CAI-NJ June 2019 (w)

Going Green By: Michael Mezzo, CPA., WilkinGuttenplan WHERE DO CONDOMINIUM AND HOMEOWNER ASSOCIATIONS FIT INTO THE “GOING GREEN ” MOVEMENT? Multifamily dwellings can consume a SIGNIFICANT AMOUNT OF ENERGY. As such, it is important for sites to regularly evaluate their infrastructure to identify opportunities for improvement. THE DILEMMA: It typically requires the association to spend green in order to go green . This is especially an issue of concern for sites which are underfunded in their capital reserve fund. Clean energy INCENTIVES AND REBATES are typically broken out into two categories, “existing buildings” and “new construction”. Many associations in the state are able to qualify for these incentives through the “existing building” programs. Programs are available under the STATE OF NEW JERSEY’S CLEAN ENERGY PROGRAM, two of which can commonly be applicable for associations. Additional information can be found at the State of New Jersey’s Clean Energy Program (www.njcleanenergy.com).

Utility Company Incentives

Direct Install Program

Pay For Performance

Vendor Financing

Financial assistance to qual- ifying businesses, to entice them to upgrade to high effi- ciency components, includ- ing HVAC systems, lighting systems, & various electrical systems.

This may not lead to a direct reduction of cost, but certain vendors will allow associ- ations to finance the costs of a major capital project di- rectly with the vendor, rather than going through a bank. Often offered with very low interest rates, or no interest at all. Repayment terms include periods of 36 to 60 months, and can be negotiated with the vendor. Does not provide a direct reduction in the cost of the project, it does provide for a much easier cash flow. The association will not be required to fund the full cost of the project upon comple- tion, they will have the option to raise funds ratably over the life of the repayment term, through additional as- sessments or other financing arrangements.

Offers financial incentives to entice businesses to up- grade to high efficiency gas & electrical systems that don’t revolve around instal- lation. Associations will work with an approved 3rd party to cre- ate an energy reduction plan (ERP). Once approved, the association is responsible for funding the installs. Energy usage will be mon- itored & submitted to the State. If requirements meet the expectations in the ERP, the association will be eli- gible for up to 3 financial in- centives. Criteria that must be met: 1. Peak electrical demand in excess of 200 kW in any of the preceding 12 months. 2. Work with an approved professional. 3. ERP must include an over- all energy reduction of at least 15%. 4. Energy reduction cannot be attributable to solely one source of reduction.

Utility providers offer finan- cial incentives to upgrade to high efficiency components. PSE&G program will pay for a portion of the installation costs for qualifying projects. The process begins with a free, on-site energy audit. PSE&G will identify and rec- ommend energy efficiency upgrades. If the association elects to undertake the project, PSE&G will pay for 100% of the upfront costs of the proj- ect, which will be completed by a PSE&G approved con- tractor. At completion, the associa- tion will only repay a portion of thercosts, as low as 30%. Costs are financed with the utility provider via an interest free, 36 month loan. This will include a detailed cost estimate.

The association must meet the following criteria:

1. Average peak electric de- mand must not exceed the demand threshold of 200 kW in any of the preceding 12 months. 2. Must be located in NJ. 3.Must utilize one of the state’s regulated utility pro- viders. It begins with a free energy assessment, to identify sys- tems & components with potential for energy usage reductions. The association will work with a state approved con- tractor to replace the desired components.

The state will pay for up to 70%of installation costs.