Bring in the Engineer

6 min read

Florida Allows a Better Way to Calculate Utility Allowances

An alternative way to estimate utility allowances (UA) in Florida is producing lower UA amounts for affordable housing managers – in some cases considerably lower.

Using an engineer to estimate usage instead of relying on Public Housing Authority (PHA) data means more accurate UA results, according to Todd Stoltz, project manager for Matern Professional Engineering Inc. of Maitland, FL.

PHA data use averages from within a district or zone, meaning inefficient properties can drive up the UA, sometimes significantly. In some cases, the engineer estimate can be more than 50 percent lower than the PHA allowance. At one 100-unit project analyzed by Matern the annualized allowance difference came to more than $68,000.

PHA allowances also are not accurate for every property, according to Stoltz, while engineer simulations are accurately based on industry standards.

The incentive affordable housing owners have for using the engineer UAs is simple: the lower the UA, the higher the rent that can be charged. And the engineer analysis allows increases in energy efficiency put in by owners to be counted in the lower UAs, resulting in the higher rental amounts.

In a report called “An Affordable Housing Owner’s Guide to Utility Allowances,” the California Housing Partnership Corp. notes, “Because rents in affordable housing are regulated and restricted, owners cannot simply increase rents as improvements are made. Instead, property owners must consider strategies to lower UAs provided to tenants as part of the rent calculation to account for lower utility costs.

The report, co-written by the National Housing Law Project, says, “This method, where possible, can often increase the rent stream or Net Operating Income to the owner and offers a pathway to recovering some of the costs of energy improvements made by the owner.”

Stoltz told the Asset Management Conference of the National Housing & Rehabilitation Association held recently in Minneapolis that simulations by his firm and three others approved by the Florida Housing Finance Corp. are “really accurate. We use a program that simulates every second of the year, rotates the sun. There’s a high degree of certainty. And Florida Housing is really strict.”

FHFC Model Is Very Specific
Florida Housing Finance Corporation (FHFC) spells out the alternative calculation quite specifically. It mandates using an energy, water, sewer consumption and analysis model.

“The (Energy Consumption) model must take into account factors, including unit size, building orientation, design and materials, mechanical systems, appliances, and characteristics of the building location. The Energy Consumption Model UA schedule shall include all utility types paid for by the tenants. Florida Housing staff must approve this owner estimate prior to implementation,” according to the housing authority.

Besides Matern, the other FHFC-approved firms are Diamond Property Consultants Inc., Heath, TX; KN Consultants LLC, Safety Harbor, FL; and Florida Solar Energy Shelter, Cocoa, FL.

To qualify as a vendor, firms must employ a professional engineer or certified energy staff on staff, must document relevant experience, list proposed software and give references.

The calculations the engineers must do are pretty involved. For electrical, they include size, orientation, wall construction, window construction, lights, plug loads, HVAC loads, water heating and people loads.

“Everyone has a computer. Everyone has a big screen television. Everyone has a cable box,” Stoltz told the meeting.

Thermostat setpoints adhere to American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) standards, Stoltz told the affordable housing leaders, using 74 degrees for cooling and 72 degrees for heating, with 50 percent relative humidity. “That’s what the calculations are based on,” he said.

Utility rates can vary between providers, he noted, sometimes substantially.

For water, each unit’s water consumption stats are entered into a spreadsheet. These include gallons per flush for toilets, gallons per minute for sinks and showers, gallons per load for dishwashers and washing machines, and human usage based on Department of Energy standards.

There’s also a methodology for reporting the UA results to the state housing authority. Stoltz said this involves a cover letter listing everything about the property that was used to calculate the allowance, housing requirements, like building identification numbers, a UA worksheet that lists only those utilities the tenant pays, lists each unit type, and certifications, and has backup information sheets, like simulation software reports for electrical and water consumption estimates.

Case Study: Coral Place Apartments
As an example of the value of engineer estimates, Stoltz used the Coral Place Apartments, a 100-unit development of one-, two- and three-bedroom rentals in Miami.

Stoltz described Coral Place as being in a tough environment “where all the outside is trying to get in. You’re trying to fight that.”

He said the walls are typical eight-inch stucco over concrete insulation with a resistance of R7 and interior drywall. The built-up roof has R30 board insulation, LW and steel decking, structural steel trusses and gypsum board ceilings. The windows are standard double pane clear. The windows are light-emitting diode (LED). The HVAC system is direct expansion split, with electric heat and air conditioning with a seasonal energy efficient ratio  (SEER) of 13. Water heating is four KW and the local utility is Florida Power and Light.

Stoltz said the UA study was only for utilities the tenant paid directly, in this case electric. His estimate was well below the PHA value. So for a one-bedroom unit, (Coral Place has 68, at 565 square feet) the difference was $47 per unit per month, a two bedroom (28 units, at 805 sf), $75 per month, and a three-bedroom (four units at 1,176 sf), $98 per month. Multiplied by 12, that comes to a $68,256 lower utility allowance yearly.

“The numbers start adding up real quick,” Stoltz said.

The analysis of Coral Place Apartments using the Trane TRACE 700 v6.2.8 computer system was quite detailed, according to a letter Stoltz sent to the Coral Place limited partnership.

It started with the building BINs, detailed the square footage of each of the three apartment sizes and noted a general north to south orientation for the project. “The top floor worst case orientation, for each unit type, was used for purposes of the estimate,” Stoltz wrote.

The design and materials are noted, as are the mechanical systems and the Energy Star appliances present in the units. Details of the lighting, energy data used and weather characteristics are also included.

Stoltz also described for the NH&RA meeting the lighting, HVAC and plumbing retrofits that can be done at Coral Place and other projects, as increases in energy efficiency help bring down the UA.

Putting in these energy conservation measures can generate rebates from the utilities, Stoltz noted. These help reduce load on the grid and accelerate payback. And, there is a little reciprocity involved.

“You help us, we help you,” Stoltz noted.

Story Contact:
Todd Stoltz, Project Manager
Matern Engineering, Maitland, FL
[email protected]

California Housing Partnership Corp. and National Housing
Law Project, “An Affordable Housing Owner’s Guide to
Utility Allowances.”

Mark Fogarty has covered housing and mortgages for more than 30 years. A former editor at National Mortgage News, he has written extensively about tax credits.