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The (Steam) Heat Is On

Operating on the principle that one good turn deserves another, a Manhattan condo board recently followed up the successful installation of on-site steam boilers with the successful installation of electricity-generating solar roof panels. This money-saving one-two punch is a welcome reminder that, despite all the economic gloom and doom of the past year, there’s still such a thing as a New York real estate story with a happy ending.

How happy? The solar panels have cut electricity bills by six percent, and during the first full heating season the new boilers saved a heart-warming $518,000. But happy endings don’t come easy, they don’t come cheap, and they don’t happen overnight.

This story began to unfold back in 2003, when the condo board at Kips Bay Towers, a pair of 20-story buildings designed by the legendary architect I.M. Pei, hired the engineering firm Power Concepts to update an earlier environmental audit of the property. The firm suggested a laundry list of potential energy- and money-saving projects. Some, such as replacing 6,000 windows, were dismissed as carrying too big a price tag and too small a payback. Others, such as the solar panels and the on-site steam boilers, were too tantalizing to pass up.

“Since it’s cheaper to make your own steam than it is to buy it, the whole board was committed to doing the boiler project,” says Suzanne Musho, an architect who has served on the condo’s board for the past three years and has been its president since May. “But it took a lot of work. We secured a low-interest, $1.7-million loan from NYSERDA [the New York State Energy and Research Development Authority]. Since we would be spending more than $100,000, it required approval of at least 25 percent of our unit-owners.”

No small task, especially considering the complexity of the project and the difficulty of getting one-fourth of 1,120 unit-owners in New York to agree on anything, let alone something as controversial, costly, and potentially disruptive as a major boiler job.

The project’s complexity stemmed from the buildings’ history. Since opening in the early 1960s, Kips Bay Towers had relied on cheap and plentiful high-pressure steam from Con Edison to power the “hydronic” system that generated heat and hot water. But over the years, Kips Bay Towers’ physical plant began to show signs of wear, and the cost of that steam crept steadily higher. The obvious solution – conversion to on-site boilers – requires two things that few New York City properties possess: ample space for bulky boilers and a chimney or other legal means of getting rid of exhaust gases.

Here, Kips Bay Towers got lucky.

At the suggestion of its property manager, Keith Werny, senior vice president of Cooper Square Realty, the board hired the small but experienced Mount Vernon-based mechanical engineering firm of Robert F. Germain PE to do a feasibility study. Ralph Germain, vice president and grandson of the firm’s founder, learned that there was ample space for two low-pressure boilers in each building. Just as critical, the south tower already had a chimney that had never been used. (I.M. Pei’s original plans called for on-site boilers, but the developer opted to buy Con Ed steam instead.) And the north tower had four stacks that had been used originally as incinerator flues and then converted into garbage chutes. One of these, lined with 10-gauge steel, could serve as an exhaust chimney.

“I try to make it as simple as possible,” says Germain. “I suggested switching from Con Ed steam to Con Ed gas, with oil as a back-up – what’s known as a ‘dual-fuel’ system.” He estimated that Kips Bay Towers would save at least 50 percent on its heat and hot water.

So it was possible – and logical – to do the job. Now all the board had to do was convince 25 percent of the unit-owners that installing the dual-fuel system was the smart thing to do.

“We had several Q & A sessions,” says board president Musho, who has lived in Kips Bay Towers all her life. (When she was born in 1968, her father, also an architect, worked in the offices of I.M. Pei.) “We had informational meetings in both towers and we discussed it at the annual meeting in 2007. People were curious – and a little nervous. People had questions about how we would get rid of the exhaust, and who would monitor and inspect the system. There were also questions about whether the interest rate on the loan was guaranteed.”

The vote was split into two questions: Do you agree to accept the NYSERDA loan? Do you approve of spending more than $100,000 on a capital improvement project? Slightly more than the necessary 25 percent voted “yes” on both questions.

Time to go to work.

Major capital improvement projects in New York City are the source of countless horror stories, but the work at Kips Bay Towers was almost scarily trouble-free. The reason, it is universally agreed, is that all the various parties pulled together as a team.

Building manager Richard Aguire, who has a background in construction and has taught heating and air-conditioning courses, helped schedule the work and supervise the crews of the contractor, Abilene.

“We worked hard to minimize interruptions and water shutdowns for the residents,” says Aguire, who has been on the job at Kips Bay Towers for three years. “We tried to make it a smooth operation.”

According to the engineer, he succeeded masterfully. “Richard Aguire was very, very helpful because he understood the systems and what we were trying to accomplish,” says Germain. “He oversaw the job on a day-to-day basis. He was my eyes and ears. That can be hugely helpful on a big job like this.

“Also, Keith Werny [of Cooper Square] deserves a lot of credit because he had the foresight to get the board to move. And [on-site property manager] Yvette Diaz was on top of things and is very knowledgeable.”

Another reason the new system saves money is that it heats the buildings more efficiently. Each tower is now divided into three zones, based on exposure to wind and sunlight. Sensors were installed throughout the buildings, making it possible to provide heat only where it is needed. Heat Timer installed an Internet Communications Management System that makes it possible for authorized personnel to control the heat and hot water on-line, verify the validity of complaints, and spot problems before they become critical.

Sophisticated technology is all well and good, but as far as board president Musho is concerned, teamwork is the key to such a big project’s success. ”We’ve been very lucky with our two major capital improvement projects,” she says (see “Sun City,” Habitat, September 2008, for information on Kips Bay Towers’ solar panels project). “We found very good contractors, the permitting processes went smoothly, and Richard Aguire’s knowledge of mechanical systems helped. Cooper Square held weekly coordinating meetings with our engineer and contractor. A board member was always present at those meetings, and that’s an important component of success.”

Musho offers a word of advice for other co-op and condo boards.

“If you’re thinking about doing this, get as much information as you can before you start talking to your shareholders or unit owners,” she says. “Some programs have been discontinued because of the economic climate.”

While such conversion projects have, understandably, become more common in recent years, Germain warns that it’s not possible in all structures. “It’s a building-by-building situation,” the engineer says. “But if you’ve got the space and can get a chimney in, it’s a no-brainer.”

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