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May. 20, 2014

Incentives Aim to Green Up New York, Reduce Operating Costs for Building Owners

By Joshua Ayers, Senior Editor

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Panelists at FirstService Residential’s Third Annual Sustainability Expo & Symposium. From left to right: Moderator, Chris De Weaver, FirstService Residential; Michael Colgrove, NYSERDA; Jenna Tatum, New York City Mayor’s Office of Long-Term Planning and Sustainability; John Skipper, Con Edison; William C. Ragals, Jr., The Strand Condominiums.

New York—A recent study found that 75 percent of greenhouse gasses in New York City are being generated by buildings, a majority of which are multifamily residential buildings. The alarming figures have prompted an assortment of companies and organizations, ranging from major utility companies to the mayor’s office, to develop programs that incentivize green upgrades in an effort to entice multifamily building owners to curb emissions.

A panel of industry experts explored the fiscal perks of these programs at FirstService Residential’s Third Annual Green Expo & Symposium May 15 in New York, stressing the importance of participating in the programs before they are no longer available.

“What’s packaged inside of this is not only trying to operate your building more efficiently, cleaner, greener, but also as a major opportunity to save money,” said FirstService Residential President Dan Wurtzel as he opened up the discussion. “Ultimately if at the end of the day that’s where we end up then we’re all in a better place. We save money, we’re contributing to a greener environment and probably our property values are going to go up because of the reputation of the building. So it’s a win-win all the way around.”

One of the largest incentive programs currently available to New York building owners is NYSERDA’s flagship program, the Multifamily Performance Program (MPP), which allots building owners $500 to $1000 per unit to help reduce energy usage by 15 percent. To qualify, owners must work with one of about 90 NYSERDA-approved partners, which include engineering firms, energy consultants and non-profit organizations. That chosen partner then assess and recommend improvements that will help them achieve the reduction. Owners become eligible for an additional $300 per-unit bonus if they are able to meet the criteria.

“The good news is that the way that all this is calculated and the way that electricity rates work, 15 percent energy reduction is about a 15 percent cost reduction,” said Michael Colgrove, director of NYSERDA’s New York City office, who directly oversees the multifamily programs. “If you know how much you spend annually on energy usage, you take 15 percent off of that, and that’s about what the program [can do to] assist you.”

Colgrove said that most buildings in the program end up reducing usage by 20 to 25 percent and that there have been some buildings that have cut energy use by as much as 40 percent. In addition to the initial incentives, owners can qualify for an additional $300 per unit if they are able to reduce usage.

But the panelists stressed the importance of taking advantage of these programs, as most of them do have set term limits.

For example, Con Edison has created a new program aimed at curbing peak summer demand energy uses. The program, called the Demand Management Program, provides a certain amount of money for every kilowatt of energy saved via a variety of methods such as lighting upgrades, While owners can potentially save thousands of dollars through these incentives, the program will end promptly in June 2016.

Con Edison also has other programs that reward energy reduction such as the four-year Commercial and Industrial Program, which features components that provides rebates for energy efficient equipment and other incentives that can help fund up to 50 percent of a green capital improvement project.

“Some programs have quadrupled the amount of programs and funding available,” said panelist John Skipper, business development for Energy Efficiency & demand response, Con Edison

While these incentive programs allow for building owners to save thousands of dollars in operating costs and give buildings a greener footprint, proper research in rare cases can lead to an additional source of income.

Panelist William C. Ragals, Jr., board president of The Strand Condominium in Manhattan says his board took advantage of now-expired NYSERDA and Con Edison oil-to-gas conversion incentives to help fund the installation of a Combined Heat and Power (CHP) that has allows the building to produce energy at below Con Edison rates.

“With the money that they gave us and the efficiencies that we received in operating expenses by switching from oil to gas, the balance of our out-of-pocket was recovered by us in about five months,” Ragals said.

Despite all of the available programs, qualifying for incentives does not come without a set of challenges. Ragals says that researching the program and educating board members or property managers is the first step to addressing these challenges.

“I had to educate my board and that is something you have to face,” he said.

Another key step to reeling in incentive money is to identify what upgrades need to made and which ones will have the best effect on operating costs.

This can be determined several ways. One way is to utilize information collected through annual benchmarking reports (a requirement of Local Law 84) to identify how much energy a building uses and how that figure compares to other similar buildings in order to determine whether an upgrade is warranted. The second involves conducting an Energy Efficiency Report, something that is already required every 10 years for larger building thanks in part to Greener, Greater Buildings Plan efforts, specifically Local Law 87, which that mandates such an inspection for “covered buildings” with 50,000 or more gross square feet.

“Basically you have a qualified contractor come in and analyze the system that’s in your building and tell you where you can save energy,” said Jenna Tatum, NYC Carbon Challenge Director, New York City Mayor’s Office of Long-Term Planning and Sustainability.

Tatum says that the building owners can get credit for the audits up to four years in advance of the 10 year deadline, and that while the audit does cost money, there are no requirements necessary to commit to any projects.

Colgrove clarified, however, that work has to already have started before NYSERDA incentives will be paid out.

“NYSERDA won’t actually give you an incentive until you’ve installed at least 50 percent of that work,” he said, adding that “NYSERDA’s MPP program has a clause in it that says ‘we will recognize any work that a building has done up to a year of applying to the program,’ and that can qualify toward your 15 percent target.”

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