Transcript Slide 1

Economic Realities
for Sustainable Real
Estate
34th Annual Real Estate & Economics Symposium
Fisher Center for Real Estate & Urban Economics
University of California at Berkeley
Green Retrofit Lending
Enterprise Overview
Our mission is to create opportunity for low- and moderate-income
people through fit, affordable housing and diverse, thriving
communities
Since 1982, Enterprise has invested more than $11 billion to build or
preserve more than 300,000 homes across the United States
We are a leading provider of financial and intellectual capital for
affordable housing development
Environmental sustainability is embedded in our mission and will
ultimately infuse all aspects of Enterprise’s activities and operations
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Retrofit Process
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Review
Building
Portfolio
Select
Building to
Receive
Energy Audit
Choose
Energy
Auditor
Perform
Building
Audits
Review Audit
Results, and
Select
Upgrades
Cost and Bid
Out
Improvements
Finalize
Funding /
Financial
Package
Install
Improvements
& Monitoring
System
Verify
Installation
Train
residents and
maintenance
staff
Monitor
savings and
health
improvements
Make
Adjustments
(As
Necessary)
ENERGY SAVINGS, WHAT SAVINGS?
Audit Findings from 32 Buildings:
 From the Bay Area (19 buildings) and LA (13 buildings)
 Master metered (17) and Individually metered (15)
 Low rise (10) and High rise (22)
 Total 2,227 units
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AUDIT FINDINGS
Reduction in energy costs over existing conditions:
 Utility savings* in master metered buildings ranged from
a low of 10% to a high of 47%; average = 26%
 Savings in buildings with a combination of master and
individually metered utilities ranged from 19% to 45%;
average = 28%
 Per unit savings averaged at $270 per unit per year
* Gas, electric & water
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WHERE DID THE SAVINGS COME FROM?
Efficiency Measures that resulted in the highest Savings to
Investment Ratio:
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Domestic Hot Water
Interior Lighting
Thermostats
Exit Lights
Low Flow Toilets
Heating boiler
Air Handling Units
Retrofit cost per unit – ranged from < $1,000 / unit to a
high of $11,000 / unit; average = $5,000 / unit
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The Bay Area Multifamily Fund (BAM Fund)
 An innovative effort to improve
energy and water efficiency in
older affordable multifamily
buildings
 Provides free energy audit,
technical support, and favorably
termed debt.
 Leverages other resources
 Located in nine county Bay
Area
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GOALS of the BAM Fund
 Improve property cash flow
 Improve health of buildings and residents
 Reduce greenhouse gas emissions
 Link to green jobs programs
 Enable retrofits to occur more quickly than a full
rehab
 Prove the concept that energy savings can be
projected with accuracy and monetized to drive debt
that can be raised from the capital market.
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BAM Fund Loan Terms
 Interest Rate
5%
 Loan Term
10 years
 Debt Coverage Ratio
1.15 – 1.25
 Security/Collateral
unsecured; flexible
guaranty
 Repayment Source
amortized monthly
payments
Loans repaid with savings achieved as a result
of the energy and water efficiency improvements
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Projected Energy Savings and Debt Service Calculations
EXAMPLE #1: Oakland, 98 units of family housing
Historic mid-rise building
COST OF IMPROVEMENTS:
ENERGY SAVINGS:
DEBT LOAD:
$358,182 ($3,654/unit)
$13,327/year
$83,770
Projected Energy Savings Over
Current Use: 17% (includes water)
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Exhaust Fan Testing
Proposed Financing Scenario
DEBT
$ 83,770
Weatherization
$ 142,472
CA Solar Thermal
Rebate Program
$ 50,000
City Housing Funds
$ 81,939
$ 358,182
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Example #1 Project Budget Scenario
Toilets (dual flush converters)
Lighting controls
DHW - Boiler Replacement
Exit lights
HHW - Boiler Replacement
Roof insulation
Roof covering
$5,288
$1,087
$15,217
$4,935
$51,712
$18,406
$115,500
Common Area Refrigerator
DHW - Solar preheat array
Public toilet replacement (low
flow)
Service doors (flush metal)
Windows - wood
Smoke/Fire Detectors
$646
$122,067
TOTAL
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$823
$7,109
$3,878
$11,515
358,182
Learnings to Date
 Energy savings may not be adequate to support the level of
debt desired
 Owners are wary of borrowing based on “projected” energy
savings
 The energy audit process is complex….need to be clear about
assumptions being inputted into the energy model, and the
outputs desired
 Monitoring utility data pre and post retrofit will be extremely
important to proving that energy savings can be projected and
monetized to leverage capital
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www.enterprisecommunity.org
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