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Habitat Magazine Business of Management 2021

HABITAT

ENERGY COMPLIANCE: TWO BOARDS, ONE MISSION

Energy Compliance: Two Boards, One Mission

Ira Meister, President, Matthew Adam Properties

 

Unique challenges. This building was built in the 1920s, and now it’s a landmark building. The bottom of the building has three retail stores plus a mezzanine floor, which is also retail. Above are very upscale condominium apartments. The retail and residential sections have separate boards of directors, so it’s a very, very unique building and a very challenging building to manage. I’ve been handling this building since about 1985. 

 

With all the new energy regulations coming up under the Climate Mobilization Act, we had our outside consultants go through the building and give us an idea what to expect in 2030 and beyond. They came back with a very shocking report. They told us our penalties will be around a quarter of a million dollars a year if we didn’t do any retrofits. That’s a lot of money for a building that has about 30 units in 21 stories. After analyzing the report with both boards, we agreed to have an additional engineer come in and also analyze the situation.

 

A second opinion. We realized the commercial spaces – doctor’s offices, a hair salon, other businesses – use a tremendous amount of energy. Somehow we had to convince them to control their energy use, which was not an easy task in itself. So we met with them, and the consultants explained everything to the two boards. The residential board was concerned that it was going to have to foot a big portion of this bill. The residential portion had many more renovations done to it before the building became a landmark – thermal-pane windows were installed, air conditioners were modernized, insulation and doors were improved – while the lower portion of the building had not had that much done to it. So everyone realized that we have to start putting together a plan now.

 

A plan is born. We engaged two engineering firms to start to put together a plan. We also brought in a law firm because we really needed to know what to do if we didn’t get everyone’s cooperation. If we get fined, do we bill back certain people certain amounts of money? Can we penalize those who choose not to participate? We’re putting together a plan to motivate people to participate. I don’t think it’s going to be easy. The commercial unit-owners have substantial operations there, and I don’t think they want to pay much more than they’re paying now. So we’re putting together this double plan – a go-ahead plan and a doomsday plan so we have something in the hopper if all else fails. We just want to make sure that we’re well covered and that we know where we’re going because 2030 is right around the corner.

 

Selling the plan. Numbers don’t lie. You sit down and you show the reports to people – here’s what you’ve got to do, here’s what it’s going to cost, here’s what you’ll be saving if you put in LED lighting or take the old crummy air-conditioning system out and put in a good unit that’s not going to be running 24/7 and can sense temperatures inside and outside. All that goes into the mix. So I think reality is starting to set in on some people. It was not an easy sell at first. It’s a door-to-door sell. The ones I thought were going to be the most difficult were the most receptive. Some of the old-time physicians were the hard sell.

 

This building has an archaic offering plan with a fines-and-penalties clause, which you don’t really see much anymore. And the lawyers are going to meet with the commercial unit-owners who refuse to comply with the plan, and they’re going to say, “Listen, you can pay now, or you can pay later.” Why would you want to pay a penalty when you can go ahead and fix up your unit and save yourself money and aggravation – and make a healthier environment for yourself and your employees? We’re putting in all these new air filtration systems, these MERV filters, all these fancy systems. You’re going to benefit now. Well, why not?

 

Boards need to start working on this now. Before you realize it, 2030 is going to be right at your door, and then you’re going to be scrambling. Why scramble? And you’re going to reap the benefits right now. Why wait?

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