Creative MassDevelopment Financing Helps Malden Housing Authority Conserve Energy
November 26, 2013
MassDevelopment has issued an $11,268,000 tax-exempt bond – the Agency’s first in support of a public housing authority exclusively for financing energy efficiency improvements – on behalf of the Malden Housing Authority. The Authority will use proceeds to renovate and improve buildings and units in several multi-tenanted developments to significantly reduce energy and water consumption. The U.S. Department of Housing and Urban Development (HUD) provides incentives to federally-funded public housing authorities that execute Energy Performance Contracts with an Energy Service Company (ESCO) to reduce consumption. One of these incentives, the freezing of the federal subsidy related to current utility consumption levels up to 20 years, permits authorities to retain the value of reduced consumption or savings for the term of the subsidy freeze, allowing the savings to pay the related debt service. The ESCO for the Malden Housing Authority's proposed projects, Siemens Industry, guarantees the energy savings, and will manage the energy conservation renovation work and perform HUD required annual measurement and verification of reductions in energy consumption. East Boston Savings Bank purchased the bond.
“At a recent forum at the Malden Public Library, we heard about the need for a variety of housing options in the Metro North region,” said MassDevelopment President and CEO Marty Jones. “We’re pleased to support the Malden Housing Authority with this low-cost financing to improve homes for low-income families, reduce the cost of utilities for the Authority’s developments, and to support the Commonwealth's goal of improving energy technologies and efficiencies, resulting in reduced cost.”
Created in 1946, the Malden Housing Authority is a municipal corporation that provides eligible families, including those with elderly and disabled individuals, with clean, safe, and affordable housing. In cooperation with federal, state, and local governments, the Malden Housing Authority manages nearly 1,400 units of public housing and administers approximately 1,000 vouchers for eligible families.
The Authority’s Executive Director, Stephen G. Finn, said, “The innovative tax-exempt bond financing opportunity offered by MassDevelopment allowed the MHA to successfully close this transaction for a 20-year term at a very attractive interest rate not otherwise available in the current market. Without MassDevelopment, the MHA may have had to abandon our EPC and the resulting energy improvements, retrofits and conservation measures that are critical to our continued ability to provide clean, safe and affordable housing to our nearly 1,200 federally assisted families. On behalf of our resident families, MHA thanks MassDevelopment and the East Boston Savings Bank for having the courage to create this new funding opportunity that will allow us to complete the work proposed under our EPC with Siemens, leading MHA to realize substantial reductions in energy and water consumption, and resulting in cost savings that can now be directed to the continuity of MHA operations.”
MassDevelopment, the state’s finance and development agency, works with businesses, nonprofits, financial institutions, and communities to stimulate economic growth across the Commonwealth. During FY2013, MassDevelopment financed or managed 350 projects generating investment of more than $2.4 billion in the Massachusetts economy. These projects are projected to create more than 7,000 jobs and build or rehabilitate 800 residential units.