The Clock Is Ticking

Being proactive, even with hefty price tags, can work out to be a cheaper alternative in the long run. We have an Upper East Side co-op facing projected fines under the Carbon Mobilization Act of $10,000 in 2025, escalating to more than $135,000 by 2030. We considered various projects that would bring the building into compliance and brought in Howard Zimmerman Architects & Engineers, which determined the best return on investment would be to replace the old gas-fired chiller with an electric one. The co-op’s old chiller was requiring constant maintenance and repairs and was nearing the end of its useful life. 

It was a significant project for two reasons: there wasn’t enough electricity available in the building, and to bring it in cost almost $1.1 million. We had to pay Con Edison to hook it up to additional power from the street, and we had to hire an electrical contractor to do the actual connection. Fortunately, we were able to refinance the mortgage to get the additional funds, as well as money for some FISP-mandated facade repairs. So we bundled a couple of projects together and secured all the financing just before interest rates began to spike.

Bottom line, this board was lucky to refinance at competitive rates. But it was also proactive about doing the chiller replacement in a timely manner. If it hadn’t, it would have paid the carbon fines for a couple of years until the project was completed, no doubt at a heftier price tag. While many boards want to comply with regulations, the significant costs associated with capital projects are a major hurdle. That’s why continuous investment in the infrastructure of your building is important, and saving a percentage of your operating budget every year for capital improvements is a good idea. Boards need to take the long view.