1. MIDWEST LENDERS CONFERENCE
GREEN ENERGY PANEL
Chicago, IL – September 28, 2017
Moderator: Rick Orf
Deputy Chief Underwriter
Berkadia
Panelists: Jason Happe
Director of Energy & Sustainability
EBI Consulting
David Wilderman
Senior Production Specialist
Tech. Division – Office of MF Housing
Department of HUD – Headquarters
Stephen Evanko
Managing Director – Energy & Sustainability
Dominion Due Diligence

4. Green MIP requires Green Building Certification, Energy Efficient design and commitment to benchmark the property
221(d)(4) NC or Gut Rehab example
Design
Construction
Occupancy
NGBS Consulting
NGBS Verification
Green Building Certification Award
Green Building Commitments
Form HUD D
Green Rider
Green
Recognition
Energy Design Modeling (SEDI)
Energy Performance
15 months
Ongoing Data Collection
Annual Energy Star Benchmark
(SEP)
Energy Data Acquisition Plan
Closing
* Non-conforming CAP

5. Projects must select and obtain a green building certification
HUD approved options for New Construction
National
Considerations for green building certifications
Cost and feasibility
Local regional incentives
Architect and developer experience
Marketability
Regional
Niche Super Green

6. Statement of Energy Design Intent (SEDI) = Energy Benchmark of the Building/Property Design
Projection of future energy use, post completion of construction or energy retrofit
Requires energy modeling by experienced, accredited professionals using approved modeling tools
Score is only as accurate as the data input, including defined design parameters and proficiency and experience of the energy modeler
What if the score is below a 60? Then the design team must work with the modeler to improve the design (eg. Better insulation, better HVAC, etc) “
For new construction and gut rehabilitation: The HUD Custom SEDI must show an Energy Score not less than the minimum prescribed in MAP Guide Appendix 5G. If less than the threshold, the design of structures must be modified to achieve the minimum energy score.
(Note exceptions for gut rehabilitation of historic buildings.)
If unacceptable, indicate reasons: “
(Pg 140) Exceptions to Energy Score Threshold.
While all applications must provide the HUD Custom SEP or SEDI and the accompanying utility analysis report, some properties are exempt from meeting the minimum score threshold.
1. The minimum score threshold for gut rehabilitation may be waived for properties designated as historic, or located within and subject to design requirements of a designated historic district where elements of the building contributing to a low score cannot be removed, or replaced (e.g. windows), or adequate conservation measures cannot be implemented consistent with historic preservation.
2. Portfolio Manager does not calculate scores for properties (or for separate sites) with fewer than 20 units, and so scoring thresholds do not apply to such properties.

7. Portfolio Manager SEDI Score
Project teams can leverage the energy modeling process to identify the most cost-effective approaches to achieve a SEDI score of 75+
Case Study:
18 low-rise garden style buildings
380 dwelling units
South Region (~3,200 HDD, ~900 CDD)
Original Design
Improved Design
Additional Options
R-38 Fiberglass Batt insulation at top-floor ceiling
R-49 Blown Insulation (air-sealing/Grade 1)
High Performance Windows and additional air sealing
HVAC 14.5 SEER / 8.2 HSPF
HVAC 16 SEER / 9+ HSPF
Incorporate Natural Gas
Few Energy Star Appliances
All Appliances Energy Star
Additional LED Lighting
Portfolio Manager SEDI Score 72 78
80+
Need to be Conservative in Modeling (per HUD) Take the following Potential Scenario
Aggressive model might score as a 77 in Energy Star
If building used 5% more energy during occupancy because of higher infiltration rates, missed common area usage, tenant behavior, etc, the Energy Star score would fall to ~70
Owner would be stuck trying to recover 5% energy efficiency in operation that might require significantly more investment (e.g. replacing new equipment) than if they had just been more accurate in their modeling and more conservative in the design phase.
Typical Design suggestions to help a property score above 75
Incorporate natural gas whenever and wherever possible to reduce source-site energy ratios
Focus on maximizing efficiency in relation to the heating needs (HDD) and or cooling needs (CDD) of the property
Use Energy Star minimums as a guideline to start design.
Envelope and Windows
Heating and Cooling Efficiencies
DHW    
Lighting
Appliances
Hard to control for tenant behavior so make sure that modeler/analyst uses appropriate conservatism and seek a design which scores at least a 78

8. Data Plan Requirements Interim Sampling Routine
Projects must also produce an Energy Data Collection Plan and commit to annual Energy Star Portfolio Manager benchmarking (SEP)
Data Plan Requirements
Interim Sampling Routine
Must demonstrate the owner’s understanding of utility data needs, management procedures for obtaining data, and technical solutions
Detail periodic steps and technology to obtain, organize, store and report data to the EPA Portfolio Manager system
Detail the roles & requirements of each utility provider at a specific property
Include details regarding
Tenant cooperation
Impact of turnover
Potential tenant resistance
If whole building data is available, it must be used
If not available then utility data from 25% of units must be collected. Data sources must be randomly selected, provided the following are proportionately represented by the sample set:
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 for annual HUD SEP compliance
Reference D3G Green MIP Data Plan Whitepaper
plan must demonstrate the owner’s understanding of utility data needs, management procedures for obtaining data, and technical solutions.
o The plan shall detail periodic steps and technology to obtain, organize, store and report data to the EPA Portfolio Manager system.
o The plan is to detail the roles & requirements of each utility provider at a specific property.
o The plan shall include details regarding tenant cooperation, the impact of turnover, and potential tenant resistance to prescribed methods of data collection.
Source: “Green MIP Reduction The Destination, and the Way to Get There” HUD-FHA MF Production Webinar, 8/25/2016
Note: This sampling plan is not compliant with EPA EnergyStar building certification

9. Green MIP requirements at closing commit the project to obtain the green certification and to conduct annual energy benchmarking
Form HUD D: Owner’s Certification and Acknowledgement for Program Obligation For Broadly Affordable, Affordable, Green/Energy Efficient Multifamily Housing Mortgage Insurance Premiums
Statement of Energy Design Intent (SEDI) showing EPA Portfolio Manager score or 75 or higher
Signed by qualified professional preparing the report
Evidence of green building certification in drawings and schedules
Note: NGBS, LEED, etc on the construction drawings title page
Green Building Scoring spreadsheet
Required milestones for the green building standard incorporated into the construction schedule (e.g. onsite verification)
Green Rider: Borrower’s Obligation to Maintain Project’s Energy Performance as Consideration for MIP Reduction
(Optional): Letter of Attestation from the Green Consultants that the project is on track to meet the green requirements. Should include the Green Consultant’s credentials and experience
Energy Data Acquisition Plan demonstrates the owner’s plan to obtain energy data and complete annual Statement of Energy Performance (SEP) benchmarking in EPA Portfolio Manager
Evidence for Green Recognition:
1.     Certification from Owner stating “Green Standard” selected and level of achievement sought, if applicable (example: LEED Silver, not just LEED).
2.     Lender should discuss the architect’s prior experience with designing LEED projects. If a consultant is being engaged, they should let us know and provide the consultants qualifications as well.
3.     Identification of required milestones for the selected green standard from either the architect or owner (or consultant if one is engaged). Construction progress milestones for the standard should be incorporated into the Construction Schedule.
Evidence for Energy Performance:
1.     Statement of Energy Design Intent (SEDI) showing EPA Portfolio Manager score or 75 or higher has been submitted
2.     Data Collection Plan is required to demonstrate the owner’s ability to complete future Statement of Energy Performance (SEP) required. Plan should show the owner understands the data needed, management procedures required, and any technical solutions implemented. Plan must contain details of steps and technology used to obtain, organize, store, and report the data to EPA’s Portfolio Manager. The plan should also detail requirements of utility providers and tenant cooperation needed in the data collection.
HUD-92466, R-6 Green Rider: Borrower’s Obligation to Maintain Project’s Energy Performance as Consideration for MIP Reduction

10. Impact on Forecasted Energy Use
Experienced, accredited modelers will ensure robust and appropriately conservative modeling
Example of how differences in modeling can impact property energy use
Modeling Parameter
Change/Explanation
Impact on Forecasted Energy Use
Complete inclusion of Multifamily amenities (e.g. heated pools), common space (clubhouse), corridors, exterior lighting, etc
Examples: Missing the common space lighting, heating/cooling or systems such as ventilation, elevators or pools
Risk of missing up to 20% of the total property energy use
Unit Selection (Bottom/Middle/Top)
Middle floor units have conditioned space above and below and thus are more energy efficient. (4% different in this scenario)
A 3-story building that was modeled with just the middle floor unit would appear to be 2.7% more efficient than a model that more accurately reflected the difference between the levels
Construction Process (infiltration rates)
Aggressive modelers may assume that the air infiltration rates are uniformly better than averages. A conservative approach assumes 0.35 air changes per hour(ACH) but a more aggressive model could claim a 0.20ACH
Aggressive assumption forecasts 2.7% less energy use
Construction Process: Insulation Installation
Changing from a grade-3 installation to a grade-1 installation
More aggressive assumption forecasts 1.2% less energy use
Occupant Behavior (Temperature Set-points)
EPA suggests set points of 70 for Heating and 75 for Cooling. Even slightly more aggressive assumptions adjusting the set-points by 2 degrees to 68 for heating and 77 for cooling
More aggressive assumption forecasts 3.2% less energy use
Property level benchmarking so analyst needs to incorporate all energy used: Multifamily amenities (e.g. heated pools), common space (clubhouse), corridors, exterior lighting, et
Cautions against aggressive modeling
Modeling too few units
Assuming overly optimistic infiltration rates
Assuming unrealistic tenant HVAC setpoints
Many building design, construction and operation parameters can dramatically affect the energy forecast
1. Property location
2. Number of buildings and building types associated with the subject property
3. Number of dwelling units and total number of bedrooms
4. Gross square footage
5. Building envelope details used in energy consumption model (Exterior walls, windows, doors, ceiling/roof)
6. Building foundation details used in energy consumption model
7. Mechanical equipment used in energy consumption model (HVAC, DHW and elevators for all dwelling units and common areas)
8. Distribution system details used in energy consumption model (located in or out of conditioned areas, insulation levels, leakage rates)
9. Set points associated with environmental controls used in energy consumption model
10. Lighting specifications used in energy consumption model (interior and exterior lighting details for all dwelling units, common areas and site)
11. Kitchen appliance specifications used in energy consumption model (all dwelling units and common area kitchens)
12. Laundry appliance specifications used in energy consumption model (all dwelling units and common area laundry facilities)
13. Air infiltration rate used in energy consumption model
14. Energy consumption associated with amenities
15. Energy consumption associated with property parking (open, partially enclosed, fully enclosed, lighting, ventilation and supplemental heat)
16. All property fuel types accounted for
17. Property characteristics accurately recorded in Portfolio Manager
Source: Analysis to demonstrate some parameters and modeling assumptions can affect an energy forecast. To avoid cherry-picking extremes this is based on an above-code Multifamily property in Virginia which represents a moderate climate

11. The hardest part is securing the energy data
Data Collection Options
Master Metered Utilities
Tenant Paid Utilities
Collect monthly utility bills for every meter associated with the property
Request Whole-Building Aggregated Data from Utilities
In limited regions, utilities will provide the whole-building aggregated energy data without requiring individual releases
Limited availability
Secure Tenant Authorization/Release
Tenants sign release form allowing the owners to request energy usage from the utility least 25% sample of representative units)
Time consuming and challenging to secure releases
Install Energy Data Loggers
Install digital, remote reporting master metering data logger upstream of tenant meters to capture all usage
Modest upfront cost
Lenders should request this energy data ASAP
Do not wait until ordering CNA!

12. It is the duty of the lender to:
The MAP guide specifies the required review and underwriting duties for the Lender
It is the duty of the lender to:
Guidance
“Review and evaluate the EPA Portfolio Manager forms (SEDI or SEP)”
Ensure the SEDI or SEP scores are reasonable
“when an energy audit is prepared …, assure that the preparer is properly qualified”
SEP and ASHRAE Level II Energy Audits must be prepared by a qualified professional, such as:
AEE Certified Energy Manager (CEM)
AEE Certified Energy Auditor (CEA)
BPI Multifamily Building Analyst (MFBA)
RESNET Home Energy Rating System (HERS) Rater
ASHRAE High Performance Building Design Professional (HPBDP)
“assess the credentials of the auditor and the reasonableness of projected utility consumption savings”
“assess the accuracy of the needs assessor’s or energy auditor’s report of utilities ... and rates charged”
Ensure the utility rates and projected savings are reasonable
“calculate and incorporate in underwriting 75 percent of documented utility cost savings”
Pg 150
5. Utility Conservation Metrics
Review and evaluate the EPA Portfolio Manager® forms (HUD Custom SEDI or SEP). When an energy audit is prepared for an existing property or a model of projected use is prepared for a new construction or gut rehabilitation project, assure that the preparer is properly qualified. Confirm and document any claim of ENERGY STAR®, LEED or Earthcraft for Multifamily certification by obtaining the certification and attaching it to the CNA. Assess the accuracy of the needs assessor’s or energy professional’s report of utilities used at the property and rates charged for these utilities as reported on the Utility Rates and Usage form. In accordance with the guidance in Section IV of this appendix calculate and incorporate in underwriting the expected cost of owner paid utilities, including in the case of existing properties with an ASHRAE Level II energy audit, 75 percent of documented utility cost savings. (Projected utility cost savings per year are reported for each immediate repair as part of the list of critical and non-critical repairs reported with each validation or submission of a CNA.)
Pg 161
8. Consider the ASHRAE Level II Energy Audit, if any, and assess the credentials of the auditor and the reasonableness of projected utility consumption savings.
Assess the accuracy of the needs assessor’s or energy professional’s report of utilities used at the property and rates charged for these utilities as reported on the Utility Rates and Usage form.
Source: 2016 MAP Guide Appendix 5 Section G

13. SEP and Energy Audit Professional Qualifications
SEP and ASHRAE Level II Energy Audits must be prepared by a qualified professional, such as:
Auditors must have a minimum of 3 years work experience evaluating multifamily
Certifications
AEE CEM or CEA
American Energy Engineers Association - Certified Energy Manager (CEM) or Certified Energy Auditor (CEA)
ASHRAE HPBDP
American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) –High Performance Building Design Professional (HPBDP)
BPI-MFBA
Building Performance Institute (BPI) – Multifamily Building Analyst (MFBA)
RESNET-HERS
Residential Energy Services Network (RESNET) – Home Energy Rating System (HERS) rater

14. Case Study #1 Existing building Refinance MAP 223(F)
3 Stories Garden Style with 480 units built in 2014
Common Space (Clubhouse, Pool, Gym)
Individual Meters with a Tenant Landlord Agreement
Energy Star Score 65
ASHRAE Energy Audit completed ECMs identified
Time of day lock out schedule for common spaces
Minimum and maximum apartment setpoints
Reduction of site lighting
Changing HW heater setpoint and placing on a schedule

15. Case Study #1 Cont. Benefit to Owner Achieved MIP Reduction
Reduced Maintenance Costs for building operation
Approximate saving 16% of operations cost
Extended life of HVAC and Plumbing equipment on average by 2 years
Was able to use energy success to market building with an Energy Star score to tenants

16. Case Study #2 Existing Building Refinance with a Green Certification
MAP 223(A7)
5 Stories Garden Style with 775 units built in 2012
Mixed Use space (Retail, Pool, Gym)
Individual Meters
Was not able to get 100% of utility bills from the Electric Provider
Energy Star Score of 79
25% sample of utility bills accepted thru Energy Star
Must be representatively sampled:
Unit types
Buildings
Each size (sq ft) and direction (N,S,E,W) of unit exterior wall
Each building floor or level
Each materially different HVAC package

17. Case Study #3 ASHRAE Energy Audit completed ECMs identified
Existing Building Refinance
3 Stories Garden style with 310 units
Common Space (Clubhouse, Pool, Gym)
Individual Meters (Currently)
Was able to get 100% of utility bills from utility provider
Parking Deck
Benchmark score of 92 without all the tenant information but 100% of common space.
ASHRAE Energy Audit completed ECMs identified
Time of day lock out schedule for common spaces
Minimum and maximum apartment setpoints
Reduction of site lighting
Balanced building to reduce humidity issues in Common Areas
Installed a Meter for future reporting

18. Case Study #3 Cont. Benefit to Owner Achieved MIP Reduction
Reduced Maintenance Costs for building operation
Approximate saving 14% of operations cost
Extended life of HVAC and Plumbing equipment on average by 4 years
Was able to use energy success to market building with an Energy Star score to tenants

19. Lender Responsibility
Engage early for Benchmark and Energy Star Certification
Accurate Property Description and Details
Provide Borrower utility data for 12 Months
Electric, Gas, Natural Gas, Heating Oil, etc
Complete info no older than last bill of 120 days
Must have actual usage not an average
Assist in site visit coordination
If Energy Audit is needed
Engage Quickly
Schedule call with owner and EBI to discuss ECMs
Provide a Data Collection Plan to HUD

20. Common Pitfalls Refi 223f Refi Common Mistakes
Insufficient/Wrong Energy Data
Incorrect Property Descriptions
Number Stories
Building Usage
Building Type
Gross Sqft
Mixed Use vs Common Space
Retail Centers
Gyms
Restaurants
Stores
Average Data vs Actual Usage Data
Cost instead of Usage
Wrong Information provided by utilities
Address
Usage