Ronda Kaysen in Building Operations on August 23, 2012
Onsite property manager Carl Caridi of Metro Management suggested installing a cogeneration plant (see "Homemade Electricity: An Introduction to Cogeneration for Co-ops and Condos") that would power the air-conditioning system, heat the domestic water and heat the building in the winter. The price tag would have been hefty for any co-op or condo, but this middle-class community would be especially hard hit by a bill of $3.6 million.
Help from State and Federal Financing
Luckily, since the project would reduce energy usage by 20 percent, it qualified for New York State Energy Research and Development Authority (NYSERDA) financing, as well as some money from federal programs. That would bring down the final price tag.
To install the system, the Americana would need to bring in a natural gas line; replace its aging boilers with seven smaller ones; buy three cogeneration units; and substitute two new chillers for the old ones.
The board called a meeting of all the shareholders. William Cristofaro, president of Rochester, N.Y.'s Energy Concepts, the engineering firm that designed the Americana plant, made a presentation. The turnout was large, as residents expressed doubts that the system would deliver the savings it promised and worried that the co-op was taking on too much debt.
But when the board members crunched the numbers and looked at the savings they could ultimately get, they reached a consensus to go ahead. Residents were reassured at the shareholder meeting.
"It was something new, but everybody was eager to have it done because we didn't see another way. It was better than anything else," says board president Flora Langer.
The Mechanics … of Raising the Money
To finance the cogeneration project, the co-op refinanced its underlying mortgage in 2010, paying off the line of credit and the second mortgage. It took out an additional $2.5 million, raising the mortgage to $12 million. But the 5.6 percent interest rate was a percentage point lower than the previous one.
The building qualified for a $1.45 million NYSERDA-backed loan with a 1 percent interest rate. Once the plant was up and running, the co-op began receiving a $500,000 rebate from NYSERDA, which is paid out in installments.
The co-op also took advantage of two federal programs. Each shareholder was able to write off a portion of the boilers and air conditioners on his or her tax returns, up to $1,500. And the U.S. Treasury sent the building a $100,000 check.
Even with the financing in place, navigating permitting, inspection, and approvals took time. DEP and Con Edison both inspected the new pipes. Con Ed had to run a gas line to the head of the service so the building could convert to natural gas.
"You accomplish a lot more if you have someone's e-mail address," says Caridi of all the back and forth. Even once the system was up and running, it took nearly a year to get billed properly. Because the building electricity demands were suddenly 85 percent lower, Con Ed rejected the property's meter readings, assuming something was wrong. "Billing can be confusing at first, although it shouldn't be," says Margarett Jolly, distributed generation ombudsman for Con Ed. "But since we've only done this 125 times so far, there's some room for improvement."
The co-op, which has central air conditioning, now produces 85 percent of its electricity, relying on Con Edison for the rest. The monthly electric bill has dropped from $60,000 to $15,000. In 2011, the first year the system was operating, the board put $340,000 into its reserves. This year, the board is putting away $20,000 a month.
Never, in all the years since the building went co-op in 1983, has the board been able to save at such a fast clip. Maintenance hasn't gone up in two years. Residents have also noticed that the building is cooler in the summer and there are fewer heating and cooling problems overall.
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