New York's Cooperative and Condominium Community

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Greenlighting Green Projects With Green Financing

Paula Chin in Green Ideas on December 15, 2017

Washington Heights, Manhattan

Green Financing
Dec. 15, 2017

The River Arts Cooperative has always been forward-thinking when it comes to cutting costs by going green. The solar panels on the roof attest to this. But when the board at the 244-unit property, which overlooks the Hudson on Riverside Drive in lower Washington Heights, decided to switch from oil to natural gas, it ran smack into a roadblock. Con Edison’s existing gas line didn’t have the capacity to run the boilers, and the co-op was told that the price tag for installing a new line would be a staggering $1.2 million.

There was a way around the problem, however. If River Arts could form a “cluster” with nine other neighborhood buildings that would share the line, Con Ed would put it in at no cost. The hitch? The offer had a looming deadline, and in order for River Arts to commit to the cluster, the board had to come up with $350,000 to finance the conversion – fast. 

Fortunately, River Arts co-op board turned to the New York City Energy Efficiency Corporation (NYCEEC), a nonprofit company that specializes in loans for projects that save energy and reduce greenhouse gases. “Every co-op or condo board wants to cut expenses to avoid maintenance increases or assessments, but there are only so many line items you can affect,” says Posie Constable, NYCEEC’s director of business development. “The biggest one is your utility and energy use.” Securing the upfront money for green projects, however, is tough, since lenders typically don’t allow co-ops with underlying mortgages to take out additional loans from other banks. NYCEEC is there to step in and fill the gap. “You could call us the Holy Grail,” Constable says. 

Funded by government and philanthropic grants, NYCEEC has financed more than $96 million in clean-energy projects since 2012 through an innovative strategy: instead of using property as collateral – which is what primary lenders do, which is why they balk at secondary loans – NYCEEC secures its financing against the equipment. “We explain to banks that the minute you install anything that’s more energy efficient, it’s an asset to the property,” says Constable. “Once they understand the value added, banks will generally agree to our loans.” 

While NYCEEC services some commercial properties, most of the projects it funds are for low- and moderate-income, multi-family dwellings. The loans – which range from $35,000 to $6 million and have interest rates of about 6 percent for market-rate co-ops and condos – can be friendlier to the bottom line than the alternatives. “Boards could add onto their existing mortgage, but the refinancing costs, such as prepayment penalties, quickly add up,” Constable says. “Boards could also tap into a line of credit if they have one, but those are frequently at floating rates, and you’d want that money as a backup for emergencies.” 

The nonprofit, Constable points out, provides more than money. “Green projects can get hairy because they’re often complicated and very labor-intensive,” she says. “Unless a board has experience with them – which they usually don’t – they can use our help. We can help them calculate costs versus savings, and how much debt they can carry, plus we have engineers who vet studies, audits and projections. We really work the numbers.”

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