Shared Savings Model Allows Buildings to Pay for Retrofits through Energy Savings without the Need for Capital or Monthly Assessments
NEW YORK, New York, August 23, 2011 –Energy management company FS Energy, LLC, has taken yet another bold step to support condominium and cooperative boards that seek to convert from Nos. 4 and 6 oil to gas. FS Energy has introduced the CRES (Cost Reduction through Energy Savings) financing program that allows condos and co-ops to repay the cost of an oil-to-gas retrofit directly from the energy and cost savings associated with the conversion.
In April, New York City enacted a rule that will phase out Nos. 4 and 6 heating oils, the most polluting grades of oil which are responsible for more than 85% of the oil soot emissions in the city – more than all New York City cars and trucks combined.
The upfront cost of a retrofit is often one of the biggest deterrents to converting to gas due to: 1) buildings’ limited reserve funds; 2) reluctance to increase carrying costs or assessments for owners; and 3) difficulty in borrowing funds. In addition, co-ops often have restrictions regarding underlying mortgages. Through CRES, condos and co-ops now have an attractive means by which they can afford a retrofit without the need for capital or increases in monthly assessments.
FS Energy is a subsidiary of FirstService Corporation (TSX: FSV; FSV.PR.U and NASDAQ: FSRV), the largest residential property manager in North America, managing more than 1.3 million homes in 5,300 communities.
CRES is available to properties managed by FirstService’s New York City subsidiary, Cooper Square Realty, and according to FS Energy CEO David Kuperberg, the initial reaction to CRES has been overwhelmingly positive. “Boards of condos and co-ops understand the cost and environmental benefits of converting and CRES makes it much more economically feasible to do that,” he says.
Through CRES, FirstService has created a fund from which the cost of the energy retrofit will be paid. The condo or co-op will not have any out-of-pocket costs, nor will they need to borrow any money. Rather, owners will share the energy savings for a period of time until the cost of the retrofit has been repaid. FS Energy estimates that a building can reduce fuel costs by as much as 30% by converting from oil to gas. The condo or co-op will immediately pay less than their historical fuel cost.
“This is yet another example of our commitment to partnering with our clients and bringing them innovative solutions,” Kuperberg notes. “CRES offers condos and co-ops an attractive economic model that is going to ultimately make the decision to convert much easier. The up-front cost of a retrofit should not stand in the way of doing what is best for the property, its residents and the environment. CRES provides the financial support that will help drive conversions citywide,” he predicts.
Cooper Square Realty manages more than 450 buildings throughout New York City – 100 of which are currently burning No. 6 oil. FS Energy is currently executing oil-to-gas retrofits and feasibility studies across a number of Cooper Square managed buildings.
FS Energy has led the way in providing innovative financial assistance for energy reduction programs. In addition to CRES, FS Energy also partners with top-tier financial institutions to facilitate loans for condos and co-ops for retrofits or renovations to improve energy efficiency. These unsecured energy loans feature attractive interest rates, require no upfront investment, and are paid off entirely from savings derived from the improvement.
“Retrofit projects improve a building’s efficiency, lower operating costs, improve residents’ comfort as well as have a positive impact on the environment,” Kuperberg notes. Building owners now have three viable economic options for energy projects: 1) paying out of the building’s reserve fund or raising assessments; 2) financing through a loan, and 3) CRES, for buildings that want to achieve savings but do not want to incur the capital costs. “All of these options help owners execute conversions while meeting their individual needs, ensure positive financial and environmental benefits and avoid increases in monthly maintenance or common charge fees,” he concludes.
Committed to the goal of reducing the energy costs of its New York City portfolio by 25% by 2013, FS Energy believes the availability of financing options such as CRES will be instrumental in making this change.
For more information about FS Energy, please visit www.FSEnergyServices.com.