A Unique Source of Funding Pay for Upgrades Through Water Conservation Savings

A Unique Source of Funding

In 1988 Mayor Ed Koch announced a new program that would give homeowners and multiple-dwelling buildings ten

years to switch over to water meters, a program that is scheduled for completion by December 31, 1998. With this change, all New York City buildings will be charged for the exact amount of water used instead of by the old flat-rate or frontage system.

Since Mayor Koch's announcement, New York City's water/sewage rates have risen a dramatic 275 percent. The New York City Water Board is predicting that metered rates will continue to rise through the year 2007 with annual increases of 8.8 percent, resulting in an increase in the average apartment owner's bill of $174 per year. By switching over to a metered system, buildings have the opportunity to see exactly how much water is being used and to encourage water conservation measures which can lead to 30 to 40 percent in savings for the building. For a typical 100-unit building, currently spending $35,000 a year on water, that can mean an annual savings of up to $14,000.

A Unique Team

Now there is a new program that will allow buildings to turn these savings into capital improvements. A unique partnership has recently introduced a fool-proof way for buildings to translate water savings directly into financing for needed building upgrades.

Conservation Contracting Group, Inc. (CCGI), founded in 1996 to specialize in identifying, creating and capturing water and energy savings, has teamed up with San Diego-based Water Management Services, a firm that provides water and related energy conservation products and services. Together, the firms will audit a building's existing water and energy consumption patterns and determine what capital projects are needed. A team of licensed master plumbers, hydraulic engineers, and computer and finance specialists will meet with the building's management team to analyze the building's needs and see what can be done for them. In this audit we look at every water-using piece of equipment and fixture in the entire building, explains Robert Bellini, Jr., president of CCGI. We take a look at consumption usage, analyze the previous two years' bills and energy which is related to the water.

Using special software provided by Water Management Services, CCGI then calculates how much water and money will be saved on a regular basis as a result of the recommended conservation measures. Based on these savings, the team then determines how much money the building can borrowmoney that will be used to finance the building's needed capital improvements. Through this program we bring the financing to the table so that the building can do critical work to the property that it doesn't have the money for, explains Wade Smith, CEO of Water Management Services. In addition, they will continually save money from these conservation efforts after the project is paid for.

Guaranteed Savings

The savings that are projected through this program are guaranteed. So if we say you will save $100,000 annually in water as a result of these retrofits we guarantee it, Bellini states. These savings will pay for the retrofits themselves and in many cases there is money left over to do other work as well.

For example, if your building will save $100,000 a year, it can complete a project for around $500,000, and ffb pay for it over five or six years. You never have a negative cash flow, says Bellini. We come into a building to install water-efficient equipment and then hire the appropriate contractors that are paid by the savings with no assessments and no maintenance increases. The savings from the upgrades pay for all the work. In the next couple of years I predict that most projects will be designed and performed around this type of program.

In addition to performing the audit and arranging the financing, CCGI will also do the actual contracting. By having us take care of all the contracting work, we save the building from having to negotiate contracts, says Bellini. We will always make sure that we take the lowest bid for the best work and that work is guaranteed.

Dayton Towers, a 1,724-unit co-op in Rockaway Beach, has nothing but praise for this program. We had new toilet bowls installed and just through that we have seen a 40 percent savings, says Angelo Scudiero, building manager at Dayton Towers. We also just signed a contract to have them install a new pressure booster system, flush valves and anti-scald devices. With the savings from the conservation measures, Dayton Towers will install 10,000 new windows and 1,750 terrace doors. This is an excellent program that everyone should look into, states Scudiero.

Reduce Water Consumption

There are many ways that buildings can reduce their water consumption and their bills. Warren Leibold of the New York City Department of Environmental Protection suggests taking a close look at the building's plumbing. If the toilets were not replaced during the Toilet Rebate Program, the building should still look into it. Low flow toilets can cut water usage in half. The building should also install new shower heads and faucet aerators. This has saved a lot of people a lot of money, adds Leibold.

Leibold also suggests taking a hard look at the laundry room. Even though the building is not paying for the machines they are most likely still paying for the water used in those machines. Make sure none of the connections to the machines are leaking and that the machines themselves are in good working condition, he explains.

Richard Silver, president of American Pipe & Tank, suggests other ways buildings can save money through water conservation. Always make sure that the tanks are checked for leaks and that they are running efficiently. A lot of water can be wasted and the building could also be fined for tank violations. Also have the building's maintenance staff pay attention to even the smallest leaks because these can exacerbate into a larger, expensive problem, suggests Silver. Also, adding a point of entry filter to the tank makes the water cleaner. The less impurities there are the more efficient the equipment will run.

Silver also suggests having a New York City approved meter installed for the cooling tower by a licensed master plumber. By doing this the building can receive a rebate on the sewage charge, Silver states. Currently this is two-thirds of the building's water bill. So for every five dollars being spent, two dollars of that is being used for sewage. This can end up being considerable sums saved for the building.

J-51 Tax Abatements

Buildings can further reduce their expenses by taking advantage of the city's J-51 tax abatement program when undertaking capital improvements. Under the J-51 program, tax abatements and exemptions are granted to residential buildings that undergo renovation or major capital improvements. Most co-ops do qualify for J-51, especially if they happen to be in Queens or Brooklyn or if it is a middle-income building, says Paul Korngold, partner at Tuchman, Katz, Schwartz, Gelles & Korngold, a Manhattan law firm that specializes in J-51. So it is definitely worthwhile to get the savings and finance other projects with that money.

Most buildings receive the pay-back in the form of reduced real estate taxes over an eleven-year period, adding up to 90 percent of the tax credit. To determine what percentage of bb4 the outlay will be recouped, the building needs to go through the application process. CCGI has a J-51 consultant on staff who is available to work with buildings on this aspect of the project.

Reducing water consumption now will lead to long-term savings that will benefit the building indefinitely. A program like the one provided by CCGI and Water Management Systems, whether combined with J-51 tax abatements or not, can translate these savings into capital improvements that can improve the building's integrity.

Your savings are going to be greater than your payments, says Bellini. Remember, after all the work is done, you continue to save. These future savings can be used to fund other projects, enhance the reserve fund or even reduce maintenance fees, all of which make the entire building more attractive and valuable.

Ms. Cooper is Editorial/Internet Coordinator for the Cooperator.

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