Convention Boston 2004
Member's Profiles Continued...
Fred Seigel HUD
FINANCING ENERGY CONSERVATION
MEASURES IN HUD-ASSISTED HUD-INSURED MULTIFAMILY HOUSING
Page 3 of 3 -- Affordable Housing Energy Loan Program (AHELP).
In addition to the
possible funding alternatives discussed above, the Department recently
endorsed the Affordable Housing Energy Loan Program.
The AHELP Loan Program Agreement was signed by
both the Assistant Secretary and the Chief Executive Officer Energy Capital
Partners, Mr. Fred Seigel. Energy Capital Partners of Boston, Massachusetts,
will originate, underwrite, and service AHELP loans which will fund energy
improvements that will be repaid from energy savings.
The AHELP loan will finance an energy quality improvement plan of
cost-effective energy conservation capital improvements with a payback
period of up to 12 years. Typical components of an energy quality
improvement plan are:
1. conversion from electric resistance to natural gas heating.
2. installation of energy-efficient light fixtures.
3. water conservation.
4. heat pump domestic hot water heaters.
5. domestic hot water tank insulation.
6. conversion from master to individual unit metering.
Prior to developing an energy quality improvement plan, Energy Capital
Partners will require an energy audit (a comprehensive assessment of the
project's energy demand and use requirements and the financial effect of
specific energy-related improvements from an approved entity). The results
of the energy audit will lead to a recommended energy quality improvement
plan. AHELP will provide the funds to implement the energy quality
improvement plan if the anticipated energy saving is more than sufficient to
repay the loan over the term of the AHELP mortgage.
Energy Capital Partners underwriting process will assure that the
improvements are appropriate, the owner has good credit, and the energy
quality improvement plan adds value to the property. A project will be
approved if it meets specific energy, property, financial, and ownership
criteria developed by Energy
Following installation of the necessary equipment to implement the energy
quality improvement plan, Energy Capital Partners will test the energy
improvements to ensure performance at the projected savings. If the test is
successful, and projected savings are realized, loan amortization will
If the test shows the improvements have failed
to produce the expected savings and the owner and the contractor cannot
resolve the problem, the principal amount of the AHELP note will be reduced
to the level supported by the savings.
Energy Capital Partners will enter into a mortgage and loan agreement with
the owner for each transaction. The AHELP mortgage will be junior to the FHA
mortgage. However, upon default of the AHELP loan or upon assignment of the
FHA mortgage, Energy Capital Partners' AHELP mortgage will cross- default
mortgage, and HUD will recognize Energy Capital Partners note payments as an
expense to be paid prior to debt service on the FHA mortgage.
The mortgagee must give written consent to each AHELP transaction.
Eligible projects for the AHELP will consist only of "performing" projects
insured under Section 236, Section 221(d) (3), and Section 221(d) (4) with
50% or more units receiving Section 8 project-based
assistance. HUD-Held projects are not eligible for AHELP.
For information regarding AHELP, staff from the Boston, Denver, and Seattle
Offices, and interested applicants for AHELP, should contact Fred Seigel at
Energy Capital Partners, (617) 574-1100.
V. HUD REVIEW
Accept for AHELP loans, all financing arrangements for implementing energy
conservation measures must be approved by the local HUD Office in accordance
with guidelines in Chapter 12 of HUD Handbook 4350.1.
HUD has designated three HUD Field Offices of Housing as national processing
centers that will be responsible for limited reviews of AHELP loan documents
in accordance with procedures approved by HUD and the provisions of the
AHELP Loan Program Agreement. These Offices of Housing are located in the
Boston, Denver, and Seattle HUD Offices.
Boston HUD Office staff will review applications submitted for, projects
located in the New England, New York/New Jersey, Mid- Atlantic, and
Denver HUD Office staff will review applications submitted for projects
located in the Midwest, Rocky Mountains, Great Plains, and Southwest
Seattle HUD Office staff will review applications submitted for projects
located in the Northwest/Alaska and the Pacific/Hawaii region.
The nature of the review process for AHELP loans will be similar to that
used in the multifamily risk-sharing programs, and will be limited to a
verification that certain items and certifications have been submitted and
endorsed as required by HUD-approved Energy Capital Partners' guidelines.
The staff in each designated Office
of Housing will receive copies of Energy Capital Partners' Procedures Manual
and the Program Implementation Guidelines which outlines HUD Field Office
review responsibilities in the AHELP program.
The appropriate staff in these Offices will be
trained in all aspects of the AHELP by representatives of Energy Capital