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Category: Going Green

Green Begets Green

December 23rd, 2011 — 11:38am

A few months back we did a post on New York City Local Law 84/09 which requires buildings that are 50,000 square feet or larger to report to the City their electricity, gas, fuel oil and steam usage, and if equipped with an automatic meter reading equipment, water usage as well.

Since then, building owners in NYC have shifted their focus as it concerns sustainability from merely adhering to legal requirements to taking proactive steps to make their properties more attractive to potential investors Continue reading »

The reason behind this shift is to address the growing trend among investors of incorporating sustainability in their evaluations of potential real estate investments.  A recent example of this was a survey initiated by a group of pension funds in the Netherlands to various real estate firms in New York to evaluate their sustainability operations.

With NYC’s new reporting requirements, there will soon be a plethora of available data on the sustainability strength of various buildings in NYC (the Department of Buildings has generated a list of all buildings that must make 84/09 reports).  This information will become critical to the economic and operational viability of property ownership in NYC.  It is safe to assume that lending institutions will follow this trend and incorporate sustainability in their due diligence before approving loans to commercial properties in NYC.

By Nahum M. Palefski, Esq.

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Water Water Everywhere

March 21st, 2011 — 5:19pm

Don’t Get Soaked!   Over the years several clients have called to complain about being overcharged for water.  More often than not the cause was a leak and while the Department of Environmental Protection (the “DEP”) was usually accommodating, the uphill battle (trying to fight an excessive water bill) through the bureaucracy was exhausting and often not worth the fight.

One of the biggest problems was that the water meter bills came out once every three months so that if you were the victim of a water leak you might not even have been aware of the problem for close to THREE MONTHS. Continue reading »

This month the DEP launched the Leak Notification Program designed to help prevent such situations.

Under the program, which is available to owners of one, two or three family homes with automatic meter reading devices, owners will receive an email notification when there is a spike in their water usage.  This way a water leak can be addressed IMMEDIATELY rather than at the end of the quarter when water bills come out. The alerts come out every 4 hours and in some cases hourly!

While not every spike is the result of a leak, at least now owners can have a chance to report and stop a leak before the water bill gets out of hand.

This program not only can save money but even more importantly can help preserve our water supply from needless waste.

Right now over 600,000 wireless water meters are in use.  These allow water users to track their water usage online.  About 7-9,000 are being added to the network each week and the DEP estimates that by January 2012 every water meter in the City will be on line. Owners can register on line for the Leak Notification Program by clicking here.

I applaud The Mayor and the DEP for implementing this.

Comment » | Going Green, Water Bills

Green Initiatives and the “Split Incentive” Conflict

February 15th, 2011 — 8:55pm

It’s Not Easy Being Green.

Last week, we had a post concerning NYC’s Greener, Greater Buildings Plan, which was enacted to install “green” performance requirements for buildings in New York City.

One issue that has arisen in the context of this initiative is the incentive, or more accurately, the lack of incentive, on the part of building owners to make capital improvements to their buildings to become more energy efficient. Continue reading »

The reason owners are not motivated to make these types of capital improvements is because most commercial leases are set up so that tenants pay their percentage share of the building’s operating costs while owners pay for capital improvements.  Therefore, owners would be the party expending funds to make the building more energy efficient, while the tenants would be the ones reaping the benefits as their energy costs decrease.

One suggested solution to what is commonly referred to as the “split incentive” conflict, is to create “green leases,” which incorporate sustainability clauses.  These clauses would provide for a shared incentive approach whereby the energy savings would be shared between tenants and owners.

While it is still too early to gauge the exact manner in which owners intend on addressing this issue, the city’s sustainability office is working on model language to be incorporated into leases to properly motivate owners to meet the increasing demand for more energy efficient buildings.

Nahum Palefski, Esq.

Comments Off on Green Initiatives and the “Split Incentive” Conflict | Going Green, News

Local Law 84/09 and Benchmarking

February 6th, 2011 — 4:15pm

It’s Not Easy Being Green.

Just when you thought you were starting to get a handle on this market, there is now something new to ponder.   New York City Local Law 84/09 requires that by May 1, 2011 buildings that are 50,000 square feet or larger will have to report to the City their usage for electricity, gas, fuel oil, steam and if equipped with an automatic meter reading equipment, water. Continue reading »

The Department of Buildings has generated a list of all buildings that must make such reports

This information will be available to the public for residential buildings starting September 1, 2013.  It will be interesting to see what influence, if any, this will have on prices of individual apartment units.  I suspect it will have an affect in buildings having an energy usage that varies widely with other similar buildings. It will be one more factor for buyers to consider in this age of increasing energy costs and so sellers should be thinking about this data in determining the selling price.  It could be a positive or negative depending upon the situation.  I can just imagine a broker advising a client about the benefits of being in an energy efficient building so that maintenance or common charges wouldn’t be as likely to increase. I can also hear a lawyer warning a client about the possibility of maintenance or common charge increases due to the energy inefficiency of a building. This seems like a good time for co-ops and condos to consider the costs and benefits of becoming more energy efficient so as not to hamper sales in the future when this information goes viral.

3 comments » | Do Your Diligence, Financials, Going Green, News, The Sellers World

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