Controlling for cost

When looking to under­take a huge retrofit project, cost was top of mind for coop­er­ator Derek K. Jones and the rest of the board members at Sherman Terrace. As share­holders in the working-class co-op, they had to consider both how much they could invest into upgrades, as well as returns they might reap in the future. 

Still, Jones was the new person on the board, and had to convince many of Sherman Terrace’s older resi­dents who were hesi­tant to accept any change that could even appear to be a cost increase. ​“When they first purchased [their homes] it was for a very, very low cost, and now every­thing is going up,” said Alan Delfish, a resi­dent since 2000, who served on the board for 20 years.

To convince his neigh­bors to say yes to change, Jones prior­i­tized cost-effec­tive methods throughout the process. ​“We’re under tight restraints,” Jones explained at a 2024 NYSERDA event about the building’s projects. ​“We don’t have revenue-driving forces in this co-op envi­ron­ment, so we have to be very smart with how we are using money, and how we are going to sustain ourselves.”

For the boiler retrofit, the board members knew they wanted to get off of oil, but their energy consul­tant, Thomas Morrisson, ran the numbers and deter­mined that full elec­tri­fi­ca­tion could be prohib­i­tively expen­sive, given the current market for heat pump tech­nology and current elec­tricity rates. That’s why the building opted instead for an incre­mental change: Powering the boiler with natural gas, a project that cost about $350,000 all-in. Because of Local Law 97​’s emis­sions limit schedule, the deci­sion to go with natural gas means that Sherman Terrace is likely to face carbon fines far off in the future. But this penalty is still far less than the current and projected cost of fully elec­tri­fying the entire building. 

Through Con Edison’s Multifamily Energy Efficiency Program (MFEEP), Sherman Terrace installed LED lights to replace all of the remaining incan­des­cent bulbs throughout the prop­erty. Many of the common areas were already lit with LED light, but the board encour­aged indi­vidual units to make the switch as well. For every incan­des­cent light­bulb the resi­dents turned in, ConEd offered an LED replace­ment at a roughly 25 percent discount. ​“It was some­thing like seventy-five cents per light­bulb,” Jones recalled. Within a few weeks, the building swapped out 600 light­bulbs in indi­vidual units, at a total cost of about $50,000.

Even after the program ended, some resi­dents continued making the change, though they paid the full cost for replace­ments. ​“We know that LEDs last for a long time, so hope­fully there haven’t been too many inci­dents where they’ve had to replace lighting,” Jones said.

The instal­la­tion of solar panels on the roof was the most capital-inten­sive of all the projects, with an out-of-pocket cost of roughly $392,000. However, the coop­er­a­tive was able to take advan­tage of $183,000 in federal tax credits, and also got $63,000 in a rebate through NYSERDA. 

Best of all, the instal­la­tion paid off in future savings on oper­a­tion costs: The elec­tricity gener­ated by the solar panels reduced the building’s elec­tricity bill by $28,000 in the first year after instal­la­tion, and the savings have only increased since then. 

“It did exactly what it was supposed to do,” Jones said, of the solar project. 

While some of these upgrade costs came as a shock to resi­dents at first, long­time resi­dent Alan Delfish pointed out that change was bound to come either way. He’s seen that co-ops and condo­miniums in the city can get caught off-guard by fines for not keeping up with city regu­la­tions in the past.

“You can pay now or you can pay later,” Delfish said. ​“And when you pay later, it’s usually going to hurt more.”