AGENDA# 14
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Follow-up Report on Air Conditioning for the Public Housing
Apartments
DATE: July 5, 2000
The purpose of this report is to recommend that the Council authorize the Manager to purchase up to 49 air conditioning units for installation in public housing units that do not now have air conditioning. Total cost to purchase the units would be about $20,000.
We recommend adoption of Resolutions A and C.
Air Conditioning Study
Advanced Energy Corporation determined in a study conducted in April 1999 that the least expensive method of providing air conditioning in the Town’s public housing apartments was through installation of air conditioning units, with annualized costs for purchase, energy costs and maintenance of $244. Please see the attached report.
Current Situation
Currently, residents in 277 of the Town’s 336 public housing apartments have purchased window air conditioning units for installation in their residences. There are 49 residents who have not purchased air conditioning units, and 10 units now are vacant.
HUD Program
We investigated a U. S. Department of Housing and Urban Development (HUD) program to determine whether it might pay for air conditioning costs. The U. S. Department of Housing and Urban Development offers a Performance Contracting Program under which public housing agencies:
· Borrow money from private lenders
· Use the money to install measures that reduce utility consumption
· Repay the borrowed money to the private lenders over a twelve year period
A key concept of the program is that the measures installed are expected to reduce utility consumption in a significant manner, so that the present HUD budget allocation for utilities will exceed the new utility consumption charges. The savings that result from reduced utility bills then can be used to repay the borrowed money over a 12-year period. As we understand it, the borrowed funds could also be used to pay for air conditioning.
HUD does not guarantee loan repayment, nor does HUD guarantee that it will continue utility allocations to the public housing agency.
We note, also, that Chapel Hill’s public housing residents already pay their own utility bills for the most part, with the Town paying only water and sewer costs, estimated to be about $86,000 in 2000-2001. Participating in the HUD program would require upgrading of water and sewer lines and installation of individual water meters at 192 public housing apartments, at a cost of about $326,400. Residents then would pay their own water and sewer bills and the Town’s present cost would be shifted to them. Whether there would be a substantial reduction in water consumption is not predictable.
We believe that the HUD program is not a good source of funding for air conditioning, because the Town would be forced to borrow money and would not be guaranteed that HUD would provide funds to repay the loan.
OPTIONS FOR AIR CONDITIONING
We estimate that the cost to purchase one window air conditioning unit for installation in each of the 49 public housing apartments that do not now have air conditioning units installed would be about $20,000. The cost would range from about $300 to $430 per unit. Installation would be carried out by Town staff. Sufficient funds are available for this purpose in the Federal Comprehensive Grant funds.
According to the Advanced Energy Corporation study, the expected life of the window units would be about 10 years.
Option A: Payment by Residents
We believe it would be reasonable to offer installation of an air conditioner to residents who do not now have one, with the residents paying fees on the same basis as they pay rent: ability to pay. This would result in some residents paying no fee and others paying on a sliding scale, with a maximum being the amortized annual value reduced to a monthly fee (about $5.00 per month). The equipment would remain the property of the Town for the use of future residents, just as is the case with refrigerators and stoves.
The principle advantages of this approach are that all residents who do not now have air conditioning will be given an opportunity to obtain it; and, that residents who already have paid for their own air conditioning units will not be treated inequitably. Key disadvantages are that the Town will use $20,000 of Comprehensive Grant funds that could be used to help pay for modernization of dwelling units; and, that some residents who already have paid for their own air conditioning units may complain of unfair treatment.
Option B: No Payment by Residents
Another approach would be to offer installation of an air conditioner to residents who do not now have one at no cost to the resident, regardless of ability to pay. We believe the principle advantages to this approach are that all of the residents likely would choose to have an air conditioner installed; and, that there would be minimal administrative costs (no fees to calculate or collect, etc.). Key disadvantages are that some residents who already have paid for their own air conditioning units may feel that they have been treated inequitably; and, that residents may not feel invested in the cost of providing air conditioning.
RECOMMENDATIONS
We recommend that the Council adopt Resolution A (Option A).
Additional Long-Term Policy Recommendation: We also recommend that the Council adopt Resolution C that would allow installation of air conditioning be included in future renovation work at existing public housing developments, so that all existing developments eventually will have standard units installed. As for any units to be constructed in the future, we recommend that air conditioning be included in design.
CONCLUSION
We recommend adoption of Resolutions A and C, which would authorize implementation of Option A and establish the long-term policy recommended above.
1. Analysis of air conditioning options provided by Advanced Energy
Corporation
RESOLUTION A
A RESOLUTION AUTHORIZING THE MANAGER TO OFFER AIR CONDITIONING UNITS TO PUBLIC HOUSING RESIDENTS (2000-07-05/R-14a)
WHEREAS, the Council desires to provide air conditioning units for public housing residents who do not have air conditioning units;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill, that the Council hereby authorizes:
· the Manager to purchase and install one window air conditioning unit in public housing apartments that do not now have air conditioning; and,
· the Manager to establish payment plans on an ability to pay basis for public housing residents for air conditioning.
This the 5th day of July, 2000.
WHEREAS, the Council desires to provide air conditioning for public housing residents who currently do not have air conditioning;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill, that the Council hereby authorizes the Manager to offer to purchase and install one window air conditioner for public housing residents who do not have air conditioning.
This the 5th day of July, 2000.
RESOLUTION C
RESOLUTION AUTHORIZING THE MANAGER TO INCLUDE AIR CONDITIONING IN FUTURE RENOVATIONS FOR THE PUBLIC HOUSING APARTMENTS (2000-07-05/R-14c)
BE IT FURTHER RESOLVED that the Council authorizes the Manager to include air conditioning in future public housing renovations, as funding permits.
This the 5th day of July, 2000.