Monday, July 25, 2011

Going Green in New York: One Co-op’s Story
[In the past three years the Brevoort], a 1955 co-op tower in Greenwich Village] ...  has spent nearly $6 million. The projects ranged from the prosaic, like new windows and light bulbs, to the ambitious, like green roofs, converting from heating oil to natural gas, and installing a $3.2 million cogeneration plant capable of powering the 20-story building in a citywide blackout.

The extent of the work and the amount spent in such a short time are unusual. But board members say the building is now a model of energy efficiency and proudly note that other co-op boards have come to see what it has done.
In April, Mayor Michael R. Bloomberg announced new heating oil regulations for thousands of buildings across the city. Now those buildings — most of them apartment houses — are reviewing their heating systems.The new rules require that by 2015, about 10,000 buildings switch from No. 6 heating oil, the cheapest but also the dirtiest fuel available, to No. 4 heating oil. Some buildings need to make the change as early as next July. But since buildings will be required to use either No. 2 oil or natural gas by 2030, many building owners are contemplating making the larger change now to avoid two separate conversions. Natural gas currently costs about 30 percent less than fuel oil.

City officials say that the soot pollution created by the 10,000 buildings that use No. 6 oil exceeds the amount created by all the cars and trucks in the city. At a seminar given by the Real Estate Board of New York earlier this month, a representative from the mayor’s office said that while converting to natural gas can be expensive, switching from No. 6 to No. 4 oil could cost a building as little as $7,000. But contractors and consultants in the audience challenged that figure, saying it represented a best-case scenario — a building whose equipment needed only minimal upgrading.

David Kuperberg, the chief executive of Cooper Square Realty, which manages about 450 buildings in New York City, described the extent of the work and the amount invested at the Brevoort as “the exception by a long shot.”

He said his company had urged the owners of its buildings to make similar changes, “but there is a great deal of skepticism and people just don’t believe the savings are there.” Most co-op and condo boards, he said, would rather make incremental changes and take on one project at a time.

About 100 of Cooper Square’s 450 buildings use No. 6 oil. “We’re in front of all our boards now,” offering advice and information on what needs to be done, Mr. Kuperberg said. Wherever possible, Cooper Square encourages gas conversion. But “the initial cost scares off a lot of buildings,” even though “we could prove the economics.” He pointed out that the savings from gas conversion could pay for the upfront costs in a few years.

The changes at the Brevoort did not come without pain.

Vigorous efforts were made to unseat board members in the last two elections, with some unhappy residents likening members to harsh and unyielding prison wardens.

But opposition candidates came shy of the votes they needed in both elections, and Ms. Nardone was re-elected this spring to her sixth term.

The switch from No. 6 oil to natural gas cost the Brevoort $225,000. It involved replacing the burner on the boiler, removing two 20,000-gallon oil tanks, and installing equipment to draw gas from the available Consolidated Edison pipeline. The board expects to save as much as $70,000 a year in fuel costs....

Property managers and environmental experts say that gaining access to gas pipelines maintained by a utility like Con Ed or National Grid could be a huge hurdle for some buildings. As Isabelle Silverman, a lawyer with the Environmental Defense Fund, put it, “The infrastructure to bring gas lines to the buildings definitely has to be built out, and we don’t know how long that would take.”

City officials say that is why the imminent rule change is for No. 4 oil and the natural gas requirement does not kick in for 20 years.

Most buildings are already hooked up for cooking gas. But long stretches of pavement may need to be ripped up to connect a building to the pipelines for heating gas, which are larger in diameter. “When you can get it and how much it will cost depends on where your building is relative to the gas line,” Ms. Silverman said.

Of the roughly 100 residential buildings managed by Rose Associates, 6 are in the process of converting to natural gas.  J. Brian Peters, a senior managing director at Rose, said that “the due diligence on this really pans out, and there is a track record that shows the savings and benefits are real.”  Getting permits and physically converting the equipment takes four to six months, he said, but how quickly Con Ed can hook up a building is less certain.

For the 15-story co-op at 910 Park Avenue, converting the burner to accept either No. 2 fuel or gas took less than six months and cost $73,000. The work was done in October, but the building burned No. 2 oil all winter, while it waited six months for Con Ed to connect its gas line.

Jerry Cohen, a board member, ... ran a spreadsheet and it showed that in three years, the savings would give us payback on the cost of the conversion.” The board approved the plan unanimously.  Con Ed waived the $23,000 cost of connecting Mr. Cohen’s building to a pipeline that runs along Park Avenue because the building committed to using Con Ed’s gas exclusively....  He said that a friend at a building on Madison Avenue had recently learned that connecting to a pipeline would cost $1 million.

Joseph McGowan, the manager for gas sales at Con Ed, said that Con Ed would install up to 100 feet of
pipe free to a building with five or more apartments, and could waive the fee for more, depending on the utility’s anticipated revenues from the building.

Hypothetically, he said, the cost to connect a building at, say, Fifth Avenue and 42nd Street, to the appropriate pipeline along First Avenue could be as high as $3 million. “Just think about having to trench along 42nd Street for that many blocks,” he said.

But if Con Ed found that seven additional large buildings along that route also wanted to convert to gas, “the revenue from all those buildings could take care of the cost.”

It has taken the co-op board at 12 East 97th Street about a year to weigh the benefits and figure out the cost of gas conversion. John Slattery, the vice president of the board, said the building was now close to signing contracts and expected a bill of $100,000 to $200,000. “All of this goes agonizingly slow,” he said, “because like most boards, we only meet once a month.”

Mr. Slattery says the building is trying to decide whether to go with a gas-only contract or to spring for the option of using both oil and gas. “It seems like most major property holders are doing dual fuel,” he said. “Maybe they’re just belts-and-suspenders people, but in today’s world, who knows what’s going to happen with the price of gas or oil?”

Myriad calculations and unknowns complicate the decision making. “The real problem is there are a lot of variables out there,” said Paul Gottsegen, the president of Halstead Management, which manages about 200 apartment buildings. “At this point, people are scrambling for the best ideas and the cheapest and greenest options.

To encourage gas conversion, utility companies are creating incentive programs and the state this year provided $6.5 million in grants to about 240 buildings. Francis J. Murray Jr., the president of the New York State Energy Research and Development Authority, said applications poured in and the money was spoken for shortly after the fund was announced in April.
“The demand clearly exceeded what was available,” Mr. Murray said. The agency is seeking other funding sources and hopes to offer more grants next year.

The state agency also provides grants for cogeneration plants, which burn gas to produce both heat and electricity, and this year distributed $20 million to 19 projects across the state, including three residential buildings managed by Rose Associates. Mr. Peters of Rose said that for certain buildings, it made sense to put in cogeneration at the same time as a gas conversion.

“It depends on the scale and the unique character of the property,” Mr. Peters said, adding that one of Rose’s rental properties, London Terrace Gardens, installed cogeneration about six years ago and saves about 15 percent on electricity annually.

At the Brevoort, while most residents approved of gas conversion, many felt the cogeneration system was unnecessary, even though the building received a $500,000 state grant for the work.... Debt went from about $3.5 million to $11 million,” he said. “Maybe we should have gone slower.”  The building this year issued a $2 million assessment, which works out to about $10,000 for the owner of a two-bedroom apartment.

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