Facing A Potpourri Of Energy Problems

When it came to the boiler, things were looking pretty grim at 49 West 12th Street in Manhattan. It was 2005, and the boiler, which had been installed when the building was erected in 1952, was limping along and costing thousands of dollars in emergency repairs. And, because of a problem with the burner, the system was occasionally coughing up black smoke, leaving the building with several city fines. The chimney was also starting to crumble. “It was a serious problem,” says property manager Ken Ryan of Gerard J. Picaso management.

It was around that time that Arlene Martin, then the board president, happened to go to a co-op expo and stumbled across a small little booth tucked in the corner. “One of the guys shouted out ‘Hey, lady – we can save your building money,’ ” Martin recalls, describing how she came across a booth manned by the New York State Energy Research and Development Authority (NYSERDA). “I never forgot those words.”

That chance encounter led 49 West 12th to embark on an energy efficiency project that will indeed save the building money over the long term. (A recent analysis of the building’s oil usage shows that it is using 11 percent less oil than before the project.)

The board members at 49 West 12th ran into some difficulties along the way, but the lessons they learned are the kind that other boards and management agencies can benefit from too.

Bob Horstmann, owner of Marlande Heating, the longtime contractor at the building, says the boiler was old but was not in terrible shape. The burner, on the other hand, was “literally falling apart.” Because of the age of the system it was virtually impossible to get replacement parts.

“They were putting Band-Aids on a major artery and they were getting concerned about that,” he says.

A new burner could probably be installed for about $40,000 to $60,000, but it was only a matter of time before the boiler itself went kaput, Horstmann says. The board, after getting connected to NYSERDA decided to take out a low-interest Energy Smart loan through the agency in order to buy a new energy-efficient boiler, install a new chimney and upgrade the hallway lighting to make it more energy efficient as well.

The plan was to take out a $200,000 Energy Smart loan (one percent for 10 years). The boiler project would cost $181,000 and the chimney $23,000. The hallway lighting would be upgraded from traditional florescent to a more energy-efficient model, which would use about 20 percent less electricity for $13,200.

The board hired EME Group to conduct an energy audit, as required to secure the Energy Smart loan. Neville Burrows, principal of EME, says at the time of the audit, the building had spent $14,000 in boiler maintenance over a 20-month time span. A typical amount might be $1,000 in a year. The boiler was running at about 77 percent efficiency, a level below what is traditionally considered acceptable at 82 percent. “But the bigger issue was the black smoke conditions,” he says, which was caused by high oxygen levels, an indicator of inadequate combustion. The building would spend $19,855 from its reserve funds to pay for the audit and a NYSERDA fee but that amount would eventually be refunded.

There was an even bigger problem, however: the process had dragged on to the summer of 2007 and the NYSERDA loan had not yet come through. It would cost additional thousands to keep the boiler running through another winter, not to mention the cost of potential fines from more black smoke incidents. Ryan says the solution was one that is hard to imagine: Marlande would start the work before they got paid any money.

“Marlande did this because of the relationship they have with Picaso,” Ryan observes. It’s a point that other boards should note, he says, adding: “You don’t want to have an arm’s length relationship from the board and the manager and your contractors. You have to go the extra mile to create a good relationship.”

In the end, the work on the boiler began in July 2007 and the new boiler was first fired on October 1, 2007. The NYSERDA loan came through 30 days later.

Horstmann agrees that his longstanding relationship with the building and the managing agent led him to take on a project before the funding came through. He says it’s an illustration of why boards should cultivate their relationships with contractors. “You think about buildings where you’ve worked for 25 years – they go out on a $250,000 project, get seven bids, and then pick some other guy because he’s $1,000 less. It’s short-sighted. We have a long-standing relationship with Picaso management. He assured me that we were going to get paid and with his assurance, I’d jump off a mountain.”

Another issue that arose was the size of the boiler. EME recommended replacing the 150-horsepower boiler with the same-sized model; Marlande Heating said its heat loss calculations indicated the building could do fine with a 100-horsepower model. The smaller, 100-horsepower model would have enhanced efficiency. Current board president Wes Wolfe says the board went with the more conservative suggestion, picking the 150-horsepower model. At times when experts disagree, Wolfe says boards simply have to trust their judgment and make a call. “We didn’t want to risk a problem and have the building not have enough heat,” he notes.

Horstmann says an additional lesson to take away from the experiences at 49 West 12th is how difficult it is to make decisions on big projects, like boilers. Sure, a boiler might be technically working. Yes, a replacement has a big price tag. But what is the eventual cost?

He recalled a building where a longtime super was able to lovingly keep a 47-year-old boiler going, but as soon as the man retired, the boiler did too. When oil prices spiked, it was easier to convince people to take on a boiler project because the return on the investment was quicker.

“When we’re paying $1.30 for a gallon of oil, the payback is so long that it can be hard to rationalize,” he says. “When oil hit $3 or $4 a gallon the things we were talking about made much more sense. We’ll have to see what happens next with oil prices.”

Ryan, the property manager, says another lesson for other boards is the sheer length of time the process can take. Engineering proposals were needed in order to secure the Energy Smart loan but those take time. “The paperwork from start to finish is time-consuming,” he says. “People need to be aware of that.”