BUSINESS:

Housing agencies find budgetary alchemy in improving old buildings

Like dozens of other historic mill cities, Fall River, Mass., at the mouth of the Taunton River on Mount Hope Bay, has suffered the indignities of a radically shifting economy. Chronic high unemployment, declining population and demographic upheaval have turned the former "Spindle City" of New England into a relic of the textile industry during America's industrial age.

But the city of just under 90,000 people, whose official motto is "We'll Try," has struck upon an idea from the federal government's green energy playbook that could turn one of its perceived weaknesses into a civic strength.

Under a new contract with Ameresco Inc., the Fall River Housing Authority will make water and energy efficiency upgrades to more than 1,500 public housing units that provide shelter to the city's poor, sick and elderly.

The $6.8 million investment, which includes upgrades to water and lighting equipment, installing advanced temperature control devices, and overhauling mechanical systems that provide heat and hot water to housing throughout the city, will inject the city's economy with cash and jobs, according to Dan McDonald, deputy executive director of the Fall River Housing Authority.

More importantly, he said, it will save the city as much as $13 million over the next 20 years in reduced energy costs as residents consume less water, electricity and natural gas to keep their homes comfortable and run household appliances.

In addition to sizable energy savings, the city will also benefit from no-cash financing of the projects. The nearly $7 million investment will be recouped through cost savings provided by the energy efficiency improvements. Cash that would have gone to pay high utility bills will instead service loans to finance the infrastructure upgrades.

How 240 housing agencies save cash and cut emissions

Such financing is made possible by what are known as "energy savings performance contracts," authorized under a nearly 20-year-old federal law aimed at improving the physical condition of the nation's government-subsidized housing without busting the budgets of state and local housing agencies.

According to the Department of Housing and Urban Development, the program has helped leverage more than $839 million in energy and water improvements for 240 public housing authorities nationwide.

Ameresco, as one of the largest energy efficiency retrofit firms in the country, has overseen multimillion-dollar projects in Boston, Chicago, San Francisco and Miami-Dade County, Fla., with tens of thousands of housing units, as well as smaller communities like Fall River where projects are more limited in scope but the energy and cost savings, especially for older buildings, can be substantial.

"It's the best of both worlds," said McDonald, a 39-year employee of the Fall River Housing Authority who has witnessed the rise and decline of much of the city's estimated 5,000 public housing units.

"We get to replace physical plant, which desperately needs to be replaced. But we're also saving money that would have had to go toward upgrading these units. So not only is it found money, but it saves us in the long run because of the reduced costs for energy."

David Anderson, executive vice president of Ameresco, which over the last year has signed similar agreements with housing authorities in Columbia, S.C.; Miami-Dade County; and Manchester, N.H., said such programs allow housing officials "to further their mission of assisting lower-income families with safe and affordable housing," while providing greater comfort for those living in subsidized housing.

Renovating within existing budgets

In an interview, Anderson said that whether the client is a housing authority, a public school system, or another government or nonprofit entity, almost all of Ameresco's energy savings performance contracts set out to address maintenance and upkeep of essential systems like lighting, heating and cooling, and other energy-consuming activities.

"Traditionally, these agencies have to fight for dollars every year, and they never get all that they need, so they have to keep kicking the can down the road," he said. By entering an energy savings performance contract, "it is going to cost them no money up front, and it won't cost them anything more later than they would otherwise pay the utility because the investment is paid out of savings."

The projects are also palatable to elected officials and voters because they don't require new tax revenues to pay for the work.

Officials also have noted the sizable reductions in greenhouse gases and other energy generation pollutants that come from energy efficiency retrofits.

For the Chicago Housing Authority, which in 2002 began retrofitting 6.3 million square feet of public housing at a cost of $47 million, the work is expected to reduce the city's annual carbon emissions by 304,000 metric tons, roughly equivalent to the tailpipe emissions of 38,000 cars, according to Ameresco.

Carbon emission reductions from the Fall River Housing Authority projects are expected to be substantial, according to project planners, aided in part by the installation of a waste-heat cogeneration electric generator atop one of the city's high-rise housing units.

The housing authority's work builds on a multiphase energy efficiency project already established with the city that involved, among other things, placing 2,700 solar panels atop three public schools and at the city's water treatment plant, as well as installing more than 3,400 energy-efficient light fixtures in two city schools and the Fall River Government Center.

Fall River officials said last year they expect the initial energy savings performance contract to reap more than $2.7 million in cost savings over the life of the contract and net a 25.8-million-pound reduction in carbon dioxide emissions.

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