Georgetown Mews is big – really big. So it seems fitting that the solar project this Queens cooperative plans to install is simply gargantuan.The sprawling, 60-acre co-op in Kew Gardens, Queens, spans a full four-block lot and has six bus stops and 930 garden apartments. Because of its ample roof space, the co-op may soon be able to install a 1,026kW system spread out over 32 separate buildings’ rooftops. In other words, the system will produce more than 35 percent of all the electricity consumed by this middle-class community. The price tag: $3.5 million. However, a laundry bag of incentives and a credit from Con Edison will shave the price down to a modest $458,000.
“For a cooperative like this, it’s huge, it’s just immense,” says Stephen Owen, the RGS Energy project development director for the Georgetown installation.
This is the second time that Georgetown Mews has toyed with the notion of solar power. The co-op first considered the idea about four years ago, but ultimately abandoned it because the cost was too high and the incentives too low.
Then about two years ago, the math began to change. Over the past couple of years, the cost of solar panels has dropped as advances in manufacturing increased production, glutting the market with materials. At the same time, various city, state, and federal incentives were introduced, making a very expensive project affordable. The payback will take four years. (The complex will save $250,000 the first year alone.)
But making a project of this scale happen is a Herculean task, with numerous moving parts that can collide at any moment – and derail the endeavor. The biggest hurdle is assembling the cash to do the work. Last October, the community refinanced its $13.6 million underlying mortgage with John Hancock. At the time, the solar project was not on the table, so Georgetown Mews didn’t take out a larger mortgage to help finance it. The terms of the mortgage give John Hancock the right to veto any additional financing the co-op seeks.
The co-op is in discussions with three different lenders for a loan of about $2.5 million; however as of early July, John Hancock had yet to approve the agreement. Part of the reason is because the project is new territory. The bank simply does not have paperwork in place to approve a project like this, according to Jim Goldstick, a vice president and property manager with Mark Greenberg Real Estate, who notes: “If we can’t get the financing in place, the project is going to die.”
Ultimately, the co-op will recoup much of the money it spends. The project is eligible for $1 million in rebates from the New York State Energy Research and Development Authority (NYSERDA). A 30 percent federal tax credit shaves off another $1.2 million. City property tax abatements reduce the cost by another $250,000 over four years after the system is in place; depreciation further reduces the costs. (In addition, the 30 percent tax credit can be allocated to individual shareholders.) The community hopes to pay back the remaining cost as it continues to sell off unsold units. Currently, the complex has about eight pending sales. Two bedrooms sell for $225,000 and one-bedrooms for $165,000.
The project was originally working under an extraordinarily tight deadline. Previously, if it had not been completed by December 31, 2014, the $250,000 in city tax credits would have expired, making the project unaffordable. Now, however, a bill has passed in both the state senate and the state assembly that extends the tax credits through 2017. Georgetown Mews’ solar project is still scheduled to be completed by the end of the year, though.
Starting the project is not simply a question of getting a green light from the bank, however. The complex will have to upgrade its electrical system, which dates back to 1952. The project must be approved by both the New York City Department of Buildings and Con Ed, and includes an impact study.
“Everybody thinks that once you decide to go solar, you just install a system,” says Owen. “But as the industry has grown up, so have the utilities and they are much more judicial about whether their grid can handle it.”
From Humble Beginnings
The project wasn’t always this big. Initially, the board considered installing a system that was about half the size of the current one. But because of falling material and labor costs, RGS Energy was able to make the math work for a significantly larger installation that would ultimately cost Georgetown Mews about $20,000 more.
Before any of this could happen, however, the board had to be convinced. Owen first approached the co-op’s lawyer, James Samson, about the idea. Once Samson, a partner at Samson Fink & Dubow, crunched the numbers and saw that the project was possible – and could really work – he brought the idea to the board last December. But it took some convincing. “When I first proposed the project, everybody said, ‘This is crazy,’ because it had never been done before,” says Samson.
But Georgetown Mews does not have a typical board. The community, which converted from rentals to co-ops in 1986, has a long history of making bold, proactive choices. In 1995, the co-op bought the mortgage on the sponsor’s unsold shares, creating an income stream. Over the years, the complex has sold off apartments as they become vacant, providing the community with another source of revenue for capital improvements. (Of the remaining one hundred rental units, about eight are currently vacant and ready to be sold.) The co-op has taken on major capital improvement projects with a focus on making the community more environmentally responsible. In 2008, the board had the entire community submetered, a process that involved amending the proprietary lease. Following that, the attics were insulated. Then, in 2011, the board had the windows replaced.
“I tell people everything the co-op has done, and I mention the solar panel project and people are very impressed,” says Mary Fisher, who has been board president since 1995.
Of all the projects Georgetown Mews has tackled over the years, the submetering project is the one that will help make the solar panel project work. The co-op will be able to direct the power it generates through the master meter. Individual shareholders won’t see a reduction on their electric bills; instead the complex’s overall costs will drop because of a credit on the overall dollar amount billed from Con Edison, which translates to lower maintenance fees.
While Fisher leaves the project details to the lawyer, contractor, and property manager, her main concerns are focused on the community. When Samson, the lawyer, and Owen, the contractor, proposed the idea, she wanted assurances that a solar installation wouldn’t be a nuisance. “I wanted to make sure this wasn’t making a humming sound over your head. I wanted to make sure I didn’t have kids throwing rocks at them,” she says.
But until the banks, the city, and Con Ed have given the project a nod, concerns about kids and rocks remain a distant problem.
“Are you asking me if anything can fall apart?” says Goldstick. “I’ve been in the business for a long time. Until the ink dries and the check clears, a lot of things can fall apart.”