It's Not Too Late To Open Buildings Back Better With Financing Options

Identifying financing for public buildings to carry out HVAC, energy, and other infrastructure improvements can be a challenge. Here's insight from leaders of two energy groups.


https://facilityexecutive.com/2020/10/its-not-too-late-to-open-buildings-back-better/
Identifying financing for public buildings to carry out HVAC, energy, and other infrastructure improvements can be a challenge. Here's insight from leaders of two energy groups.
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It’s Not Too Late To Open Buildings Back Better

Identifying financing for public buildings to carry out HVAC, energy, and other infrastructure improvements can be a challenge. Here's insight from leaders of two energy groups.

It's Not Too Late To Open Buildings Back Better With Financing Options

By Dr. Timothy D. Unruh and Jennifer A. Schafer

Out of any great national crisis comes the opportunity to reset expectations and create a more promising future. And amidst the simultaneous crises caused by COVID-19, deep social unrest and accelerating climate change, we have an exceptional opportunity to look forward, plan appropriately and maximize the effectiveness of the actions we take to build a better, post-crisis future. To that end, both sides of the aisle have embraced one proven tactic — prioritizing federal infrastructure — that fulfills some of the government’s new COVID-era mandates, including job preservation and creation, building a more resilient economy, saving energy and curtailing planet-warming greenhouse gas emissions. How does this impact buildings and those who own and operate the building stock?

buildings
Photo: Getty Images

Nearly 40 years ago, legislators devised an innovative solution that addresses some of our current issues. This solution — performance contracting — is a system to invest in functionality and performance improvements for public buildings and infrastructure without using a single taxpayer dollar that’s now well-established nationwide.

Specifically, this contract model is a debt financing mechanism that a beneficiary, such as the facility manager of a federal, state, municipal, university, school or hospital (MUSH) building, can employ to reduce operating costs. The attendant savings can then be funneled into a stream of cash flows into what, in many cases, are long-overdue upgrades of HVAC systems, water heating and pumping networks, and other infrastructure assets.

When considering these needs, it’s important to remember just how much we demand from our public building stock. We expect military installations to always be ready, we use our public schools as shelters in times of disaster, and we expect our local emergency response authorities to always function. And while the list of demands we have for our public facilities vary, the universal expectation is that each of the buildings that house our taxpayer-funded institutions be resilient.

With the public health and economic crises stirred by COVID-19 showing little sign of receding anytime soon, scores of government, industry, and academic figures have pointed to reopening as the key determinant for a return to economic stability and normalcy. However, reopening means kids in the classroom and workers in office buildings; it means shorter queues outside shopping centers, more commuters in public transit facilities and more spectators at events.

Yet, despite reopening’s potential for positive impact, the fact of the matter is that “reopening” entails reentering indoor places, or spaces where airborne transmission of COVID-19 is markedly higher than it is outside their confines.

Getting Facility Improvements Accomplished

Fortunately, mounting calls to reopen are coinciding with emerging evidence that, by implementing certain upgrades or installing new equipment to improve a building’s indoor air ventilation and filtration or surface sanitation systems, property managers can drastically and effectively reduce the risk of viral disease transmission.

But this is easier said than done. Ventilation, filtration, and resiliency are all interrelated to building operation and efficiency and changing any one of these systems measurably changes the whole. Clearly, we must approach our plans to reopen in a coordinated way that enables us to simultaneously become more resilient in the process. If we simply try to address these needs individually, we create a more costly state of operation and lose the cost savings from a more comprehensive, holistic systems approach.

Several years ago, Congress provided a method to solve this problem by funding a then little-known program at the Department of Energy called Assisting Federal Facilities with Energy Conservation Technologies (AFFECT). This program has been able to leverage every appropriation dollar with performance contracting. This means that for every dollar spent, infrastructure is improved by five-fold, and in some cases, by a whopping twenty-fold.

The program is run through Energy’s Federal Energy Management Program (FEMP) and has proven very successful for several years, as indicated by its steadily expanding budget. Now is the time to replicate this proven success at federal facilities across the nation through funding in the same manner via State Energy Programs (SEPs).

When we look back at the Great Recession recovery programs in the U.S., we see that rather than stimulate the inflows of private investment needed to finance the renewal of our public infrastructure, they effectively restricted them. Between 2009 and 2012, the federal government invested almost $15 billion in grants for government buildings, which ultimately delivered about $15 billion worth of energy efficiency and other infrastructure projects. The government had, in other words, footed the bill without leveraging a single private dollar — not exactly what taxpayers had in mind.

Today, we know far better. The AFFECT program has proven that we are no longer willing to invest without leverage and the added assurance that some other entity will pick up where the government left off. Perhaps representatives and senators recently returned to Washington should think of this opportunity to leverage federal dollars as the new norm for spending. This form of public-private partnership offers a better future of reopened, more resilient buildings. Now is the time to act so that we can truly open back better.

buildingsDr. Unruh is the executive director of the National Association of Energy Service Companies (NAESCO) and former deputy assistant secretary of renewable power at the Energy Efficiency and Renewable Energy (EERE) Office of the U.S. Department of Energy.

 

 

buildingsSchafer is serving her 25th year as the Executive Director of the Federal Performance Contracting Coalition (FPCC), representing companies involved in Energy Savings Performance Contracting with the Federal government. She is the President of Cascade Associates, a governmental affairs consulting firm located in Washington, DC.  Cascade Associates primarily represents the energy efficiency community, companies and organizations.

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