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Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

How the Leonori Got Its Gas

The Leonori is not your average condo.

The roster of celebrities who call the Beaux-Arts building home includes the actor Samuel L. Jackson, restaurateur Vittorio Assaf, and former Morgan Stanley CEO John Mack. But even the condo’s Madison Avenue location couldn’t help it convert to natural gas in a timely fashion.

“Everybody is at our beck and call because of the power of the board. These are guys who just punch in their BlackBerrys and get the name of four architects and four contractors,” says board president Tobias Sumner.

So it came as a surprise when it took more than a year to switch from heating the building with No. 6 oil to natural gas, a changeover that often takes six months. “The process was unbearably slow,” says Sumner, who pointed to delays by Con Edison as the root of the problem.

Building management expects the Leonori will now save as much as $50,000 a year when it fires up the new natural gas burner on its boiler this winter.

The conversion cost the property about $218,000, but when $61,000 in state and Con Ed rebates arrive, the final cost will be less. The condo financed the project with money in its reserve funds and did not raise maintenance fees.

With natural gas prices falling and the city phasing out two of the dirtiest heating oils, Nos. 4 and 6, buildings are rushing to switch to natural gas. But switching is not simple. It requires coordination among various city agencies, private contractors, and Con Ed. With requests up by 400 percent within the last three years, according to Con Ed, the system is overloaded. In 2010, Con Ed received 400 requests to convert. In the first half of 2012, it has received 1,200.

The story of how the Leonori made the switch – and handled the pitfalls along the way – serves as a roadmap for any building hoping to replace oil with natural gas.

Starting the Journey

The Leonori is a limestone, 12-story apartment building built in 1901. With its storied history come the challenges of maintaining an older building. Many windows are old and drafty, light fixtures are inefficient, the boiler is nearly 30 years old, and, until this spring, it used No. 6 heating oil.

So, in February 2010, residents began to reconsider their energy usage. Property manager Steven Furman of Rudd Realty suggested they begin with a sustainability audit. They could do the audit at the same time the building had its annual energy benchmark inspection as part of the new Local Law 84 requirement.

A sustainability audit is a review of a building’s energy usage and provides a blueprint for how a property can reduce its costs and carbon footprint. The Leonori turned to Lewis Kwit, president of Energy Investment Systems, an energy consultancy firm. Kwit has done energy audits for eight Rudd Realty properties.

“When you walk around the building, it’s impeccable,” Kwit says. “But when you start scratching the surface, there are a lot of things the building can do to begin saving energy.”

Kwit finished the audit in June 2010, after checking everything from roof to elevators to lighting. He made four suggestions: convert to natural gas, add a separate hot water heater, submeter the building, and replace light fixtures in the common areas with energy-efficient ones. Kwit also discovered that an AT&T cell tower atop the roof was using the building’s electricity and not paying the Leonori. The condo is now suing AT&T.

The board gave Kwit the go-ahead on the natural gas conversion. It also agreed to replace the light fixtures, a $35,000 project that was completed in March 2011.

Hands Off

The culture of the seven-member condo board is “hands off.” The board president lives in the Berkshires in Massachusetts and visits his Manhattan pied-à-terre periodically. Many residents own their apartments as investment properties and are frequently away. So the board, which meets monthly, relies on Furman’s recommendations.

“I leave it to others to get done what needs to get done and keep me apprised of what we need to do,” says Sumner.

As part of the sustainability audit, Kwit used ultrasound technology to test the quality of the boiler. He decided that, although it was aging, it could last another few years with a new natural gas burner. He suggested they buy a hot water heater, which cost $40,000. By using this, the building could shut down the boiler in the warmer months, adding years to its life.

With a green light from the board, Furman got the project rolling. He kept Kwit on as a supervisor, paying him an $8,000 retainer. By September 2010, the building had hired a mechanical engineer, Ralph Germain, vice president of Robert F. Germain’s engineering firm. For $10,000, the engineer drew up specifications that were ready within a month.

The building would need to build a gas meter room; install a sleeve in the foundation to which Con Ed could bring the gas line; install a ladder and platform to reach the sleeve; and buy a water heater and new burner.

The Leonori was able to save on one major cost: chimney improvements. Because the property has a metal stack chimney and not a brick chimney, it did not have to install a metal lining, which can cost $150,000. The Department of Buildings (DOB) prefers metal chimneys because condensation from natural gas eats away at brick and mortar.

“This building got very lucky because they had a metal stack. The chimneys are one of the biggest problems with the gas conversions today,” says Germain.

Bidding, Waiting, Hoping

Once Germain delivered specifications, Furman put the job out to bid for a contractor, a 90-day process. In March 2011, the Leonori tapped Controlled Combustion for the $155,000 job. The bid included adding the new sleeve, new gas service, gas booster, burner, new controls, and all-new gas piping from the gas meter to the boiler. The building spent an additional $40,000 on the new hot water heater.

With a contractor selected, Furman expected that the building would have natural gas by the fall and enjoy the savings that winter. Initially, it seemed like the project was running smoothly. In June, the DOB issued permits. By October, all the internal work – the sleeve, the new burner, and the gas meter – was done. For residents, the work went unnoticed: “It was seamless in terms of the building. No one knew,” says Sumner.

Next, Con Ed needed to rip up the sidewalk and bring gas to the building – a cost borne by the utility company. “We were ready. We did the work that we were supposed to do, but then we hit a snag. And the snag was twofold,” says Furman.

The first hurdle was with city permits. Con Ed could only get them for the weekends. So, what couldn’t be finished on a given weekend had to wait until the following weekend. According to Con Ed, permit restrictions delay jobs. If Con Ed receives a weekend-only permit from the Department of Transportation (DOT), a job that is supposed to take a week could take three or four times as long. If a tree is involved, Con Ed has to get a permit from the parks department, which has a much slower turnaround time than DOT, according to Joe McGowan, a manager in the gas conversion group at Con Ed. “Things are outside of our control that we have to deal with,” says McGowan.

Fateful Discovery

So, it wasn’t until November that Con Ed workers opened up the street. And that’s when things really went awry. Workers discovered asbestos in the pipes they uncovered. Before Con Ed could deliver gas to the Leonori, it had to abate the asbestos. “Until you open up the street you might not know what’s there,” says McGowan.

Suddenly, Thanksgiving was approaching. Thanksgiving marks the start of a moratorium on permitting for many non-essential street work projects. The moratorium lasts through Christmas. “We didn’t get this done until the end of February,” says Furman.

In an effort to temper frustration from customers, Con Ed launched a “gas customer solutions” group in July 2011 to streamline the process and reduce confusion. The company has gone so far as to add a conversion timeline to its website to curb expectations.

“It’s a vastly improved process,” adds McGowan, noting that the Leonori project started before the new group was up and running.

In February, after the moratorium ended, Con Ed abated the asbestos and finished the street work, bringing gas to the property line. The Leonori’s contractor brought it into the building, connecting it to the new burner.

In March, the DOB inspected the work, signing off on it so Con Ed could come back and install a new gas meter. Before Con Ed would turn on service, however, the condo paid a $17,000 deposit for establishing a new gas account. The conversion was finished in April 2012.

The building is still waiting for a $52,000 rebate from the New York State Energy Research and Development Authority. The rebate will arrive after the agency conducts its own inspection. The building is also waiting for a $20,000 rebate from Con Ed. Kwit, who filed all the paperwork, receives 20 percent of any rebates as part of his fee.

Finally, two years after the Leonori first began thinking about how it could reduce its energy usage, it is ready to save up to $50,000 a year.

 

 

 

 

Riverdale Report

Joseph Bohm was frustrated. As he saw fuel prices rising, he thought the co-op in which he lived was “missing a bet. We were losing money,” he recalls. “It bothered me no end where heating oil prices were relative to gas prices. I pushed the board to make a change to gas, or to a dual-fuel system [where the co-op could switch from one source of fuel to another, depending on price]. No one was really sure how to go about doing it. Nor was I.”

It was 2008 and board member Bohm knew something about gas already, since he was then working at Sempra Energy as a natural gas trader (he subsequently left Sempra to start his own firm, Dual Fuel). Changing from oil to gas or having dual-fuel capacity at Bohm’s 97-unit Riverdale co-op, The Imperial, was not a simple task. “It looked to be expensive,” he recalls. “We had a limited amount in reserves and this would deplete our reserves significantly,” he says. “The board wanted to know, ‘How do we know we’re going to get savings? Is there a payback here?’ “I was a committee of one,” Bohm continues. “I worked with the president, I worked with the treasurer. We hired a plumber, we hired boiler mechanics.” Issues ranged from dealing with Con Ed to deciding “who was going to paint a fence that covers the meter set. Every headache comes out if you work for a time – and this project took a lot of time.

“There are many steps in the process. You have to get the internal work in the building done, and you have to get the external work, which is Con Ed, done. You have to have the DOB [Department of Buildings] sign off on the job for the gas conversion work. Once they’re in there, they’re going to cite anything they see; you have to make sure everything is tip-top.

“If everything moves very fast and is perfect, the job can take four months; I found that the average job takes eight months. If you can do it in six months, then you’re doing a great job from start to finish. If you’re doing it in a year, that’s a long time.

“The savings are tremendous,” he concludes. “We were budgeting fuel for $230,000 a year and now we’re budgeting for $85,000. That payback was two years.”

–Tom Soter

 

 

The Cost to Convert

Every building is different and costs can vary depending on what new appliances a building needs or how much renovation is involved. But the costs the Leonori incurred may help your building prepare for the checks it will soon be writing.

 

Sustainability audit $10,000

Mechanical engineer $10,000

Retaining an energy consultant

as a job supervisor $8,000 retainer

General contractor $155,000

(Contractor’s fee included installing a sleeve; new gas service; a gas booster; a burner; new controls; and new gas piping from the gas meter to the boiler)

New hot water heater $40,000

Decommissioning the oil tank $5,000

Adding metal liner to the chimney stack $150,000**

**Although the Leonori did not have to add a liner, many buildings would need to take this additional step.

 

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