Bill Morris in Bricks & Bucks on September 27, 2023
A dozen multifamily buildings in Manhattan, including co-ops and condos, are benefitting from a $4 million loan from NY Green Bank that is helping them increase their energy efficiency and reduce their carbon emissions three months before Local Law 97 goes into effect. The loan is just one example of the money that has begun flowing from city, state and federal spigots as New York building owners race to meet ambitious city and state climate goals.
“We provide capital advances against the incentives buildings are getting from utilities, such as Con Edison,” says Konstantin Driker, a managing director at NY Green Bank, a division of the New York State Energy Research and Development Authority. Since its inception 10 years ago, the bank has committed $2 billion to finance clean-energy and sustainable-infrastructure projects. “We’re allowing co-ops and condos to tackle retrofits without waiting for the incentive money to come through.”
The $4 million loan was secured not by the co-ops and condos themselves but by Parity, a company dedicated to increasing the efficiency of existing heating and cooling systems in multi-family buildings. Using the money throughout the dozen Manhattan buildings, Parity is upgrading HVAC systems by adding proprietary software and such hardware as control panels, electrical wiring, sensors, Variable Frequency Drives (VFDs), motors, thermostats, valves and data gateways.
“These are not retrofit projects, we’re trying to get the most efficiency out of existing systems,” says James Hannah, the managing director at Parity. “We directly reduce energy use, which reduces the building’s carbon footprint, which reduces exposure to fines under Local Law 97.” He adds that the current upgrades might qualify as “good faith” efforts by boards that fail to reduce their carbon emissions under the caps laid out by Local Law 97, which goes into effect next year. Under new rules just released by the city, “good faith” efforts can lead to reduced fines.
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Hannah likens the NY Green Bank loan to a line of credit, in that Parity draws on the loan as needed. “The Green Bank funds us,” he says, “and we repay the bank plus interest once we receive the incentive from Con Edison, which can take six months or longer. We replenish the line of credit every time we get paid by Con Edison.”
The NY Green Bank, in turn, puts that money back into circulation. “As we get repaid,” says Driker, “we’re able to redeploy that capital to further reduce greenhouse-gas emissions. If Parity performs as expected, we hope larger banks will support them.”
In a sense, the loan to Parity is a lubricant that keeps the machine running smoothly. The money allows the company to do the work while waiting for the incentives to arrive. ($1 million of the loan is going toward refinancing Parity’s debt.) There is little upfront cost to the client, the work continues without interruption, and Parity guarantees a certain level of energy savings. If those goals are not me, Parity cuts the client a check to cover the shortfall.
“A solution like ours eliminates risk for the client,” Hannah says. “It allows us to keep the upfront cost low, and we can also help boards understand how well, or poorly, their building systems are working. This loan helps us buffer our clients from the uncertainty of utility incentives.”
Adds Driker: “We’re allowing co-ops and condos to tackle upgrades and retrofits without waiting for the incentives to arrive.”
The incentives from Con Edison will cover from 10% to 70% of the cost of the upgrades, which range from $30,000 to $250,000 per building.
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