No Sweat: Paying for an AC Overhaul

The summer of 2015 was a miserable time for the residents of the Newport East, a 342-unit co-op on First Avenue between 75th and 76th Streets. The building’s 25-year-old central cooling system was showings its age and, despite repeated repairs, kept breaking down. “Nobody wanted another summer without AC,” says Andrew Weiss, a member of the seven-member board.

Weiss, a lawyer who specializes in drafting business contracts, was tapped to remedy the situation. “The board felt I had the most incentive and expertise to oversee the project, find fair prices and competent contractors,” says Weiss. With a hands-on approach and daily phone calls to all parties involved, he attacked the problem head-on. First, Weiss hired Michael Scorrano, managing director of the engineering firm En-Power Group, to study all possible energy-efficiency upgrades, including rebates and incentives.

“Our company got involved just after they had gotten two new boilers,” Scorrano says. “First, we identified how they could become more energy-efficient and also how to get rebates from New York State Energy Research & Development Authority (NYSERDA) and Con Edison. Then we switched to natural gas, did lighting upgrades, and started planning a new cooling and heating system.”

When the board was presented with a $1.4 million project, according to Weiss, it was time to ask some hard questions: “Do we need to save energy? Is it worth it? How can we pay for it?  Will it deplete our reserve fund?”

In the end, the board decided to dip into the reserve fund and impose an assessment. The board also increased its line of credit in case the job went over budget. “Shareholders understood this capital project was needed,” Weiss says, “and they were supportive. It helped that they had not been assessed in about 15 years. Not that they enjoyed paying for it, but they all agreed something had to be done.”

Shareholders were presented with three payment options: pay the assessment in one lump sum; pay in two installments; or spread it out over two years. If they paid in a lump sum, they would get discount.

The $1.4 million paid for the all-important chillers for the central cooling system. In addition to cooling the building, the chillers produce waste heat, which fuels the hot-water boilers. This means that during the summer months, the hot water is heated solely by the chillers. “This means we have lower operating costs, leave a smaller footprint, and have lower maintenance,” Weiss says. According to engineer Scorrano, the co-op also saves more than $175,000 per year.

The project was finished on budget, thanks in part to a $250,000 rebate from NYSERDA that will help replenish the reserve fund. “It’s very important for us to have a healthy reserve fund,” Weiss says. “It’s also important for new buyers because banks are more inclined to grant a mortgage if you buy into a financially healthy building.”

The main challenge was to have the cooling system in place for the summer of 2016. It was up and running well before the summer heat set in.

Mission accomplished. No sweat.

PRINCIPAL PLAYERS: ENGINEER: En-Power Group. CONTRACTOR: Matco Construction. PLUMBER: George Bassolino Plumbing. RESIDENT MANAGER: Jimmy Necaj. PROPERTY MANAGEMENT: Douglas Elliman.