What could be better than a new, watertight roof? Answer: a new, watertight roof that generates free electricity and pays for itself in four years.
Sound like pie-in-the-sky? Guess again. That is precisely what 51st-52nd Street Tenants Corp., a 427-unit co-op in Woodside, Queens, installed, thanks to creative professionals, an industrious board, state-of-the-art technology, and a little bit of luck. After negotiating some Byzantine regulations, red tape, and tax laws, the board proved that it’s possible to save your building serious money – and do the environment a favor while you’re at it.
Back in the summer of 2006, Woodside and several nearby Queens neighborhoods were hit by a wicked Con Ed power outage that lasted for nine days and affected 174,000 people – including the residents of 51-52 Tenants Corp., who had to rely on Con Ed generators for several weeks while repairs dragged on. That grim memory was still fresh when the board started discussing the need to replace the two worn-out roofs. (The co-op consists of ten separate properties housed in two buildings with the two roofs.)
“The board, other professionals, and I were bouncing around ideas on ways of reducing our consumption of electricity,” says Maryann Carro-Caputo, president of Tribor Management, who has managed the co-op since its conversion 25 years ago. “We also knew the roofs were nearing the end of their lives.”
Replacing the two roofs would carry a price tag of roughly $1 million. The board was refinancing its mortgage at the time and wisely built that money into the loan, which meant there was no increase in monthly maintenance and no assessment. The co-op had also won a grant of $175,000 per building from the New York State Energy Research and Development Authority (NYSERDA) to install a solar electricity-generating system. The board turned to Veronica Blanco, who at that time was an architect at Devon Architects of New York, to see if the need for a new roof and the desire to become less dependent on Con Ed could somehow be dovetailed.
“Veronica came up with the idea of using something called a Uni-Solar system,” says Carro-Caputo. “It’s a solar system with lightweight panels that lie flat on the roof rather than traditional vertical solar panels, which would have been a problem because of aesthetics and weight. We realized this would work in theory because it’s another roof surface that would integrate with the roof itself – and the cost of the roof and the cost of the solar system would overlap. Better yet, the system qualified for the NYSERDA grant.”
Ahead Of The Curve
The idea of installing the innovative Uni-Solar system had a key ally in Noel DeBattista, who has been the building manager since 1985 and knows the two buildings intimately, from basements to rooftops. “When Maryann brought us the idea, Noel was extremely excited about it,” says board president Frank Dwyer, who moved into the building in 1988 and has served on the board, off and on, for about 15 years. “We realized that government tax credits and assistance, as well as reduced electricity costs, would help pay for it. And the board liked the idea of being ahead of the curve moving toward a green building. We raised the idea at our annual meeting and the shareholders were excited about it, too.”
The cost of installing the system was about $425,000 per building, which the NYSERDA grant brought down to $250,000. The board decided to pay the upfront costs out of the co-op’s $4 million reserve fund, then try to find ways to defray that cost through various tax breaks and grants. But there was still a lot of paperwork to do before the system would pay for itself.
The co-op’s roofing contractor, Tommy Zovas of Starcel Waterproofing, started doing some research. Eventually, he got in touch with Jared Haines of Mercury Solar Systems, in Portchester, N.Y., a company that installs some 20 solar electricity-generating systems, including the Uni-Solar system. The system uses a thin Building Integrated Photo-Voltaic (BIPV) membrane – picture a very large yoga mat – that lies flat on the roof. It absorbs sunlight and creates direct electric current, which is then converted to alternating current and fed into the building’s existing electrical lines.
Blanco, the architect, says that while the Uni-Solar system was the perfect fit for the Woodside job, a major hurdle remained. First, the good news. “Glass solar panels weigh 200 pounds apiece,” says Blanco, who has started her own sustainable-energy firm, Blanco Design, “while the BIPV membrane weighs less than four pounds per square foot, which is nothing. Normally, when you have glass panels, [if] one panel is in shade, the entire row shuts down. With the membrane, if one gets shade, the others continue to produce electricity. That’s a big advantage in a cloudy and polluted area like New York City.”
Now, the bad news. The board had decided to use an energy-efficient “cool roof” manufactured by Johns Manville, which has a light- and heat-reflecting coating of granulated white stone. But, no one was quite sure how to get warranties on two separate but contiguous systems – the Johns Manville roof and the Uni-Solar membrane that is still relatively novel in New York. If the roof leaked, who would be at fault? If the solar membranes malfunctioned, who would be responsible?
After some complex negotiations, the maker of the solar system and the manufacturer of the roofing materials agreed to a co-warranty on the two systems for 20 years, with no dollar limit on labor and materials. It was a crucial piece of this complex puzzle. “It was the first time Uni-Solar and Johns Manville agreed to do a co-warranty,” says Carro-Caputo. “This is an arrangement that should move forward in other buildings. Because the solar system is so novel, there was a lot of oversight by both companies during installation. And it’s a tremendous warranty. In the next 20 years, if we want to upgrade the system we can peel off the membrane and install something new without losing our warranty. We couldn’t have moved ahead without that co-warranty.”
The work went smoothly and the new roof and solar system were in place in the spring of 2009. But the co-op was not out of the woods yet. Far from it. “Con Ed didn’t like the way the system was connected to the building,” says Haines, the solar installer. The problem was working out a method of “net-metering,” which causes the electric meter to run backwards when the solar panels are generating more electricity than the building is using at a given moment. Without net-metering, the co-op wouldn’t realize full savings for the electricity the roof system produced.
But it’s illegal to operate a solar system before Con Ed has signed an “Interconnect Agreement.” Con Ed, suspicious of the system’s sizable energy savings, refused to sign. “It was horrific,” Carro-Caputo, the property manager, says of the negotiations with Con Ed. The co-op had paid for a functioning electricity-generating system that it couldn’t legally use. Negotiations moved forward only when Con Ed brought in a new project engineer. “Finally,” says Carro-Caputo, “Con Ed reversed itself and installed new meters that take into account the electricity we’re generating.”
Up And Running
The system was finally up and running this past spring and began trimming electricity use in the boilers, elevators, garages, and common areas, including lobbies, hallways, laundry rooms, and building exteriors. With an assist from other energy-saving measures – efficient light fixtures and bulbs throughout the co-op, and a motion-activated lighting system in the three garages – the co-op has cut its electric bill by more than 40 percent.
Now, it was time to attack those Byzantine regulations and tax laws, which would be crucial to recouping the co-op’s investment.
The NYSERDA grant had been spent on installing the solar system, but Carro-Caputo had three more cards to play. First, she applied for a federal energy tax credit, which runs for two years and amounts to 30 percent of the $500,000 net cost of installing the solar system on both roofs. This is passed through the corporation directly to shareholders, who are allowed to deduct $1.40 from their federal income tax for each share of the corporation they own. Residents of two-bedroom units will save about $1,500 on taxes over the two years, or slightly more than one month’s maintenance.
Carro-Caputo’s next move was to apply for an investment tax grant, stimulus money made available by the American Recovery and Reinvestment Act of 2009, which was one of the Obama Administration’s weapons for fighting the current recession. The co-op received $75,000 a year for 2009 and 2010, and the $150,000 went into the depleted reserve fund.
Finally, Carro-Caputo is getting ready to apply for a solar-energy abatement on the co-op’s New York City real estate taxes, a major initiative of Mayor Michael Bloomberg’s administration. “The paperwork is onerous,” she says, “but we’ll fight through it and we’ll get it. It’ll probably take a year.”
Haines, the solar installer, adds that the city won’t grant the tax abatement until a city inspector has approved the solar system – even though the system has already been inspected by a licensed electrician, Underwriters Laboratory, NYSERDA, the city’s Department of Buildings, and Con Ed. “It’s absolutely criminal what they’ve done,” Haines says, “the way they’ve put up more hurdles before they’ll approve the city property tax abatement. They have to certify the system themselves – at a cost of $5,000 to $10,000 to the co-op. It’s ridiculous.” Adds Carro-Caputo: “The hurdles are so hard to get over. This should be a no-brainer.”
But it’s worth it to the co-op to pay for the additional inspection in order to win the tax abatement, which is computed by taking 35 percent of the $500,000 net investment in the solar system – $175,000 – and spreading it over four years, which amounts to an annual tax reduction of $43,750. Add on the savings on Con Ed bills, which will plummet from $140,000 to about $80,000 per year, and the Uni-Solar system starts to look awfully attractive.
“One hundred percent of the investment will be recouped for the co-op and its shareholders within four years, instead of the usual fifteen-year payback,” Carro-Caputo says proudly, adding that the co-op benefited from some good luck. “We did everything at the ultimate time,” she says. “NYSERDA grants for photo-voltaic systems were at their peak. Bloomberg came in with the real estate tax abatement while we were getting ready to sign the contracts. Then tax credits became tax grants under the recovery act when the recession hit. We lucked out on some of that.”
But there’s no denying that a forward-looking board and hard-working professionals, from the super to the contractors to the suppliers, helped make the project a success. Doggedness didn’t hurt. “Just be conscious that when you’re involved in complicated projects like this that they may take more time than you expect,” says Dwyer, the board president. “Although we moved forward reasonably quickly, you always hit bumps in the road that slow you down.”