Capital Fund Green Physical Needs Assessment (GPNA) Overview

1. U. S. Department of Housing and Urban Development Capital Fund Green Physical Needs Assessment (GPNA)January 10, 2013

2. Agenda • Overview, Strategic Planning, GPNA, Energy Audit, and Rollout • 90 Minutes • Break • 5 Minutes • Questions and Answers • 25 Minutes • Basic Demonstration GPNA Software • 30 Minutes • Break • 5 Minutes • Questions and Answers • 25 Minutes

3. Capital Fund - GPNA Overview

4. Capital Fund - GPNA Introduction Implementation of the GPNA is an import new activity for PHAs. • It is not simply a form to be submitted. It is designed to provide PHAs with data to make informed strategic decisions about their Public Housing portfolio and operations. It will require a significant investment of time and resources by PHAs and HUD. • Implementation will be a marathon not a race. • Plan accordingly. PHAs will be working primarily with their local Field Offices to implement the new GPNA requirements.

5. Capital Fund - GPNA Overview • U. S. Housing Act of 1937 – Public Housing Enabling Legislation • Provide decent, safe, and sanitary housing for low-income families. •  Significant production 1940–1975. • Today there are over 1.1 million public housing units around the country.

6. Capital Fund - GPNA Overview • 1937–1968 PHAs charged “low rents” to live in public housing • Low rents enough for basic operations. • No Federal subsidies.

7. Capital Fund - GPNA Overview • 1968 Congress passes the Brooke Amendment • Limits PHA rent to not more than 30%(originally 25%) of a low-income family’s income. • Effectively limits PHA ability to maintain the physical condition of public housing.

8. Capital Fund – GPNA Overview • 1968 Congress begins to appropriate operating subsidies and modernization funding Modernization Funding • Modernization programs have evolved over time: • 1968. Comprehensive Improvement Assistance Program (CIAP) for all PHAs. • 1990. Comprehensive Grant Program (CGP) for PHAs with 500 and more units initially, later 250 and more units. • 1998. Capital Fund for all PHAs. • Included in new “PHA Plan” required by the Quality Housing Work Responsibility Act (QHWRA).

9. Capital Fund – GPNA Overview • Capital Needs Studies • HUD contracts with Abt Associates to determine national backlog and annual accrual. • Two contracts: 1998 and 2010. • 1998: • Backlog – $20 billion; Annual Accrual – $2 billion. • 2010: • Backlog – $26 billion; Annual Accrual – $3 billion. • Public housing has lost more than 10,000 units per year in each year of the last decade.

10. Capital Fund – GPNA Overview •  Capital Needs Studies • Capital Needs studies indicate that PHAs need to change the way they manage their public housing portfolio over time: • Need longer term strategic planning. • Need to look at additional funding sources to fund modernization and development requirements. • Successful long term management of housing requires time. • PHAs need to start now.

11. Capital Fund - GPNA Strategic Planning

12. Capital Fund – GPNA Strategic Planning • Given capital needs studies and related data: • Long and short term strategic planning is necessary. • Remember-Each annual Capital Fund ACC amendment is for a 20 year period. • PHA Plan: • PHAs required to do strategic planning through the PHA Plan, which includes an analysis of how they plan to use their Capital Funds over the next 5 years.

13. Capital Fund – GPNA Strategic Planning • PHAs must answer some basic questions in strategic planning: • How much do we need to maintain our inventory now and over the long term? • What are we going to do with our inventory? • Repair, modernize, demolish, disposition, replace; sale as homeownership some or all of the above? • Where are we going to get the money?

14. Capital Fund – GPNA Strategic Planning • In order to answer the questions and conduct the required planning, as a starting point: • PHAs must have a physical needs assessment (PNA). • As a part a condition for receiving funding under ARRA, PHAs agreed to conduct PNAs.

15. Capital Fund - GPNA New HUD Requirements

16. Capital Fund – GPNA New HUD Requirements • Rule Changes HUD published two proposed amendments to the Capital Fund regulation at 24 CFR 905 in 2010 and 2011: • All PHAs to conduct a PNA as part of the Capital Fund requirements. • Referred to as the GPNA. • Moves the existing energy audit requirement from 24 CFR 965 to the Capital Fund Rule at 24 CFR 905.

17. Capital Fund – GPNA New HUD Requirements • GPNA • All PHAs, regardless of size, must prepare and submit to HUD a PNA. • GPNA will include PHA level summary information, as well as detailed data on each public housing project/AMP. • GPNA will reflect life cycle costs over a 20-year period.

18. Capital Fund – GPNA New HUD Requirements •  GPNA • GPNA will be conducted without regard to the amount of funding available to perform work identified in the PNA. • The cost of the PNA is an eligible Capital Fund expense. • Will be completed in the form and manner prescribed by HUD.

19. Capital Fund – GPNA New HUD Requirements •  GPNA • GPNA will also account for costs associated with: • Complying with Section 504 of the Rehab Act. • Planned demolition. • Healthy Homes guidance regarding air quality and pest management.

20. Capital Fund – GPNA New HUD Requirements •  GPNA • GPNA will be submitted to HUD. • The first GPNA will be due not later than: • 120 days prior to the end of the PHA fiscal year. • Beginning 120 days from the effective date of the final rule. • May include data from PNA collected up to 2 years prior to the submission due date for the first GPNA if it meets new standards (e.g., 20-year assessment, integration with energy audit, etc.; see notice PIH 2010-46).

21. Capital Fund – GPNA New HUD Requirements •  GPNA • GPNA will be submitted to HUD. • Example on Timing: • Assume Final Rule Published: 3/2/2013. • Effective Date Final Rule: 4/1/2013. • First PNAs Due after: 7/30/2013. • Due date: 9/1/2013 (FYE 12/31 PHA).

22. Capital Fund – GPNA New HUD Requirements •  GPNA • PNA provider will be experienced in performing residential assessments and have knowledge of building systems, health and safety issues, structural issues, energy efficiency and green construction, and cost estimating, including: • 5+ years of experience facility inspection/assessment. • 5+ years of experience cost estimating. • Knowledge of applicable building codes. • Knowledge of energy efficiency/green practices. • Working knowledge of computer technology and systems. • Third Party is not required if staff members are qualified and if PNA is not used for a transaction that may require a third party objective assessment.

23. Capital Fund – GPNA New HUD Requirements •  GPNA • PHA must use the software provided by HUD, known as the GPNA. (GPNA produces the required format of submittal to HUD). • Must be performed in conjunction with energy audit and integrated in the GPNA. • Energy audits done within 3 years of the due date of the first GPNA will not have to be redone if they meet the new energy standards. • After the GPNA is completed by the PHA, data extract will be emailed to HUD.

24. Capital Fund – GPNA New HUD Requirements •  GPNA • After the first GPNA is completed, the PHA submits to HUD an annual update, until the next scheduled GPNA is due. • Annual updates will include only modernization work completed during the past year. • GPNA is not a commitment document. • GPNA will be used to prepare its PHA 5-Year and Annual Plans, including Capital Fund portions.

25. Capital Fund – GPNA New HUD Requirements •  GPNA • PHAs will download PIC building and unit data characteristics into the GPNA. • PIC download data currently updated approximately every 2-3 weeks. • Accurate PIC data is critical: • PHA GPNA upload to HUD will not be accepted unless the building and unit counts match PIC EXACTLY.

26. Capital Fund – GPNA New HUD Requirements •  GPNA • PHA can either purchase commercial cost indices of its choosing and input cost data into GPNA, or use supportable cost data, such as a custom cost database prepared for the PHA. • Commercial cost indices (or PHA cost data) will be used by the PHA to build the “cost library” in the GPNA. • This effort will be very staff intensive for the first GPNA. • Subsequent GPNAs will not require the same level of pre-assessment work. • Data can be carried over and then updated as appropriate.

27. Capital Fund – GPNA New HUD Requirements •  GPNA • Cost library will require data from individual projects/AMPS, such as: • Architectural “takeoffs” for individual building components such as amount of square or linear feet of a component. • The Effective Useful Life (EUL) of each individual building component. • The Remaining Useful Life (RUL) of each individual building component.

28. Capital Fund – GPNA New HUD Requirements •  GPNA • GPNA may be performed by either PHA staff or contractors, as the PHA determines appropriate, as long as they meet the HUD qualifications. • PHA shall make the results of the PNA available to the residents and Resident Advisory Board at time of submission to HUD.

29. Capital Fund – GPNA New HUD Requirements •  GPNA • A PHA shall be subject to sanctions if it: • Does not submit the GPNA in accordance with the HUD timeframes. • Does not make corrections required by HUD. • Sanctions are the same as those currently available to HUD, e.g., corrective action order, etc.

30. Capital Fund – GPNA New HUD Requirements •  Energy Audit • The new energy audit requirements are more descriptive than before. • They will PHAs with more standardization and practical information to assist PHAs in: • Identifying cost effective energy conservation measures and • Reducing both capital and operating costs.

31. Capital Fund – GPNA New HUD Requirements •  Energy Audit • As before: • All PHAs, regardless of size, will do an energy audit for each public housing project/AMP. • Energy audit will be performed not less than once every 5 years. • These requirements will continue.

32. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Energy audit will review projected costs, savings, and payback periods related to variety of energy conservation measures (ECMs). • ECM: Reduces utility and energy consumption. • Energy audit • May include “green measures” that do not save energy. • May provide information on environmental or potential health benefits of green measures (e.g., air quality).

33. Capital Fund – GPNA New HUD Requirements •  Energy Audit • PHAs not required to implement specific ECMs, unless required by statute. • PHA shall integrate utility management with capital planning to maximize energy conservation. • Energy audit shall be done in conjunction with the GPNA.

34. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Energy audit not required if: • Current energy audit is less than 3 years old and meets the standards of the new rule. • Demolition/disposition approved by HUD. • Timing (pending publication of the Final Rule).

35. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Core ECM — proven track record at reducing energy and water consumption: • Building envelope (e.g., insulation). • Heating, cooling, and other mechanical systems. • Water conservation. • Power, lighting systems, and controls (e.g., CFL). • Appliances (e.g., Energy Star).

36. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Advanced ECMs — advanced, experimental, or difficult. • Fuel conversion. • Conservation technologies (energy management systems). • Energy-generating technologies and renewable energy systems (solar, geothermal).

37. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Energy audit must, at minimum, address Core ECMs and: • A summary of findings. • Assessment of energy-related physical components within Core ECMs. • Assessment of operations and maintenance and resident education related to energy conservation and green. • Analysis of fuel, electric, and water bills and usage for PHA held accounts. • Identification of cost-effective ECMs.

38. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Energy audit must, at minimum, address Core ECMs and: • Categorization of ECMs into payback periods of: • 5 years or less. • 5 to 10 years. • greater than 10 years.

39. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Energy audit must, at minimum, address Core ECMs and: • Projected cost of the ECMs and the incremental cost of the ECMs. • Projected annual savings in water consumption. • Projected annual energy savings in both consumption and dollars for the recommended ECM.

40. Capital Fund – GPNA New HUD Requirements • Energy Audit • Expected Useful Life for recommended ECMs and green measures. • Life cycle costs or savings of ECMs, including disposal, maintenance, etc. • Identification of elements, not quantification.

41. Capital Fund – GPNA New HUD Requirements •  Energy Audit • Energy Audit must also address: • Related physical improvements. • Reliable data from previous audits that may carryover. • Differentiate ECMs between those considered routine operating and maintenance, and those that are capital in nature.

42. Capital Fund – GPNA New HUD Requirements •  Implementation and Rollout • Timing of completion and submission of initial GPNA and Energy Audits. • TBD – (pending publication of the Final Rule). • Anticipated that both will be published as a single Rule.

43. Capital Fund – GPNA New HUD Requirements •  Implementation and Rollout • HUD contracted with Econometrica, Inc. to support implementation: • Provide HUD (HQ and Field Offices), PHAs, and GPNA Providers with: • Technical assistance in implementing the new GPNA and Energy Audit requirements (via the Field Offices). • Training on the new GPNA and Energy Audit requirements.

44. Capital Fund – GPNA New HUD Requirements • Implementation and Rollout Econometrica will provide training opportunities: • Webinars: • PHAs and for provider/contractors. • January 10, 2013 • February 27, 2013 • On-Site (Washington, DC) Training: • For PHAs and for provider/contractors • February 6, 2013 in Washington, DC

45. Capital Fund – GPNA New HUD Requirements • Implementation and Rollout Econometrica will provide and/or manage: • Technical Assistance (TA): • Web-based TA, including: • Ongoing FAQs, regularly updated. • Email-based Qs and As, including tracking of questions and responses.

46. Capital Fund – GPNA New HUD Requirements • Implementation and Rollout Econometrica will provide and/or manage: • Technical Assistance (TA): • Quality Control (QC) reviews of completed GPNAs during implementation. • QC will include reviews of submitted PNAs and data analysis. • Issue resolution and tracking system to address items identified during QC. Includes coordination between HUD HQ, HUD Field Offices, PHAs, and PHA GPNA Providers.

47. Capital Fund – GPNA New HUD Requirements • Role of PHA • Upon publication of the Final Rule, PHAs will begin to complete and submit data from GPNAs and Energy Audits to HUD. • PHAs may elect to contract this task to a third-party GPNA Provider. • Sample SOW is available for this purpose. • Not a required document, PHAs are invited to edit and revise the document to suit its needs and circumstances.

48. Capital Fund – GPNA New HUD Requirements • Role of PHA • Prior to publication of the Final Rule, PHAs can begin preparing to complete the GPNA. • Starting to prepare for the GPNA TODAYis not too early.

49. Capital Fund – GPNA New HUD Requirements • Role of PHA • The first step in preparing for the GPNA is to decide who will be involved in completing and submitting the GPNA to HUD: • Executive level. • Property management and maintenance. • PHA architect and/or engineer. • PHA information technology. • Finance, accounting, and procurement.

50. Capital Fund – GPNA New HUD Requirements • Role of PHA • Other preparation will include: • Validate accuracy of PHA PIC data—critical. • Become familiar with the GPNA tool. Download the prototype first for practice. • Review GPNA Webinars on HUD’s Web site at http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/capfund/physicalassessment. • Download GPNA User Guide from HUD’s Web site at http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/ph/capfund/gpnatool. • If the PHA plans to contract out completion of the GPNA, begin working on procurement solicitation (Request for Proposals).