Harlem Co-op Benefits from Decarbonization Pilot, Paving Way for Offset-Funded Program

For some buildings facing major financial hurdles in transitioning away from fossil fuels, a pilot program has offered a glimmer of hope. For residents at a group of four buildings at West 120-126 Sts. in Central Harlem that are being converted to a co-op through the New York City Department of Housing Preservation and Development's (HPD) Affordable Neighborhood Cooperative Program, the HPD Retrofit Electrification Pilot is providing crucial funds to switch the co-op from oil to heat pumps for space heating and hot water. The pilot, available to buildings receiving support through HPD's existing preservation programs, is also funding envelope upgrades, new lighting, and the installation of low-flow fixtures.

The retrofit is one of nine electrification projects that has served as a model for HPD’s Resilient & Equitable Decarbonization Initiative (REDi), launched last fall. Within this program, the REDi: Existing Buildings (REDi: EB) is supporting beneficial electrification projects in apartment buildings with five or more units — typically those that are income restricted — that are already receiving support through HPD. For example, once the complex at West 120-126 Sts. is converted to co-op, some families will have the opportunity to purchase their long-time units at a fraction of their value, in some cases as low as $250. Other apartments will be sold through HPD’s housing lottery to families earning up to 90% of the area median income.

These types of cash-strapped buildings would not be able to meet longer term emission limits without help. A HPD spokesperson says there’s an “active pipeline” of buildings seeking support from the REDi: EB program. Qualifying buildings must be Con Edison customers and cannot overlap on incentives from other NYSERDA and Con Edison programs, such as the NYSERDA Low-Carbon Pathways or Con Edison Affordable Multifamily Energy Efficiency Program. Another requirement states the work must be completed by a New York State Clean Heat participating contractor. There are also time limits within which the work must be done. Funding is capped at $1 million per building or $2 million for multi-building projects.

The number of HPD-subsidized buildings eligible to receive this kind of decarbonization help should increase in coming years, thanks to newly approved carbon offset certificates established as part of Local Law 97 compliance guidelines. (REDi: EB funds will not be available to market-rate co-ops.) Offset certificates will soon be available to purchase by buildings wanting to mitigate emission penalties. The offsets will be calculated at the same rate as penalties, at $268 per ton of carbon emissions. Even if there’s no financial incentive to buy offset certificates, they can help keep a building in compliance. Violations can negatively impact a building’s bottom line, affecting financing options for other projects as well as the marketability of units.

The money paid for carbon offsets will go into what’s called the GreenHOUSE Fund. This fund will flow through the REDi program to help electrify more low-income buildings, including co-ops. To enhance accountability, there will be a registry to track how specific offsets are used as well as itemize their effectiveness. In this way, a funding loop is created where market-rate co-ops and condos buy offsets, which go back into the multifamily ecosystem, funding energy efficiency projects in affordable buildings owned or rented by low-income residents.

Although the majority of apartment buildings are able to meet Local Law 97 requirements for the first compliance period, Chris Halfnight, senior director of research and policy at the Urban Green Council, anticipates “some meaningful demand” for the offsets when building owners are able to buy them ahead of the May 1 reporting deadline. And as emission thresholds become more stringent and demand for offsets likely increases, this ramp up period allows the program to “work out the kinks in implementation and fine tune the program’s design,” he adds. The offset registry will open in early spring, according to a HPD spokesperson. Boards can lower penalties by offsetting up to 10% of excess carbon emissions with credit certificates ahead of the reporting deadline.