+----------------+----------------+--------+---+-----------+-----------+
| ![](media/i    | **U.S.         | **No:  |   | **Rev:    | **Date:   |
| mage1.wmf){wid | Department of  | 406**  |   | 3**       | 02/       |
| th="1.63125in" | HUD**          |        |   |           | 03/2006** |
| he             |                |        |   |           |           |
| ight="1.154861 | Buffalo        |        |   |           |           |
| 1111111111in"} | Office, Region |        |   |           |           |
|                | II             |        |   |           |           |
|                |                |        |   |           |           |
|                | 465 Main       |        |   |           |           |
|                | Street         |        |   |           |           |
|                |                |        |   |           |           |
|                | Lafayette      |        |   |           |           |
|                | Court          |        |   |           |           |
|                |                |        |   |           |           |
|                | Buffalo, New   |        |   |           |           |
|                | York           |        |   |           |           |
|                | 14203-1780     |        |   |           |           |
+----------------+----------------+--------+---+-----------+-----------+
|                |                | **Su   |   |           |           |
|                |                | bject: |   |           |           |
|                |                | Energy |   |           |           |
|                |                | Perfo  |   |           |           |
|                |                | rmance |   |           |           |
|                |                | Agree  |   |           |           |
|                |                | ment** |   |           |           |
|                |                |        |   |           |           |
|                |                | > **\[ |   |           |           |
|                |                | > PHA  |   |           |           |
|                |                | > Deve |   |           |           |
|                |                | loped, |   |           |           |
|                |                | >      |   |           |           |
|                |                | Add-On |   |           |           |
|                |                | > Inc  |   |           |           |
|                |                | entive |   |           |           |
|                |                | > \]** |   |           |           |
+----------------+----------------+--------+---+-----------+-----------+
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|                |                | *Appro | i |           |           |
|                |                | ved:** | g |           |           |
|                |                |        | n |           |           |
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+----------------+----------------+--------+---+-----------+-----------+
|                |                | **     |   |           |           |
|                |                | Public |   |           |           |
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|                |                | ousing |   |           |           |
|                |                | Dire   |   |           |           |
|                |                | ctor** |   |           |           |
+----------------+----------------+--------+---+-----------+-----------+

[1.0 [Purpose]{.underline}]{.smallcaps}

> This procedure defines requirements and describes the process for
> planning, performing, documenting, and developing an energy
> performance agreement. It will provide for consistency in reporting of
> programmatic deficiencies, positive results, and good practices.

2.  [[Scope]{.underline}]{.smallcaps}

> This procedure applies to energy performance contracts, using the
> add-on incentive, developed by a Public Housing Authority and approved
> by the U.S. Department of Housing and Urban Development, Buffalo
> Office personnel.

3.  [[Requirements And References]{.underline}]{.smallcaps}

    1.  [Requirements]{.underline}

        1.  24 CFR 85.36 - Procurement Requirements

        2.  24 CFR 990 - Annual Contributions for Operating Subsidy

            1.  24 CFR 990.185 - Incentives for energy conservation
                /rate reduction.

        3.  2 CFR 965.308 - Energy Performance Contracts

    2.  [References]{.underline}

        1.  HUD -- Field Office Review Procedure -- dated July 31, 2005.

        2.  Buffalo HUD Office computer disk on energy performance
            contracting.

4.  [[Definitions]{.underline}]{.smallcaps}

    1.  Energy Performance Agreement - An agreement between a Public
        Housing Authority(PHA) and the U.S. Department Of Housing and
        Urban Development (HUD) whereby the PHA has qualified for and
        has been approved for a monetary incentive as defined in 24 CFR
        990.185.

    2.  Energy Conservation Measure - A physical improvement that
        results in the reduction of energy sufficient to pay for itself
        in 12 years or less. Waiver requests may be submitted for a 20
        year option.

5.  [[Responsibilities]{.underline}]{.smallcaps}

    1.  [Public Housing Director]{.underline} - Responsible for assuring
        that the initial energy performance contracts are approved in
        compliance with Federal Regulations and that yearly oversight
        activities are completed as required.

    2.  [Public Housing Deputy Director -]{.underline} Responsible for
        the overall management of the Buffalo HUD energy performance
        contract program including:

        1.  Assuring that initial energy performance agreements comply
            with Federal Regulations and are well documented.

        2.  Assuring that yearly reviews are adequate and well
            documented.

    3.  [HUD Engineer]{.underline} - Responsible for:

        1.  Technical Resource - The HUD Engineer shall be the technical
            resource for **all** energy performance contracting issues.

        2.  Planning, developing, and documenting the preliminary and
            final energy performance contract agreement between the
            Buffalo Field Office and respective Public Housing
            Authorities (PHAs).

        3.  Planning, developing and documenting the yearly energy
            performance contract review.

        4.  Coordinating activities between the HUD Engineer and HUD
            Financial Analysts.

    4.  HUD Financial Analysts -

        1.  Responsible for the processing of the initial energy
            performance incentive through the operating fund.

        2.  Responsible for the processing of the yearly financial
            incentive and / or adjustment through the operating fund.

    5.  HUD Program Assistant - Is responsible for the organization,
        maintenance and filing of all documents.

    6.  PHA -- The Public Housing Authority assumes all responsibility
        and risk for development, procurement, financial, construction
        activities associated with the energy performance agreement, and
        yearly verification of energy savings.

6.  [[General Information]{.underline}]{.smallcaps}

> Energy performance agreements between the Buffalo HUD office and
> PHA\'s will be executed based upon time management and risk as
> determined by the Buffalo HUD Office.

7.  **[[Procedure]{.underline}]{.smallcaps}**

    1.  Initial Questions -

        1.  The HUD Engineer will conduct a preliminary review of the
            proposed energy conservation measures to determine the
            feasibility of conducting an energy performance contract.

            1.  The HUD Engineer will provide technical assistance to a
                PHA explaining:

                1.  The financial benefits and risk associated with an
                    energy performance contract.

                2.  HUD requirement that the PHA hire a qualified "3^rd^
                    Party Consultant" to advise them through the
                    process.

                3.  The commitment and time involvement required by a
                    PHA to design develop and execute an energy
                    performance contract as their own ESCO.

    2.  3^rd^ Party Consultant

        1.  The HUD Engineer will review and approve the PHA\'s request
            for proposal to hire a qualified 3^rd^ party consultant.

    3.  PHA Application -

        1.  The PHA will submit to the Buffalo HUD Office, a written
            letter of request to enter into an energy performance
            agreement.

        2.  The PHA will provide the following information with its
            request:

            1.  A copy of the energy audit conducted.

            2.  A completed energy conservation measure data worksheet
                ([Attachment A](../ECM%20Worksheet.doc)) for each
                recommended energy conservation measure.

            3.  A cost summary work sheet which summarizes all of the
                energy conservation measures, installation costs and
                related energy savings. ([Attachment
                B](../ECM%20-%20Sample%20Cost%20Summary%20Form.xls)).

            4.  Completed energy consumption data worksheets for the
                last three years for [each project]{.underline}
                identified on the cost summary work sheet.

                1.  Electrical Data ([Attachment
                    C](../Electricity%20Data.doc))

> Or
>
> Electrical -excel input sheet ([Attachment N](../Electric.xls))

2.  Natural Gas Data ([Attachment D](../Natural%20Gas%20Data.doc))

> Or
>
> Natural Gas - excel input sheet ([Attachment O](../Natural%20Gas.xls))

3.  Water Data ([Attachment E](../Water%20Data.doc))

> Or
>
> Water -- excel input sheet ([Attachment P](../Water.xls))

5.  Complete energy baseline data worksheets.

    1.  Electrical Baseline Data ([Attachment
        F](../Electrical%20Baseline%20Data.doc))

> Or
>
> Electrical -excel input sheet ([Attachment N](../Electric.xls))

2.  Natural Gas Baseline Data ([Attachment
    G](../Natural%20Gas%20Baseline%20Data.doc))

> Or
>
> Natural Gas - excel input sheet ([Attachment O](../Natural%20Gas.xls))

3.  Water Baseline Data ([Attachment H](../Water%20Baseline%20Data.doc))

> Or
>
> Water -- excel input sheet ([Attachment P](../Water.xls))

6.  A projected physical needs assessment worksheet ([Attachment
    I](../Physical%20Needs%20Assessment%20Worksheet.doc)) for the
    affected projects.

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4.  Preliminary Approval -

    1.  The Buffalo HUD Office engineer will provide in writing
        preliminary approval of the PHA\'s energy performance contract
        request.

    2.  The preliminary approval letter will include:

        1.  A statement addressing 24 CFR 990.185 requirement concerning
            financing of the energy conservation measures by an entity
            other than the Secretary.

        2.  A cost summary work sheet which summarizes all of the energy
            conservation measures, installation costs and related energy
            savings. ([Attachment
            B](../ECM%20-%20Sample%20Cost%20Summary%20Form.xls)).

        3.  Energy Baseline Data including complete energy baseline data
            worksheets.

        4.  A copy of this procedure.

5.  Funding Source - The PHA will obtain a non-HUD funding source.

6.  Design Phase

    1.  The PHA will develop with the 3^rd^ party consultant's
        assistance a request for proposal to hire a design professional
        for the design, award and construction of the energy
        conservation measures.

    2.  The HA will forward the Buffalo HUD Office a copy of the RFP and
        proposed contract.

    3.  The Housing Authority will perform the following tasks in
        accordance with 24 CFR 85.36 requirements:

        1.  Advertise the RFP

        2.  Solicit the RFP

        3.  Evaluate the proposals.

        4.  Select the design professional based upon the RFP
            requirements.

        5.  Perform a cost or price analysis

        6.  Develop a finding of fact to document the rationale for
            contract award.

        7.  Execute a contract with the design professional.

    4.  Schematic and Final Design Review

        1.  The 3^rd^ party consultant will provide technical
            assistance, during the schematic and final design review
            process.

        2.  The Housing Authority will review and approve the schematic
            and final design reviews.

    5.  The Housing Authority will develop a final bid package for the
        energy conservation measures.

    6.  The HA will submit copies of the final bid package to the
        Buffalo HUD Office.

    7.  The HA will perform the following tasks in accordance with 24
        CFR 85.36 requirements:

        1.  Advertise the construction bid package.

        2.  Solicit the construction bid package.

        3.  Conduct the bid opening.

        4.  Ensure that the low bidder is both responsive and
            responsible.

        5.  Perform a cost or price analysis

        6.  Develop a finding of fact to document the rationale for
            contract award.

7.  PHA Final Application Request

    1.  The PHA will submit to the Buffalo HUD Office, a written letter
        of request to enter into an energy performance agreement
        contract.

    2.  The request will include:

        1.  A description of any deviations from HUD\'s preliminary
            approval letter.

        2.  A copy of the bid tabulation

        3.  A full disclosure of the financial loan terms including a
            complete amortization table.

8.  Final Approval

    1.  The Buffalo HUD Office engineer will be responsible for
        developing the final agreement letter between the Housing
        Authority and the Buffalo HUD Office.

    2.  The approval letter will include:

        1.  The terms of the financial incentive being offered to the
            Housing Authority.

        2.  A cost summary work sheet which summarizes all of the energy
            conservation measures, installation costs and related energy
            savings. ([Attachment
            B](../ECM%20-%20Sample%20Cost%20Summary%20Form.xls)).

        3.  A description of any changes in the energy baseline data

        4.  An explanation of the yearly monitoring procedure that will
            be required of the PHA to submit including example
            worksheets.

            1.  Yearly Electrical Data ([Attachment
                J](../Yearly%20Electrical%20%20Data.xls))

            2.  Yearly Natural Gas Data ([Attachment
                K](../Yearly%20Natural%20Gas%20Data.xls))

            3.  Yearly Water Data ([Attachment
                L](../Yearly%20Water%20%20Data.xls))

            4.  A sample yearly certification that will be required.
                ([Attachment M](../Yearly%20PHA%20Certification.doc))

        5.  The HUD engineer and HUD financial analyst will sign off on
            the approval letter.

        6.  The Public Housing Deputy Director will review the final
            agreement and insure that all provisions of this procedure
            are met.

        7.  The Public Housing Director will approve the final agreement
            letter.

9.  Execute a construction contract

    1.  The PHA will execute a construction contract to install the
        energy conservation measures.

10. Construction Review

    1.  The HUD engineer may participate in the final inspection for the
        installation of the energy conservation measures.

11. Yearly Review

    1.  The Housing Authority will submit the following data to the
        Buffalo HUD Office within 45 days after their fiscal year end
        date.

        1.  Completed energy consumption data worksheets for the
            previous year for each [project]{.underline} identified on
            the cost summary work sheet.

            1.  Yearly Electrical Data ([Attachment
                J](../Yearly%20Electrical%20%20Data.xls))

            2.  Yearly Natural Gas Data ([Attachment
                K](../Yearly%20Natural%20Gas%20Data.xls))

            3.  Yearly Water Data ([Attachment
                L](../Yearly%20Water%20%20Data.xls))

            4.  A sample yearly certification that will be required.
                ([Attachment M](../Yearly%20PHA%20Certification.doc))

    2.  The HUD engineer will review the utility data and H.A.
        certifications and verify it against the terms of the final
        agreement.

    3.  The HUD engineer will develop a written memorandum to the HUD
        financial analyst which includes:

        1.  A statement that all requirements of this procedure have
            been met.

        2.  A statement that all terms of the final agreement between
            the Housing Authority and the Buffalo HUD Office have been
            met.

        3.  A recommendation for payment of the yearly add-on subsidy.

        4.  Copy of all calculations and PHA back-up information.

    4.  The HUD financial analyst will incorporate processing of the
        yearly add-on subsidy into the Housing Authority operating fund
        approval letter.

        1.  The HUD financial analyst will sign off on the approval
            letter.

        2.  The Public Housing Deputy Director will review and approve
            the yearly approval letter and insure that all provisions of
            this procedure are met.

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8.  **[[Records Maintenance]{.underline}]{.smallcaps}**

> **Note:** The organization, maintenance and filing of these documents
> are extremely important. These agreements are long term agreements and
> will be used by multiple parties.

1.  Records generated as a result of implementing this document are
    identified as follows:

    1.  PHA Energy Audit

    2.  PHA Preliminary Letter of Request /Application -

    3.  HUD Preliminary Approval Letter

    4.  Design Phase

        1.  HUD Approval Letter of PHA\'s Request for Proposal.

        2.  HUD Approval Letter of the PHA\'s final bid package.

    5.  HUD Final Agreement Letter

    6.  Yearly Review -

        1.  PHA Documentation (Financial & Engineering Files)

        2.  HUD Engineer Memorandum

        3.  Yearly subsidy letter.

2.  Records **shall** be maintained in the PHA Energy Performance
    Contract folder.

3.  A copy of the final approval letter shall be maintained in the PHA's
    ACC Agreement file.

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9.  **[[Forms / Templates Used]{.underline}]{.smallcaps}**

    1.  The Buffalo HUD Office has provided sample forms for use in
        processing this procedure. The intent of the forms is to
        streamline and provide consistency in documenting the necessary
        data to logically execute an energy performance contract. The
        use of these forms by a PHA is not mandatory but does assist and
        aid in the process.

10. **[[Attachments]{.underline}]{.smallcaps}**

    1.  [Attachment A](../ECM%20Worksheet.doc) - Energy conservation
        measure data worksheet

    2.  [Attachment B](../ECM%20-%20Sample%20Cost%20Summary%20Form.xls)
        -- Cost Summary Worksheet

    3.  [Attachment C](../Electricity%20Data.doc) - Electrical Data

    4.  [Attachment D](../Natural%20Gas%20Data.doc) - Natural Gas Data

    5.  [Attachment E](../Water%20Data.doc) - Water Data

    6.  [Attachment F](../Electrical%20Baseline%20Data.doc) - Electrical
        Baseline Data

    7.  [Attachment G](../Natural%20Gas%20Baseline%20Data.doc) - Natural
        Gas Baseline Data

    8.  [Attachment H](../Water%20Baseline%20Data.doc) - Water Baseline
        Data

    9.  [Attachment
        I](../Physical%20Needs%20Assessment%20Worksheet.doc) - Physical
        needs assessment worksheet

    10. [Attachment J](../Yearly%20Electrical%20%20Data.xls) -- Yearly
        Electrical Data

    11. [Attachment K](../Yearly%20Natural%20Gas%20Data.xls) -- Yearly
        Natural Gas Data

    12. [Attachment L](../Yearly%20Water%20%20Data.xls) -- Yearly Water
        Data

    13. [Attachment M](../Yearly%20PHA%20Certification.doc) - Housing
        Authority yearly certification

    14. [Attachment N](../Electric.xls) -- Electrical -- excel input
        sheet

    15. [Attachment O](../Natural%20Gas.xls) -- Natural Gas -- excel
        input sheet

    16. [Attachment P](../Water.xls) -- Water -- excel input sheet