Finally, An Energy-Efficiency Loan for Smaller Buildings

The first co-op to close on a Multifamily Express Green (MEG) Loan from the New York City Energy Efficiency Corp. (NYCEEC) isn’t even big enough to fall under the carbon-emission goals of Local Law 97. But the forward-thinking board of the four-unit 90 Sterling Place in Brooklyn’s Park Slope borrowed the funds to take on projects that will nevertheless reduce its energy consumption and carbon footprint.

The $150,350 project entails decommissioning and removing the gas boiler, upgrading the electrical system and installing all-electric heat pumps for space and water heating. The board borrowed $120,000 at an interest rate of 7% and secured a $12,000 incentive from Con Edison.

Built in 1920, 90 Sterling Place is a self-managed four-story, four-shareholder brownstone with an aging gas boiler that overheated some apartments and underheated others. All four shareholders sit on the board. 

“Our boiler is very old,” says Toby Johnson, a college math professor who serves as the board treasurer. “We didn’t want to sink stupid money into this archaic technology. Eventually the world is going to switch to electric heat pumps, so we decided to go ahead and do it.”

To pay for the fully amortizing 10-year loan, the board dipped into its reserve fund and raised maintenance from $1,000 to $1,600 a month. There was no assessment. Because of today’s skewed lending market, Johnson says, the board was delighted to get the loan from NYCEEC. “It’s very difficult for a co-op of our size to get a loan,” Johnson says. “It’s not about our creditworthiness; it’s that it doesn’t make economic sense for banks to make such small loans. So it was very important for us to get this money from NYCEEC.”

NYCEEC has been providing green loans for over a decade, “so we’re pretty well versed in financing energy-efficiency projects,” says Andrew Haser, an associate on NYCEEC’s business development team who shepherded the co-op’s loan through the approval process. In addition to its Property Assessed Clean Energy (PACE) loans, which allow co-ops to install energy-saving retrofits at no upfront cost and to repay the loan through a lien on their property taxes, NYCEEC now has several more MEG loans in the pipeline. 

“We were extremely happy with how the project worked at Sterling Place, and we’re very optimistic about these loans,” Haser says. “MEG Loans are a good fit for smaller co-ops and condos. It’s a streamlined and more efficient loan process. We’re shooting for a six-week process between initial contact from the borrower and closing the loan.”

Johnson, for his part, would like to see his pioneering co-op serve as an example for other small buildings.