Citizens Comments on Harvard Utility Cost Study for Public Housing

Framingham, MA – January 2, 2003 -Three years ago, at the direction of Congress, HUD signed a cooperative agreement with the Graduate School of Design (GSD) at Harvard University to conduct a study on the operating costs, including utilities, of public housing, as well as to prepare recommendations for how HUD should budget future operating expenses and utility costs. The Harvard investigation of utility costs is part of the larger, ongoing study to examine all operating costs of housing authorities, undertaken to suggest a new formula for allocating operating funds in future appropriations.

A central task of the Harvard researchers on the utility component of the study was an investigation of private multifamily housing utility costs in an attempt see if such costs could be used as the basis of benchmarks for PHA utility payments, potentially replacing the current three-year rolling base reimbursement system.

Engaged in the Harvard study from beginning, Citizens recommended research methodologies and commented upon the early findings of the utility investigation. Handicapped by a small sample of housing authority data, an interim report was issued last year which recommended sustaining the existing rolling base funding formula.

Supplemented by a study carried out by Leonard Jones of JMA Consultants, Inc., Harvard determined that reliance upon private sector experience and utility costs was not a useful guide to shaping a formula for PHA utility cost allocations. Citizens is enthusiastic about this recommendation since there are significant differences in housing structure types, age and type of equipment, metering and rate structures, maintenance staffing capabilities, renovation schedules, and resident behaviors renders any direct comparisons between private and public housing utility costs quite difficult.

Additionally, Citizens argued to keep the significant department investment in present efficiency incentives available to PHAs and disagreed with a recommendation urging conversions of master metering to individual metering because of the rate penalty paid by residents (and, in the case of low-income residents, ultimately the taxpayer). Instead Citizens recommended more utilization of check metering, a submetering approach where lower commercial tariff rates are maintained.

Although Harvard has received additional funding to gather more data in its attempt to derive a new formula for operating costs based on comparable federally assisted properties, utilities are not a focus of this work. The ultimate fate of the treatment accorded utility cost reimbursements to PHAs by HUD is not resolved.

The next Harvard study should be released later in 2003. Citizens will continue to closely monitor the Harvard study and work to assure that any new formula is both fair and encouraging of energy efficiency investments.