Optimizing Optimizing PerformancePerformance

Through ConsortiaThrough Consortia

David AndersonDavid Anderson

Enlightened Energy Enlightened Energy ConsultantsConsultants

Using Consortium to Increase Using Consortium to Increase the Value of HUD’s Energy the Value of HUD’s Energy

IncentivesIncentives

Making Big(ger) Ones Making Big(ger) Ones Out of Little OnesOut of Little Ones

ConsortiumConsortium

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

Why Consortia?Why Consortia?

• This mirrors private sector practice.This mirrors private sector practice.

• Banks and insurance companies are Banks and insurance companies are entering into cooperative ventures entering into cooperative ventures to:to:

Expand their customer base.Expand their customer base. Provide a wider range of services.Provide a wider range of services. Save money on backroom operations Save money on backroom operations

such as human resources, accounting such as human resources, accounting and facilities management.and facilities management.

Close offices with overlapping areas of Close offices with overlapping areas of coverage.coverage.

• 4,286 housing agencies in 50 states.4,286 housing agencies in 50 states.

• 3,376 are classified as small 3,376 are classified as small agencies, because they have 249 or agencies, because they have 249 or fewer public housing units.fewer public housing units.

• Of those 3,376 small agencies:Of those 3,376 small agencies:

2,469 have 249 or fewer total units 2,469 have 249 or fewer total units (Public Housing and Housing Choice (Public Housing and Housing Choice Voucher)Voucher)

2,264 have 200 or fewer total units2,264 have 200 or fewer total units

1,947 have 150 or fewer total units.1,947 have 150 or fewer total units.

1,556 have 100 or fewer total units.1,556 have 100 or fewer total units.

901 have 50 or fewer units.901 have 50 or fewer units.

364 have 25 or fewer units.364 have 25 or fewer units.

HUD is reducing program funding.HUD is reducing program funding.

• Public HousingPublic Housing Operating SubsidyOperating Subsidy Capital FundCapital Fund UtilitiesUtilities

• Housing Choice VoucherHousing Choice Voucher HAP fundingHAP funding Administrative feesAdministrative fees

What is a Consortium?What is a Consortium?

A consortium serves as a vehicle in A consortium serves as a vehicle in

which the participating public housing which the participating public housing

agencies share resources, develop agencies share resources, develop

and enhance cooperative and enhance cooperative

opportunities and promote housing opportunities and promote housing

initiatives for the benefit of low and initiatives for the benefit of low and

moderate income families.moderate income families.

• Each participating PHA in a Each participating PHA in a consortium retains its own identity, consortium retains its own identity, its own Board appointed by local its own Board appointed by local governmental authority, its own governmental authority, its own policies, and its own Annual policies, and its own Annual Contributions Contracts with HUD.Contributions Contracts with HUD.

• A consortium is not a legal entity.A consortium is not a legal entity.

• A consortium operates pursuant to a A consortium operates pursuant to a Consortium Agreement between the Consortium Agreement between the participating parties.participating parties.

Lead Agency: An authorized PHA in Lead Agency: An authorized PHA in accordance with 24 CFR Section accordance with 24 CFR Section 943.112 that has not been 943.112 that has not been designated a “troubled PHA” by HUD, designated a “troubled PHA” by HUD, has been determined by HUD to be in has been determined by HUD to be in compliance with the civil rights compliance with the civil rights threshold for new funding, and has threshold for new funding, and has not had it’s PHAS designation not had it’s PHAS designation withheld for civil rights or other withheld for civil rights or other reasonsreasons..

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

Lead Agency Activities for Lead Agency Activities for EPCEPC

• Point of Contact for initial EPC Point of Contact for initial EPC activities including:activities including:

• Notify HUD of intention to pursue Notify HUD of intention to pursue EPC with consortium membersEPC with consortium members

• Consultant selection (if any) Consultant selection (if any)

• Consortium EPC RFP issuanceConsortium EPC RFP issuance

• Convene ESCO oral interviewsConvene ESCO oral interviews

Functions of the Participating Functions of the Participating AgenciesAgencies

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

Functions of Participating Agencies Functions of Participating Agencies (cont.)(cont.)

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

Functions of Participating Agencies Functions of Participating Agencies (cont.)(cont.)

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

CoordinationCoordination

Inter-agency consultation within the Inter-agency consultation within the consortium exists primarily consortium exists primarily through the Executive Directors. through the Executive Directors. This includes administration, This includes administration, operations, financial management operations, financial management and policy development.and policy development.

Executive Directors then relay the Executive Directors then relay the information and activities to their information and activities to their respective Boards of Commissioners respective Boards of Commissioners for final approval.for final approval.

Each agency remains independent Each agency remains independent

and is governed by the PHA’s and is governed by the PHA’s

Board of CommissionersBoard of Commissioners

IndemnificationIndemnification

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

Other Advantages of ConsortiaOther Advantages of Consortia

• Financial savings through economies of scale.Financial savings through economies of scale. Personnel training and utilization efficiencies.Personnel training and utilization efficiencies. Accounting and auditing savings.Accounting and auditing savings. Reduced insurance premiums.Reduced insurance premiums. Consolidated capital improvements.Consolidated capital improvements.

• Enhanced program performance.Enhanced program performance.

• Improved compliance with HUD requirements.Improved compliance with HUD requirements.

• Enables PHAs to strategically position Enables PHAs to strategically position themselves to avert takeovers or regional themselves to avert takeovers or regional consolidation.consolidation.

Advantages of Consortia Advantages of Consortia (cont.)(cont.)

• FlexibilityFlexibility PersonnelPersonnel Accounting and auditAccounting and audit Capital fundsCapital funds

Using Consortia to Improve Using Consortia to Improve Your Agency’s EPC ViabilityYour Agency’s EPC Viability

• By aggregating the needs of multiple By aggregating the needs of multiple smaller agencies under a single contract, smaller agencies under a single contract, efficiencies of scale can be achievedefficiencies of scale can be achieved

• Contractor interest is stimulated, project Contractor interest is stimulated, project and financing costs can be reducedand financing costs can be reduced

• Presents opportunity to expand uses of Presents opportunity to expand uses of consortia to reduce other operating costsconsortia to reduce other operating costs

Keys for Agency EPC Keys for Agency EPC ConsortiaConsortia• PHAs may aggregate their potential PHAs may aggregate their potential

needs with those of other PHAs seeking needs with those of other PHAs seeking similar improvements and having similar similar improvements and having similar characteristics, including:characteristics, including:

• Same-state procurement requirementsSame-state procurement requirements• Geographic location and proximityGeographic location and proximity• Share two or more of the same utilitiesShare two or more of the same utilities• Have the ability to work togetherHave the ability to work together• Have a consortia project championHave a consortia project champion

Opportunity ConsiderationsOpportunity Considerations

• High average utility unit costs (per therm, High average utility unit costs (per therm, kilowatthour and gallon of water)kilowatthour and gallon of water)

• Availability of gas to replace electricity Availability of gas to replace electricity for space heating and domestic hot waterfor space heating and domestic hot water

• Extent and effectiveness of previously Extent and effectiveness of previously installed conservation measuresinstalled conservation measures

• Larger PHA EPC projects help to drive Larger PHA EPC projects help to drive overall group EPC potentialoverall group EPC potential

SummarySummary

• Making a single big user from a Making a single big user from a collection of smaller users drives costs collection of smaller users drives costs down and improves the return for all down and improves the return for all participating membersparticipating members

• Benefits are equally shared by all to the Benefits are equally shared by all to the extent of their participationextent of their participation

• Model can be adapted to other Model can be adapted to other opportunities that can benefit HAsopportunities that can benefit HAs

• Helps foster a closer knit HA communityHelps foster a closer knit HA community