Green Retrofit Program for Multifamily Housing - HUD Webinar Overview
Explore the Green Retrofit Program for Multifamily Housing discussed in a HUD webinar held on May 13, 2009. Learn about the objectives, program guidance, and eligibility criteria for this initiative aimed at boosting the economy, creating jobs, and promoting sustainable development in multifamily properties.
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Presentation Transcript
The Recovery Acts Green Retrofit Program for Multifamily Housing HUD Webinar May 13, 2009
Todays Presentation Background and Program Overview Program Discussion --- Intermission --- Program Discussion (continued) Questions and Answers During this webcast, email questions to: AssistedHousingGreenRetrofit@hud.gov Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 2
Presenters (from HUD s Office of Affordable Housing Preservation) Ted Toon, Deputy Assistant Secretary Jerry Anderson, Associate Deputy Assistant Secretary Harry West, Director, Chicago Preservation Office Donna Rosen, Director, Wash. Preservation Office Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 3
Background and Program Overview Ted Toon Deputy Assistant Secretary Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 4
GRP Authorization The Green Retrofit Program for Multifamily Housing (GRP) was authorized by the American Recovery and Reinvestment Act of 2009, whose objectives are to: Boost the economy Create jobs Restore economic growth Strengthen America s middle class Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 5
GRP Guidance The program guidance is provided in Housing Notice H-xx, published on May 13, 2009, available at www.hud.gov/recovery: $250,000,000 shall be for grants or loans for energy retrofit and green investments Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 6
Green Building An approach to sustainable development that is designed to result in a property that Reduces demand for energy and water Costs less to operate and maintain Improves the residents quality of life, and Reduces its impact on the environment. Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 7
GRP Eligible Properties Funding is available for Section 8, 202, 811, and USDA Section 515 properties with project-based assistance Minimum project size as detailed in the Notice Limits by project type, geography, and projects with same owner Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 8
Funding & Eligible Purposes Maximum per-unit improvements of $15,000, expected to average $10,000 per unit across the portfolio Green and energy retrofits only (improvements that conserve energy and water, improve indoor air quality, or benefit the environment) Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 9
Benefits to Residents May replace old, inefficient appliances with new energy-efficient models Keeps tenants warmer in winter and cooler in summer May reduce dust, mold, and pests-- without toxic pesticides May provide healthier homes Preserves affordable apartments Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 10
Benefits to Property Owners No cost to most owners (with some exceptions) Includes four performance-based financial incentives Adds years to property s long-term viability Adds to property marketability and value Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 11
Benefits to Property Owners (cont d) Provides access to green materials, systems, and technologies Contributes to energy and water conservation May improve indoor air quality Benefits the environment Share in future utility savings Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 12
Owner Financial Incentives Pre-Development Incentive 1% of Green Retrofits up to $10,000, paid at closing Efficiency Incentive 3% of Green Retrofits up to $30,000, paid upon satisfactory and timely completion of the rehab Incentive Performance Fee 3% of collected revenue, paid annually from SC upon meeting pre-conditions Targeted Job Creation Incentive (optional) 10% of qualified expenditures up to $25,000, for contracting with Eligible Residents or Eligible Business Concerns (or both), pursuant to HUD Section 3 guidance Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 13
Benefits to HUD, Taxpayers Reduced utility costs Improved indoor air quality and healthier residents Extended affordability for 15 years Trained Green property managers Green replacements Greener property operations Integrated pest management Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 14
Program Discussion Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 15
The Application Stage Jerry Anderson Associate Deputy Assistant Secretary Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 16
Stages of Processing APPLICATION 1. Preparing the application 2. Submitting the application 3. Selection 4. Initial Feasibility PLAN DEVELOPMENT 5. Tenant Meeting 6. GRPCA 7. PAE s Plan 8. Bids / Estimates 9. Discussions with PAE 10. GR O&M Plan 11. Final Feasibility Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 17
Stages of Processing Cont d APPROVAL AND CLOSING 12. HUD Approval 13. Green Retrofit Plan Commitment 14. Closing POST CLOSING 15. Starting Green Retrofits Timely 16. Davis Bacon 17. Recovery Act Reporting 18. Completion of Green Retrofits 19. Final Adjustments and Close-Out Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 18
Application Applications Must Be Complete, or Will Be Rejected. A Complete Application Includes: 14 items of Required Information 15 Owner Certifications 8 Owner Commitments Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 19
Required Information Initial Feasibility Assessment (and comments, if necessary) Evidence of Authority Owner Preferences: Grant or Loan, Optional Green Alternatives owner wishes to pursue, other Green Retrofits of interest Three Years Annual Financial Statements and Current Year s Unaudited Financials Accounts Payable (if Negative Surplus Cash) Flood Insurance (if applicable) Description of Existing Components Utility Releases (owner paid) Utility Releases (tenant paid) 2530 Clearance DUNS Number CCR (Cage) Registration Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 20
Required Certifications Application materials are accurate, not misleading AFS current, no findings Not pursuing other Recovery Act funding, except as disclosed Not pursuing any other funding, except as disclosed No judgment lien for a debt to federal government No delinquent federal debt Owner/Affiliate consent to subordinate debt to GRP In compliance with applicable Fair Housing and Civil Rights laws Executed Byrd Amendment and Lobbying Disclosure Project is an Eligible Project Not debarred or suspended Not subject of an LDP Not an Ineligible Owner No litigation, except as disclosed Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 21
Required Commitments Cooperate with HUD in developing the Green Retrofit Plan Specify latest expiration date of existing use restrictions and provide documents (if requested) Execute documents to extend project affordability 15 years beyond end date of existing use restrictions Execute Legal Documents at closing Agree to early renewal of project-based contract if it expires within 18 months of application date Use best efforts to obtain tenant releases Provide bids/cost estimates within reasonable time period prescribed by PAE Make owner contribution if Partially Assisted, Large Account Balance, and/or needs non-Green rehab Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 22
How to Apply for GRP An Application Requires: (see Notice for full details) 1. Meeting threshold eligibility requirements 2. Emailing the EXCEL spreadsheet 3. Mailing the required documentation Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 23
Selection Among Applicants Size of applicant pool HUD to process GRPs for projects containing about 25,000 units in total Limits by four project categories Projects in multiple categories Waiting list transparent, public can monitor at www.hud.gov/recovery Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 24
Special Processing Early Renewal Process Projects with Section 8 contracts expiring within 18 months Mark-to-Market With GRP Add-on Projects in the M2M pipeline now, as well as those coming in with the filing of the GRP Application Projects that have closed a traditional M2M Restructuring are eligible Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 25
Initial Feasibility Assessment HUD-provided template downloadable from hud.gov/recovery ARRA requirements to pass Feasibility Owner completes as required part of GRP Application HUD/PAE s validation of Feasibility Sample follows on next slide Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 26
GRP Initial Feasibility Assessment for: Sample Project Three Years' AFS Starting with: 2006 73 Units Feasibility Criteria Type: 236 Other 2006 Actual 2007 Actual 2008 Actual Feasibility Assessment Line Description Feasibility Assessment: Explanation Feasibility Criteria Gross Potential (Apartments) Gross Potential (Other) Rent Loss (Apartments) Rent Loss (Other) Other Income $487,808 $10,072 ($33,187) $501,080 $7,817 ($25,046) $489,135 $19,761 ($28,508) $489,135 $12,785 ($28,745) Actual for 2008 Average, trended to 2008 5.88% see below Average, trended to 2008 Average, trended to 2008 2.50% trending rate $0 $0 $0 $0 $4,754 $5,037 $4,926 $5,028 Effective Gross Income $469,447 $488,888 $485,314 $478,203 15% reduction 10% reduction Utilities Expenses Oper/Repairs & Maintenance Other Operating Expenses Replacement Reserve Deposit ($18,337) ($54,397) ($163,854) ($13,254) ($18,355) ($49,091) ($175,082) ($13,254) ($19,837) ($49,773) ($163,002) ($13,254) ($16,410) ($47,173) ($171,537) ($35,697) Average, trended, minus Average, trended, minus Average, trended to 2008 Median for M2M debt restructures $489 PUPA Adjusted NOI $219,605 $233,106 $239,448 $207,386 Total Mortgage Debt Service ($190,006) ($189,979) ($189,639) ($189,639) Actual for 2008 Operating Cushion $29,599 $43,127 $49,809 $17,747 Apartment rent loss assessment is greater of: 5.88% historical average plus or 0.0% 5.0% Rent Loss (Apartments) % of GPR 6.80% 5.00% 5.83% 5.88% 7.55% 1.094 Pass Pass 5.1% * 1.063 * Operating Cushion % of Expenses* Debt Service Coverage Ratio* 12.51% 1.16 17.78% 1.23 21.41% 1.26 27 Show Revised Initial Feasibility Assessment worksheet *Cushion / coverage standard for 236 Other is Limited Distribution
Initial Feasibility Assessment (cont d) A project may fail the initial Feasibility, but have project-specific adjustments that would result in passing Feasibility: Notice includes examples of adjustments that could change an infeasible project into a feasible project HUD review and concurrence that the adjustments make the project feasible is required for acceptance for GRP processing Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 28
Intermission During this webcast, email questions to: AssistedHousingGreenRetrofit@hud.gov Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 29
Development of the Green Retrofits Plan Harry West Director, Chicago Preservation Office Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 30
GRP Tenant Meeting Purpose: Get residents input on Green Retrofits Conducted by HUD s PAE Coordinated with property manager Scheduled to get maximum resident participation Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 31
Green Physical Condition Assessment Three Components: 1. Rehab and Replacements, with Green Alternatives 2. Energy Audit 3. Integrated Pest Management Inspection Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 32
Required Green Alternatives 24 alternatives for early replacement-- generally if there is less than 15% remaining useful life Products and Appliances Heating and Cooling Water Heaters Building Envelope Lighting Ventilation and Indoor Air Quality Other Green Features Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 33
Optional Green Alternatives 12 alternatives owner must agree to pursue before including in the Green Physical Condition Assessment 1. Combined heat and power or fuel cells 2. Solar or wind power 6. Smooth & 5. ENERGY STAR shingles 9. Porous pavers 10. Retention ponds 11. Geothermal cleanable floors 7. Cementitious siding 8. Compact fluorescent light fixtures 3. Vegetative roof 4. Reflective metal roof 12. Gray water recycling Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 34
Other GRPCA Features Cost-effectiveness (limits on additional cost for Green alternatives) Recovery Act, Section 1604 restrictions Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 35
PAEs Proposed Green Retrofit Plan 1.PAE uses electronic underwriting model. 2.PAE develops the plan using Physical Condition Assessment, owner input, and comments from the tenant meeting. 3.PAE reviews its recommended Green Retrofit Plan with the owner. 4.Owner prepares Green Retrofit Operating & Maintenance Plan for HUD approval. 5.PAE runs Final Feasibility Assessment. Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 36
PAEs Proposed Green Retrofit Plan (cont d) 6. PAE develops recommended terms for the rehab escrow, reviews with the owner. 7. PAE submits to HUD the agreed-upon Green Retrofit Plan. 8. HUD approves or rejects Plan. GRP processing must move quickly; Owners must respond timely or risk being removed from consideration. Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 37
Legal Documents For ALL projects Green Retrofit Plan Commitment Green Retrofit Program REDA Green Retrofit Owner Commitments Green Retrofit Use Agreement Necessary consents and org authorities State-specific security documents Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 38
Green Retrofit Grant Eligibility Ongoing Requirements Annual Financial Statements Physical Inspections Amount of Grant Green Retrofits + Contingency Owner Incentives Rehab Administration Fee Utility Baseline Fees Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 39
Green Retrofit Loan Eligibility Ongoing Requirements Annual Financial Statements Physical Inspections Loan Green Retrofits + Contingency Rehab Administration Fee Utility Baseline Fees Grant - for all Owner Incentives Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 40
Green Retrofit Loan (cont d) Payments from Surplus Cash First, to HUD, 50% of Surplus Cash, as a payment on the Green Retrofit Loan. Second, to owner, to pay any earned Incentive Performance Fee for that fiscal year. Third, any remaining Surplus is distributed in accordance with the documents governing the project. Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 41
Green Retrofit Loan (cont d) Security Interest Rate: 1% or AFR Loan Term: 15 35 years Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 42
Bids / Estimates Owners agree to get bids / cost estimates for Green Retrofits when the PAE requests Some requests will come quickly after assignment to the PAE Other requests will come after the GRPCA has been completed Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 43
Discussions With PAE Green Retrofits Rent Loss Assumptions Operating Expense Assumptions New Monthly Replacement Reserve Deposit Amount Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 44
GR Operations & Maintenance Plan Details of the owner s plans for: Green operations Resident incentives and outreach Integrated pest management Maintaining the required Green property management certification Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 45
Final Feasibility Assessment Same financial thresholds as the Initial Feasibility Assessment But based on the PAE s determinations Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 46
Approval, Closing and Implementation Donna Rosen Director, Washington Preservation Office Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 47
HUD Approval Green Retrofit Plans go through standardized review, and committee approval, at OAHP OAHP may approve, reject, or modify the Plan Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 48
Green Retrofit Plan Commitment Template legal document Contains all material terms of the proposed Green Retrofit transaction Presented to owner for signature After owner signs, HUD signs, and reserves funding Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 49
Closing Within 30 days after GRPC execution Legal documents are signed GRP funding is wired to Rehabilitation Escrow Administrator (REA) Green Retrofit Program for Multifamily Housing (GRP) HUD Webinar, May 13, 2009 50
