Comments on HUD 2009 Capital Needs Assessment Study


To:  Sandra Henriquez, Assistant Secretary for Public and Indian Housing, U.S. Department of Housing and Urban Development

Cc: Meryl Finkel, Senior Associate, Abt Associates

Fr:  Council of Large Public Housing Authorities            

RE: Capital Needs Assessment Survey Addendum 

DATE: November 13, 2009                 

CLPHA appreciates the additions made by HUD in response to previous concerns raised about energy efficiency, healthy homes, accessibility and asset management. The changes are a very real improvement, and make considerable strides towards achieving a reliable estimate of the capital needs in public housing.

Unfortunately, HUD chose not to share the survey questions with members of the Capital Needs Assessment Study Group before it was widely distributed. There are several areas where clarification is needed and where additional questions are required to gather the necessary information to properly estimate capital needs. We are reiterating our request that an addendum be part of the survey.

Below are our concerns.

PHA Accessibility

Each year, the percentage of seniors in public housing increases, requiring more senior and/or disabled accessible units, and more retrofits of existing units. However, there is no reliable national estimate of the number of units needed to address this growing sector of public housing residents. 

The study is an opportunity to change that with the addition of the crucial question about projected local needs for Uniform Federal Accessibility Standards (UFAS) units. Question 32 (page 21) asks whether or not demand for UFAS units exceeds a housing authority’s ability to supply the units. In order to reliably estimate the cost of making a sufficient amount of units UFAS accessible, there needs to be an estimate of both cost and projected need for such units. CLPHA recommends including a question that asks for an estimate of the percentage of units that will need to be upgraded to be UFAS accessible over the next 10 years.

Question 26 needs some clarification. The question asks “how much on an average per unit basis” has the housing authority spent over the past three years on UFAS modifications. Does this mean the average spent on only those units that were modified? It could be interpreted as including all units, regardless of whether they were modified (e.g., the total amount spent divided by all ACC units). In order to get a reliable renovation estimate, it would be better to provide an estimate of the average cost on only those units that were modified.

Healthy Homes Improvements

The healthy homes section (page 22) only includes questions about lead paint abatement/removal. Unfortunately, this section is an inadequate depiction of the possible healthy homes improvements that can, and are, being made. For example, many housing authorities are renovating or building units using non-toxic materials to improve indoor air quality, utilizing integrated pest management, and making strides towards mold prevention. All of these improvements are known to have a positive impact on resident health, and lower maintenance costs over the useful life of the project. Excluding the numerous possibilities of healthy homes improvements from this study will underestimate the actual capital improvement costs. CLPHA recommends adding questions about cost and percentage of the stock that have received the following upgrades:


·        Proper Ventilation

·        Indoor Air Quality

·        Moisture Control

·        Rodent Control

·        Radon Exposure Prevention and Remediation

·        Pesticide Control

·        Mold Prevention

·        Dust/Dust Mite Prevention

·        Carbon Monoxide Exposure Prevention

·        Arsenic Exposure Prevention

·        Asbestos Removal or Abatement


Energy Efficiency Improvements

 We appreciate the addition of questions on energy efficiency improvements. This information can help estimate the level of improvements already made; the percentage of the stock that still needs improvement; and the level of savings that can be achieved.

 CLPHA is concerned, however, about the criteria being used to determine whether an upgrade by a housing authority is an energy efficient upgrade. It has been well documented that different levels of energy and cost savings are achieved by different energy conservation measures. For example, two housing authorities could replace windows, one using highly efficient windows, and the other using only moderately efficient windows. While both may be an upgrade, the upgrades will have vastly different effects on energy consumption and savings at the different housing authorities. Unfortunately, the survey only asks if an upgrade was made, but fails to establish a minimum level of efficiency that must be achieved for each category in order to be considered an energy efficiency upgrade.

In order to establish a threshold for determining whether an energy efficient upgrade has been made, CLPHA recommends that the study adopt some widely recognized set of standards like the Enterprise Green Communities Checklist.

CLPHA recommends adding a category for renewable energy upgrades such as solar and wind production as a possible upgrade to all applicable questions in this section. Several housing authorities are implementing or examining the possibility of implementing such energy upgrades to their portfolio.

Question 39 (page 23) needs clarification. The questions ask about the potential savings identified by an energy audit. It is unclear whether this means energy consumption savings or utility cost savings. We ask the department to clarify the type of savings and whether the question applies to each type of utility.

Questions 41a-41g ask for information on the percentage of ACC units that have received energy efficiency upgrades, with categories are divided into 25 percent increments. CLPHA believes that the categories are too large. For example, if a housing authority has 1,000 ACC units and answers the question that it has upgraded between 25 and 49 percent of units, this could under or over estimate the actual units upgraded by as much as 250 units. As housing authority size grows, the potential for under or over estimation becomes more severe. CLPHA recommends shrinking the categories into 5 percent increments to provide a more accurate estimate. 

Questions 43a-43g should require more specificity about the energy efficiency upgrades purchased. The potential energy savings from two different heating systems replacements can be drastically different. For example, if one housing authority replaces the heating system in a building with more energy efficient boilers, while another replaces the heating with geothermal heating, neither the possible energy savings nor the costs involved are the same. By asking for information on the upgrade specifications the survey could provide information on the level of upgrades being made, and outliers that affect the overall estimate of costs could better be accounted for.


In addition to the comments raised above, CLPHA is concerned that the issue of design, construction, and rehabilitation standards have yet to be defined. Until these issues are resolved, CLPHA is concerned that the Capital Needs Study will not provide the information necessary to properly estimate public housing’s long-term capital needs.

Beginning on page 8, there are several questions about the proportion of a housing authority’s ACC units that are “marketable to the low-income, public housing market.” CLPHA is concerned about the term “marketable” used in the survey of housing authorities because the standard for marketability is not defined by the survey. Furthermore, there was some indication at the November 4, 2009 Study Group Meeting that Abt had defined marketability as whether or not the unit was occupiable. CLPHA believes that defining marketability as “occupiable” is inappropriate; PHAs are renovating and constructing units to a higher standard.

CLPHA recommends that the study make two important changes. First, rather than using “occupiable” as the design standard, the study should use the same standard used to determine Total Development Cost (TDC). This standard is widely accepted and used in a variety of HUD programs, and is the basis for public investment in many development projects. Secondly, all cost estimates should be shared with the housing authority to compare the estimate with recent capital improvement costs. If the authority finds that the cost estimates are too low, they should be able to appeal the CNA estimates and replace the estimate using recent, verifiable cost data.  

Case Studies

 In the ten years since the last Capital Needs Assessment was done, there has been a sea change in the way housing authorities have addressed capital needs. They have used the Capital Fund Financing Program, Energy Performance Contracts, HOPE VI and other mixed finance investment strategies to address a backlog of capital needs, improve energy efficiency, and repositioned their portfolios, resulting in new communities of opportunity.

While the CNA will provide a needed and valuable snapshot of current capital needs and the likely cost to repair and replace PHA portfolios in the future, it does not provide information on how housing authorities have been able to build sustainable affordable housing, absent a sufficient capital funding stream, in the recent past. As we transition to a project-level asset management model, we believe that case studies of various capitalization strategies would prove extremely useful in helping authorities envision individual projects and determine the best method of financing.

We welcome the opportunity to talk with HUD staff further about how these case studies could be conducted, and the kind of information they would provide.