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Running Head: LEADERSHIP OPPORTUNITIES WITH THE LOW INCOME WEATHERIZATION PROGRAM IN OREGON
Leadership Opportunities with the Low Income Weatherization Program in Oregon:
Maximizing the Three E’s of Equity, Economy, and Environment
Stephen John McMurtrey
Capstone Project
Executive Master’s of Public Administration
Portland State University
June, 2012
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 2
Table of Contents
Abstract…………………………………………………………………………………..3
Chapter 1: Introduction and Background…………………………………………….4
Chapter 2: Review of Literature....................................................................................19
Chapter 3: Demonstration Project.................................................................................39
Chapter 4: Conclusion and Suggestions........................................................................48
References.........................................................................................................................59
Exhibits.............................................................................................................................68
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 3
Abstract
Increasing energy costs are over-burdening low-income Oregonians. To combat
this, developers of affordable housing in Oregon draw funds from Oregon Housing and
Community Services under their Low Income Weatherization Program (LIWP). This paper
details the need for a re-design of the LIWP programmatic requirements and policies. It presents
the results of a demonstration study, which shows significant energy savings could be achieved
by changing the incentive criteria built into the current LIWP program. Adopting the criteria
used in the demonstration study project would require opening communication between the
affordable housing development Community and Oregon Housing and Community Services
(OHCS). This paper identifies the key elements of a leadership strategy for both opening up
dialogue with OHCS regarding the LIWP and adopting new practices for reducing energy usage
in low-income affordable housing developments in Oregon.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 4
Chapter 1: Introduction
The purpose of this Capstone project is to formulate an appropriate leadership strategy
for altering current practices governing low income weatherization funds for multifamily
developments in Oregon. The project is divided into two parts. The first part examines in detail
the existing policies and practice surrounding the Low Income Weatherization Program (LIWP)
as it is managed through Oregon Housing and Community Services (OHCS). The second part
explores various leadership strategies for initiating change and recommends a strategy that seems
most appropriate for the case problem I have selected for this study.
The case I have selected for this study is Oregon’s Low Income Weatherization Program
(LIWP). This program provides a dollar for dollar funding stream for each kilowatt hour (kWh)
saved for meeting energy reduction benchmarks when building new or rehabbed multifamily
affordable housing in Oregon. Affordable housing developers who request funds must verify
through a third-party process that energy reductions were met. Recent evidence suggests that the
LIWP places too heavy an emphasis on expensive mechanical and electrical systems for
maximizing energy reduction measures and does not value the efforts of design team input,
resident input, and more cost effective measures for achieving energy savings.
This case study is written from the perspective of Northwest Housing Alternatives
(NHA), the largest nonprofit provider of low income housing in the state of Oregon. In 2011
NHA undertook a study to measure the energy reduction performance of an existing building in
their portfolio. The goal was to identify how the entire construction program (as designed by an
integrated project team with resident input) affected the building’s energy performance. The
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 5
results of this study suggest that the measures used by NHA resulted in more energy savings than
those prescribed by LIWP. Though NHA followed the guidelines of the LIWP, it has been
determined through the case study that the weatherization measures allowed under the LIWP,
though capable of lowering energy usage, don’t focus on building elements which would provide
the greatest and best use of these limited resources. The NHA case study not only determined
highest and best use of weatherization measures but it also took into account a project’s location
in Oregon and the resident population usage of the building.
The second part of this paper discusses the leadership strategies that might be most
appropriate for opening up dialogue opportunities between OHCS and NHA to discuss the
findings of NHA’s study in 2011. Currently there are barriers to communication that exist
between the two organizations. Some barriers are consistent with historical barriers that seem to
be inherent in the government to nonprofit service provider relationship (see Osborne, 2010).
Other barriers can be linked to interorganizational structure and how each organization “does
business” (Lipsky, 1993). Another barrier is the lack of a direct way to share knowledge between
organizations. This last point is extremely important, especially given the findings from the case
study that will be presented. Without an open line of communication in place that can allow for
interorganizational sharing of knowledge, skills, and abilities precious dollars allocated under the
LIWP will not maximize value of the investment to low-income residents (equity), the public
(economy), or our natural environment (environment), hereafter, referred to as the three E’s.
The two major parts of this Capstone paper will be organized into the following 4
chapters. This Introduction serves as Chapter 1. It provides an in-depth examination of the
current crisis of rising energy costs and the impact these costs have on low income residents in
Oregon. It also explains the LIWP as it is currently being implemented through OHCS and
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 6
documents the importance of improving weatherization for low income residents. Chapter 2
provides a literature review relevant to this study. It examines current research surrounding
leadership practices for strengthening interorganizational communication while creating
stakeholder buy-in. This study draws from this body of literature to recommend key elements of
a leadership strategy for opening up dialogue between OHCS and NHA to share knowledge that
would likely result in altering current LIWP practices and achieve greater energy savings.
Chapter 3 presents the results of a field demonstration project undertaken by NHA, which
relied on a charette approach to maximize the value of existing weatherization funding policy
and implementation requirements. This method takes into account what is most needed (on a
building by building basis) to maximize utility reduction costs. Chapter 4 provides suggestions
for how the LIWP might be modified to maximize the three E’s (equity, economy, and
environment). The chapter also identifies some of the key leadership implications for initiating
changes to current LIWP practices then draws together the findings from the literature review
and NHA’s demonstration project to present a strategy for creating a dialogue with OHCS
regarding changes in the existing LIWP program.
A National Energy Crisis
There is a national crisis facing low income Americans—rising energy costs. The
extreme rise in the cost of energy over the last several years has created a climate that adds to the
cycle of poverty in our country. As high energy costs begin to burden low-income households
(LIHEAP program, Oregon.gov), choices must be made that weigh some of humanity’s basic
human needs (Max-Neef, 1991). As energy costs rise, low income Americans are forced to
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 7
choose between paying their utilities and providing essential needs (food, clothing, shelter) for
themselves and their families. A recent USA Today article notes that,
households paid a record $1,419 on average for electricity in 2011, the fifth consecutive
yearly increase above the inflation rate. The jump has added about $300 a year to what
households pay for electricity. That's the largest sustained increase since a run-up in
electricity prices during the 1970s (Cauchon, USA Today, 12/13/2011).
The graph below demonstrates the steep rise in electrical utility rates from 1990 through
2010.
(USA Today, 12/13/11)
According to the latest Census Bureau calculations, 46.2 million Americans are counted
as poor (US Census Bureau). In 2010, 13.8% of Oregonians were qualified as “in poverty”; this
figure represents a 2.1% increase from the same metrics used to calculate poverty in 2008 (US
Census Bureau poverty data). Thanks to the current economic crisis, federal and state budget
cuts, and the rising cost of energy, the number of low-income households continues to expand.
Between 2000 and 2010 energy prices to consumers have increased by 70% (Mulvey, 2008).
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 8
Perhaps no population has felt the effects of rising energy costs more than those classified as
low-income.
The problem for many poor Americans is the unreasonably high percentage of energy
costs in proportion to their limited income. According to the Hearthlight Foundation, the average
American household spends roughly 6 percent of income on utilities: for low-income families,
that amount jumps to more than 15 percent (Hearthlight; see also HUD.gov). Preliminary
information shows that as low-income households focus on meeting basic needs, few of them
practice energy conservation or financial management to budget for escalating utility costs.
The disproportionate percentage of income spent by poor households on utilities
threatens to grow. Federal funding for bill payment assistance programs has been cut nearly in
half for 2013 (LIHEAP, 2012). The $80 billion need for low-income energy assistance relies on
just $3.03 billion in funding. Unpaid bills fuel a vicious cycle that drives low-income families
deeper into arrears with their utility bills. With average household utility costs of $3,600 each
year and annual household incomes lower than $20,000, low-income families fight to preserve
the few funds they have available. According to the Hearthlight Foundation, The impact of
utility bills on low-income households is increasingly gaining attention. Utilities impose a
disproportionate burden on the poor. For single, elderly poor and disabled persons living on
Social Security Income (SSI), the average energy burden was 19 percent of SSI (Hearthlight
Foundation, 2012; Cawthorne, 2008).
For Aid to Families with Dependent Children (AFDC), the energy burden was on
average, seven times greater than for families at median income (LIHEAP.org). AFDC families
paid an average of 26 percent of their income toward energy, while median income families
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 9
spent an average of less than 4 percent of their income on energy (HUD.gov, 2009; see also
NLIEC.org).
Table 1- Utility Burden on U.S. Demographics (HUD.gov, 2009)
Income Level Percent of Income for Utilities
U.S. median
SSI elderly
SSI (DE, IL, VT)
AFDC
4 percent
19 percent
25 percent
26 percent
According to the Congressional Research Service, senior households that earned less than
$15,000 a year spent a staggering 20% or $3,000 a year on energy related expenditures in 2006,
the bulk of which was household energy usage (Mulvey, 2008; CRS, 2008). Since energy burden
is calculated by dividing individual or family incomes by their energy cost, the lower the income,
the higher the burden for the same energy bill.
Chart 1 demonstrates the 1998-2008 estimate of bottom quintile of Income [MFI] v.
Home Fuel Prices (Power/EOS update, February 2008). The results clearly demonstrate the
burden faced when considering flat, stagnant, or no income households and the direct effect of
increased home utility costs.
Table 2- Income v. Fuel Prices1999-2008
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 10
1999-2008: Income v. Fuel Prices
50
100
150
200
250
300
350
400
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
year
Perc
ent I
ncre
ase
MFI Electricity LPG Nat. GasFuel Oil
(EOS, 2008)
In an effort to combat rising energy costs government backed grant programs for
weatherization upgrades have been expanded in recent years. One of the main publicly funded
programs that provide energy assistance to low-income households is the Low-Income Home
Energy Assistance Program (LHEAP.org). The LIHEAP program is a block grant program and
operates its programmatic weatherization activities through state housing finance agencies
(HFA’s) or through regional Community Action Agencies created under President Johnson’s
Economic Opportunity Act of 1964 (Congresslink.org).
Each state’s LIHEAP division receives a majority of its funding from the federal
government under the energy assistance fund. However, only about 10% of LIHEAP funding is
allocated towards weatherization programs in multifamily development (Ambinder, 2010). For
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 11
low-income multifamily development in Oregon, developers must rely on agreements between
local electrical utilities and the state under the Low Income Weatherization Program (LIWP).
Low Income Weatherization Program (LIWP) as a Strategy for Reducing Utility Costs
In the State of Oregon the LIHEAP program funds are administered by Counties or
directly through Community Action Agencies (CAA’s). This program lends itself most clearly to
single-family qualifying households and perhaps Housing Authority’s with single family units
that utilize low-income housing vouchers (EERE.energy.gov). For the good that can be provided
by LIHEAP funding, however, it lacks a strong equivalent for multifamily development. This
leaves only the Low Income Weatherization Program (LIWP) available for large scale
weatherization measures on new and rehabbed multifamily low-income developments. The
attraction of the LIWP is that it provides a dollar for dollar funding stream for demonstrated
kilowatt per hour (kWh) reductions. Oregon Housing and Community Services (OHCS) manage
the program through their Consolidate Funding Cycle (CFC), utilizing the LIWP as a gap
financing tool. OHCS receives funding for the LIWP through legislation passed in 1999 under
SB 1149 (Oregon Legislative Assembly, 1999). This legislation established a Public Purpose
Charge to electrical utilities of $60 million of which $7.6 million is annually allocated for low-
income weatherization and is under the control of OHCS to manage; these funds are split
between the LIHEAP and LIWP programs (US Dept of Health and Human services, 2012; see
also SB1149). As a financing tool the LIWP acts as an additional funding source with the
understanding that by drawing LIWP funds the developer receiving the funds will seek energy
reduction measures that have been third-party verified.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 12
Applicants seeking LIWP funds can only apply once a year through the state’s
Consolidated Funding Cycle (CFC) and like many assistance programs, the amount of money
available for weatherization funds has reduced steadily over the last three years (OHCS, CFC
awards 2009-2011). The program is designed on a point system that allows a developer to
request one dollar of weatherization money for each kilowatt hour saved. To arrive at a number,
the developer must hire a state approved third-party energy auditor who verifies (based on
project scope) kilowatt per hour savings (kWh). However, there are very few acceptable ways to
demonstrate kilowatt hour savings. The program only accepts certain categories which primarily
focus on: appliances, windows and doors, and floor and ceiling insulation measures. While
important, these measures don’t maximize the value of energy reduction measures that could be
reached through a more integrated co-production and design charette process.
Given the current design of the program there is not an effective way to maximize the
three E’s of energy reduction. With limited funding available for the program and rigid
guidelines that don’t allow a regional or building by building way to demonstrate energy
reductions, developers are incentivized to follow the minimum guidelines of the LIWP and go no
further. The value in energy reduction measures isn’t being overtly supported by OHCS through
the current design of the LIWP and as a result the program is at best a half measure.
Financing for the LIWP relies almost entirely on agreements between utility companies
(Portland General Electric and Pacific Power and Lighting) and their public purpose agreements
(House Bill 3587, 2011; SB 1149, 1999). This is important because from the outset, energy
reduction measures are focused entirely on electricity. For the few regions in Oregon that
participate, there’s no complimentary incentive for other utility fuels (Natural Gas, Propane,
Heating Oil) or any explicit water reduction measures. Most of the state is therefore either
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 13
underserved by any incentive for weatherization measures or there is no incentive to build green
at all.
The LIWP has adopted many of the Leadership in Energy and Environmental Design
(LEED) requirements for demonstrating energy reduction. In a rehab like the case study to be
presented in chapter 3, these categories include the following: windows, doors, walls, ceiling,
floors, refrigerator, lighting (CFL’s), and heat pump. As designed the LIWP lacks a way to
reward (outside of marginal financial incentives) the efforts of developers that demonstrate
tremendous energy reductions through their construction program that are more passive in
design, e.g. good building envelope performance, eaves at the roofline, storm water management
and water reduction measures.
LEED as a programmatic outline for the LIWP
The LIWP shares many features of Leadership in Energy and Environmental Design
(LEED), which was first created and implemented by the U.S Green Building Council in 1998
(USGBC.org, 2011). LEED has been very successful in educating builders and consumers in the
value of green construction practices; however, the certification process is costly. Data suggests
that LEED certification in and of itself costs the average multifamily project no more than
$2,500 (Murray, 2010). However, the bulk of the costs associated with LEED certification can be
directly correlated to increased hard costs to meet certification requirements. Calculated at a 2%
overall increase in hard costs a developer could expect upfront costs to exceed $200,000 on a 10
million dollar project (McCormick (2008), quoting Gerding Edlin data, p. 37). Obviously, few if
any low income housing projects can afford this kind of expenditure. Another factor that plays
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 14
into LEED systems design is the timeline for payback on the measures installed. For many
Affordable housing projects cash flows may be minimal. For those projects that may not have the
option of using LIHTC’s, large capital investments in systems that may not be entirely useful for
the project add costs that increase the project debt. After operating expenses are covered and the
required fees are paid for existing loans, distributions to the project partnership are made and
management fees are paid, very little is available to re-distribute back into the building to cover
systems expenditures.
Developers of luxury condos and high end apartments are better able to absorb the
construction costs associated with LEED certification because they are in a direct sales market or
are able to charge high-end rents (McCormick 2008, Mulvey 2008). For developers of affordable
multifamily housing, however, rents are fixed based on a tenant’s income and a variety of other
rent structuring requirements that run with multifamily development units for the duration of
their affordability period (OHCS.gov). Also, efforts to become LEED certified haven’t always
produced the most sustainable structure for a particular region (McCormick, 2008). LEED lacks
the ability to weigh points for a particular region or biome. As a result, developers find
themselves needing to spend large portions of their project capital for mechanical and exhaust
systems when they might have maximized utility reduction by simply increasing insulation in the
exterior walls, providing shade trees, or reducing high water costs. As currently modeled, few if
any of these measures would qualify under the LIWP and it would be up to the construction
budget to find an off-setting financing source to include these measures in the construction
program.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 15
Communication and Leadership Issues
Oregon Housing and Community Services has a very top-down hierarchical
approach to governance and is an ingrained part of its culture. The void in communication
between OHCS and their partners (e.g. NHA) has lead to a large degree of confusion regarding
the ultimate goals and expected achievements concerning the LIWP. This has created a barrier to
getting OHCS, developers, and NHA to work together to re-examine the LIWP. But recent
developments at OHCS suggest there is an opportunity for change to occur.
OHCS has recently gone through an extreme restructuring of its hierarchy in an
effort to make it more transparent and open to its constituency and partner organizations. This
change provides an opportunity to revisit the existing leadership challenges that have lead to
interorganizational communication issues. Several approaches to dealing with these
communication issues and a review of the existing models for generating good inter-
organizational communication and leadership are discussed in the literature review portion of
this capstone in chapter 2.
Data Based Analysis through a Demonstration Project
The organization that I work for, Northwest Housing Alternatives (NHA) has taken an
approach to green building that I believe is outside the box. It seeks to find ways to align stake
holder wishes through a cost-benefit analysis that serves common goals. As a nonprofit
affordable housing development firm we have as one of our core principles to provide reduction
of energy costs at all of our properties. Our reasoning is two-fold: first, our tenants are vulnerable
populations, many of whom are well below the federal poverty line. Typically our residents earn
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 16
about 30% of area median income which by nature means that they are at-risk financially. Any
way that we can reduce their overall cost burden is a mission of ours and one way we can do that
is to try and design construction programs that seek to maximize systems that lead to drastically
reduced energy expenditures. Second, by focusing on reduced energy costs we are also focusing
on reduced operational expenditures. By reducing our operational expenditures we are reducing
not only the long term costs to operate our projects but also reducing our need for extra state
funding. Lower operating costs equal lower long term per unit per year expenses that require
large retainers of cash to protect against debt service payments and loan default, etc.
NHA is a long-term owner of all of our properties and as such we are keenly aware of
the rising costs of energy to operate the projects in our portfolio. We are a statewide organization
that has buildings in every corner of Oregon so we have seen firsthand the effects of poor
building performance on our bottom line. By spending the up-front costs to assemble teams of
architects, engineers, contractors, planners, and our own project staff we have been able to create
a baseline program that can be carried to any corner of our state and act as a set of standard
operating procedures for weatherization.
Cottonwood II’s energy analysis provides a template for maximizing the usage of the
state’s LIWP funds by marrying their benchmarks for performance with smart design. The
results are that we have been able to reduce overall energy costs for our residents and our
properties which benefit everyone. Our experience shows that by focusing intently on a
building’s envelope (tightening up the shell) we can directly influence the effects of solar gain
and heat loss as well as protect against water infiltration that can lead to mold and dry rot. The
tightening of the shell along with low U-value windows means that it takes less energy to heat
and cool a building regardless of its location. The results are a trickledown effect. The more
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 17
energy efficient a buildings shell is, the less you need expensive mechanical systems to operate
the heating and cooling functions. The less you need these large mechanical systems the less you
ultimately draw from the energy grid. The more savings you can demonstrate from reduced
energy consumption the lower your operating costs are, and so on. The exact same methodology
works for our tenant population and demonstrates directly the social, monetary, and
environmental value brought by this approach.
Summary
Low-income Oregonians are spending an increasing amount of their income to cover
escalating utility costs. As these costs continue to rise there are quality of life considerations that
must be made. Weatherization of multifamily affordable housing developments represents a
chance to maximize Equity, Economy, and Environmental benefits to low-income Oregonians,
owners of low-income housing and the general public. Currently the LIWP doesn’t allow enough
flexibility to maximize its value to low-income residents, the public or the environment.
The LEED program used by LIWP was developed to serve large commercial and
residential buildings in a market rate environment and the programmatic requirements for
demonstrating energy reductions create too high a cost burden for affordable housing
developments. Further, LEED and the LIWP don’t provide a way to maximize energy reductions
on a building by building basis, which takes into account geographically important factors.
Current LEED requirements specify that the same demonstrations of energy reduction be applied
whether a building is in Oregon or Florida.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 18
There is recent empirical data to justify an alternative to LEED designed weatherization
strategies as it applies to the LIWP. This data shows that through design charette’s with
stakeholders, in conjunction with resident input, maximum energy reduction benefit can be
derived from approaching each project on a case by case basis based on location and taking into
account building envelope and assessment of building operational and resident needs. While
there are organizational barriers to using the information provided by the empirical data findings
as they pertain to low-income weatherization strategies, there are new conditions that bode well
for initiating a change in direction.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 19
Chapter 2: Literature Review
In this chapter, I will undertake a review of the literature that is relevant to my research
question. Since my research question has several connected parts, I will organize my literature
review around the following four questions: What is the problem we are trying to address? Why
is weatherization an important starting point? Why does the state of Oregon’s program need to
be changed? What leadership strategies are most appropriate to address the problem?
The Problem
Rising energy costs are over-burdening Oregonians classified as low-income. The steep
increases in household energy related costs are estimated to be 20% or more of a low-income
family’s yearly budget (Mulvey, 2008; CRS 2008). As energy costs continue to rise, the cycle of
poverty is increased and low-income individuals and family’s alike are forced to choose between
keeping the lights on and providing basic human needs like clothing, food, and shelter (Max-
Neef, 1991; Lipsky, 2001).
For low-income multifamily development in Oregon, programs are in place that attempt
to reduce energy cost burdens to residents of affordable housing. The main program utilized by
Oregon Housing and Community Services (OHCS) is the Low-Income Weatherization Program
(LIWP). The program can be utilized by for-profit and nonprofit housing developers through
OHCS’ Consolidated Funding Cycle, also known as a tax credit application (OHCS.gov; see also
HUDuser.org).
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 20
The LIWP provides a dollar for dollar funding source for demonstrating reductions in
kilowatt per hour (kWh) usage by a given development. Though the program does achieve kWh
reductions it lacks the flexibility to allow for innovative design techniques and resident input (co-
production) that could maximize resident, public, and environmental value (Moore, 1995;
Osborne, 2010). There are also significant barriers to communication between OHCS and partner
organizations Like NHA. These barriers don’t lend themselves to necessary knowledge transfer
between organizations (Osborne, 2010). Hierarchical management systems that are in place at
OHCS have furthered difficulties in communication. The hierarchical design of the agency,
however, has recently been challenged by the new Director level leadership, but it is too early to
tell whether any changes will drastically affect program management.
Historically, communication barriers frequently exist between government and their
service providers, who rely on different organizational and power structures to get their work
done. But increasingly the literature is showing that a deliberate attempt on the part of both
parties to recognize and address the differences can produce much better outcomes.(Bockmeyer,
2003; Lipsky, 1993; Osborne, 2010; Silverman, 2008). Most of these new approaches recognize
the importance of power sharing strategies, which have been absent between NHA and its
government partner OHCS, for over twenty years. As a result there is a distinct communication
barrier, which has created confusion about common goals, pressures and perspectives which
stymies OHCS’ ability to meet their mission and design sensible policy.
Why Weatherization?
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 21
The LIWP is unique as an affordable housing financing tool because it provides an
opportunity to develop quantifiable energy savings from various strategies. Utility reduction
savings are passed directly to residents and building owners. If there are lower utility costs for
residents then fewer individuals and families need to draw auxiliary assistance from the
government for reducing their energy burden. This is good fiscal policy making. Though many
tax credit tools used to create or preserve existing affordable housing can measure the increase in
units during a funding cycle, they cannot directly demonstrate exact cost savings for a resident or
property owner like the LIWP can; the process is formulaic. If “A” represents kWh usage prior
to construction and “B” represents kWh usage after construction, then you get “C” which should
be the delta between A and B or net energy savings. Once a project is completed, the building
and its components can be tested against the weatherization techniques used. The end in essence
justifies the means.
The importance of quantifiable measures should not be understated when demonstrating
value to a wide array of stakeholders. Quantifiable measurement helps foster public trust
(Osborne, 2010). Mistrust of Housing Finance Agencies (HFA’s) and their use of public funds is
a common theme (Basolo, 1999; Brunick and Maier, 2010; Silverman, 2008). As HFA’s shift
from public sector delivery of affordable housing programs to a public-nonprofit partnership
where the nonprofit becomes the service provider, governments take on more of a supportive
role to program delivery (Silverman, 2008). This supportive position can foster public distrust.
The onus for delivery lies with the nonprofit service provider. Their knowledge of what is
beneficial to maximize the value of their service becomes tantamount to service success. In the
case of the LIWP, anything that a nonprofit service provider can do to maximize energy
reductions helps to build trust for both co-producers of the partnership (Scally, 2009). It does so
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 22
by first saving on energy use and second by providing the occupants with more cash income for
other basic necessities.
As was pointed out in the introduction of this paper, funding from the LIWP comes from
legislation that mandates electrical utilities to earmark funding for weatherization in single and
multifamily developments. Part of the resources that fund this program come from rate increases
so demonstrating that maximum public value is occurring is a high priority. However,
maximizing value and reaching the three E’s of equity, economy and environment take good
policies and communication on an interorganizational basis. As good fiscal managers of the
LIWP, OHCS can be seen as a “hub” firm (Barringer and Harrison, 2000). The
interorganizational relationships developed for service delivery begin at the “hub” and branch
out to the other stakeholders involved. Through successful management of partner relationships
along with quantifiable measures that can be released to the public, OHCS has the opportunity to
legitimize their efforts during a time of great organizational re-shuffling.
Why Change the LIWP?
The LIWP as currently designed doesn’t go far enough towards energy reduction
measures. The program is rigid and only allows for limited categorical demonstrations of
electrical utility reductions. Currently there are no equivalent funding streams for natural gas or
propane usage; there also are no measures to encourage reduced water consumption. Further, the
program has no way to measure for a site’s geographic location or utilize historical knowledge
(in a rehab application) of resident input. Lastly, the program doesn’t allow for an integrated
(charette) design approach that uses a cost-benefit analysis for demonstrating real-time energy
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 23
reductions. These factors, coupled with the fact that OHCS is using public money to finance the
LIWP, demonstrate the need to re-examine the policies and procedures currently utilized.
Stakeholder Theory provides a useful approach for helping to understand and solve the
problem I have outlined above. The approach looks at interorganizational relationships in the
context of identifying affected and interested parties to a given set of organizational goals and
programs. In stakeholder theory, as discussed by Barringer and Harrison (2000), “firm’s
stakeholders are any group of individuals who can affect or are affected by the firm, including its
investors, suppliers, employees, customers, competitors, local communities it operates within,
regulatory agencies and so on” (Barringer & Harrison, p.6)
OHCS fits perfectly the situation described by Barringer and Harrison. OHCS serves as a
hub for a wide variety of interorganizational relationships with its service delivery providers. By
receiving funding for the LIWP that is at least in part financed through public user rate increases,
OHCS has directly created a partnership with the citizens of Oregon. As Freeman (1984) and
Clarkson (1998) point out, however, not all stakeholders are created equal and it is up to the
“firm” to expertly determine which stakeholder matters most. In the case of the LIWP, is it
enough to provide some level of utility relief? Or does OHCS have a larger fiduciary
responsibility to the greater public? If OHCS has information that would produce greater energy
savings and do so in ways that would benefit low income users even more than the current
programs, do OHCS leaders have an affirmative obligation to take the initiative in using this
information to create some fundamental changes in existing low income weatherization policies
and practices? This capstone project argues that because OHCS leaders are keepers of the public
trust, they are required to demonstrate a higher level of fiscal and social responsibility to the
citizens of Oregon.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 24
Leadership Strategies with the LIWP
This Capstone project uses the concept of “value” as a central leadership strategy for
bringing about changes in the low income weatherization program. This Capstone case argues
that OHCS leaders need to use the concept of value found in the literature on public service
leadership to initiate change. Following is a summary of the principles from this literature that
are relevant for initiating change.
Principle 1--Value must be demonstrated in multiple ways
As Stephen Brookes and Keith Grint point out in their book, The New Public
Leadership Challenge, leadership and its effect on public value has [historically] centered on the
quantitative outcomes desired by centralized government rather than on the social goals desired
by the general public (Brookes & Grint, p. 9). For example, balancing a budget by cutting funds
to social welfare programs has been “acceptable” practice on the national and state level. In the
case of the LIWP this is equivalent to OHCS pursuing the conservatively adopted criteria from
LEED that allow for base metrics to meet energy reduction measures rather than going with a
more malleable strategy that may create what would appear to be inconsistencies when it comes
to measuring kWh reductions. Though the function of public managers is to maintain close
watch of the quantitative measures associated with public governance, manager’s must also
maintain a high level of alignment between stewardship of public finances and the achievement
of larger societal goals (Brookes & Grint, p.9).
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 25
The idea that public managers must maintain a balance between fiduciary leadership and
creating public value may be seen as a conundrum, especially when social goals often times do
not create money making endeavors (Lipsky, p.85-86). Public determination of what constitutes
value can often times be at odds with fiduciary requirements. When this occurs, managers must
“embrace” the paradox of their situation (Osborne, p. 419). By “embrace” Osborne means that
they must strive to align themselves with internal and external stakeholders that bring expertise
and credibility from both sides of the discussion. Often times public managers’ trend towards
conservatism (Brown, Potoski, and Van Slyke, 2006) and seek to optimize value tradeoffs for
service delivery (deLeon, 1995). Typically, managers have little influence over the rules and
laws governing service delivery and must seek these tradeoffs which trend towards favoring
programs or policies with lower transaction costs (Dunn, as cited in Brookes & Grint 2010;
Osborne 2010; Brown, et al, 2006). These value tradeoffs can begin to dilute the intended goal of
the policy or program in place. In an effort to embrace elected officials and the public
simultaneously, public managers’ conservatism may have the tendency to embrace knowable
outcomes rather than risk more innovative findings (Ruckelshaus, as cited in Moore, p. 99). For
example, maximizing the flexibility of the LIWP may be politically feasible and in the eye of the
public may be the best avenue for demonstrate the highest and best use of public funds.
However, the organizational implications of managing the program may represent too high a risk
for OHCS because of internal capacity considerations or internal cost implications. As a result
many public housing entities have chosen to go with a model based on LEED that is easily
managed internally and provides at least some level of energy reduction.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 26
Principle 2—In order to create stakeholder buy-in, leadership must be strong at the
programmatic level
Public managers are seen as keepers of the public trust and as such must make continual
value judgments (Moore, 1995; Morgan, et; al, Foundations, chapters 1-3, (5); 2008; Osborne,
2010; Brookes & Grint, 2010). In order to make these judgments, however, there needs to be
appropriate latitude for a manager to make the type of calculated leadership decisions necessary
to balance value tradeoffs.
The idea that a public manager is a keeper of the public trust is a common theme (see
Moore, 1995; Lipsky, 1998; Bardach 2009; Brookes and Grint, 2010; Osborne, 2010). As
keepers of the public trust, managers take on a persona that defines their operational role within
the organization where they interact. Talbot (2010) defined managerial roles within public
organizations in the UK as falling within four distinct categories: Counselor, Chief Executive,
Collaborator, Conservator (Talbot, as cited in Brookes & Grint, pgs. 24-30). For the purposes of
this discussion the role of the Collaborator is most directly relevant for the kind of leadership
role needed to bring about change in my Capstone project.
The Collaborator role as discussed by Talbot is centralized in a mid-managerial position
within the parliamentary government in England (Talbot, as cited in Brookes and Grint, p. 29).
Here in the U.S. this same position may be seen as a program manager or mid-level executive
(see Morgan, et. al. 2008, pp. 27-29, 140-141). At OHCS this person likely would be the head
of the LIWP program and, given OHCS’ current hierarchical design, would surely have
interagency dealings in other programmatic areas. In other words, the nature of the OHCS’s
hierarchy enables the collaborator to have direct control over the LIWP as well as considerable
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 27
influence in other areas that provide funding for low-income housing development. While OHCS
as an organization values intra-agency communication and knowledge sharing the culture of
OHCS does not encourage this type of leadership initiative to be taken at the moment. As
“keepers of the public trust”, OHCS staff are by nature of their position forced to make decisions
in a vacuum. The stress of compliance and demand beyond agency capacity creates the need for
programmatic simplifications. In the case of the LIWP it becomes easier and safer to “check
boxes” than it is to engage with nuanced analysis (Martha McLennan, Executive Director of
NHA, personal communication, 5.24.12).
As Talbot (2010) further argued, the role of the collaborator is chiefly responsible for
providing the leadership necessary for inter and intra-agency dealings. The position is not unlike
that of a broker who marries together similarly interested parties for a common goal. The
collaborator must have the authority to broker relationships and enough charisma to create
stakeholder buy-in. Structurally, the collaborator role uses value tradeoffs both internally and
externally to demonstrate public trust. Key to this process is the use of stakeholders both within
their organization and within the community where they operate. Leadership becomes a cross-
sectional approach for the collaborator role and power is spread along a more lateral than vertical
plane (Schofield and Pegg, as cited in Brookes & Grint, 2010).
In the case of the LIWP as managed by OHCS, Moore’s entrepreneurial advocacy
approach is structurally viable but lacks empowerment of the manager’s assigned to the program.
Simply put, program managers at OHCS don’t appear to make direct decisions without seeking
approval from the upper echelon of the agency. From a partnership perspective this is an
exasperating process. First, it stretches organizational process (both intra and interagency) to
extremes. This costs both organizations involved extra staff time and significantly lengthens the
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 28
time to reach decisions. Second, it does little to foster trust in OHCS’ ability to lead. If assigned
managers cannot make direct decisions without seeking approval, then they aren’t really
managing.
As “keepers of the public trust”, the role of a program manager is to prioritize the
fiduciary goals of the program being managed As mentioned previously, this is often times
difficult if not impossible to achieve given lofty policy goals that significantly increase the
financial costs of a project. Further, if there is no ability for a program manager to rebalance the
tradeoffs between financial and social goals on a given project, then a leadership void is created
with resulting poor policy implementation.
Osborne (2010) discussed the importance of leadership and collaboration amongst
stakeholders. Osborne agrees with Brookes and Grint on the importance of a collaborative
leadership approach (see also Huxham and Hibbert2008; Brookes & Grint, 2010) when dealing
with managerial problems that require balancing competing values. Osborne’s (2010)
collaborative advantage process looks to substantiate the existence of the partnership by
establishing common ground and tradeoffs between organizations. Key themes are building trust
and identifying roles through proper use of all parties’ knowledge, skills, and abilities (k,s,a’s).
The sharing of k, s, a’s becomes the shared power needed to make the collaboration function
effectively. Given the case at hand, many of these elements are already present for information
exchange but again, organizational culture prevents lines of open communication. The necessary
inter-departmental flexibility may be built into OHCS’ operational design but interactions with
the agency lead to a different experience; less flexibility and more rigid adherence to entrenched
policies have been the norm.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 29
In order to accomplish housing development goals OHCS must work with a variety of
partners outside of the agency. These partnerships (in the case of housing development) are less
affected by, or concerned with, service delivery and act more like a conduit relationship in their
design. This conduit relationship is based on the financing stream that places the developer in an
ownership role with OHCS as a monitor of compliance with the funding requirements. After the
project converts to permanent financing, continued monitoring of the program is in the hands of
the developers own management of the asset and the oversight brought by the purchaser of the
tax credits and the permanent lender. What occurs in this partnership is a period of intense
scrutiny from tax credit application through construction and ultimately until the permanent loan
takes hold. Afterwards, OHCS has only limited interaction with the project development staff.
Though OHCS has worked with NHA as a partner over twenty years, the moment NHA
receives a financing award, the open lines of communication begin to close and resignation to the
status quo takes hold. In the case of the LIWP, this resignation places value on easy
implementation of programmatic rules rather than flexibility that may move a project closer to
the policy goal of maximizing energy reductions. For whatever reason, OHCS resists direct
suggestions when it comes to re-defining existing policies; the result is that important ground-up
communication is lost.
Principle 3—Organizational capacity affects all
OHCS as a large public agency views itself as a keeper of the public trust. As such there
seems to be some reticence to allowing the type of bottom up communication that an
entrepreneurial advocacy model of leadership would require. As Moore (1995) argues, however,
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 30
the process of identifying stakeholders becomes an invaluable part of assuring that buy-in is
created. By allowing for bottom up communication, a manager can assure that the necessary
stakeholders are identified and that the necessary programmatic changes can be made to increase
legitimacy (Moore, p.155). The process becomes more improvisational and less planned, allying
itself more with the experiences of a private corporation than that of a government body (Moore,
p.159). The people best situated, best equipped to exercise this leadership are the managers of the
agency (Behn, p. 212). This type of leadership, however, is successful when the organization
provides a public manager with the structural capacity to utilize leadership to gather allies for
programmatic achievement.
Organizational capacity is a key contributor to exactly what an agency can accomplish
(Moore, 54). Public trust and value will mean nothing if an organization is unable to follow
through with its plans. In the case of OHCS, partnerships are an essential ingredient for
programmatic delivery. Under the LIWP, OHCS distributes funding to a third-party organization
to follow through with programmatic requirements. OHCS isn’t in the business of developing
housing, rather, they are in the business in assuring that homelessness is combated by engaging
with for profit and nonprofit affordable housing development agencies to meet the agency goals;
goals that have been established both on the national, regional, and local level. In this capacity,
OHCS acts as a pass through entity for the cause of reducing homelessness. This “passing
through” requires that not only OHCS but also its partners have both the authority and the k,s,a’s
to develop affordable housing and use best judgment of how to maximize public value through
institutional knowledge (Osborne, p. 140). Who better to have an understanding of how best to
maximize value of a program than the service partners responsible for implementing it? In order
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 31
for this process to work, OHCS must empower its middle-managers to align stakeholders for
service delivery through negotiating and managing contracts.
The contractual relationship built between agencies provides the organizational capacity
for service delivery. A strong partnership around an aligned mission can become the most
important element for defining value. Identification of the goals a staff is assigned to achieve is
critical; are goals aligned with meeting compliance with rules or a larger policy purpose? Many
agencies stop at the compliance level (McLennan, 2012) because it is a satisfactory measure of
the policy goal. When examining the LIWP, the opportunity exists to move past compliance into
real energy savings by adding to OHCS’ capacity. When partnering with a mission driven
organization, value expands from a narrow focus on monetary issues to a concern for more
intrinsic social values (Moore, 1995; Brookes & Grint, 2010; Osborne, 2010). With increased
capacity there comes an opportunity to redefine value (Finch, as cited in Brookes & Grint, 294).
Larger societal goals are able to be incorporated and expand beyond compliance and a
strengthening of collaboration and leadership not only between agencies but within them
(Moore, p. 117-118). Without a well thought plan for power sharing or without a well established
set of stakeholders on both the horizontal and vertical axis, public faith in the designed
partnership can be lost. In fact, adding the additional component of a public-private partnership
(instead of a more formal public agency service delivery model) to the mix can exacerbate the
situation if the proper leadership roles aren’t clearly identified (Finch, as cited in Brookes &
Grint, p.287).
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 32
Osborne (2010) details the power and leadership dynamic through interagency
knowledge transfer (174-178). The idea is that agencies approach collaborative arrangements
with a certain mindset to how shared k,s,a’s will be transferred. The knowledge transfer dynamic
must work both ways but is often controlled by the organization with access to the bulk of the
monetary capital (Osborne, p. 137). Osborne furthers that a type of collaborative inertia (p. 180)
occurs where collaborations between organizations find themselves sidelining; which he
describes as a process that leads to each organization sharing k,s,a’s on an intra-agency level but
ignoring any interagency sharing . The overall message is that a clearly defined and aligned set
of goal statements and expected outcomes needs to be agreed upon between partnering
organizations. Agreed upon goals in a collaborative environment maximize buy-in at all levels of
the partnership and maximize appreciation for what the collective team is trying to accomplish.
The move in recent years to use contractual relationships as a way to demonstrate public
value has been widely discussed. Public value is achieved by an alliance between the public
agency and the service deliverer that is memorialized with a formal legal contract. This
arrangement creates a clear separation of responsibility for fiduciary management and
responsibility for the alignment of social and societal goals with policy objectives (Lipsky, p.98).
The end result is a marrying between the horizontal and hierarchical levels of bureaucracy. The
horizontal hierarchical line becomes a shared leadership that is intra-agency in its design and the
vertical becomes an inter-agency leadership within each organization (Brookes and Grint, p.8).
The relationship between the horizontal and vertical levels of leadership for the delivery
of public value is demonstrated by Stoker (2010) when he discusses the role of networked
governance. To Stoker the role of networked governance is to legitimize the role of a “wide
range” of participants in public decision making and provide more “bottom-up” approaches to
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 33
creating public value (as cited in Brookes and Grint, 2010, p153-154). The idea here is that
leadership must cast a wide net for stakeholders who become co-producers of public value. By
providing for the ability to network in an interagency fashion, leadership becomes more holistic
in its approach where a broad cast of stakeholders are working towards a common goal. But how
can this type of leadership emerge when there is a hierarchical mindset and no predisposition on
the part of the parties to change? One of the answers is the increased reliance on “contracting
out for service” that has been driven by scarce financial resources.
The traditional top-down approach to government service delivery has begun to change
with the increasing use of contracts for services outside of government (Lipsky, p. 55). No longer
is a local authority required to be directly responsible for service delivery and monitoring. The
relationships between local authorities and nonprofit and private sector service deliverers has
allowed government bodies the opportunity to create an arm’s length distance between societal
goals and values and the implementation of those goals. In England, the establishments of Local
Area Agreements (LAA) have allowed local agencies and communities to co-produce service
provision that is directed at partnership formation for tackling local problems (Goss and Tarplett,
as cited in Brookes and Grint, p. 264-265). Leadership, therefore, is allowed to flow in the
Building Leadership Capacity
Clarity of RolesWorking Together
Focus and Prioritization
Awareness
Community Leadership
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 34
networked governance model as discussed by Stoker and as depicted in the diagram below.
(Source: Audit Commission 2003, as citied in Brookes and Grint, 2010)
The importance of a community based approach to leadership is two-fold. First,
leadership in this design allows for community input. Public value is created by giving
stakeholders direct access to the decision making process (Brookes and Grint, 2010; Osborne
2010; Moore, 1995). Second, leadership in this form allows for a more open communication
channel from the ground up.
In Mark Moore’s book, Creating Public Value: Strategic Management in Government
there is considerable discussion about the role of public governance and leadership. Moore
argues that in order for a manager to mobilize support for an idea the idea must resonate with the
internal and external stakeholders’ views (Moore, p. 93). In other words, there must be some
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 35
level of action taken by managers that demonstrate their commitment to the greater whole of an
idea not just the individual parts. Moore further develops this idea when he talks about
entrepreneurial advocacy. Moore suggests that it isn’t enough for a public manager to create
value-added results; rather, the manager must be able to demonstrate that the results achieved are
worth the, “cost of private consumption and unrestrained liberty forgone in producing the
desirable result; only then can we be sure that some public value has been created” (Moore, p.
29). The first part of this explorative process is to identify those within the agency or department
that must “sign-off” on the policy or idea. In other words, managers must identify horizontally
who they can align themselves with intra-agency. Secondly, a manager must identify those
(likely external) parties that wish to participate because of aligned interests (Moore, p.151-152).
This is an interesting point when considering the managerial style of a large organization
like OHCS. Culturally the organization seems reticent to change. Though the partnerships
formed both inter and intra-agency suggests a collaborative working relationship, the realities are
that the relationship is much more parochial. Perhaps the most dangerous thing that can happen
is that the inner workings of a partnership begin to fail and the general public loses faith that
either partnering organization can effectively accomplish the goal at hand. An integrated
understanding of the stakeholders on the vertical and horizontal planes by partnering
organizations will be important. Partnering organizations (like NHA) have the ability to further
outreach and support based on their status as a mission-driven organization. This type of
outreach helps build capacity can help legitimize efforts to the general public and can bring new
funding streams and stakeholders to the overall partnership.
Stephen Osborne suggests caution on the part of managers when seeking to provide
public value through the use of organizational partnerships. He argues that public value should
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 36
be demonstrated by the implementation of the partnership, lest the partnership, “be seen as just
another word for privatization” (Osborne, p. 150-151). This is a critical notion. What Osborne
and others in this review have suggested is that in order for a public-private partnership to work
there must be shared knowledge, some level of authority, and leadership at all levels that provide
for buy-in.
Osborne (2010) points out that majority power lies with those who have access to the
majority of funds (p. 137). In such cases public trust will be tied to the most visible face that is
implementing the policy or program in question. One of the adverse consequences of this
imbalance in power is the absence of industry knowledge necessary to successfully implement a
partnership agreement. This describes the current set of relationships surround the LIWP. The
face of the program is squarely tied to OHCS as the manager of the funds and the manager of
their usage. However, for adaptations to the existing policies to be made, knowledge and the
skills and abilities of those utilizing the funding must have an ally within the “managing”
organization in order for change to occur.
The programmatic guidelines for the LIWP are designed to cover a wide base and aren’t
necessarily adaptable. Their lack of flexibility and orientation towards complicated or expensive
systems don’t allow for the recipient of funds to guide usage of those funds to areas of their
project that may provide a better return on investment. What ends up happening is that new
technologies and/or prioritization of departmental goals to demonstrate savings outweigh the
benefit that could be derived by utilizing the funds to maximize effectiveness on a building by
building level. At what point do secondary goals begin to outweigh primary goals? If affordable
housing is the primary goal and green building design is a secondary goal that has tremendous
internal and external support, at what point do the resources set aside to meet the secondary goals
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 37
begin to divert us from the primary objective? If secondary goals of maximizing energy
reductions under the LIWP have the industry investing precious resources in brand name
reductions (Energy Star, LEED) but ignore the building envelope, then every dollar spent
becomes wasted because the building itself can’t regulate its temperature. The result is that
resident’s and operations have an energy efficient refrigerator but must continue to maximize
their heating and air conditioning use because the building acts more like a sieve than it does like
skin. If the existing policy is directing resources in the wrong areas; if the resources designed to
create public value are being allocated to the wrong metrics, how does communication then enact
change?
Principle 4—Trusting the expertise of your partnership
One suggestion provided by all authors reviewed is the power of co-production. In this
sense, data derived from the clients receiving the benefit of the services provided becomes a
powerful leverage tool. For example, the case study presented herein represents the value of
resident input in defining a construction program. The decision to include the institutional
knowledge of residents who, in some cases, have resided at Cottonwood II for as many as twenty
years was an invaluable and cutting edge decision. Resident knowledge of how the building
operated seasonally directly influenced our approach to weatherization.
Each author in turn discusses the caveats associated with co-production (see Moore 1995;
Brookes & Grint, 2010; Osborne 2010). These include stereotypes regarding the services
provided and the clientele accepting these services. In the case of low-income residents there is a
stigma that poverty equals a lack of credible input (Saunders, Social Policy Research Center,
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 38
2004; see also Robb, Can the Poor Influence Poverty, 1999; 2002). This lack of credibility stems
from stereotypes wrought within the general public (Saunders, 2004). However, the advantages
of co-production seem to far outweigh the potential stigmas that may surround it. As Moore puts
it, co-production through the use of input from those receiving (e.g. low-income citizens) public
benefit is given legitimacy by demonstrating a uniform application of rules and guidelines;
developing the role of multiple players in providing “specialized expertise” and creating
significant economies of scale (Moore, p. 287-88). According to Moss, the people best aligned
with identifying where resources should go and how best to use those resources are the local
authorities, the community where the services are being provided, and the clients that receive the
benefits of the service (as cited in Brookes & Grint, p. 258). Osborne (2010) sees co-production
as a way to create synergy between what government objectives are and what client needs are.
Co-production is an important part of developing a construction program for the use of
weatherization funds. Who better to understand the needs of an existing building than the
residents who live there? Though building code and funding source requirements may drive the
initial ideas of what is to be accomplished, ultimately NHA decides how we will develop green
building measures through regular interaction with the residents we serve. Our policy was
developed from information gathered from residents through a series of community meetings
where we direct a Q&A about how residents feel the building is performing. We then take this
information and discuss it with our project team of architects, engineers and general contractor.
From this information gathering session and design charette we are able to create a base template
for the differing areas we will measure existing efficiencies in the subject building. As the
following demonstration project will demonstrate, this co-production approach creates a
property-specific plan for identifying how LIWP funds should be invested.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 39
Chapter 3: Demonstration Project
Introduction
This chapter discusses the methods and results that lead to an energy performance
audit of the Cottonwood II Apartments in Hermiston, Oregon. The audit was conducted post-
rehab of the site and after a year’s worth of post-rehab utility information had been collected.
The goal was to examine pre and post-rehab building-wide energy usage and to determine
whether our weatherization strategy for energy reduction measures was in line with the goals we
had set. What was ultimately discovered was that through an integrated design team approach
and the use of co-production, we were able to experience exciting reductions in energy usage.
This system also showed that there is a strong link between emphasizing building envelope
considerations and not emphasizing the suggestive energy reduction measures as found in the
LOW Income Weatherization Program (LIWP), which is available as a funding source for
multifamily affordable housing development.
This chapter is organized around the following questions: What were the outlying
circumstances leading to an energy performance audit? What team was needed to examine
existing building components and provide suggestive measures for change? What if any
stakeholder buy-in was required to implement our energy reduction strategy? What were the
results and implications of the energy audit performed in 2011?
Background and circumstances leading to our energy audit case study
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 40
Northwest Housing Alternatives (NHA) mission statement is to create opportunities
through housing. As a long standing goal of our organization, opportunities are broadly explored.
Opportunities are seen as quality of life endeavors which have NHA staff working diligently to
provide all that we can for our residents to ensure they have the opportunity to spend less time
worrying about where they live and more time focused on themselves and their family needs.
In early 2008, NHA began discussing how to lower utility burdens at our properties. This
was in part driven by communication from our Asset Management departments that had alerted
the organization to alarming spikes in utility costs. These costs were threatening to over-burden
several properties in our portfolio so much so that the organization would have to financially
support these properties or raise rents to our residents to offset the utility cost increases. Though
raising rents is an option and allowable within varying guidelines of an affordable housing
properties rent structuring (Federal Register, 2012), raising rents to cover budget oversights
doesn’t fit within our mission.
Historically the overall approach to weatherization of a building had largely been
informed through requirements imposed by OHCS under the LIWP. Our project partners,
however, had been gathering evidence that would suggest that focusing on a buildings envelope
(siding, windows, and air barrier) would maximize the benefit of all energy reduction measures.
It also was the best way to demonstrate value when considering scarce resources. Though siding
and windows represent a very large portion of a construction budget, when mapped out over the
entire square footage of a multifamily property, the price per square foot comes down. Also, and
most importantly, evidence suggested that in order for the other prescribed measures of the
LIWP to truly maximize energy reductions and thereby maximize, economic, social, and
environmental value, the building must be treated as a living entity where the skin (or envelope)
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 41
acts as human skin does in regulating heat gain and heat loss. In order to test our hypothesis we
needed the right setting and circumstances to try our approach on an occupied building.
The Cottonwood II Senior Apartments are located in Hermiston, Oregon. The complex
contains 24 units over three stories and is elevator served. The rehab of this project was
undertaken by Northwest Housing Alternatives (NHA) in 2009 as part of a process to continue
the buildings affordability period for another thirty years. Simultaneously, NHA rehabbed the
Cottonwood I Family Apartments which consisted of 24 units of townhome style apartments and
shared a connecting parking lot with Cottonwood II.
Cottonwood II was chosen for energy auditing for a variety of reasons. The site is a
single building which is elevator served so resident usage is spread outside of individual units
and into common areas, corridors, and the main tenant lounge. The building is part of a portfolio
of projects that were purchased by NHA in 2008. The Cottonwoods had been designed, built and
owned by the same ownership group and general contractor during the late 1970’s as part of a
HUD project based Section 8 program (US Dept of Treasury). This allowed NHA to test our
methodologies for weatherization practices on very similar structures in Bend and Medford; the
Bend and Medford buildings are nearly identical to Cottonwood II. Cottonwood II covers all
project utilities including resident apartment usage. This is a unique situation and it places a
premium on energy reduction from a building operations standpoint. Any reductions in
apartment utility usage and common area utility usage affect our overall operational costs. It also
allowed us the opportunity to explore historical energy usage documentation. Lastly,
Cottonwood II has been managed by the same property management firm and onsite property
manager since 1978. This provided NHA not only access to historical records of how the
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 42
building has operated from a utility standpoint but also a unique look at tenant usage patterns and
a historical look at how the building has aged over time.
Team and methodology
As an organization that values an integrated approach to housing development, we sought
out partnerships with architects, general contractors, financing (both construction and
permanent), equity investment and the like that would participate in our process for
recapitalization of the Cottonwood II and also would approve our construction program as part of
the 9% tax credit application through OHCS. As a standard procedure, NHA issues request for
proposal for most of our development needs. In the case of equity, we chose Wells Fargo (Wells
also handled the construction lending) and for permanent financing we approached the Network
for Oregon Affordable Housing (NOAH; noah-housing.org). Both Wells and NOAH have
worked with NHA for many years and on many different developments. The mutual trust that
has been formed between the organizations made it easier for us to approach them with our ideas
for the entire rehabilitation of Cottonwood II, but also made it easier to keep them apprised of
our desires for trying new techniques for reaching energy efficiency measures. For our general
contractor, we chose Walsh Construction Co. /Oregon. Walsh is widely recognized as the leader
in affordable housing construction. They have an excellent reputation and are well respected by
the financing community and OHCS; a strong reputation and track record are key to providing
the necessary stakeholder buy-in when attempting levels of innovation with both public and
private financing. Our architects were Andrews Architects. A boutique firm, the Andrews has
been long standing activists and proponents of affordable housing development for neighborhood
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 43
connectivity. They have over thirty years of experience working on multifamily developments in
Oregon and SW Washington and share NHA’s vision for energy reduction while creating the
best possible living experience for residents. The team also extended outside of the direct
development team into the local community. As a project, we sought to draw subcontractors and
local suppliers to the site helping to assure that local businesses and the community would be
able to stimulate job growth. Building officials were brought in from the local planning and
permit departments to advise on code considerations with our wall assemblies and to provide
insight on climate considerations. Lastly, we sought advisement of Cascade Management, our
onsite manager and the existing Cottonwood II residents.
Knowing that we would be applying for Low Income Housing Tax Credits (LIHTC)
through OHCS we started the process of identifying energy reduction measures by calculating
what categories of funding we could draw LIWP funds from (see Exhibit 1). Once we had these
categories determined we took the gathered information from local building officials, the
institutional knowledge of our general contractor and architect, and the information provided by
Cascade and our residents to determine the best place to focus our weatherization program. All
indicators pointed to the importance of the building envelope. The building envelope consists of
a weather resistant barrier at the building sheathing; air-sealing of all potential penetration areas
on the building exterior; rigid insulation (1” rigid foam); new high efficiency vinyl windows and
patio doors or sliders; fiber cement siding. An aggressive plan at the exterior would then inform
how we looked for energy reduction on the interior of the building.
During the pre-development stage we held community meetings with site staff and
residents. The culmination of this information directly helped us understand how the building
functions during a seasonal cycle. The results corroborated what we had expected, that in the
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 44
summer the building gets incredibly hot and in the winter incredibly cold. This information
coincided with information gathered from local building officials and our own investigations
regarding weather patterns and Cascade’s long term management of the site. For a variety of
reasons we chose not to add expensive mechanical heating and cooling systems to resident
apartments and the building as a whole. First off, mechanical systems can add a considerable
amount to the projects construction budget. Add to this the long term maintenance agreement
costs and the overall cost savings take a considerable time to be recovered. Instead we focused as
previously mentioned on the building exterior, which helps reduce heat gain in the summer and
heat loss in the winter (see Exhibit 2). We then replaced existing base board electric heaters
(main apartment heat source) with updated heaters. We also added ceiling fans in every room
and upgraded kitchen exhaust and bathroom exhaust fans to help with air quality and circulation.
The windows we installed have trickle vents in them that allow an apartment to draw make-up
air even when the windows are closed which also helps with indoor air quality and air
circulation.
We upgraded ceiling and wall insulation wherever we could and made sure that we air
sealed all penetrations. The tightening of the building shell created the foundation for drastic
energy reductions (see Exhibit 3). To all of this we added Energy Star rated appliances where
applicable, installed new low-flow pressure balanced tub/shower valves; low flow kitchen sink
faucets; low flow toilets.
For the common area spaces we drastically reduced existing overhead lighting which was
contributing to heat gain. We discovered during construction that the Community Room air
conditioning unit was failing so we replaced it with a heat pump style unit and added variable
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 45
speed fans that could help distribute conditioned air throughout the community room and to the
open day room on the second floor above.
Lastly, we focused on a variety of long term more passive measures for reducing energy.
Exterior lighting was focused down rather than the traditional up and utilized higher efficiency
bulbs. This reduced wasted lighting into the night sky and drew less electricity. We installed an
electronic door opener called a Door King. This increased the buildings overall security and kept
residents from propping the main entry door open throughout the year allowing heating or
cooling energy to be lost. We installed shade trees on the south and west exposures where the
sun can be very powerful. We also looked to install lower gallon per minute sprinkler heads for
irrigation. We used a light color of roofing shingle to reduce heat absorption and we utilized
patio doors that had integral screens to promote cross-ventilation in units.
Stakeholder buy-in
There was little need for stakeholder buy-in from anyone other than OHCS; this will be
discussed in greater detail in the next chapter. All of the project partners were excited about the
opportunity to preserve a resource like Cottonwood II and all felt that the construction program
we had chosen to undertake was not only wise it was important. Local officials were thrilled to
have work for their planning and permitting departments and appreciated being part of the
conversation regarding design elements. Our residents were excited to have a stake in the
construction program and our onsite manager was overjoyed that the building was getting a
facelift. Buy-in from our funding partners was evident from the outset. Each funding partner has
its set of analysts to review and advise on our financing and construction assumptions. Prior to
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 46
beginning any construction work, each partner (Wells Fargo, NOAH, OHCS) had the chance to
review our project plans and specifications and vet any concerns they may have had with our
assumptions. This process assured that everyone was well aware of what we were trying to
accomplish. It also created an extended team dynamic and began for us the idea that this type of
envelope-centric focus could be applied to several buildings in our portfolio as well as any new
acquisitions we have in the future.
Results and Implications of Findings
As can be seen from Exhibit 3, the results of the energy audit were very exciting. In the
first year of operations post-rehab we reduced building wide electrical energy usage by 25% and
water consumption by 18% (see Exhibits 4 and 5). In essence, we had chosen to draw LIWP
funds under the allowed categories and augmented the program to argue for efficiencies at the
building envelope rather than trying to achieve large scale energy reductions through
complicated mechanical systems and expensive lighting and appliances. As the energy audit
notes, where lighting and appliances were replaced, we used Energy Star rated fixtures which
meet the minimum standard for OHCS. The overall outcome of our weatherization strategy is an
energy signature that demonstrates a significant reduction in energy usage at the site (see Exhibit
6).
Though OHCS’ categories for weatherization will no doubt help reduce energy
consumption, it is evident from the analysis of Cottonwood II that true energy reduction starts
with building envelope considerations. It could be argued that the LIWP as currently prescribed
is an augmenting feature for a building. The LIWP could be seen as bonus reduction measures
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 47
but as the program is designed and implemented, there is no applicable category to assure that
important envelope considerations are being made by a developer. As designed, the LIWP is a
misused tool for achieving energy reduction. Further, and as will be discussed at length in the
next chapter, there doesn’t appear to be the necessary leadership at OHCS to champion true
energy reduction measures. Though energy reduction is a high priority for the department (OAR
813-205-0000; see also Economic Impacts of Weatherization, Oregon.gov), the maximization of
weatherization benefits isn’t being undertaken. According to OHCS, for every dollar spent as a
result of energy savings yields an additional $.63 for Oregon Counties and $.85 statewide
(Oregon.gov). From an economic standpoint, if you could increase this re-investment in our state
at a very low price-point, wouldn’t it be worth it? If you could exponentially reduce resident
utility costs such that low-income citizens could be on a more equitable level with other
Oregonians wouldn’t it be worth it? Lastly, if you could do all of these things and help reduce
the carbon footprint for our planet, wouldn’t you be maximizing the three E’s (economy, equity,
and environment)? The next chapter will discuss the necessary leadership needed and at what
levels of organizational hierarchy they are needed in order to stimulate an evidence based change
to the LIWP.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 48
Chapter 4: Findings and Conclusions
There is little question that those involved with low-income housing development are
passionate people. The mission of the industry is to fulfill societal goals of providing one of our
agreed to essential human needs (Brunick &Maier, 2010; Max-Neef, 1991). Engaging
stakeholders is rarely an issue in affordable housing development due to the financing structures
and the fact that on a national level, housing for all citizens holds high value. Where stakeholder
buy-in can become problematic is in the sharing of power, leadership, and capacity (Barringer &
Harrison, 2000; Hillman and Keim, 2001; Nutt, 2004).
The preceding chapters discussed the alarming rate at which utility costs are rising and
their adverse effects on low-income Oregonians. The existing strategy for mitigating these rising
costs in affordable housing development is to rely on the Low Income Weatherization Program
(LIWP) as managed by Oregon Housing and Community Services (OHCS). This paper has so far
demonstrated that the existing LIWP program as it currently stands does not allow for the types
of weatherization strategies that maximize benefit to low-income residents in affordable housing
developments. Further, as keepers of the public trust, the LIWP doesn’t allow OHCS to
maximize benefit to their funding partners or the general public. Though evidence can be
marshaled to show that the LIWP is in need of a redesign, there are existing organizational
barriers to opening up a dialogue with OHCS to address data based findings. These barriers are
primarily found in the historical funder to nonprofit service provider relationship (Osborne,
2010) and a lack of empowerment of middle management at OHCS.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 49
In light of the current hierarchical shifts occurring at OHCS, the author believes there are
opportunities to engage with OHCS to discuss the need for changes to the LIWP and to promote
the necessary partnership sharing of knowledge, skills, and abilities. Such a partnership would
greatly increase the equitable, economical, and environmental value sought by all participants in
their collective efforts to aggressively reduce energy consumptions by low-income affordable
housing residents and the owners of those properties.
The following suggestions will focus on the necessary preliminary steps for opening up
dialogue with OHCS, thus laying the groundwork for a new leadership strategy for maximizing
the usefulness of the LIWP. It is hoped that these steps will secondarily strengthen the working
relationship between OHCS and their service providers while promoting a co-production model
for achieving aligned goals. The following suggestive measures are not ranked in any priority;
rather, they represent what is believed to be necessary components (based on assembled data and
findings) to promote a dialogue that is truly interorganizational in design.
Power must be shared
There must be agreement that the existing LIWP program needs a facelift. This
requires that both OHCS and their service providers (e.g. NHA) agree to cooperatively pursue
the sharing of knowledge, skills, and abilities. Data collected must be freely presented on an
interagency level. In order for a power sharing dynamic to exist, there must be the necessary
structural components available to transfer knowledge on an interorganizational basis. This point
has been discussed by Osborne (2010) and Moore (1998). As Osborne points out, “one of the key
benefits associated with effective interagency cooperation is that it can lead to more efficient
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 50
policy delivery, by eliminating the duplication of effort and improving communications”
(Osborne, p.133). This in and of itself isn’t the easiest hurdle to overcome. As has been
suggested in the literature review portion of this paper, the sharing of k, s, a’s requires that the
parties involved recognize the value of the collaboration and are willing to share power. As
Schofield and Pegg have discussed, as service delivery becomes more and more complex, there
needs to be a devolution of “power and resources from the center to those delivering public
services” (Schofield and Pegg, p.212; as cited in Brookes and Grint, 2010). Given the existing
relationship between OHCS and NHA, this would require a fundamental shift by OHCS in
recognizing the ability for a single service-provider relationship to help inform LIWP
procedures.
There must be leadership at the middle manager level
Middle managers are the necessary ingredient for creating stakeholder buy-in.
Middle managers act as programmatic champions. They provide the necessary leadership push to
rally people to a cause or an ideal. They are the primary developers of interorganizational
relationships (Morgan et al, 2008) and given the opportunity will determine how best to manage
the stakeholders involved (Hillman and Keim, 2001). In order for this to occur at OHCS, middle
managers (program managers) must be allowed to champion a cause. They must be given the
power and authority to coordinate support and foster relationships. Historically, this type of
leadership at OHCS has not been apparent. Power does not appear to be distributed amongst
middle or program management. Rather, decisions are made at higher levels of the managerial
chain and passed down to middle management. Given the recent hierarchical and organizational
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 51
shifts occurring, it is yet to be seen whether the new climate at the organization will value and
foster this type of leadership.
Co-production must be valued
As the data presented from the Cottonwood II energy audit would suggest, co-
production as a strategy for maximizing value was a key process in reaching NHA’s energy
reduction goals. This required that NHA be willing to listen and absorb the collective wisdom of
the integrated team to reach our goals.
Co-production at the nonprofit level for reaching internal goals isn’t the issue.
Rather, the issue is that the same valuation of co-production must be exhibited by OHCS. In
order for this to occur, OHCS must acknowledge that the sharing of knowledge will help them
reach their own internal goals. This requires leadership at the middle manager level but also it
requires an organizational culture shift that values (beyond the fiduciary link) the findings of
their agency partners. This will require that OHCS acknowledge that as managers of public funds
there is the opportunity in the LIWP to increase the public’s return on investment in
weatherization. As the data would suggest (Cottonwood II energy audit; Oregon.gov), return on
investment is increased when considering new ways to structure the LIWP. As Moore (1995)
suggests, if an agency like OHCS is to recognize the value of its partnerships in achieving public
benefit, then the organization must continue to seek opportunities that increase partnership
contributions and align interests that have public, private, and nonprofit organizations,
“coproduce the value attributed to public sector organizations” (p. 287).
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 52
Partnerships build capacity
The collected results of the data on Cottonwood II must be shared with OHCS.
This requires that NHA take a leadership stand in the nonprofit community and have the
willingness to stand by our findings. Currently there are shifts occurring in the affordable
housing world (outside of NHA’s findings) that are challenging how we increase energy
efficiency in buildings. Buildings (industrial, commercial, and residential) in the U.S contribute
to over 48% of this country’s greenhouse gas emissions and over 70% of all electricity usage
(Passive House US, 2011). Going back to the rising costs of energy on our most financially
challenged citizens, organizations are seeking new ways to look at building energy performance.
Given the findings from Cottonwood II, NHA must take a leadership role through engaging
further study of our weatherization program and keep collecting data. Our collected knowledge,
when combined with the knowledge of our direct partnerships (contractors, architects, engineers,
residents) and also the findings of our affordable housing counterparts, is building our industry’s
capacity. We as an industry have become the experts and through this knowledge we can help
build capacity for OHCS.
Oregon’s State Housing Finance Agency (HFA) OHCS is the face of affordable housing
finance. Therefore, underutilized funds or policies and procedures that don’t maximize benefit
are bad for the whole industry. Through the sharing of k, s, a’s we have the opportunity to
reshape the policy and procedures surrounding the LIWP. Greater attention needs to be paid to
how the LIWP is managed. If the program as currently modeled doesn’t maximize; if it is in fact
increasing overall costs, then a networked subsystem (Morgan, et al, 2008) needs to be
developed that will help advance the policy. The maximization of value will then allow for
scarce resources to be allocated towards other programs or resource streams.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 53
As an industry it is important that we utilize the Oregon Opportunity Network (OON).
OON (oregonon.org.) acts as the policy voice for affordable housing developers in the state and
is a critical component to communicating with OHCS. Their primary function is to advocate for
affordable housing policy and provide guidance as a liaison between Community Housing
Development Organizations, housing support organizations, and OHCS. Policy chapters
comprised of volunteer members from the affordable housing industry are regionally located
around the state. Platforms for discussion fall along main hubs of the affordable housing
industry: Development, Finance, Asset Management, Resident services, and Executive Directors.
The groups act as a think tank for issues facing our industry. Collected topic ideas and findings
are then coordinated into Industry Support Conferences which are held in varying parts of the
state. Given the recent findings of Cottonwood II, projects undertaken by Portland’s Central City
Concern (see Passive House, Hooper Detox Ctr, and Hatfield Building) and several other
developments around the state, there is significant momentum for utilizing OON as a way to
open communication regarding a revamping of the LIWP. The data collected demonstrates the
need for change and as partners it is the industry of affordable housing development that should
provide the necessary leadership in presenting this information to OHCS.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 54
Conclusions and Suggestions for Opening Communication and Discussions with OHCS
regarding the LIWP
There are three major conclusions from this study that have implications for the future work of
NHA. First, the leadership of NHA needs to take the initiative to have conversations with OHCS
about revamping the criteria for the LIWP program. Second, NHA needs to continue collecting
benchmark data on its weatherization strategy and using this information to enlist the support of
other partners supporting low income housing. Third, NHA as a matter of policy should adopt
an “envelope first” approach to all of its low income housing construction and rehabilitation
NHA and OHCS Partnership Re-alignment
The power relations and communication channels between OHCS and their service providers
like NHA need to be reworked in order to maximize the economical, equitable, and
environmental value of the LIWP. Changes in the hierarchical structure of OHCS make the
timing right to jointly explore a variety of questions related to LIWP, including the following:
Who has the power to make changes to the program? What are the programmatic outcomes that
OHCS wants from the LIWP? How are the distributions of LIWP funds handled internally by
OHCS; Is there a well planned distribution schedule based on need or is there a “fire-drill”
scenario where funds are brought in and need to be distributed as quickly as possible on a first-
come first-served basis? What, if any, cultural shifts are present that could open up
communication between OHCS and NHA?
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 55
But what is the best way of laying the foundation for high level conversations to occur
regarding the previous list of strategic issues, some of which may require changes in
administrative rules and perhaps in legislative authority. A two pronged strategy is needed
which requires OHCS to continue collecting benchmark information and then using this data to
strengthen its relationship with partners within the affordable housing network in Oregon.
Using Benchmarking Data to Build NHA Partnerships
The data collection initiated by NHA needs to continue. At each new and rehabbed project NHA
needs to continue to utilize energy modeling techniques in conjunction with integrated team
design approaches (project partners, management, and residents) to maximize energy reduction
for each specific building. As this data is collected there needs to be an industry wide look at
findings from OHCS efforts.
One of the best ways to leverage NHA’s data is to partner with OON. As pointed out in the
previous section OON has the ability to communicate directly with upper tier staff at OHCS.
Though NHA communicates directly with the upper tier staff at OHCS, the communication lines
that have been established by OON are a far more effective way to create buy-in to policies or
programmatic considerations. Also, OON’s entire function is to act as industry support for
affordable housing issues. The design of the organization allows for industry professionals to
convene, open up dialogue regarding issues or desires, and vet any potential issues that may
result from network sessions prior to presenting them to OHCS.
One caveat to this is that OON is currently experiencing some organizational shifts.
Traditionally OON has been operating as the affordable housing industry in Oregon’s de facto
policy representative for several years but they haven’t historically been tremendously organized.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 56
The organization is largely dependent on volunteerism as found within the industry and it has
recently been made clear that they are reorganizing how they will do business. Given this
scenario, it is suggested that if talks regarding the LIWP and OHCS stall either within OON or
between OON and OHCS, that NHA needs to take the necessary leadership action to organize
stakeholders and present findings directly to OHCS.
If NHA is to act as a champion for LIWP program changes, success will only come by
aligning ourselves with the necessary vertical and horizontal stakeholders who share our
common goals and ideas. These would include architects, contractors, engineers, and fellow
developers who, like us, are seeking to maximize building energy efficiencies. It will also take
the backing of our financial partners in the lending environment; equity investors, construction
and permanent lenders and the involvement of organizations and individuals that champion
energy reduction will carry power and influence that adds an additional layer of legitimacy to the
cause.
In reviewing the Oregon Administrative Rules (OAR) regarding the LIWP, it becomes
clear that there is enough flexible language that the program could be revisited (OAR 813-205-
0120; see also ORS 757.612). ORS 757.612 requires that a public purpose expenditure standard
for electric companies for the funding of low-income weatherization efforts be in place until
January 1, 2026. A 3% surcharge will be applied to retail (non-residential) electrical utility users
for the funding of these efforts. Funds received by OHCS through ORS 757.612 are then at their
discretion to be distributed through the establishment of an advisory committee for
weatherization (see ORS 458.515). Once weatherization funding is received by OHCS the
monies are split into two distinctive pots. One pot is for Low Income Weatherization Assistance
(OAR 813-205-0000) and the other is for the LIWP (OAR 813-205-0085). There are very basic
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 57
requirements for receiving funding and can be distilled into a few common themes: funding is
available to for-profit, nonprofit, and local government entities; funding is designated for low-
income housing development serving qualified households at or below 60% of area median
income; projects must maintain their affordability status for a minimum of 10 years (OAR 813-
205-0110). What is truly important is the vagueness of the rules when it comes to eligible
activities. AS OAR 813-205-0120 would suggest, weatherization measures need to demonstrate
one or more of the following: measurable cost-effective energy conservation; repair measures
that are deemed necessary for energy savings performance or preservation of existing energy
saving measures; and general weatherization measures (including health and safety
improvements) that when installed represent an improved energy performance beyond code. This
would suggest that OHCS has maximum flexibility in providing, accepting, or modifying
changes to the policies and procedures associated with the LIWP.
NHA Should Adopt an “Envelope First” Policy
Regardless of the given policies and procedures’ surrounding the LIWP, enough data has been
collected by NHA to justify an “envelope-first” approach to construction and one that promotes a
performance based standard rather than a system that bases its measurement on specific
categories. Utilizing a performance based standard allows maximum flexibility on a building-by-
building basis and takes into account a building’s geographic location (see passive house
international.org). In communicating this information to OHCS, either via OON or via another
route, NHA should make a commitment to continue our weatherization approach at no cost to the
state on the understanding that the costs have been incurred at no-burden to the general public
and that the data will be non-proprietary. Currently, pre-development spending is allowed to be
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 58
folded into the construction budget during the Consolidated Funding Cycle for 9% tax credits.
By suggesting that until formal adoption of findings and agreement to methods can be
established, that NHA cover these costs, we are demonstrating our commitment to a new energy
reduction strategy and are also demonstrating our commitment to truly co-producing results with
OHCS.
LEADERSHIP OPPORTUNITIES WITH THE LIWP IN OREGON 59
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