ADDING SOLAR ENERGY, P.2

Buckner did the solar analysis, and presented his report to the board in early 2007. He found that solar panels could be placed on the roofs of the bulkheads. He sized the system for each building at 55 kilowatts (kW). Taking into account the various state incentives and the fact NYSERDA would pay for half the $500,000 project, the payback period was estimated at 10 years.

At the Eastgate, before even considering solar, the board was focused on reducing or eliminating its debt. Five years ago, it refinanced the building's underlying mortgage by taking on two concurrent loans to pay it off: a fixed-rate, interest-only, 10-year loan for $1.2 million, plus a credit line with a floating interest rate. Through 2008, the building substantially paid down the credit line by budgeting a certain sum each year to do so. To finance its new projects, shareholders are being assessed, and the building will also borrow $445,000 from the NYSERDA loan fund.

To Schofield, eliminating debt was just one more method of gaining control of the co-op's financial future. "We've been proactive in paying down debt. That's the one thing we can control in our maintenance. If we can eliminate our debt two things happen. One is we permanently reduce our maintenance by our now-eliminated debt service. And the other is, and this is less quantifiable, buyers like buildings that don't have debt."

With that idea in mind, the board laid out a blueprint for controlling its future. Many buildings do a little bit of this and a little of that, and call it a plan. Schofield's co-op, on the other hand, thinks about all projects from a cash-management perspective.

"Current owners and potential buyers recognize a well-operated building," Schofield reflects. "They will pay a premium for being in one," appreciating the quality-of-life benefits and lower living costs of a well-run building compared to a less well-organized property, and also, often, liking the fact they live in an energy-conscious building.

The board, says Schofield, turned a sharp eye on the financials of solar power. "Because energy costs have gone up so much our improvements will defray the increase. We're not going to reduce our costs from where we were in '06 and '07, but we will pay less than we would have paid had we not done these investments."

Getting the Green Light

The final control may, however, be in the unit-owner's hands (depending on the bylaws). At Kips Bay, the project was considered "discretionary," so 25 percent of owners needed to give their go-ahead. "There was curiosity but minimal controversy," remembers Keith Werny, the site manager and a senior vice president at Cooper Square Realty. "The board does a very nice job of laying things out. What we try to do is anticipate the questions and then do a Q&A with the owners to minimize the questions down the road."

Musho devised a handout answering possible owner queries (see sidebar). "There were a lot of questions that I assumed were going to be asked, so I included them in the Q&A sheet I prepared," she says. She remembers a concern that "we were going to be the first residential building to do solar in Manhattan. A lot of people didn't want to be the first. Why do we have to forge new ground? Why can't we [go solar] after all the kinks are worked out?"

(Musho's residents didn't realize that at another co-op, the 15-story Cabrini Terrace at 900 West 190th Street in Washington Heights, had already installed a 50kW system on their roof, successfully using solar energy to run the elevators, the laundry room and the hall lights. See "Solar Power DIY: Kilowatts without Killing Yourself," Habitat, September 2007.)

Despite the expense and the dizzying array of incentives, taking the solar plunge is probably a good step to take in controlling costs. As energy prices continue to rise, more buildings will like consider going solar. "These energy investments have a positive economic payback," says Schofield. "You spend money to make money. That's the primary impact of all this. It's not just a 'feel good' thing."

Not that the feel-good factor should be discounted, she adds. "Honestly, it's not just about how much money we are saving, or how long it will take itself to pay back. It's also just our responsibility to research other ways of producing energy regardless of the financial factors. Everybody is relating it to money, but it's really not just about money."

Adapted from Habitat September 2008. For the complete article and more, join our Archive >>

Illustration by Dave Bamundo