PITTSBURGH—An unusual loan guarantee, backed only by the promise of energy efficiency, helped the Allegheny County Housing Authority (ACHA) pay for some pricey new windows for several of its oldest public housing projects.
Since 1999, ACHA has spent $8 million on renovations to make its properties more efficient. The authority paid for all of this work with low-interest loans that were guaranteed by Honeywell International, Inc., an energy services company, based solely on the utility savings that the renovations are projected to produce in the future.
ACHA is now finishing its fourth phase of work, which will cost a total of $1.5 million and was funded with a loan from the Fifth Third Leasing Co., a subsidiary of Fifth Third Bank. The loan has a nine-year term and a fixed interest rate of just 4.1 percent.
That interest rate is only slightly higher than the yield on a 10-year Treasury bond, thanks to a Honeywell guarantee that the improvements would produce $116,000 a year in utility savings for ACHA.
For this strategy to work, the Department of Housing and Urban Development (HUD) had to agree to let the authority keep the energy savings it produced. Otherwise, because HUD subsidizes the utility costs for public housing apartments, HUD’s utility costs would shrink and the authority would be left with the mortgage payments. An energy consultant can help local officials negotiate with the agency.
The fourth phase of renovations will put new energy-efficient windows and doors on three high-rise public housing projects for senior citizens: Blawnox Manor, Springdale Manor, and West View Tower.
It will probably take about 20 years for the energy savings to pay for the new windows, too long to support a loan that will be paid off in a decade. Fortunately, ACHA’s plans also include several renovations that will pay for themselves much more quickly. West View Tower will get a new boiler, in addition to its new windows, and John Fraser Hall, a high-rise with 98 apartments for families, will get a new, high-efficiency boiler and chiller.
“When you replace a 25-year-old boiler, you don’t have the same maintenance costs,” said Walt McFann, ACHA’s director of investments. He estimates that the new energy-efficient boiler and chiller will pay for themselves in just six years.
Another three high-rise projects for seniors—Carver Hall, John Fraser Hall, and Wilmerding Apartments—will get new thermostats, and Carver and Braddock Towers will get new boiler controls.
ACHA manages more than 3,000 public housing apartments in 42 communities in the towns ringing Pittsburgh. The federal HOPE VI program recently transformed one of these projects from the dilapidated McKees Rocks Terrace, into Meyers Ridge, a new mixed-income community filled with traditional design touches like front porches and gabled roofs.
But that still left 41 other public housing communities that have been in service here for decades and needed some work. ACHA is planning a fifth phase of renovations, this time focusing on water savings.