Making it make cents

Condominium build­ings like the one at 430 Clinton Ave often face unique chal­lenges when financing green energy projects, as they rely more on self-funding or alter­na­tive loans than co-ops. In the following Q&A, Jay Merves, Director of Business Development and Finance at NYCEEC, walks Skylight through the financing options avail­able, explaining that while financing options may vary, there is more support for energy-effi­cient projects these days than owners may think.

Skylight: So, 430 Clinton is a condo­minium. I’m wondering how the financing options for a project like this might differ from coop­er­a­tives or other types of buildings? 

Jay Merves: Condominiums have some­what unique financing needs. A coop­er­a­tive is, gener­ally speaking, some sort of corpo­rate-type entity. An LLC would own a rental building. But condo­miniums are kind of their own thing, in that each indi­vidual owns their own unit, and then of course there’s also common prop­erty. So the financing options for condo­miniums are not as broad as you might find for coop­er­a­tives and commer­cial real estate.

So given these constraints, could you give a little bit of an overview of the different financing types that NYCEEC offers? 

For co-ops and condo­minium asso­ci­a­tions, we have a product that we call our Multifamily Express Green, or MEG, loan. Those loans are gener­ally under $1 million. The condo asso­ci­a­tion would be the borrower, and the condo association’s dues would include loan repay­ment as it would any other condo expenses. MEG loans offer an expe­dited legal process with a low legal fee. 

Let’s turn specif­i­cally to the project at 430 Clinton. How was NYCEEC able to offer support?

Basically, they wanted to do a solar project that obvi­ously had economic and green bene­fits. And along with the solar project, they needed to upgrade their roof. Solar panels can last 25 years plus, so you want to make sure you put them on a roof that’s in tip-top shape, or else you’re going to have prob­lems later. To the extent that we can help out with financing the roof repair compo­nent of the project, we like to be able to do that.

So what are the first things you look at when consid­ering if a project is a good fit?

Our first order of busi­ness is to qualify the project. So for us, solar is easy. It’s obvi­ously a clean energy measure, and it’s key to the city and the state’s energy goals. What we’re doing is trying to under­stand: What is the envi­ron­mental impact of our dollars? That’s why there are no hard and fast rules. If you’re lucky enough to be in a situ­a­tion where you’ve got a high-perfor­mance solar project, then maybe the roof can be a bigger part. So it’s more about how much impact a NYCEEC dollar can bring in terms of green­house gas mitigation.

I’m curious where you draw that line — between money going towards the roof and money going towards the solar instal­la­tion — because I’m sure this is some­thing that a lot of boards would be thinking about as they figure out how to get funding.

Well, like anything in life, it’s going to be situ­a­tional. We don’t have firm lines in the sand, but we have seen projects where a vast majority of the need is for repairing the roof and then the solar is just a small compo­nent, and that’s not for us.

So if a building in this size range isn’t going to you, where are they going for funding instead? What are their options?

Self-funding is an option, and, for coop­er­a­tives, they have access to the mort­gage market that a condo­minium wouldn’t have. That’s the oper­a­tive differ­ence: A coop­er­a­tive is a corpo­ra­tion that owns a building, with unit owners as share­holders, whereas in a condo­minium, each person owns their piece.

Okay, so then it’s either you’re self-funding or you’re getting a loan from somewhere?

Right. Exactly.