Green MIP Reduction The Destination, and the Way to Get There HUD-FHA MF Production Webinar, 8/ 25/ 2016
A S imple Formula: Green Recognition + Energy Performance = MIP Reduction Green Recognition Energy Performance (aka “ certification” per Earthcraft, LEED, (annual ENERGY S TAR score of 75+) National Green Building S tandard, etc)
Green MIP Reduction Green Recognit ion + Energy Performance = MIP Reduct ion First let’s talk Energy Performance, because that’s HUD’s goal How do we measure Energy Performance? With An ENERGY S TAR score: A 1-100 index score created by EP A Obtained from EP A ’s Portfolio Manager benchmarking software Reported in a standard form called a “ S tatement of Energy Performance” (S EP) 75 is the minimum score for MIP Reduction, meaning the property must perform in the top quartile of its peers among a reference group of 500 properties separately surveyed by EP A.
A S tatement of Energy Performance (S EP) IS IS NOT A modeling tool or predictor of ABOUT PAST PERFORMANCE construction results Available in several file formats, A diagnosis of performance, analysis including .pdf and .xls. The pdf is of equipment or report of use by standard and sufficient to prove function (cooking, heating, cooling, Energy Performance for MIP etc.) reduction. But the CNA e Tool will Evidence of any Green Recognition require the machine readable xls. RELIABLE UNLESS CREATED FROM Results of a recent period of 12 VERIFIED, QUALITY DATA . Given consecutive, whole months of time a toddler can enter random #s yielding a score, but HUD requires an metered energy consumption. Energy Professional.
What Does an ENERGY S TAR S core Do? The score does: Does not: Evaluate actual metered energy Compare a property to others in use Portfolio Manager Normalize for selected Normalize for equipment choices characteristics: size, # units, # or quality or pricing of energy floors, # units by floor level, Normalize for socio-economic climate. factors (affordable, market rate, Compare a property to its peers as senior housing) described by a survey of a 500 property national sample
At What Time is the S EP required? As a measure of 12 months past, S EP due dates vary by program and level/ content of construction: S OA 220, 221,231 S ustaining Occupancy + 15 months, then annual S OA 223 w/ Retrofits Completion of Repairs + 15 months, then annual S OA 223 NO Retrofits Endorsement +15 months, then annual Knowledge of these dates is most crucial for Account Execs/ OAMPO, but Production staff need to understand, document and explain.
Proving Energy Performance… pretty simple except for ONE BIG HUDache GETTING QUALITY DATA, because: Most tenants have separately metered utility accounts Only a few utilities can report “ whole building” data, combining tenant accounts to protect tenant privacy Many utilities cannot/ will not provide landlords with tenant consumption data Even when utilities can/ will provide tenant data, tenants may refuse the required permission Even when tenant permission is embedded in lease provisions, turnover, vacancy and record keeping are burdens to management requisite to uploading data to a Portfolio Manager account Fortunately, these conditions are changing for the better and we do have some remedies
S EP Is Not Due ‘ til Later, What’s the Issue In Underwriting? High Risk of Future Failure The Underwriting Remedy Require a “ data collection plan” with PHYS ICAL F AILURE- property does not or before Firm Application perform, score < 75 S hows owner underst ands dat a DATA COLLECTION F AILURE-owner needs, management procedures, can’ t provide data t echnical solut ions Benchmarking is a new concept for Det ails periodic st eps and t echnology t o obt ain, organize, st ore and report many owners dat a t o Port folio Manager At t ract ion of 45 bps MIP S avings Det ails role & requirement s of ut ilit y S ugarcoat s Fut ure Dat a Challenges providers Owners may not grasp what t hey Det ails any needed t enant have promised t o do cooperat ion and impact of t urnover, t enant resist ance A valid agreement depends on mut ual underst anding
What Data Is Needed to Get a MF S core? Whole Building Energy Use, Property Use Details (the HUDache) Gross Floor Area (accuracy essential) Metered use for existing properties (modeled estimate for # Units construction) # Units# In hi-rise setting (10+ 12 full, consecutive months stories) All fuels # in mid-rise setting (5-9 stories) # in low rise setting (up to 4 All tenant & common areas stories) Total # bedrooms Zip code of property, needed for weather normalization
Remedies for Data Collection HUDaches HUD Initiated Remedies: Owner Initiated Remedies: S eek whole building data from utility HUD allows sampling of tenant provider, preferably reported directly meters to reduce data collection to Portfolio Manager account required Install digital, remote reporting Provided that when/ if larger share master or sub metering devices to or 100% of tenant data is available report consumption it must be used Arrange tenant permission for utility provider to supply tenant data Arrange tenant commitment to provide utility consumption data directly from monthly bill
HUD’s Interim S ampling Routine If whole building data is available, it must be used If not available then: 25% of Units, randomly selected, provided the following are proportionately represented: Unit types Buildings Each size (s.f.) and direction (N, E, S , W) of unit exterior wall elevation Each building floor or level Each materially different HVAC package A properly selected sample may be repeated year to year
Basics of Data Collection Plans Required With or Before Firm App From “ Terrific” to “ Best We Can Do” Utility providers provide “ whole building” data Even bet t er, owner arranges for ut ilit y t o direct report t o owner’s Port folio Manager account Install master or submeter system reporting to owner’s central data system Cost may be limit ed by collect ing an approved sample of t enant met ers Proposed ML/ HN may require 100% mast er/ sub met ering in const ruct ion scenarios if ut ilit ies do not provide whole building dat a Obtain/ maintain tenant permission for utility to release tenant data S hould det ail ut ilit y provider forms, met hods and lease addenda or ot her means of t enant permission Tenant part icipat ion may be limit ed t o approved sample Must address t urnover, propert y management procedures Obtain tenant commitment to provide data (bills) directly to owner S ame det ails as above
S ummary of Energy Performance Requirement Provide Data Collection Plan All S OA apps with proposed Green MIP Reduction With or Before Firm Application Deliver S EP documenting first year energy performance with ENERGY S TAR score 75+ S OA 220, 221, 231 S ustaining Occupancy + 15 months, then annual S OA 223 w/ Retrofits Completion of Repairs + 15 months, then annual S OA 223 NO Retrofits Endorsement + 15 months, then annual QUES TIONS ? ? ? COMMENTS
Green MIP Reduction Green Recognition + Energy Performance = MIP Reduction Now let’s talk about the other MIP Reduction requirement: GREEN RECOGNITION Owner selects a “ Green S tandard” Owner plans construction to achieve GREEN RECOGNITION, or Owner evidences prior achievement of GREEN RECOGNITION
When Must GREEN RECOGNITION BE EARNED? S OA 220, 221, 231 S ubstantial Completion + 3 months S OA 223 w Retrofits Completion of Repairs + 3 months S OA 223 No Retrofits With/ before Firm Application Basic idea: The only reason for delay is that construction/ retrofits are required. The “ Green S tandards” are mostly intended as a building code overlay to regulate construction or renovation.
Which Green S tandard is Appropriate? New Construction & Gut Rehab: Energy S tar High Rise Energy S tar HOME LEED Home/ LO/ Mid Rise LEED High Rise Green Point Rated New Home MF Passive House Enterprise Green Communities Earthcraft House (townhouse/ rowhouse) Earthcraft MF Earth Advantage National Green Building S tandard Living Building Challenge
Which Green S tandard is Appropriate? Substantial Rehab & 223(f) with Repairs > 223(a)(7) Limit Enterprise Green Communit ies Eart hcraft House (t ownhouse/ rowhouse) Eart hcraft MF Eart h Advant age Nat ional Green Building S t andard Living Building Challenge Green Point Rat ed Exist ing Home-MF Whole Building EnerPHit
Which Green S tandard is Appropriate? 223(f) w Repairs<= 223(a)(7) limits & All 223(a)(7) Green Point Rat ed Exist ing Home-MF Whole Building Energy S t ar Exist ing Buildings LEED for Exist ing (EBOM) NOTE: Properties with no Retrofits must have have earned GREEN RECOGNITION prior to Firm Application
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