Heshey and the Giant Boiler

Co-op Village’s longtime manager ushers in a new, non-polluting era.

Harold Jacob might just be the only property manager in New York City with a collection of 4,000 rare and out-of-print books. Dozens of them, with their dusty, fraying covers, are piled high in his cluttered office at Co-op Village, a sprawling Lower East Side housing complex along Grand Street in Manhattan.

“My boiler room is the only boiler room in New York City that’s under rabbinical supervision,” says Jacob, with tongue firmly in cheek. The manager, known to most simply as Heshey, delivers the line with the deadpan seriousness of a born standup comedian.

That’s Heshey. He’s been at the property so long, you can’t think of him without thinking of Co-op Village. Commonly called the Grand Street Co-ops, it has one of the largest communities of elderly residents in the city, although the community is fairly mixed. Many of the elderly residents are Jewish and many worked for the city’s labor unions, which built the 12 buildings that make up the complex before and after World War II. For the past 25 years, Jacob has run the property, with only two other managers preceding him. Until a decade ago, he managed all 4,400 units; he now manages “only” the seven buildings that make up Hillman Houses and East River Housing – 2,500 units. The other Grand Street co-ops are under separate management.

Jacob’s portfolio might be smaller today, but his influence reaches beyond the mundane tasks of running high-rise apartment buildings. He is a famously close friend of New York State Assembly Speaker Sheldon Silver, who lives in Hillman Houses (the two attend the same orthodox synagogue, Bialystoker on Willet Street). Jacob is also president of Hatzolah, the city’s largest volunteer ambulance service, and chairman of the United Jewish Council, the umbrella group for local Jewish organizations on the Lower East Side.

Getting Rid of No. 6

When Jacob decided in 2009 that the time had come for Co-op Village to wean itself off the highly polluting No. 6 heating oil, he ushered the sprawling complex into a new era of energy efficiency, lowering the community’s energy consumption and dramatically reducing its pollution. It is now a dual-fuel system that relies mainly on natural gas and can periodically switch to the cleaner No. 2 oil, at Con Edison’s request.

“The mayor ought to take me out to a very good dinner,” says Jacob, leaning back in his black leather chair, photos of his five children and numerous grandchildren covering his desk. Jacob, a lifelong Lower East Side resident, lives in two combined apartments in Co-op Village. Several of his adult children also live in the complex. A large man, with a moony face and long gray beard, Jacob happily shared pictures of his wife and children with a recent visitor. “Don’t ask me how many grandchildren I have!” he says.

The natural gas project was far from simple. It cost the co-ops $6 million and involved shutting down the George Washington Bridge so a six-ton boiler could be driven across. But long before the 32-foot-long boiler crossed the Hudson under cover of night, Jacob had to convince co-op boards to go along with his plan, get Con Edison to extend a 500-foot gas line to the mechanical room, and build a new foundation to support that giant blue boiler.

It helps that Jacob has friends in high places. Silver facilitated a meeting between Co-op Village and Con Ed after the building hit a wall trying to get information about cost savings from the utility company.

“Speaker Silver was able to get us in a room with Con Ed,” says Richard Valcich, a board member at East River Housing who was vice president of the board during the time. Did it help that Jacob and Silver were friends? “I think he would have done it for any of his constituents,” he says.

For years, the price of oil consumed Jacob. A small television is mounted in his office and tuned to CNBC. Jacob feverishly watched the ticker running across the bottom that reported incremental changes in the price of oil. Jacob would wait until the dog days of August, when prices were at their lowest, to lock in oil contracts for 200,000 gallons at a time.

“When you’re buying 2 million gallons, a few cents make a difference,” explains Jacob.

When the co-ops burned No. 6 oil, 300 trucks a year would bring oil to the boiler room, idling in the street in front of a public school. In the winter, two or three trucks would traverse the congested Grand Street corridor every day with fuel for the complex. Last winter, only two trucks delivered oil.

“Just having less trucks going through the neighborhood with a school across the street is good for the environment,” says Marc Karell, president of Climate Change and Environmental Services, the construction and environmental manager for the project.

Now that the co-ops have converted to a dual-fuel system, the boilers generally run on natural gas. But the mechanical room stores two 40,000 gallon tanks of No. 2 heating oil so it can switch to oil heat on an hour’s notice if Con Ed requests it. Con Ed provides a discount to customers that use dual-fuel because it reduces the burden on the grid, allowing the utility company to triage when natural gas demand is high.

Going to the People

Before Jacob could green-light the project, he had to manage another powerful constituent: the shareholders. He had to convince them that overhauling a system that wasn’t broken was a good idea.

“To me, Mr. Jacob is the biggest hero of them all,” says Karell. “The biggest part of a job like this is the psychological part. People don’t like change. People are reluctant to do it. But Mr. Jacob, to his credit, knocked down those psychological barriers.”

Jacob enlisted one member from each of the co-ops to sit on a natural gas committee. Amalgamated Dwellings, one of the co-ops that broke off years earlier, still used the Co-op Village plant. A member of their board sat on the committee as well. Each month, the members would report back to their respective boards, keeping them up-to-date on the project.

“Heshey sets a good tone,” says Howard Stern, a board member at Hillman Houses, who sat on the natural gas conversion committee. “He can be tough when he needs to be, but he can also be thoughtful.”

Best Deal, Best Co-op

In 2001, Co-op Village converted to market rate from an affordable housing rate. The decision dramatically changed the demographics of the community. What was once a complex made up largely of Jewish labor union workers is today a mixture of elderly pensioners from that earlier era and young families paying market rate.

“The residents are changing,” says Jacob. “We have many, many young couples. But this is still the best bargain in New York.”

The transition to market-rate housing may have benefited many of the older residents who can sell their units for a windfall, but it has also created tension between the older residents who built the co-ops and now live on a fixed income and the younger ones who paid hundreds of thousands of dollars, if not millions, for their apartments.

“The two groups, their ability to pay for services and the amenities that they are looking for, are radically different,” says Valcich. “As a board member, I walk the fine line where you’re aware of both groups.”

In the case of the natural gas conversion, it meant navigating divergent opinions about how to finance the project. Newer residents, concerned about long-term debt, worried about increasing the underlying mortgage; older residents with limited finances worried about the huge burden of an assessment.

Ultimately, the co-ops decided that an assessment would be too heavy a burden during difficult financial times. In September 2011, they refinanced their underlying mortgages, taking advantage of historically low interest rates. East River Housing settled on a 10-year mortgage with New York Community Bank for $25 million. Hillman Houses took out a $12 million mortgage. The interest rate on both mortgages is 4 percent for the first five years and 4.5 percent for the second five years. They include a provision to allow the co-ops to pre-pay up to $2 million a year, reducing their overall debt load.

The co-ops also avoiding paying Con Ed upfront for the gas line. Instead, they agreed to pay the utility company a premium on natural gas for a year to pay back its cost.

The returns have been dramatic so far. In the first year since the project was finished in May 2012, the co-ops saved $2.24 million in fuel costs, according to Karell. The co-ops received a $175,000 incentive payment from the New York State Energy Research and Development Authority (NYSERDA).

The boiler room is a high-pressure facility housed in East River Housing. Manned 24 hours a day, seven days a week, it houses four boilers and two oil tanks. One of the boilers is decommissioned and will eventually be demolished and removed piece by piece. Of the remaining three, two are brick boilers that were refurbished with new dual-fuel burners. The third is the custom-made 1,800-horsepower giant that was built in a factory in Kansas and trucked across country. Engineers had to redesign the boiler room ramp to accommodate the enormous new device. When the boiler arrived, it was more than an inch too tall for the space. Workers shaved down a pipe on the top to make room.

The new boilers provide heat and hot water for Hillman, Amalgamated, and East River. They have improved the complex’s energy efficiency by 33 percent, according to data provided by Climate Change and Environmental Services. They also reduced emissions dramatically: nitrous oxide is down by 73 percent; volatile organic compounds (VOCs) by 9 percent; and sulfur dioxide by 92 percent. “It’s much more efficient than we anticipated,” says Valcich. “Personally, I feel like I died and went to heaven.”

And what about Heshey, the mover and shaker behind the grand boiler project? He is philosophical, as always. On a hazy summer afternoon, Jacob led a visitor to the brick boiler room in East River Housing. Unable to find an available parking spot, he double-parked in front of the door. “If you’re going to own a car in New York City, you have to budget for tickets,” he says, unbuckling his seat belt. “It’s New York. You need oil. You need gas. And you need tickets.”