The Malden Housing Authority will spend more than $11 million to make its public housing units more energy-efficient, work that officials believe will pay for itself in lower utility costs.
Upgrades include new toilets, more efficient shower systems, and energy-efficient lighting at some of the 1,400 housing units managed by the authority.
But the most substantial project will be an overhaul of the main utilities system at the housing development on Newman Road, said Stephen G. Finn, the authority’s executive director.
The 250-unit complex has a central power plant with utilities distributed to each building through pipes installed in the 1950s. The pipes are in poor condition, Finn said, which results in uneven distribution of heat and water pressure. “Those pipes are a problem; they are aging in place,” he said.
The new system will feature one energy-efficient boiler for every two units in the 58 Housing Authority buildings on Newman Road, Finn said. The old pipes will remain and could be used by the authority or the city as underground electricity conduits, he said. The work on Newman Road is expected to cost $4.3 million.
The Housing Authority received the 20-year $11.27 million bond through MassDevelopment , an entity created by the Legislature in 1998 to act as a finance and development authority.
“We’re pleased to support the Malden Housing Authority with this low-cost financing to improve homes for low-income families, reduce the cost of utilities for the authority’s developments, and to support the Commonwealth’s goal of improving energy technologies and efficiencies, resulting in reduced cost,” MassDevelopment chief executive Marty Jones said in a prepared statement.
For the bond financing agreement, the authority will pay a fixed interest rate of 4.12 percent to East Boston Savings Bank, which is loaning the funds. But the bank was only able to do that by entering into an interest-rate swap agreement with another institution, PNC Bank.
The move allowed East Boston Savings Bank to offer a fixed-rate loan, which the Housing Authority needed in order to comply with federal housing standards, said Joseph Leary, vice president of East Boston Savings Bank.
“I knew the bank would only do a variable rate, and I knew the Housing Authority would need a fixed rate,” Leary said. “By going to the intermediary we could satisfy both parties.”
Leary said he thought such an agreement may be unusual, but he learned from the Department of Housing and Urban Development that it had perhaps never been done before.
“I didn’t think it would be that different, but apparently it’s the first time it has been done,” he said.
Finn credited the bank for finding a way to make a loan work when it may have been easier to walk away.
The efforts to secure the bond began in October 2011, when the authority selected Siemens as its energy provider, Finn said. Since then, it has negotiated the scope of the work with MassDevelopment.
The work at Newman Road and other sites is expected to begin later this month.
Jarret Bencks can be reached at firstname.lastname@example.org.