going green

Avenues to Affordability | 1

G r e a t L a k e s C a p i t a l F u n dG r e a t L a k e s C a p i t a l F u n dG r e a t L a k e s C a p i t a l F u n dG r e a t L a k e s C a p i t a l F u n d || V o l u m e V o l u m e V o l u m e V o l u m e 11 77 || I s s u e I s s u e 11 || 2 0 1 02 0 1 0

GOING GREENUtilizing Today’s Incentive Programs to Enhance Tomorrow’s Opportunities

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Presidentʼs Note ............................................5

Growth in a New Cleaner Economy ................6

Community Action Agencies ......................... 10

Tale of Two Developers ................................ 12

Keeping Affordable Housing Affordable ....... 14

Money Left on the Table? ............................. 18

Energy Upgrades .........................................20

Events & Happenings ...................................23

Advertiser Index ..........................................25

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PRESIDENT’S NOTEGOVERNING BOARDJames M. Hammond III, ChairIndiana Association of Rehabilitation Facilities

Marsha A. Kreucher, Vice ChairCommunity Action Agency

Michael J. Taylor, Secretary/TreasurerNational City CDC

James S. BernackiComerica Bank

Wendell JohnsTh e NHP Foundation

R. Wayne KoehlerFifth Th ird CDC

William C. PerkinsWisconsin Partnership for HousingDevelopment, Inc.

Th omas TracyHunter Chase

Paul J. WeaverFederal Home Loan Bank of Indianapolis

CORPORATE OFFICERSMark S. McDaniel, President & CEOChristopher C. Cox, CFOJames L. Logue III, COOJennifer A. Everhart, Executive Vice PresidentRick Laber, Executive Vice President

Th is magazine is published quarterly by the Great Lakes Capi-tal Fund (GLCF) to provide readers with information on the Low Income Housing Tax Credit and other community de-velopment resources.Th is publication is copyrighted. Th e re-production of Avenues to Aff ordability is prohibited by law. For additional copies, comments, concerns or to be added to the mailing list, please contact the Great Lakes Capital Fund offi ce at 517.482.8555 or visit www.capfund.net.Editorial, Advertising and Layout/DesignMary McDaniel, CMP • Alternative Solutions, LLC 517.333.8217 • [email protected] Travis • Ink Ideas Graphic Design, LLC517.625.0835 • [email protected] Offi ce1000 S. Washington, Suite 200Lansing, MI 48910 Phone 517.482.8555Detroit Offi ce1906 25th StreetDetroit, MI 48216 Phone 313.841.3751Indianapolis Offi ce320 N. Meridian St., Suite 1011Indianapolis, IN 46204 Phone 317.423.8880Madison Offi ce16 N. Carroll Street, Suite 300Madison, WI 53703-2716 Phone 608.209.7821Willowbrook Offi ce7223 South Route 83, PMB 227Willowbrook, IL 60527

GO GREEN!GO GREEN!GO GREEN!GO GREEN!GO GREEN!GO GREEN!GO GREEN!GO GREEN!


by Breanna Camarillo

In past decades, only a small minority of environmentalists argued that states should invest in clean technologies, and until recently, many leaders thought sus-tainability would come at the cost of the economy. However, in recent years, not only has that notion been unraveled, but completely reversed, with the entire world now investing in clean energy as a move toward a “new economy,” that we now know brings with it the possibility of mil-

lions of dollars in profi ts and jobs. According to Tom Stanton at the Michigan Economic Development Au-thority, energy effi ciency services delivered directly from related companies brought in about $3.5 billion nationally a year in 2006, and have grown at a rate of about 22 percent or more annually. “Researchers studying economic and employment impacts typically catego-rize separately the direct, indirect, and induced eff ects associated with changes in the economy”, he said. “With electric power, for example, direct impacts are in the businesses engaged in building and operating generation, transmission, and distribution systems. Indirect impacts oc-cur in related businesses that are upstream and downstream from the core activities. For example, the indirect impacts occur in those businesses that supply the di-rect sectors with raw materials and parts,

waste disposal, and other support activi-ties. Induced impacts result from changes in discretionary spending by employees in the direct and indirect businesses and, in this particular case, by electricity consum-ers.” “Because energy is a practical necessity for modern life, and is a critically impor-tant input for manufacturing and com-mercial activity, the net eff ect of policy changes should be of the utmost impor-tance to policy makers”, said Mr. Stanton. “Ideally, policy makers should base their

decisions on comprehensive analyses of the combined eff ects of impacts in all of the major sectors of the economy, taking into account both gains and losses. For-tunately, economic and employment im-pacts of energy policy changes have been studied extensively for many years. Such studies typically use economic input-out-put modeling to identify eff ects on state’s economies.” Mr. Stanton said large numbers of studies about the economic and employ-ment impact of energy technology choic-es have found that energy effi ciency and renewable resources produce more jobs and greater economic multiplier eff ects nationally, growing the economy in fi ve main ways: (1) Supports construction jobs per unit of energy produced, and the jobs tend to be fi lled by local laborers, as opposed to migrant workers who do specialized con-

struction jobs and move from project to project; (2) Supports more jobs per unit of en-ergy produced in operations and mainte-nance; (3) Fuel imports can be avoided, and using indigenous fuels or avoiding fuel costs altogether (via energy effi ciency, hy-droelectric, solar, and wind technologies), helps stem the fl ow of dollars out of the state economy that would otherwise be used to import fuel; (4) Supports discretionary spending

by consumers and engenders more in-duced local employment and economic multiplier eff ects, compared to spending on utility bills; and (5) Supports manufacturing of en-ergy effi ciency and renewable energy equipment; typically supports more lo-cal employment and economic benefi ts, compared to spending on traditional cen-tral station utility power plants and util-ity transmission and distribution system equipment. Factors (3), (4), and (5) are especially important for states like Michigan and Indiana and others that import most or all the fuels used in the state and have a large potential for in-state manufacturing of various advanced energy technology components. Probably very few people are more at-tuned to the benefi ts of clean technologies than contractors hired by communities to

Prospects For Growth In A New, Cleaner Economy

“Because energy is a practical necessity for modern life, and is a critically im-portant input for manufacturing and commercial activity, the net effect of policy changes should be of the utmost importance to policy makers.” — Tom Stanton


accelerate their move toward a greener way of life. Loch McCabe, president of Shepherd Advisors, www.shepherdadvi-sors.com, since he began his company in 2000 is one such example. He said he works with businesses and communities that know they are ready to take a leap toward a cleaner existence but aren’t sure how to lessen their carbon footprint. McCabe said because the goal of each client varies widely, once he discovers whether they simply want to change out a few light bulbs and update appliances, or enter into a more complex upgrade and perhaps even switch to using alternative energy, he helps them decide their priori-ties. Many times, he said, clients decide which energy conservation or alternative energy project to undertake by the pay-back period; the shorter payback periods usually come fi rst, and then clients can do more expensive projects with the money saved from those less expensive changes. Th e process not only helps identify en-ergy waste but helps leaders prioritize,” he said. As an example of McCabe’s recent work, in Wyandotte, Michigan, he helped the city distribute compact fl uorescent light bulbs through local hardware stores, handing out more than 80,000 fl uores-cents to homeowners who traded in less energy effi cient bulbs. He also helped the city by fi nding ways to reduce and subsi-dize the cost for a dozen small businesses to upgrade their lighting to more energy effi cient lighting and helped secure fund-ing for a 10-kilowatt photovoltaic system (solar panels) for the local school. While the solar panels only provide enough en-ergy to supplement traditional energy sources, they are able to help reduce the city’s dependence on fossil fuels, he said. In another Michigan community, he’s helping offi cials get through the request for proposal (RFP) process to replace older furnaces, windows, doors, fl oors, light bulbs, and increase installation. Mc-

Tree Trench from Country Trace, Palmyra, IN – Great Lakes Capital Fund is the investor in this proj-ect. This tree trench is a green way to both retain water and then discharge it to the storm system clean. The trees/plants shown are special varieties that tolerate drought AND have root systems that soak up a lot of water. They are planted in this trench which has special soils and a large rock base. Storm water run off drains into one side of this tree trench, where it soaks down into the trench. The plant/tree roots soak up a lot of the water too. Remaining water is fi ltered through the rocks and let out a drain pipe the other side into the rest of the storm water system. This is much prettier, much greener than a dry detention pond and it never needs mowing, etc.

Cabe said he also helps plan for energy effi ciency upgrades to their buildings, engage certifi ed energy auditors to do an energy audit, which helps identify which upgrades to make and in which buildings based on which use an excessive amount of energy.

Especially with federal stimulus funds, $17 of which the state most recently re-ceived in January to go to communities for their ‘green’ project plans, the demand for his services is steadily increasing, he said. While local leaders tend to enter into the process with caution, as they would


with anything that is new and involves spending money, McCabe said, he hasn’t run into a lot of bureaucracy. He added: “more and more people are agreeing that the economy and environment can coexist without damage to one another.” “Communities are generally excited about this,” McCabe said. “At the same time, many proceed slowly and deliber-ately.” He said increasingly even utility com-panies, which stand to lose money to en-ergy saving choices or alternative energy sources, are also becoming open to help-ing communities become more energy ef-fi cient. Th e reason, McCabe said, is prob-ably a blend of government mandates in several states that require alternative en-ergy standards and public pressure, which has people becoming more demanding of environmentally friendly options. However, while the future for clean en-ergy and conservation looks bright, there are still two major hurdles, said McCabe.

Because the country was built with the assumption of cheap, plentiful energy, conserving energy requires changing the way we live. “Th e biggest impediment to becoming more independent is a combi-nation of lack of awareness and willing-ness, he said. We are spread out. We don’t really live in villages anymore. If you really want to use less energy you have to make diff erent choices than you did before. It takes commitment.” However, McCabe said, there is good news: communities are becoming increasingly comfortable with the belief that they can become more energy effi cient without sacrifi cing their lifestyles, something he is witness to with every phone call from a new community asking him how it can go green. Many state leaders have heeded the call of what they call often call the “new economy” and haven’t waited to secure an advantage by luck. Instead, in places such as Wisconsin, Michigan and New York, to name a few, lawmakers have set timelines

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by which utility companies must begin providing a percentage of their fuel from alternative energy sources. Th e mandates range from 10 percent alternative energy guidelines to the most aggressive among Midwestern states, in New York, where Governor David Paterson has called for a 45 percent renewable standard by 2015. Leaders say the standards position their states to off er the alternative energy in-dustry a guaranteed and steady demand for their products, and therefore a guar-anteed profi t. With that reasoning, the state with the highest standard stands to gain the largest competitive edge in the sustainability and renewable energy mar-kets. Paterson spelled his mission out in his January 6th State of the State address. “So, to pull this all together, we are going to need an economic plan that actually suits the issues of our times and provides the jobs that New Yorkers seek. No longer can we say all roads lead to New York. For, in

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the end, we are going to need the innova-tions, the ideas, and ingenuity to be there as well. Th is will be a New Economy jobs program that will focus on the clean ener-gy and high-tech growth jobs of tomorrow. Th is program will be sustainable. It will be one that we will all be proud of because it will be open and it will be transparent. To develop this program, we went all around the State, seeking out business leaders that would give us advice in all communities, he said. “We have come back with three aggressive initiatives tar-geted for growth industries, such as clean energy.” Th is, combined with our “45 by 15” energy plan and a $25 million invest-ment in a new technological fund for entrepreneurs, will create the kind of en-couragement for capital investment, will spur innovation, and create tens of thou-sands of jobs to go along with the 50,000 jobs that will be realized from our great energy plan, which converts electric use to clean and renewable energy sources. New York’s governor also spoke of his state’s university partnerships and using them to capitalize on the existence of the fi ve largest patent-holding research com-panies in the country. Also, the eff ort we are making for sus-tainable communities, with thousands of housing stock laying dormant in cities like Buff alo, Rochester, and Syracuse” said Mr. Paterson. “We will develop that housing stock into aff ordable housing — starting with Buff alo, which right now has 23,000 vacant units.” We are poised to lead this economy, and we shall lead,” he said But several other state leaders also think their advantages will make them the leaders in the green economy. In Michigan, for example, where there is also an aggressive renewable standard at 25 percent, state experts hope to use its water and wind generation possibili-ties from its unique geography, along with its early start in battery technology and history in manufacturing to build an in-

dustry around the renewable energy and clean technology markets. Th e energy industry — production, delivery, and consumption — is an inte-gral part of Michigan’s economy, respon-sible for signifi cant employment in our state. Energy policy changes and the re-sultant investments in the aff ected sectors and changes in energy costs to consumers have signifi cant impacts on most if not all of the state’s businesses, said Stanton, from the M.E.D.C. Because of plentiful forestry resources and work with research universities, the state is also making research strides in cellulosic biomass from the waste prod-ucts in crops. Michigan’s extensive forest resources and long history of leadership in the primary and secondary forest prod-ucts industries give our state a head start on development,” Stanton said. “Michigan is already home to important manufac-

turers of wood harvesting and wood fuel processing equipment, and researchers at Michigan universities are doing cutting edge work on biofuels production and processing.” In Indiana, biomass with anaerobic digesters are making waves, while many communities in the state are exploring whether switching to wind power could be both productive and money-saving. Elijah Welch, assistant district engineer at Rich-mond Sanitary District, in Richmond, Indiana, said his city contracted with a company called Johnson Controls to ret-rofi t boilers at the city’s wastewater treat-ment facility so they could go from using natural gas to methane. While the project is small for now, saving about 100,000 to 125,000 cubic feet a year in natural gas by using human waste as methane, it has po-

(continued on page 24)

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A third prong to the private/public partnership toward going green is com-munity action agencies. Th ese nonprofi t groups are involved in almost every aspect of conservation and especially weatheriza-tion, but their primary focus is to receive and distribute federal weatherization funds, train energy conservation profes-sionals and refer low-income residents to developers, energy companies and others who want to work toward making hous-ing more energy effi cient. Wisconsin, which is current-

Community Action Agencies:A Partner In Conservation

ly ranked third in the nation for the num-ber of homes weatherized so far, has kept its community action agencies busy. Th at state and many others plan to use federal money to double, triple or even quadruple their past eff orts toward weatherization. By making homes more energy ef-fi cient in extreme climates and focusing on the highest energy users fi rst, weath-erization has helped residents save 25 – 30 percent in household energy costs, said Mary Patoka, President and CEO

of CAP Services, Inc., a com-munity action agency in Stevens Point, Wisconsin. CAP Services, which

serves fi ve counties in Wisconsin, not only funnels weatherization money into the community, but also has taken on a con-tract of its own to weatherize 379 hous-ing units by June of this year. Th e group received $1.43 million in American Re-covery and Reinvestment Act funds (also known as stimulus funds) out of the $145 million total weatherization funds award-ed in Wisconsin. Also relying on about $1.93 million in other state and federal funds, the group has completed 23 units as of February, and has 89 more projects in progress or completed but awaiting in-spection or other fi nal details. While Patoka is optimistic that her

Front view of Spicewood Garden, LEED Silver Certifi ed in Sheridan, IN

munity action agency in Stevens Point, Wisconsin. CAP Services, which


CAAs: VitalReferral Source

When community action agen-cies aren’t directly working with util-ity companies to increase energy ef-fi ciency in homes, they act as a vital source of referrals for independent contractors who have contracts with the utility companies. For example, Timothy Celovsky, an energy consultant with Clear Result in Okemos, Michigan, www.clearresult.com, works with two ma-jor utility providers to replace older, energy wasting refrigerators with Energy Star approved models. He works with community action agen-cies to determine who qualifi es for and who needs a new refrigerator. Celovsky said he chose to up-grade refrigerators because everyone has them, they last an average of 20 years, and use an immense amount of energy if they are outdated. He has installed approximately 2,500 re-frigerators since he began the project last summer and each new appliance saves 300 – 500 kilowatts per hour per year. Th is initiative has been pri-marily funded by utility companies at a cost of about $1.8 million. In some cases, landlords share in the costs.

agency will fulfi ll its contract, it wasn’t without a few challenges. Th e biggest is-sue in Wisconsin and many other states has been “the red tape” in receiving stim-ulus money. For example, in Wiscon-sin many CAA’s couldn’t access stimu-lus funds because their workers weren’t paid the prevailing wage required by the AARA act. To keep on track, many agen-cies began weatherization eff orts in the summer by tapping into state and other funding sources and then started receiv-ing stimulus funding by the fall, Patoka said. Dave Menzer, with INCAA (Indiana’s

statewide association for community ac-tion agencies) said his state’s greatest hurdle with stimulus funding has been to streamline programs so he can help triple the number of units Indiana has histori-cally weatherized, while maintaining the quality of work, training and certifi cation programs community action agencies oversee. As an example of the increased work-load facing agencies, before the stimulus package, the Hoosier State weatherized about 3,000 residences a year, but Indi-ana plans to weatherize roughly 20,000 homes over the next two to three years us-ing federal stimulus funds, said Menzer, the team leader of Utility Programs with INCAA, www.incaastimulus.org. He said weatherization is targeted to low-income residents who earn up to 200% of the federal poverty level. He es-timated the upgrades will save the aver-

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age household about 20% on heating and 10% on electric costs annually. While Indiana has focused the major-ity of its energy conservation eff orts on homeowners, rental properties can qual-ify for weatherization if most of the ten-ants in the building meet the federal in-come guidelines. In those cases, the CAA and the landlords usually develop a cost sharing agreement for the upgrades and agencies often require an agreement from property owners to limit rent increases for a set period of time. Menzer also works with seven diff er-ent utility companies to replace outdated energy guzzling fi xtures and appliances inside the home because the same people who need weatherization also qualify and would probably benefi t from a more effi -cient furnace, lighting and other conser-vation upgrades to help them save even more money.

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by Breanna Camarillo

While leaders from the Great Lakes states for several years have been studying diff erent ways to improve the en-ergy-performance of their

properties, with the help of government incentives, mandates and grants, more developers are now starting to invest in new energy products or build communi-ties with energy and water sustainability in mind. Two such companies, American Com-munity Developers, Inc. in Detroit, Mich-igan and Milestone Ventures based in Indianapolis, Indiana, both Great Lakes Capital Fund partners, in some ways have much in common. Th ey both work in af-fordable housing and the leaders of both corporations said all of their projects are “green,” with varying levels of investment in sustainability at each property depend-ing on the budget and demand. Both have gotten funding from LIHTC fi nanc-ing, HUD/FHA fi nancing, OMHAR/OAHP mark-to-market full restructur-ings, Mark-to-Market “lite” transactions, and Tax Exempt Bond fi nancing, and also have secured other sources of funds/loans for their properties including syndication of Historic Tax Credits, HOME Loans, Section 241 Rehab Loans, Federal Home Loan Bank Grants/Loans, HUD Drug Elimination Grants, Weatherization Grants and various city and state agency trust funds. Both developers also focus primarily on using high effi ciency appli-ances such as low-fl ow toilets and energy saving light bulbs, Both say that until more cost eff ective and realistic alterna-tive sources are available, fi nding ways to

save energy and therefore emitting fewer pollutants from coal or natural gas, are the most viable options to reduce their carbon footprint. However, that is where the major simi-larities end. For example, A.C.D. buys older buildings and rehabs them, replacing the single pane windows, paint, furnaces and other ineffi cient fi xtures that are often present with the best grade high effi ciency products. Its business model is to retain ownership of its properties, which it hires management fi rms to oversee. Milestone, in contrast, acts as a contractor for senior, family and other housing types and pro-poses green updates to owners that have a fi xed budget they need to stick to. In this case, not all of the sustainability features Milestone proposes will make it into each community because of the costs they add. Th ere’s no question that sustainability features increase costs, but how much de-pends on how green the project gets; for instance geothermal heating costs about $10,000 per unit compared to $2,000 for traditional heating, but the average cost for all sustainability features at Milestone is about 15 percent, said Carla Naum, one of the founders of Milestone. While Naum and Gerald Krueger, A.C.D. president, both agreed that they’ve seen a decrease in maintenance costs for appliances such as tankless wa-ter heaters, in many cases savings go into residents’ pockets because they pay their own utilities. Th is leaves some developers to wonder why they should spend more on environmental friendly changes if they don’t get the added savings. Th e reason-ing behind A.C.D. and Milestone’s pur-suits is yet another diff erence between the two developers. One is motivated by deep-rooted principles and the other was

prompted into action by simple logic. Naum said her company began its effi -ciency eff orts because “it just makes sense in the long run” fi nancially for residents that don’t have a lot discretionary income to decrease their energy and water costs. “We have one pool of money,” she said. “We could use it to put in prettier things or we could use it to go green.” Krueger said that he has been “going green long before it was fashionable.” He said that while it costs more, for example, to buy the most energy effi cient heating system or to purchase low V.O.C. (vola-tile organic compound) emitting paints, sealants and other products, his company simply has a commitment to do the right thing by protecting the environment. “In general we don’t look at the payback period because it’s an initiative we’ve taken on as a company,” he said. “We are doing our civic duty.” Investing in quality products that are up to the latest standards and long last-ing also makes good business sense, added Krueger, since he’s not likely to do any major upgrades for the next 15 to 20 years. He said he would endorse any sustain-ability feature except LED lighting, which he uses only in outdoor signs. While LED technology is safer than fl uorescent light-ing, which contains mercury -- a problem that will likely surface eventually -- until the cost decreases, Krueger said it doesn’t make sense to use it throughout housing projects. Naum, who said her number one focus is fi nding ways to become more energy ef-fi cient, meets that goal by taking simple steps such as using dual fl ush toilets, which use .8 gallons of water to an aver-age toilet’s 1.3 gallons. However, they are

Tale of Two Developers:Goals For Greener Communities


programmable to use up to 1.6 gallons if a diff erent lever is pushed when the user needs a full fl ush. While Milestone can’t always fi t the most advanced systems into the budget for each project, Naum said small mea-sures such as installing insulation in ex-cess of government regulations are just as important as buying more fl ashy, state of the art features. Th at’s not to say Milestone isn’t taking some innovative steps. From the rain gar-dens the company often uses, which con-sist of native plantings to fi lter out impu-rities from oil spills and other toxic runoff that would ultimately go into ground water, to the completion of Indiana’s fi rst LEED certifi ed aff ordable housing project in Sheridan, Indiana in the fall of 2009, Naum said Milestone is poised to continue exploring new technologies. Her dream project if money weren’t an issue? She said she’d put geothermal heating in more units and would like to investigate further the benefi ts and costs of solar

Milestone Ventures vs. American Community Developers Compare and contrast American Community Developers, Inc., and Milestone Ventures, both Capital Fund partners. ACD, located in Detroit, Michigan, began in 1980 for the primary purpose of acquiring, developing, constructing, and managing aff ord-able housing. Th e company is a parent corporation to St. Clair Construction Company, which specializes in apartment rehabilitation and has 22 employees in its home offi ce. Milestone, on the other hand, opened its doors in the summer of 2000, and has completed only 41 projects to date, mostly rural. Th e company, located in Indianapolis, Indiana, has four employees. Th e tables below summarize the companies’ current portfolios: Sources: www.milestoneinc

panels that look like regular shingles, set to go onto the market from Dow in the summer. As for Krueger at A.C.D., he got start-ed in sustainability by saving water, when a company came to him with a new type of toilet that had a fl apper system for wa-ter savings and low fl ow heads on faucets. He said he was skeptical when the com-pany said the water savings would more than off set the costs from the more ex-pensive toilets, which is when they made him a deal he couldn’t refuse. Instead of asking him for an investment upfront, the company agreed to let him install the toi-lets and then took its payment out of the savings from the water bill. When Krueger saw the savings, which he called signifi cant, he said that really got him thinking about what else he could be doing to save water and eventually led to energy effi cient improvements and other techniques to improve the air quality in the home and recycle waste from con-struction.

Milestone VenturesCategory No. of Properties No. of Units

Total Portfolio 17 540

LIHTC 3 104

HOME 16 516

FHLB-AHP 12 382

Foundation Funds 6 179

Trust 3 46

New Construction 7 282

Rehabilitation 10 2,112

American Community DevelopersCategory No. of Properties No. of Units Total Units

Total Portfolio 58 7,150 100%

LIHTC 34 5,762 74%

HUD/FHA Financing 40 6,392 90%

Tax Exempt Bond Fin. 3 996 8%

HUD Section 8 41 5,775 92%

Family Population 34 4,134 66%

Senior Population 14 2,112 34%

“Th e savings in the water bill from the new toilets and faucet heads really woke us up to the savings around,” he said. “We implemented standards into each of our rehabs moving forward. We are constant-ly working to fi nd the best new things out there.”Some other technologies and products A.C.D. takes advantage of include Green Label carpeting, mold-resistant surfaces in wet areas, Energy Star compliant ap-pliances, light bulbs and fi xtures, walk-able neighborhoods, which connect de-velopments with the neighborhood via sidewalks and public transportation, and native landscaping that requires little or no irrigation. With A.C.D.’s high goals for itself, in-cluding that it chooses the most energy ef-fi cient appliances even though they often cost more higher and that all of its housing will be at least 30 percent more effi cient than traditional complexes after they are



Everyone is being stressed by the current eco-

nomic troubles and there are few areas in which we

can do anything about it. However, building own-

ers can make a major impact on their costs

and their profi t margins by working

on energy effi ciency and conser-

vation. Much is being done to

improve the effi ciency in new

construction, but there are

many opportunities for cost

savings in existing buildings.

Some of these are related to

basic maintenance tasks such

as replacing burned out bulbs

with compact fl uorescents or

asking maintenance staff to empty

lint fi lters in clothes dryers every time

they walk past a common laundry room. Oth-

ers require some forethought such as ordering

MERV-10 fi lters for the HVAC units rather than

standard-use fi lters. Still others will take a few

dollars but will have immediate pay-back—such

as having maintenance staff install water-saving

shower heads and faucet aerators whenever they

make service calls to any apartment or includ-

ing caulking and air-sealing in the routine

maintenance of each building. See the

attached list for additional “easy”

fi xes.

Such simple and inexpensive

steps will directly impact utili-

ty costs, but they will also help

reduce operating costs be-

cause many of these effi cient

products are better engineered

and are more durable than stan-

dard products. Although some of

these “upgrades” will reduce utility

costs for the tenants rather than for the

property, they can still contribute to occupant

stability by reducing household costs. Energy-sav-

ing improvements can also improve the comfort of

tenants and reduce complaints and maintenance

calls. And, of course, it is the right thing to do!

Keeping Affordable Housing Affordable



We are hearing a lot lately about the importance of Energy Effi ciency. Clearly, there is a universal recognition that a large amount of energy and money can be saved through basic mea-sures. However, it may be helpful to have some suggestions that are easy implemented in multi-family buildings: 1. Upgrade lighting. Th is is especially important in common areas where lights are left on 24 hours per day or exterior uses where lights are on from dusk to dawn: a. Replace Exit lights with LED fi xtures—this minimizes both energy use and maintenance costs because the life expec-tancy of the LED fi xtures is 10 to 20 years with no maintenance beyond cleaning. Change 50w incandescent sign to 2w LED sign ($36), sav-

ings per year = $35 b. Replace T-12 fl uorescent fi xtures with T-8 fl uorescent fi xtures in hallways and common rooms. T-8 fi xtures use elec-tronic starters rather than magnetic starters and use less energy while at the same time not needing as much maintenance. Change 2-40wT-12 fl uorescent to 2-32w T-8 ($61), sav-

ings per year = $12 per 24hr/day/fi xture Change 2-40wT-12 fl uorescent to 2-32w T-8 ($61), sav-

ings per year = $6 per 12hr/day/fi xture Change 2-40wT-12 fl uorescent to 2-32w T-8 ($61), sav-

ings per year = $3 per 6hr/day/fi xture c. In living units, install CFLs in ceiling fi xtures, especially in rooms where they will be left “on” for more than 20 minutes at a time. Even if the tenants pay their own electricity, the reduced maintenance costs to replace burned-out bulbs will quickly pay for the CFLs. Change 60w incandescent bulb to 32w CFL light ($12),

savings per year = $6.52 per CFL/4 hr/day d. In exterior fi xtures, make sure that the timer or photo-electric sensor is working properly. Make sure that every exterior light is connected to one or the other. Replace any incandescent fi xtures and consider replacing mercury or sodium vapor lights with LED fi xtures (i.e. have a policy to replace any fi xture at the time of maintenance if an outside service company needs to be called for repairs) Replace 350w Sodium with 120w LED ($2400) saving per year = $80

2. Furnace Filters and air conditioning—Replace HVAC with MERV 10 rated pleated fi lters. Th ese will improve indoor air quality and only need replacement once per year. On a sea-sonal basis, lubricate any pumps or fans, if possible. Vacuum dirt

and clean around vent openings and from air conditioning con-densing units.

3. Upgrade laundry rooms to front-loading washers and dry-ers. Th ese should be available from appliance leasing companies and the combined water and energy savings will immediately pay for any up-charges for the equipment. Vacuum clean ex-haust ducts on dryers once per year. Encourage tenants to clean lint fi lters after every load but maintenance staff should also check at least daily.

4. Upgrade faucet aerators to ½ gallon to 1.5 gallon per min-ute fi ttings. Upgrade shower heads to 1.5 or 1.75 gallons per minute. Even if this is not done wholesale, there should be a maintenance policy that the upgrades are made whenever a ser-vice-call is necessary.

5. Air-Sealing—stop air leakage from ductwork, exterior wall joints, window and door openings: a. Annually, inspect the exterior of the building(s) for cracks, holes, open joints, loose boards. Cable, telephone install-ers and contractors will have made multiple holes since last year. Caulk and refasten as necessary b. Renew caulking at the trim around all windows and doors. c. Adjust or replace weather-stripping on doors and win-dows if a piece of paper can be easily drawn through the closed window or door. d. Seal any ducts in unheated attics or crawl-spaces. Re-pair or replace any damaged sheetmetal and secure joints with screws. Do not use “duck” tape! Use a liquid mastic to seal joints on all sides of the duct. Even small changes matter: Reducing air leakage by 10% can save $66 per year per apartment.

Cost averages 10 cents per Square Foot of fl oor area.

6. Insulation—Check insulation where visible in attics and crawl spaces. Maintenance staff can level out uneven “blown-in” insulation, but (especially where fi berglass insulation was origi-nally used) consider adding six to ten inches of Cellulose on top of the existing: the relatively heavy Cellulose will hold the fi berglass in place and will increase the heat resistance by an R-4 per inch. Pay-back for heat loss is long (over 10yrs) but impact on COMFORT is great and thermostats will get turned down.Cost averages $1.63 per Square Foot of insulated area.

Basic Measures for Energy Effi ciency



However, beyond these simple, inex-pensive measures, there is usually much more that can be done. To fi nd out what, several steps should be taken: 1. Know utility costs. Monitor the

common-area costs for water/sewer, gas and electricity and track them from year to year. Compare these costs-per-unit in each building to others in your portfolio or to other buildings managed by your property manager. Th is will help you pri-oritize the buildings for upgrades. 2. Hire an energy auditor. A certifi ed energy audit will usually cost less than

$5000 and will provide a laundry list of potential improvements along with esti-mated costs and projected savings. Such audits can help you plan immediate up-grades and to schedule for longer-range improvements. 3. Use your Replacement Reserve

wisely. When upgrading appliances, select Energy Star. When replacing fans and motors, consider variable frequency mo-tors. When replacing windows, spend the extra dollars to get units with a lower U-value and insist that they are foamed-in-place during installation. 4. Verify equipment performance. Af-ter new HVAC equipment is installed,

have it “commissioned” by a third party to verify that it is installed and adjusted correctly and that the system is “balanced” for comfort and effi ciency throughout the building. 5. Use maintenance staff . Simply ask-ing maintenance staff where effi ciency

can be improved can provide insights into building operations. Make sure that main-tenance procedures are written down and available in a binder in each building. In-sist on training and orientation to these procedures for every new staff member. Another resource to tap into is your lo-cal Community Action Program (CAP) Agency. Th e American Reinvestment and

(contintued from page 14)

Simply asking maintenance staff where effi ciency can be improved can provide insights into building operations.

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Recovery Act legislation in 2009 provid-ed a huge increase in funding for Weath-erization. Th e CAP agencies will provide a certifi ed energy audit and will install any measures that have a 1:1 savings-to-investment ratio. Th ese will gener-ally include weatherstripping, air-sealing, insulation, lighting upgrades and water conservation measures. Th ese measures will generally be installed for free, though some counties require a contribution from the property owner. Th e “Final Rule” for the ARRA Weatherization Program was published by the Department of Energy on Janu-ary 10, 2009. Th is rule makes it easier for most USDA and LIHTC projects to qualify for the weatherization program by including these income-restricted proper-ties as eligible for weatherization without requiring individual household income verifi cation. Th e rule also suggests that states can consider the income restrictions, themselves, as evidence that rents will not

be increased because of the weatheriza-tion work and suggests that the improve-ment of comfort, health and safety for the tenants demonstrate that the benefi ts of weatherization inure primarily to the ten-ants. Prior to the fi nal rule, multiple forms and covenants required by CAP agencies to satisfy these questions made it diffi cult for multi-family buildings to qualify. Finally, contact your local gas and electric utility for information on their “Energy Optimization” program. Some improvements such as water-conserva-tion fi xtures, set-back thermostats and lighting upgrades will be provided for free through the utilities. Other upgrades to building systems and common areas will require that the owner pay for the measures and then provide a cash rebate based on the type of equipment installed. Th e programs vary from one utility to an-other and they change each year, so keep an eye on the web site of the utility com-pany serving your properties.

7. Variable Frequency Motors—replace conventional motors, fans and pumps with Variable Frequency motors and pumps. Th is will not be economical for unit-sized HVAC units but will save signifi cantly on whole-building systems.

8. Hot water heating—install dense-foam pipe insulation on both hot and cold pipes within 4 feet of each tank. If installing new Hot Wa-ter Tanks, install thermal traps on the Hot and Cold pipes at the heat-er. (Insulation of all exposed pipe would also help prevent mold and humidity.) Check water heater tem-peratures to be sure they are set to 110 degrees (medium). Consider in-stalling an insulated jacket on tanks unless prohibited by manufacturer.

(contintued from page 15)

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Electric utility statutory or Public Utility Commission mandated energy savings targets:2008 2009 2010 2011 2012 2013 2014 2015

Wisconsin* 0.7% 0.7% 0.7% 1% 1.25% 1.5% 1.75% 2%Illinois 0.2% 0.4% 0.6% 0.8% 1% 1.4% 1.8% 2%Michigan .3% .3% .5% .75% 1% 1% 1% 1%*.7% is calculated off cost savings goal. Higher amounts are proposed in current regulations

Over the next two years, over One Billion Dol-lars is allocated for free weatherization services in

the areas served by Great Lakes Capital Fund. Much of this funding is from the American Recovery & Reinvestment Act (ARRA) which increased weatherization funding to almost 10 times what was al-located by Congress in 2008. Much of the weatherization work is being done by Community Action Agencies that were

accustomed to working with less funding in the past. While the CAP agencies are diligently working to increase the size of their staff s and the pool of subcontractors they use for energy audits and construc-tion, the ramp-up has been slow. Th ere has been uncertainty about regulations for the new Weatherization Program and states have experienced diffi culty training and certifying inspectors who need to ver-

Money Left on the Table?

Weatherization Funding by StateState 2009 Weatherization Funding New ARRA Weatherization Funding Multi-Family Set-Aside

Wisconsin $14,966,407 $141,502,133 $16,000,000

Illinois $24,070,095 $242,526,619

Indiana $12,342,276 $131,847,383

New York $36,654,490 $394,686,513 $50,000,000

Michigan $25,949,859 $243,398,975

TOTAL $113,985,136 $1,153,961,623 $66,000,000

ify the work specs and the weatherization installations. Still, the federal guidelines say that 40% of the ARRA funding needs to be spent by the spring of 2010, or the

balance of the funding could be distrib-uted to other areas. Th is could lead to a huge missed opportunity for aff ordable housing in our states! One potential way to get the ARRA Weatherization money spent and at the same time reach a huge number of low-income households is to establish spe-cial programs to weatherize Low Income Housing Tax Credit communities, as

New York and Wisconsin have done. Th e ARRA regulations specifi cally allow the program to be used on any multi-family building where at least 66% of the tenants

meet low-income guidelines. Most states have accepted the ARRA limit of 200% of the Federal Poverty Rate (about $44,000 per year for a family of four); however, some, such as New York, have opted for a limit of 60% AMI. In buildings that are federally fi nanced or that have project-based Section 8 subsidies, the tenants do not even need to have independent in-come verifi cation. Th ese buildings are au-

These Energy Effi ciency requirements have resulted in utility companies offering free energy upgrades or strong incentives for energy upgrades for households who meet

the ARRA Weatherization income limits.


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tomatically eligible for the weatherization funding. Controlling utility costs is one of the keys to keeping housing truly aff ordable for lower income families. Th e rapid esca-lation of utility costs has resulted in lower cashfl ow for building owners and eco-nomic stress for many tenants leading to higher movership and rent delinquencies. If owners and management companies put in the time and eff ort necessary to en-courage the tenants in their buildings to apply for the Weatherization Services and to work with the Weatherization Program subcontractors in their area, a signifi cant dent can be made in the utility costs paid by the owners and the tenants. Th e result will be healthier, more comfortable and more aff ordable buildings for everyone. Check with the Community Action Agency that serves your community to apply for the weatherization services. All units will receive an energy-audit by a certifi ed professional and the measures recommended by the audit should be in-stalled for free. Th e most common weath-erization measures include:

• Weatherstripping windows and doors

• Air sealing of cracks and holes• Installing a digital set-back thermo-

stat• Installing water-saving shower

heads and aerators• Installing additional insulation• Installing Compact Florescent

Lights (CFLs) in the most-used light fi xtures

• Installing other measures that have a payback period of 10-years or less

Don’t forget to check your local utility provider, too. Most states have mandates from their Public Utility Commissions to cut energy use by a specifi c amount each year: Th ese Energy Effi ciency requirements have resulted in utility companies off ering free energy upgrades or strong incentives for energy upgrades for households who

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meet the ARRA Weatherization income limits. Each utility has its own approach and programs are being rolled out on an on-going basis. In Michigan, DTE Energy provides income qualifi ed tenants and ho-meowners with free thermostat upgrades, water conservation devices, and Compact

Florescent lights. Businesses can also take advantage of these free services. Consum-ers Energy provides these same upgrades and they also provide free Energy Star refrigerators for qualifi ed households. Check the website of your local utility to see what is available.

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Utility Companies are now re-quired to provide energy effi -ciency improvements to their customers, paid for by Utility

Surcharge Funding which is on all electric and gas bills. Th eir program is intended to complement the CAP agencies’ Weather-ization program, but does not run through the CAP agencies, nor needs to be coordi-nated with them. Owners or Management Companies can apply to DTE or Consum-ers Energy directly to get on their list. If the CAP agencies will do Weatherization later, that is preferred, but not required. Th e Detroit contact for this program is at 7140 W. Fort Street 313-297-1278. Th e Consumers Energy contact is Megan At-kinson, Project Coordinator at Consum-ers Energy Saving Solutions in Okemos,

Energy-Upgrades from DTE and Consumers Customersbe eligible for replacement at no cost or at a radically reduced cost. For the common-area upgrades, own-ers are responsible for contracting out the work. Once work is competed, DTE inspects and authorizes payment either directly to the contractor or to the owner. For work inside apartments, the DTE Energy Multifamily Program would pro-vide both material and labor. Material and labor is covered 100% except in mixed-income buildings. If less than 66% of the tenants are income-eli-gible (200% of Federal Poverty), there is a co-pay required from the owner: 15% co-pay for 24-hour per day use; 25% for 8-16-hour per day use or 35% for up to 8-hour per day use. Th e energy-upgrade inspections are not energy audits. Th ose would still need to be done by the CAP agencies before any additional Weatherization work is done. But the inspections will highlight additional energy upgrades needed that are not part of the program and may be part of future programs. Below is a breakdown of what is avail-able to each unit from Consumers Energy. • 1 showerhead per bathroom

– Maximum 3 bathrooms– Resident’s showerhead (whether

“as is” with apartment or their own), it will be replaced with low-fl ow standard showerhead

– If resident has their own hand-held showerhead and it gives a reading above 1.5gpm, we will replace it with a low fl ow 1.5gpm handheld showerhead (chrome)

• 1 bathroom faucet aerator per bath-room

– Maximum 3 bathrooms • 1 kitchen faucet aerator with spray feature

– See specifi cation sheet with photo to explain spray feature

Michigan. She can be reached at (877) 607-0737. DTE and Consumers will accept cop-ies of the rent rolls from LIHTC proper-ties as evidence of income eligibility and automatically qualify multi-family build-ings for their services. In 100% low-in-come buildings, the program will: 1. Provide energy-upgrade inspec-tions to determine the measures that could be installed 2. upgrade common-area lighting and heating 3. in residential units, will install pipe insulation, shower-head and faucet re-placements, and set-back thermostats 4. Also, stay in touch with the local utility to see if other upgrades are avail-able. For instance, older refrigerators may


• Up to 4 CFL bulbs per unit– Existing 60-watt incandescent gets replaced with 13-

watt CFL– Existing 75-watt incandescent gets replaced with 20-

Watt CFL– Existing 100-watt incandescent gets replaced with 23-

Watt CFL Consumers does not remove existing fi xtures from the unit entirely. Th ey install the maximum amount of product possible (unless advised otherwise by resident or leasing offi ce) and leave existing fi xtures and bulbs in the unit to allow resident to switch back if they are unhappy with the new upgrade. Also, residents may decline installation of any and/or all products if they feel inclined to do so. Consumers Energy Saving Solutions can only work on Con-sumers Energy customer’s properties. Right now, they are work-ing on properties that use Consumers Energy for gas AND electric but will be soon branching to those who use Consumers Energy for gas ONLY. Below is a list of the prescriptive measures and incentives available through the multi-family program. Keep in mind that these would only apply if the area in which they are being in-

stalled is billed on a residential rate. If it is billed on a commer-cial rate, incentives may diff er. Th e charts below should be used just as a general reference.

Electric Prescriptive Measures Common Area: 2’ and 3’ T8 $5.00 Common Area: 4’ and 8’ T8 $8.00 Common Area: 4’ T5 $7.00 Common Area: T12 4ft de-lamping $5.00 Common Area: Hard wired CFLs $50.00 Common Area: LED exit signs $30.00 (retrofi t) Common Area: Controls $100.00 Indoor Garage Lighting $200.00 Outdoor Safety Lighting $100.00

Gas Prescriptive Measures Boiler controls $150.00 Steam traps $50.00 Boiler tune-ups $100.00

For more information, contact Megan Atkinson at Consumers Energy at (877) 607-0737.

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tential as a model for other communities, said Welch. He said at a retrofi tting cost of $1,000 each, the changes made to the boilers will pay themselves back in about 10 months. Additionally, once all of them are running, the energy generated from the boilers will eventually heat them, as well as two buildings at the sanitary plant. Turning waste into energy not only has money-saving benefi ts, Welch said, but it is environmentally friendly. Using a bacte-rial process, it separates environmentally harmful “sludge” from energy rich meth-ane instead of burning down all of the waste and releasing the entire contents into the atmosphere. As for other alternative energy projects that have more potential for job growth, such as building and installing wind tur-bines and capturing geothermal heat, Welch said his state seems to be opening

up to those possibilities especially in rural areas. When it comes to wind, he said in East Central Indiana, near the highest point of the state, he anticipates seeing many more wind turbines in place on farm land by 2011, which would benefi t not only the environment, and those who manufac-ture and maintain the turbines, but also the farmers who rent out the space. Th ough Indiana hasn’t yet offi cially gotten behind the green movement with a strict renewable energy standard from the governor or Legislature, Welch said it doesn’t seem to be for lack of support from its citizens. Welch said he hasn’t heard a lot of objection to wind, geothermal or cellulosic energy, but he is cautious about continued development in ethanol. While that industry has created a few thousand around the state, Welch thinks much of the research and development will disap-pear — and with them, jobs — after gov-ernment incentives wane.

Most studies of policies that result in energy savings through effi ciency pro-grams and state-initiated policies toward a greener way of life show signifi cant posi-tive impacts due to changes in spending on utilities, increased jobs and increased energy effi ciency, said Stanton. Th e gen-eral fi nding is that as much as half of the total positive impacts of energy policy changes result from energy consumers spending less on utility bills, thereby in-creasing the amount they have to spend on discretionary items. Similarly, most studies fi nd gains to a state’s economy and the potential for thousands of jobs, espe-cially in rural areas and states with strong manufacturing infrastructure. While Stanton said he thinks states should ini-tiate more research to model conclusively the net economic and employment eff ects that will result from major increases in renewable and alternative energy, he said preliminary studies do suggest the results will be both positive and signifi cant.

(continued from page 9)

done rehabbing them, the company could pursue certification. However, Krueger said he doesn’t pursue certifications be-cause he believes some developers do so to raise awareness about their green efforts and to get recognition for them. He said he doesn’t need to advertise his efforts since people with low incomes don’t have many choices about where to live and he doesn’t think advertising that he has better paint or carpet makes a difference about whether they choose his housing, which fills up so fast there is a waiting list for all of A.C.D.’s proj-ects. Because he doesn’t look to certify his projects, Krueger said he doesn’t need to hire LEED certifi ed engineers or contrac-tors on his projects but learns along with his project managers through the years.

Naum agreed, saying much of what she’s learned about sustainability has been “on the job training.” She added that Mile-stone does get consultants’ help on proj-ects that are destined for certifi cation. Th ese developers, while very diff erent from one another, have both taken steps to build more sustainable communities, proving that any company, no matter its size, the role it plays in the developments once they are fi nished and the extent to which they can aff ord to make green in-vestments can make a move toward sus-tainability. Th eir advice to anyone willing to learn more about how to build more environ-mentally friendly is to attend tradeshows and take continuing education classes, with Naum adding that talking to an ex-pert engineer or contractor is a good way to fi nd which options are most cost eff ec-tive and effi cient.

(continued from page 13)

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Events and HappeningsBlue Ribbon Loft Apartments Wins Award Blue Ribbon Loft Apartments was recognized for overcoming signifi cant ob-stacles and using innovative and replicable strategies to surmount its challenges. Th e 95-unit mixed-income apartment build-ing with 69 available to income-qualifi ed families and individuals making 50 to 60 percent of the area’s median income was nominated by Great Lakes Capital Fund. Th e project came to fruition after four years of attempts to revitalize a former Pabst Brewery, including overcoming ex-tensive environmental hazards. Amenities include an indoor main street, a music studio, artists’ workspaces and galleries, business center, fi tness facil-ity, indoor parking, conference rooms and theater/presentation space.

Molland Joins GLCFKara Molland joined Great Lakes Capital Fund in March 2010 as an Asset Manager, primarily serving cli-ents in Wisconsin and Michigan. Prior

to joining Great Lakes Capital Fund, Kara was an Associate Director at GE Real Estate where she was responsible for originating and underwriting commercial real estate loans. In addition, Kara has worked for National Equity Fund as an Asset Stabilization Manager. Kara gradu-ated from the University ofWisconsin – Madison with a degree in Real Estate and Urban Land Economics.

Left to right: Jerry Krueger, President American Community Developers, Inc.; Jeff Supowit, Vice President ACD; Ed Bobincheck, Great Lakes Capital Fund; and Frank Carswell, Independent Man-agement Services at Westland Meadows grand re-opening receiving Green Communities Award from Great Lakes Capital and Enterprise for green initiatives at Westland Meadows.

Westland MeadowsGrand Re-Opening Westland Meadows Apartments, lo-cated in Kalamazoo, Michigan, was ac-quired by ACD in 2007, and in 2008 a major rehabilitation of the project was completed with the assistance of an award of LIHTCs through the Michigan State Housing Development Authority, and an award of a $100,000 grant through En-

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terprise for meeting the criteria of their Green Communities program. Th e award pictured below was presented to West-land Meadows Apartments and Ameri-can Community Developers, Inc. by En-terprise and its Michigan affi liate Great Lakes Capital Fund at the Westland Meadows Apartments grand opening on October 16, 2008.

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Community Economic Development Association of Michigan .............517.485.3588 ....................... www.cedam.info ...........................................19

Con-Pro Corporation ..................................................................................248.557.8121 ................................................................................................20

Godfrey, Hammel, Danneels & Company, Pany, Pany .C., P.C., P .......................................586.772.8100 ....................... www.ghdcpa.com .........................................21

Gordon Advisors, P.C. .................................................................................248.952.0200 ....................... www.gordoncpa.com ....................................11

Loomis, Ewert, Parsley, Davis & Gotting, P.C. .........................................517.482.2400 ....................... www.loomislaw.com .......................................8

McCartney & Company, P.C. .....................................................................517.347.5000 ....................... www.mcco-cpa.com .....................................22

Medallion Management ..............................................................................269.381.0350 ....................... www.medallionmgmt.com ...........................23

Michigan State Housing Development Authority ...................................517.373.6840 ....................... www.michigan.gov/mshda ..........................25

O’Brien Construction .................................................................................313.297.6724 ....................... www.obriencc.com .........................................2

Plante Moran ................................................................................................517.336.7460 ....................... www.plantemoran.com ..................................9

Rohde Construction Company, Inc. ..........................................................616.698.0880 ....................... www.rohdeconstruction.com ........................4

Rolar, Inc.Rolar, Inc.Rolar ......................................................................................................248.589.1800 ....................... www.rolarinc.com .........................................19

Unifi ed Property Group ..............................................................................800.611.0950 ....................... www.unifi edpropertygroup.com .................24

michigan.gov/mshda

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