HUD’s Green and Energy Retrofit Assessment: Key Findings and Policy Implications

HUD’s Green and Energy Retrofit Assessment: Key Findings and Policy Implications

Background

Recent research assesses green and energy retrofits in HUD-subsidized housing. The American Recovery and Reinvestment Act of 2009 (ARRA) allocated $13.6 billion to HUD. Of this allocation, HUD disbursed $4 billion toward the Public Housing Capital Fund (PHCF) for modernization and renovation, including promotion of energy efficiency and $250 million toward the Green Retrofit Program (GRP) for Multifamily Housing to complete energy-efficient building upgrades.

PHCF encompasses two grant programs: a $3 billion formula grant and a competitive grant of approximately $1 billion. HUD allocated the formula grant funds based on the sizes of public housing agencies (PHAs) and the numbers and types of housing within each PHA. As of the 4th quarter of fiscal year 2011, 4,418 Asset Management Projects (AMPs) within PHAs received formula grants.

HUD allocated the competitive grant funds based on the “merits of the applications.” PHAs could receive competitive grants in addition to the formula grants. HUD allocated $400 million for public housing upgrades, the continuation of stalled projects, and housing for senior and disabled residents. The remaining $600 million, placed under category 4 of the competitive grants, focused on the “Creation of Energy Efficient, Green Communities,” which HUD divided into two options. The first option allocated funding to energy-efficient investments in new construction or facilities undergoing substantial rehabilitation. HUD awarded PHAs 37 Option 1 grants totaling $277 million. The second option allocated funding to facilities undergoing moderate rehabilitation. HUD awarded PHAs 238 Option 2 grants totaling $323 million.

GRP for Multifamily Housing offers loans and grants for privately owned rental housing units that receive project-based assistance and need green upgrades. The program, which awarded 227 grants, aimed to create “green collar” jobs, improve property operations’ efficiency, improve residents’ health, and support the environment.

Research Purpose

HUD published Assessment of ARRA Green and Energy Retrofits in HUD-Subsidized Housing in June 2017. Among several goals, the assessment aimed to help HUD select future energy-efficient projects within existing affordable housing. The main goals of HUD’s ARRA project funding included the following:

• Measure the progress of energy-efficient projects.
• Create healthy and safe living environments.
• Reduce long-term utility costs.
• Conserve energy and natural resources.
• Use renewable energy sources whenever feasible.
• Enhance and preserve local ecosystems.

Findings

To assess energy conservation measures (ECMs) at specific properties, the research team visited the sites of 20 competitive grantees to identify how PHAs completed and maintained the retrofits. As part of these site visits, the research team interviewed PHA management and maintenance staff who were most familiar with the retrofits and inspected units, rooftops, common areas, and façades. PHA staff also provided the researchers with relevant documents such as maintenance manuals, construction and engineering information, and energy consumption data.

Of the 20 sites studied, 19 experienced energy savings; one saw increased electrical costs following the installation of heat pumps. Across the 20 sites, each unit saved an average of $288 in utility costs annually. Among competitive grantees, investments in ECMs generated energy savings averaging 20.33 percent. The savings in electricity in 1 year could power approximately 29,000 average U.S. homes, and the savings in water could supply approximately 7,000 families. The findings also indicate that the annual savings in carbon dioxide emissions are equivalent to removing approximately 37,400 vehicles from the road.

The research team also calculated simple paybacks — the estimated time it takes for properties to see a return on their investments in green retrofits. To conduct the payback analysis, the researchers divided the incremental costs of energy-efficient equipment for each site by the annual utility savings. Researchers calculated paybacks at seven of the competitive grantees’ sites, which show attractive returns for HUD’s green projects. The paybacks ranged from 2.4 to 13.8 years.

Recommendations

The research team suggests several initiatives to promote resident engagement in green energy retrofits. For example, training sessions for residents and PHA maintenance staff could explain how to use new technology, preserve the investments, and meet energy savings targets. In addition, the researchers suggest that regular meetings with residents could keep them involved and informed throughout the retrofitting process. It is important that residents feel that the retrofits are practical and desirable, so surveys of residents would be useful for evaluating their satisfaction. Creating a resident council or appointing resident ambassadors also promotes resident engagement.

The researchers suggest that each site have a tailored retrofit plan because each property varies by type; age of construction; and resident characteristics, such as senior citizens or people with disabilities. PHAs should also use contractors who are already familiar with the property to reduce costs and maintain control over the retrofitting process.