The Providence Housing Authority last month announced that it will be partnering with Framingham, Mass.-based Ameresco to implement a $12.1 million program to improve energy efficiency at 16 of its elderly and family housing developments.
CEO Stephen O’Rourke spoke to Providence Business News about the program and the state of the PHA.
PBN: Could you tell me a little bit about the new program?
O’ROURKE: Soaring utility costs have placed a severe financial strain on the operating budgets of public housing authorities across the nation. It is estimated that these costs currently represent almost a quarter of annual housing authority operating expenditures. In an effort to help reduce these costs, Congress authorized the U.S. Department of Housing and Urban Development, under the Housing and Community Development Act of 1987, to offer financing incentives to PHAs in the form of an Energy Performance Contract.
This contract allows us and other PHAs to finance a host of energy conservation initiatives with the savings generated by lower utility costs. The beauty of this innovative financing technique is that it allows financially strapped PHAs to achieve energy efficiencies without upfront capital expenditures. HUD requires a partnership with an energy service provider who arranges the financing, carries out the work, and verifies energy savings. After a competitive procurement process, we selected Massachusetts-based Ameresco Inc. as our energy service provider.
PBN: Where is the funding coming from?
O’ROURKE: Under the terms of our contract with Ameresco, financing for the $12.1 million project cost will be financed by a 20-year tax-exempt municipal lease securitized by guaranteed energy savings estimated to be $1.2 million annually following full implementation of the program. Also critical to the success of this plan was a very generous rebate offered by our utility provider National Grid. The two-year rebate exceeds $600,000 and is the largest award to date offered in Rhode Island under National Grid’s natural gas energy efficiency program. Energy savings under the 20-year term of the lease are expected to exceed $23 million.
PBN: What types of changes are going to be made to the facilities?
O’ROURKE: A major focus of this plan is the decentralization of very outdated heating systems at our Chad Brown and Admiral Terrace family developments. Chad Brown was opened in September 1942 and Admiral Terrace about a decade later, so the need was obvious. Many apartments within our 16 elderly and family developments will receive new Energy Star-rated refrigerators, as well as new steam valve control systems and thermostats. To reduce water consumption, we are installing low-flow toilets and [reducing] the volume of shower and faucet aerators. Some heating plants will be converted from oil to cleaner and more energy efficient natural gas. Tenants will also enjoy our new natural-gas dryers and front-load washers. We are also upgrading our lighting and consolidating our water and electric meters.
PBN: Can you put in perspective what the savings in energy and heating costs will be each year?
O’ROURKE: Total energy savings are estimated to be $1.2 million annually. This equates to a 20-percent reduction in yearly energy costs. There are also opportunities for further savings, particularly in several of our elderly high-rises, and we are currently exploring opportunities to further reduce our energy consumption.
PBN: What’s the state of the PHA?
O’ROURKE: I would say that we are systematically challenged. Maintaining the quality of public housing has not been a federal priority for some time. During the past five years, we have experienced a substantial reduction in our annual operating subsidy from HUD. Last year, our operating subsidy was funded at only 82 percent and we are bracing for a similar percentage for FY09. For us it means a $2 million shortfall annually. Some social-service programs have been reduced or completely eliminated and I have been forced to eliminate positions. Changes in the executive office and in Congress could result in a shift in focus towards increased support for public housing and resident social services. We are hoping for the best, but bracing for the worst. The taxpayers have invested more than $120 million in capital improvements to this housing authority alone in my 21 years as CEO. I would hate to see the investment wasted due to dramatic reductions in our operating subsidy and loss of staff to maintain the portfolio of more than 2,600 family, special needs and elderly housing units.
Providence Housing Authority, founded during 1939, owns and manages 2,606 units of public housing and is contract administrator for about 2,500 units of Section 8 housing. For more information, visit www.pha-providence.com.
For additional information about Ameresco, an international company headquartered in Framingham, Mass., visit www.ameresco.com.
