.00 $16.00 $17.00
bottle as water heating $14.00 $17.00 $22.00 $28.00 $33.00 $36.0000
electrics ace heating $10.00 $12.00 $17.00 $20.00 $22.00 $27.00
electric cooling $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
electric water heating $14.00 $17.00 $27.00 $34.00 $35.00 $34.00
"= 0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
0
d ass ace heating $8.50 $10.20 $11.90 $13.60 $14.45 $16.15
•- bottle gass ace heating $17.00 $21.25 $23.80 $28.05 $30.60 $33.15
c
heat pump $9.35 $11.90 $17.85 $19.55 $18.70 $24.65:::`:
as water heatin
w $5.95 $6.80 $9.35 $11.90 $13.60 $14.45
bottle as water heating $11.90 $14.45 $18.70 $23.80 $28.05 $30.60
im electrics ace heating $8.50 $10.20 $14.45 $17.00 $18.70 $22.95
W electric cooling $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
electric water heating $11.901 $14.451 $22.95 $28.901 $29.75 $28.90
3 0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
d
z c ass ace heating $6.33 $7.66 $9.02 $10.37 $11.07 $12.40
0 bottle gass ace heating $12.65 $15.82 $17.72 $20.88 $22.78 $24.67
LD
heat pump $6.42 $8.18 $12.26 $13.43 $12.85 $16.93:....
W v, as water heating $5.73 $6.56 $9.04 $11.54 $13.21 $14.06
o bottle gas water heating $11.47 $13.921 $18.02 $22.93 $27.031 $29.48
c electrics ace heating $5.84 $7.07 $10.10 $11.95 $13.20 $16.25
W electric cooling $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
electric water heating $14.00 $17.00 $27.00 $34.00 $35.00 $34.00
Figure 7. Energy Efficiency-Based Utility allowance Schedule Tool
HESCHONG MAHONE GROUP, INC. Page 15 August 3, 2004