Optimizing Performance Through Consortia David Anderson Enlightened Energy Consultants

Using Consortium to Increase the Value of HUD’s Energy Incentives Making Big(ger) Ones Out of Little Ones

Consortium Two or more PHAs that join together to perform planning, reporting and other administrative or management functions for participating PHAs as specified in a Consortium Agreement. Two or more PHAs that join together to perform planning, reporting and other administrative or management functions for participating PHAs as specified in a Consortium Agreement.

Why Consortia? This mirrors private sector practice. This mirrors private sector practice. Banks and insurance companies are entering into cooperative ventures to: Banks and insurance companies are entering into cooperative ventures to:  Expand their customer base.  Provide a wider range of services.  Save money on backroom operations such as human resources, accounting and facilities management.  Close offices with overlapping areas of coverage.

4,286 housing agencies in 50 states. 4,286 housing agencies in 50 states. 3,376 are classified as small agencies, because they have 249 or fewer public housing units. 3,376 are classified as small agencies, because they have 249 or fewer public housing units.

Of those 3,376 small agencies: Of those 3,376 small agencies:  2,469 have 249 or fewer total units (Public Housing and Housing Choice Voucher)  2,264 have 200 or fewer total units  1,947 have 150 or fewer total units.  1,556 have 100 or fewer total units.  901 have 50 or fewer units.  364 have 25 or fewer units.

HUD is reducing program funding. Public Housing Public Housing  Operating Subsidy  Capital Fund  Utilities Housing Choice Voucher Housing Choice Voucher  HAP funding  Administrative fees

What is a Consortium? A consortium serves as a vehicle in which the participating public housing agencies share resources, develop and enhance cooperative opportunities and promote housing initiatives for the benefit of low and moderate income families. A consortium serves as a vehicle in which the participating public housing agencies share resources, develop and enhance cooperative opportunities and promote housing initiatives for the benefit of low and moderate income families.

Each participating PHA in a consortium retains its own identity, its own Board appointed by local governmental authority, its own policies, and its own Annual Contributions Contracts with HUD. Each participating PHA in a consortium retains its own identity, its own Board appointed by local governmental authority, its own policies, and its own Annual Contributions Contracts with HUD. A consortium is not a legal entity. A consortium is not a legal entity. A consortium operates pursuant to a Consortium Agreement between the participating parties. A consortium operates pursuant to a Consortium Agreement between the participating parties.

Lead Agency: An authorized PHA in accordance with 24 CFR Section that has not been designated a “troubled PHA” by HUD, has been determined by HUD to be in compliance with the civil rights threshold for new funding, and has not had it’s PHAS designation withheld for civil rights or other reasons. Lead Agency: An authorized PHA in accordance with 24 CFR Section that has not been designated a “troubled PHA” by HUD, has been determined by HUD to be in compliance with the civil rights threshold for new funding, and has not had it’s PHAS designation withheld for civil rights or other reasons.

If at any time during the Agreement the Lead Agency is not eligible under the regulations to be a lead agency, and such ineligibility continues for a period of 30 consecutive days after the PHA has exhausted the appeal and all other legal measures to regain eligibility status, then all parties to the Agreement shall designate, by majority vote, a new lead agency. If at any time during the Agreement the Lead Agency is not eligible under the regulations to be a lead agency, and such ineligibility continues for a period of 30 consecutive days after the PHA has exhausted the appeal and all other legal measures to regain eligibility status, then all parties to the Agreement shall designate, by majority vote, a new lead agency.

Lead Agency Activities for EPC Point of Contact for initial EPC activities including: Point of Contact for initial EPC activities including: Notify HUD of intention to pursue EPC with consortium members Notify HUD of intention to pursue EPC with consortium members Consultant selection (if any) Consultant selection (if any) Consortium EPC RFP issuance Consortium EPC RFP issuance Convene ESCO oral interviews Convene ESCO oral interviews

Functions of the Participating Agencies Each participating PHA shall disclose to the Lead Agency and other participants any significant threatened, pending or current litigation; performance measures and ratings; findings and recommen- dations by HUD, IG, IPA, etc.; audit reports and other information reasonably requested by the participating PHAs for development and maintenance of the consortium. Each participating PHA shall disclose to the Lead Agency and other participants any significant threatened, pending or current litigation; performance measures and ratings; findings and recommen- dations by HUD, IG, IPA, etc.; audit reports and other information reasonably requested by the participating PHAs for development and maintenance of the consortium.

Functions of Participating Agencies (cont.) Each participating PHA ensures that it remains responsible for its own obligations under its ACC with HUD. It will ensure that all program funds, including funds paid to the Lead Agency for administration of the consortium, are used in accordance with HUD regulations and requirements, and that the program is administered in accordance with regulations and requirements. Each participating PHA ensures that it remains responsible for its own obligations under its ACC with HUD. It will ensure that all program funds, including funds paid to the Lead Agency for administration of the consortium, are used in accordance with HUD regulations and requirements, and that the program is administered in accordance with regulations and requirements.

Functions of Participating Agencies (cont.) Each participating PHA shall continue to administer, manage and maintain responsibility for all programs and activities not administered by the Lead Agency. Each participating PHA shall disclose any findings, performance measures or other information on the programs it administers that may have an impact on the consortium either directly or indirectly. Each participating PHA shall continue to administer, manage and maintain responsibility for all programs and activities not administered by the Lead Agency. Each participating PHA shall disclose any findings, performance measures or other information on the programs it administers that may have an impact on the consortium either directly or indirectly.

Coordination Inter-agency consultation within the consortium exists primarily through the Executive Directors. This includes administration, operations, financial management and policy development. Executive Directors then relay the information and activities to their respective Boards of Commissioners for final approval.

Each agency remains independent and is governed by the PHA’s Board of Commissioners

Indemnification Each of the participating PHAs agrees to indemnify and hold harmless a participating PHA and its employees, agents, board and officers against all claims, suits, proceedings, judgments and other expenses, including attorneys fees, which may be prosecuted against or incurred by the participating PHA by reason of its activities on behalf of the participating agencies. Each of the participating PHAs agrees to indemnify and hold harmless a participating PHA and its employees, agents, board and officers against all claims, suits, proceedings, judgments and other expenses, including attorneys fees, which may be prosecuted against or incurred by the participating PHA by reason of its activities on behalf of the participating agencies.

Other Advantages of Consortia Financial savings through economies of scale. Financial savings through economies of scale.  Personnel training and utilization efficiencies.  Accounting and auditing savings.  Reduced insurance premiums.  Consolidated capital improvements. Enhanced program performance. Enhanced program performance. Improved compliance with HUD requirements. Improved compliance with HUD requirements. Enables PHAs to strategically position themselves to avert takeovers or regional consolidation. Enables PHAs to strategically position themselves to avert takeovers or regional consolidation.

Advantages of Consortia (cont.) Flexibility Flexibility  Personnel  Accounting and audit  Capital funds

Using Consortia to Improve Your Agency’s EPC Viability By aggregating the needs of multiple smaller agencies under a single contract, efficiencies of scale can be achieved By aggregating the needs of multiple smaller agencies under a single contract, efficiencies of scale can be achieved Contractor interest is stimulated, project and financing costs can be reduced Contractor interest is stimulated, project and financing costs can be reduced Presents opportunity to expand uses of consortia to reduce other operating costs Presents opportunity to expand uses of consortia to reduce other operating costs

Keys for Agency EPC Consortia PHAs may aggregate their potential needs with those of other PHAs seeking similar improvements and having similar characteristics, including: PHAs may aggregate their potential needs with those of other PHAs seeking similar improvements and having similar characteristics, including: Same-state procurement requirements Same-state procurement requirements Geographic location and proximity Geographic location and proximity Share two or more of the same utilities Share two or more of the same utilities Have the ability to work together Have the ability to work together Have a consortia project champion Have a consortia project champion

Opportunity Considerations High average utility unit costs (per therm, kilowatthour and gallon of water) High average utility unit costs (per therm, kilowatthour and gallon of water) Availability of gas to replace electricity for space heating and domestic hot water Availability of gas to replace electricity for space heating and domestic hot water Extent and effectiveness of previously installed conservation measures Extent and effectiveness of previously installed conservation measures Larger PHA EPC projects help to drive overall group EPC potential Larger PHA EPC projects help to drive overall group EPC potential

Summary Making a single big user from a collection of smaller users drives costs down and improves the return for all participating members Making a single big user from a collection of smaller users drives costs down and improves the return for all participating members Benefits are equally shared by all to the extent of their participation Benefits are equally shared by all to the extent of their participation Model can be adapted to other opportunities that can benefit HAs Model can be adapted to other opportunities that can benefit HAs Helps foster a closer knit HA community Helps foster a closer knit HA community