Bill Morris in Bricks & Bucks on April 5, 2023
When President Biden signed the Inflation Reduction Act (IRA) last summer, he opened the spigot on a $27 billion pot of money known as the Greenhouse Gas Reduction Fund. Its mission is to help building owners, including co-op and condo boards, make the switch from fossil fuels to renewable energy.
One of the features of the sweeping legislation was an expansion and extension of the investment tax credit, which can reduce the taxes of homeowners or investors who install solar panels. The credit, instituted in 2006, was at 26% and set to expire in 2024. Under the IRA, the credit was extended for 10 years and raised to 30% — with available increases if certain criteria are met. These changes are already benefiting a moderate-income co-op in the Bronx, and they offer a glimpse of what’s in store for other co-op and condo boards as they struggle to meet carbon-emission caps under New York City’s looming Local Law 97.
Before the IRA became law, this 132-unit co-op near the New York Botanical Garden had embarked on an ambitious $600,000 string of capital projects, including a roof replacement and work on parapets and facades. That’s when the co-op’s property manager, Anker Management, connected the board with Urban Energy, a solar consultancy founded by Russell Wilcox. The company offered to pay the co-op $129,000 for a 25-year lease of its roof, which would help defray the cost of the roof replacement. Urban Energy would install and own an array of 220 bifacial solar panels on the new roof, and the co-op would get a $120,000 abatement on its city property taxes spread over four years. The co-op also got a $59,400 grant from the state’s New York Sun program. The co-op board did not have to put up any money, and in addition to the cash windfall its electricity bills would be cut by 10%.
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Then the IRA became law, and the calculations changed. The increase to 30% in the investment tax credit would bump the roof lease to $134,000. A 10% boost for buying domestic materials would bump the number even higher, to $147,000. And another 10% boost for installing the panels in a low- to moderate-income area would raise the lease to $160,000.
“These boosts, known as ‘adders,’ are a new concept,” Wilcox says. “The Internal Revenue Service has put out information on who’s eligible for them, but they haven’t yet put out who’s going to get that money. The original deal that we had with the Bronx co-op board was to provide a roof replacement budget of $129,000, and with the IRA improvements we negotiated a roof replacement budget of $150,000, since the process for receiving the adders is still undefined. Hopefully it will be clarified this year.”
Peter Morello, the president of the co-op board, sees multiple benefits in the project. “We’re getting a 10% discount on our electric bill,” he says, “we’re getting money to defray the cost of the roof work, a property tax abatement, and we’re hoping that the solar panels will wipe out any fines in 2030 and beyond under Local Law 97. Another benefit is that we didn’t have to buy the solar panels — and we don’t have to maintain them. It’s a nice package.”
Under Urban Energy’s business model, it will sell the project to investors — who will be attracted by the improved investment tax credit. The bottom line is that the IRA is a pot of gold for co-op and condo boards struggling to turn their buildings green.
“More solar projects will happen in the future because there’s more federal government support,” Wilcox says. “That support used to be in flux. Not anymore.”
PRINCIPAL PLAYERS — SOLAR CONSULTANT AND INSTALLER: Urban Energy. PROPERTY MANAGER: Anker Management Group.
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