Think you can’t afford to convert from dirty No. 6 oil to a cleaner fuel source? Think again!
NYC Clean Heat lists numerous financing options and incentives to make the process affordable for everyone. Now that the deadline to convert is approaching, there are some things you need to know in order to finance the conversion process.
Most buildings will be able to convert to a cleaner heating source with minor upfront costs, although others may need to invest more depending on their internal and/or external expenses. There are many things to consider when it comes to the economics of conversion; here are some things that NYC Clean Heat suggests to keep in mind when converting your building to a cleaner heating source:
- Overall cost of the conversion process: Every contractor will quote a different estimate. Property managers should therefore consult with different contractors in order to negotiatie the best offer.
- Operating Savings from conversion: In order to see payback, buildings need to figure out what their particular budget is.
- Available Capital and Operating Expenses: Taking natural gas as an example, $200,000 is probably the highest a property manager should go to complete a conversion.
- Estimated financial payback, if applicable.
NYC Clean Heat also lists factors that will determine a buildings’s ability to receive financing:
- Access to exisiting resources such as line of credit or current mortgage.
- A building’s ability to take additional debt.
- Financing impediments such as existing liens, tax arrears, etc.
In order to get financing, buiding owners should demonstrate the overall benefit of conversion, both to the tenants and for building operational savings. Here are some examples property mangers can use to argue for financing:
- It will allow the building to burn a less costly fuel.
- Using a cleaner fuel will allow for lower heating system maintance.
- Overall fuel usage is reduced for greater energy efficency.
- Healthier living conditions for tenants.
NYC Clean Heat is always diversifying its financial solutions. Here is just a sample of some of their financing options:
- Traditonal Loans: For condos, commerical buildings, and cooperatives that have an outstanding first mortgage on the property, NYC Clean Heat recommends discussing your financial needs with your current lender to asses whether the building financials can bear additional debt. These may include 2nd mortage lenders. NYCEEC will vouch for lendees with bad credit for their credit enhancing program.
- Energy Service Agreements (ESA): a multi – year agreement where buildings purchase engergy from a field provider at a price based on historic billings. In exchange, the company pays all the conversion costs upfront. This financing agreement is then repaid through saving that accure through either selling a less expensive commodity to the customer ( i.e gas rather than oil) or through energy savings from efficiency measures. Note: This is only for oil to gas conversions. This option may not be good for expensive conversions that require more than 5 years to pay back.
- Equipment Lenders: Tank clean ups are very expensive, but luckily there are companies that will rent you a tank. This may be preferable for building owners because it does not show up as a loan. Equipment lenders purchase equipment and simultaneously lease the equipment to the building owner. The building will then make predetermined lease payments back to the lender. NOTE: Lenders look to the building operations and cash flow to determine the credit worthiness of the building.
- Performance Contrasting: The building saves money by making energy efficiency repaires and uses the savings accured to pay for the bill. The building agrees to a set time for when repayments are made. This finances any type of conversion. This is also a good option for buildings that cannot make the changes out of pocket.
For additional information on NYC Clean Heat’s financiaing options, check out our financing page .