Bomee Jung on Planning for Upgrades in Affordable Housing

An interview of Bomee Jung by Julia Wagner

Bomee Jung is a longtime climate justice advocate and leader of green building principles for affordable housing development and a CCI Fellow. She served as the inaugural Vice President of Energy and Sustainability for the New York City Housing Authority, the nation’s largest public housing agency, where she developed the agency’s ambitious 10-year sustainability plan. Bomee is now the co-founder and CEO of Cadence OneFive, which offers capital planning software to housing providers to facilitate and scale energy retrofits.

As part of our series of CCI substack posts and a policy brief exploring why the United States needs a Green Industrial Policy for Housing, Julia Wagner asked Bomee about the common on-the-ground challenges that housing providers face when planning and implementing energy upgrades in affordable housing. To prepare buildings for climate-readiness, providers must plan carefully and navigate technological and financial uncertainties. This conversation has been edited for clarity and brevity.

Julia: We know the benefits of decarbonizing housing, but building owners have been relatively slow to implement these projects. Can you describe some of the roadblocks that builders and housing providers face when they're trying to plan and execute housing decarbonization projects in pre-existing buildings?

Bomee: It's hard. A lot of the things that have the biggest impact are either expensive or disruptive. It's more expensive because you're modifying a building in a way that wasn't part of its original design. When you're talking about existing buildings, you're also talking about occupied buildings – getting tenant buy-in and minimizing disruption. It's a logistically complicated construction project. And the ideal technologies are not all there yet.

Which is why stuff like NYCHA’s [New York City Housing Authority’s] Clean Heat For All program, where you have a heat pump technology that is really geared towards retrofitting, is really going to unlock conversion at scale. There's no core drilling required and you're not replacing a big central system with another big central system.

Julia: I want to ask you about money. Energy upgrades can greatly benefit tenants when it lowers monthly energy bills; yet, these projects can cost a lot to install up front. What are genuine cost tensions related to investing in energy upgrades?

Bomee: In the past, we used to argue that the efficiency stuff will pay for itself. This is not that. This is not light bulbs; it's not faucet aerators. If you want to do a facade retrofit, that's expensive, no matter what. If you want to deal with your ventilation system, that will be expensive; it just will be. These are not small changes.

These are high cost, high capital investment items that are going to take a long investment horizon. Frankly, affordable housing has that long horizon. These are not buildings that are flipping in five years. They invest for 15-30 year horizons, hopefully to keep housing affordable indefinitely. Just give them funds to invest in the upgrades.

I think the picture from an owner’s perspective is this: you have a fixed pot of money, and you have a long list of things that will be great to do for the building. You have to prioritize based on what you can actually get done, and what is important for your specific stakeholders.

If, for example, residents’ top complaint is that you had a heating outage during a polar vortex, then that's the number one issue. The stakeholders and the owner are going to be say, “What can I do about this immediately with the money that I have at hand?” They're not going to say, “what can I do with this three years from now.” No, it has to be now. What's ready for me now, with the amount of money that I have now.

And this is why it's so important to try to figure out standardized approaches. You can’t be trying to solve a problem for the first time in a bespoke way. It has to be super easy, and it has to be implementable now, when you need it. Not a year or two from now.

Capital decision making is about: a) what can I get? b) when will it be done? c) how much money is it going to cost me? and, d) how much uncertainty is there?

It is fundamentally a risk management exercise, assuming that you have enough money to do something. If I've done 50 boiler replacements, then I know how much the boiler replacement is going to cost me. If I've done zero conversions to heat pumps, I don't have a lot of context for what that estimate might be. I don't have a way of accurately estimating the risk, cost-wise or performance-wise.

Julia: So that's risk from the perspective of a housing provider. Are there also risks for the other players, like residents?

Bomee: There's always risk for residents in any kind of construction. Construction is disruptive: You are going to be inconvenienced, and even perhaps lose services for some time. In affordable housing, construction often requires that residents be at home to let them in when they're doing the work in the unit. So, that means that people are having to take time off from work to provide unit access.

But my experience is that residents want you to maintain their building. They don't want systems to be failing.

And, frankly, it’s our job, as housers, to provide quality housing. What “quality” means has changed over time. We used to build housing without indoor plumbing. Today, “quality” needs to address all the factors that we’ve learned about over the past 20 years: indoor environmental quality – not just air, but also noise; resiliency in case of disruptions like heat waves or heavy downpours, minimizing the operating burdens both for residents and operators, and more. As a planner, I would say that includes making living more densely – in multifamily buildings – really great, so that social and economic pressures don’t push you toward choosing sprawling, lonely typologies that cost more when you include transportation. It’s our responsibility and obligation to apply the technology and know-how that we already have at our disposal.

Julia: You’ve described how sound construction planning and management can minimize disruptions to residents. What does the landscape look like for capital planning in the affordable housing sector?

Bomee: Our business [Cadence OneFive] provides software to make planning for decarbonization easier and to enable planning earlier in the process. Construction takes a year to plan, minimum. So if you want work done before the next heating season, it’s better to have started planning it before the boiler starts having problems, really.

How do [housing providers] typically deal with capital planning? Well, the typical process for mid-cycle work (i.e. not as part of a recapitalization) is that everybody does their budgeting in September. So over the course of three weeks in September, everybody has to pick the buildings that are going to get funding for upgrades. At that point, if you don't already have any technical reports in hand by the first week of September, you're not going to be able to get it in time to make a decision by the third week of September. So a lot of times the decisions are being made without really any technical information available. You don't have information you need to manage risks across multiple buildings and you don't have the ability to conduct multi-year capital planning, because there's no system to give you the data to make and maintain plans over time so that you can reach a long-term goal.

That's the problem that we're trying to solve with software. I think there's recognition of the potential benefits of being able to do these kinds of detailed, responsive, long-term capital investment plans, but the tools that people have – it’s just, like, your motivation and an Excel spreadsheet.

Julia: Can you give me an example of what good capital planning enables in terms of decarbonization?

Bomee: Buildings are whole in the way that bodies are whole. The systems interact. Decisions that you make in one part affect the decisions that you can make later in a different part. So, if you have a limited amount of capital, what's the right order of operations for making investments? And so you need to have decision support tools, because they're complicated, expensive, long term decisions. What you decide today, you have to live with for 30 years. It's the nature of this decision-making that really makes it imperative to be well-supported. Because they really are important decisions.

So good capital planning might get you fewer emergencies and unplanned work. It might mean you get to make more strategic decisions that allow you to be responsive to funding opportunities. It might mean smarter money because your work over time is coordinated, so you’re not investing in something in year 1 and then having to replace it in year 4. It might also mean that you have a shared vision developed with your stakeholders, including residents, so that you’re allied in preserving housing and preserving affordability. It might mean that when you go to a regulator, you get to make a stronger case for a permit or an exemption. I’m a planner, so maybe that’s a bias, but planning isn’t rigidity – it’s adaptability.

Julia: What kind of public policies and programs at the state or local levels would support the coordination of decarbonization for the various stakeholders involved?

Bomee: In New York, there’s been a longstanding effort to try to use utility resources to benefit housing. Just like in other markets, we all pay a “service benefit charge,” a little tax to the utility that is controlled by the NYS Public Service Commission, who regulates how the utility and our state energy office distributes those monies. A chunk of it is meant to go towards supporting housing, particularly affordable housing – or in their language, to invest in upgrades that keep utility costs low for customers.

The issue that I have struggled with for a long time is when those energy resources are being made available for housing, they often don’t take account or don’t understand the way that housing works as a business. So it makes it harder for the housing player to take advantage of those resources because they are not available on the right terms, the right schedule, the right approval process. For example, a lot of utility programs use performance-based reimbursements. So I promise to give you x tons, and for the x tons, you set aside y amount of money. If I set aside x-n tons, you give me y-n chunk of money. That does not work for housing, because for me to plan construction, I need to know how much money I have, up-front.

If that’s the system that you’re going to use to give money to housing, what you’re saying is: the owner needs to put in their own money and be reimbursed by the utility. That makes the decision much harder to say yes to, because owner equity is very dear in housing. Nonprofit organizations, especially, don’t have piles of money that they can invest and wait to be reimbursed.

Julia: What kind of form should that money take if it were to be more useful to housing providers?

Bomee: New York State has actually come up with some really good ways of doing this. One of the ways is the program called Clean Energy Initiative, where the state energy office just gives the money to the housing agency, and lets the housing agency deploy it alongside their own capital. You have one regulatory agency that takes point. Then everybody is playing by one set of rules.

Julia: You’re describing a disconnect between the energy and housing industries that leads to inefficiencies in the transfer of resources to support decarbonization. What are some of the ways to build communication and collaboration across sub-sectors?

Bomee: It's really hard to get housers to think about the utility systems. It's really hard to get utility systems folks to think about housing. New York just happens to have a situation where there's been a lot of investment in moving the energy transition conversation, and at the same time, there's been an almost 20-year investment in dedicatedly moving affordable housing to high performance. And I think having both sides of that come together is very motivating for everybody who's working in this sector.

And certainly, I think the CLCPA [New York State Climate Leadership and Community Protection Act] process had a lot to do with creating this feeling of everybody pulling in the same direction. The CLCPA process was lengthy and involved a lot of people. Everybody had a lot of time to get used to it.

Not everything is hunky dory, but there's a sense that everybody's pulling in the same direction, particularly around climate justice. Our top utility regulator can talk about housing. The housing commissioner can talk about energy justice. It’s good to feel like it is an economy-wide transition.