July 6, 2011 — He has seen the soybean, and it works. Plus, it gives him a real estate tax credit.
"There were really no downsides," says Paul Miller, board president of the prewar co-op at 308 East 79th Street, speaking of his 189-unit building's seamless conversion to "biofuel" heating oil. "There were no capital costs in terms of equipment changes, since you use the same equipment as you do for regular [petroleum] oil, and our upkeep costs went down, since [biofuel] burns so much cleaner," he says.
That's fortunate, because starting in October 2012, the new Local Law 43 will require all heating oil sold within New York City to contain at least two percent biodiesel, a type of biofuel.
That's the generic name for any fuel that contains plant product or animal fat, whether it's corn-based ethanol for cars or soybean-based biodiesel for heating oil. Biofuel heating oil ranges from B2, which is two percent biodiesel and 98 percent petroleum, to B20, which is 20 percent biodiesel and 80 percent petroleum
"The intention of the state and the city are to clean up the fuels in New York, and biodiesel has zero sulfur," says Gene V. Pullo, CEO of the Brooklyn-based Metro Energy, Miller's supplier and one of a handful of companies that locally supply biofuel (some others include: Schildwachter Fuel Oil and Tri-State Biodiesel).
Credit Where Credit Is Due
To help with the transition, the New York State Department of Taxation and Finance has been offering a "Clean Heating Fuel Credit" (tax forms CT-241 for corporations and IT-241 for others) for all biofuel purchases made through December 31, 2011. Buildings using biofuel get a tax credit of one cent a gallon for each percent of biodiesel blended with conventional home heating oil, up to a maximum of 20 cents a gallon.
Or as Miller puts it simply, "The tax credit is based on the percentage of 'B' used. Using B20 would give you 20 cents tax credit per gallon used. … It's a one-page form that you fill out and give to your accountant, and it gets attached to your tax return."
CPA Stephen Beer, a partner in the accounting firm Czarnowski & Beer, cautions, howver, that the credit applies to the New York State corporation tax, "so it generally will only benefit co-ops. Condos don't generally pay New York State corporation tax," which, he adds, "caps at $1,500 anyway, though there's also a 17 percent surcharge [on the tax amount] in the New York City metropolitan area." His bottom line, for condos in particular: "Evaluate it with your tax adviser."
An Oily Adopter
Miller's co-op hopped on the biofuel bandwagon earlier than most, partly because he was familiar with it through his job as creative director of the marketing and branding company the Pinwheel Group, which consulted with the city on the clean-fuel mandates. But as part of a young-blood slate that replaced the leadership that had dominated the six-member board since the building's conversion 24 years ago, Miller also spearheaded the change "to help get rid of some of the negative baggage that had accumulated" with his building's image.
"Some of the online real estate blogs had been giving us a bad rap about the old board – that it was run with an iron fist, that the building didn't allow certain animals, which we do, that we didn't allow pieds-à-terre, which we do. Once you have negative postings on the Internet you can't get rid of them, so you have to put out a positive image and positive deeds. And one of our positive deeds is to take a strong, sustainable position in improving energy efficiency, water usage, and reduction of waste."
The new slate of board members, elected in March 2010, "changed a number things — our legal representation, our managing agent, and our conversion to biofuel within three months" of taking office. They also created a website "in order to give people in the building a way to know what's happening," Miller says.
How did he sell the biofuel conversion to the shareholders? "We didn't have to sell it to the shareholders," he notes. "As a board it's our fiduciary responsibility to do the right thing. One goal was not only to improve the indoor air quality but also be fiscally responsible because we needed to bring our costs down."
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