Are Co-op and Condo Boards Waking Up to the Upside of Retrofits?

Is it possible that New York City co-op and condo boards, after years of resistance, are finally beginning to realize that the city’s push for clean and efficient energy is not only inevitable but also a potential source of benefits? Anecdotal evidence suggests that the answer is yes.

“We’ve seen a shift in attitudes from co-op and condo boards in two ways,” says Alan Burchell, principal at Urbanstrong, a green building consultancy with a specialty in rooftop development. “First, they’re realizing they can’t fight these local laws. Therefore, rather than spending energy fighting, they’re looking for vendors who can help them navigate ways to comply. Second, they’re hearing from other boards by word of mouth that solar panels can be a nice source of income, and if a green roof can accommodate an amenity space, it will increase property values.”

All this is driven by Local Laws 92 and 94, which require solar panels and/or a green roof on all newly constructed buildings and on older buildings that undergo a roof replacement, and Local Law 97, which will begin imposing carbon emission caps on large buildings next year, with stiff fines for violators. Any increases in property values will benefit not only apartment owners but also the bottom line of buildings that have imposed a flip tax.

“We have definitely seen a serious uptick in requests for information from co-op and condo boards, driven by these local laws,” Burchell adds. “Now people are seeing they can use their rooftops as a way to comply with Local Law 97. At the minimum, these laws have forced boards to start doing their homework and get at the truth about the costs and benefits.”

In addition to providing an enjoyable, value-enhancing amenity, green roofs prolong the life of roof membranes, provide thermal benefits for the upper floors, lower energy bills, manage stormwater runoff and, best of all, reduce the building’s carbon emissions.

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Ryan O’Hara, business development director at Brooklyn Solarworks, says 2022 was the busiest in the company’s eight-year existence. Of the company’s 1,800 completed solar installations, 400 — nearly a quarter — were done last year.

“What’s starting to change,” O’Hara says, “is that boards are realizing they have no choice. They’re also realizing that installing solar panels is a great way to use rich real estate to cut their buildings’ carbon emissions.”

Rich real estate, indeed. New York City’s 1 million buildings have 40,000 acres of roof space, only a tiny fraction of which is currently developed with energy-saving projects or resident amenities.

O’Hara cautions against believing that co-op and condo boards have had an epiphany and have suddenly become passionate warriors in the fight to halt climate change. It’s a bit more prosaic than that. “With the boards we deal with, it’s all economics,” he says. “They have a duty to do what’s in the best interest of their shareholders or unit-owners. The new urgency comes from the fines — and the realization that it’s no longer acceptable to kick these projects down the road. Yes, there are some board members who are pro-environment, but they can’t take on an expensive project just because it’s the right thing to do for the environment.”

Sweetening the economic calculus, O’Hara adds, are robust incentives, rebates and tax credits — including the Inflation Reduction Act — plus payback times that keep shrinking. The average payback for a solar array is four to five years, while some boards are able to recoup their investments in as little as two years. “Another key metric,” O’Hara says, “is that as utility costs keep rising along with inflation, that speeds up the payback even more.”

Ben Milbank, a senior project development engineer at the Ecosystem Energy Services, an engineering and construction company, is overseeing a project in a pre-war co-op near Union Square that’s replacing its old, inefficient heating and cooling system with a combination of heat pumps and efficient gas boilers. The co-op board realized that doing nothing about its aging infrastructure was a luxury it could no longer afford.

“Once you’ve taken into account the cost of maintaining and replacing 60-year-old systems, it makes sense to bite the bullet and invest in these transformational projects,” Milbank says. “Slowly, people are realizing the high cost of inaction.”