Turn $100K Fines Into Smart Building Investments

Time is running out for New York co-op and condo boards facing Local Law 97's 2030 compliance deadline, but there's a smart path forward. Punit Shah, Vice President of Existing Buildings at Bright Power, shares the surprising reality facing one Upper East Side condo that was looking at massive penalties. Shah reveals the three-phase approach that's transforming buildings across the city, from quick-payback retrofits to electrification readiness measures. Whether your building can achieve full electrification or needs hybrid solutions, this episode provides the actionable roadmap every board member needs to hear before 2028. Habitat's Emily Myers conducts the interview.

Thanks for listening. Subscribe to this podcast for more stories on how New York co-ops and condos have solved a myriad of problems. Brought to you by Habitat Magazine, the "bible" that hundreds of board directors turn to every day!

Transcript

Emily Myers (00:33)
Welcome to Problem Solved, a conversation about the challenges facing New York co-op and condo board directors. I'm Emily Myers with Habitat Magazine, and I'm joined by Punit Shah, Vice President of Existing Buildings at the engineering consultancy firm Bright Power. Punit welcome.

Punit Shah (00:50)
Thank you for having me, Emily.

Emily Myers (00:51)
So the majority of buildings will meet emission caps set for the first local law 97 compliance period. But the question is, what happens after that? We'll discuss some of the stepping stones to decarbonization and how boards should be thinking about the future, even if full electrification isn't currently feasible. Punit, you have lots of experience in this area and I know every building is different.

But let's start with a look at a 150 plus unit condo you're working with on the Upper East Side. What are some of the building's current challenges?

Punit Shah (01:26)
Right, so you absolutely are correct that a lot of the buildings that are in the 2024 cycle for Local Law 97 are under the cap. But the 2020 2030 cycle is somewhere they have to take actions because they are facing fines, right? It does sound like it's six years away from the current deadline, but there is very little time, especially for buildings that need to make significant change. So

The building that we are working with in the Upper East Side is coming up with the plan to electrify their heating and domestic hot water, but they're essentially starting from scratch. They have a steam boiler that was installed in like 2000, still has about five to 10 years of life in it, but they're focusing on taking measurable steps towards electrification.

What we were able to do in a service with them is do an electrification feasibility study, which evaluates all options to the building. So we essentially put building blocks for them in a phased approach to tackle not only their energy consumption, but also their ongoing maintenance issues and really prepare for electrification.

Emily Myers (02:38)
So what fines are they facing in 2030?

Punit Shah (02:40)
So they're facing about $100,000 worth of fines in the 2030 to 2035 cycle.

Emily Myers (02:46)
and the plan is then a phased electrification. Can you explain some of the steps and break down the key phases of the plan?

Punit Shah (02:52)
Right, so the way we like to approach this is break it down into kind of three major phases. The first phase is identifying how they can implement measures that extend the life of the existing equipment, right? So in the first phase, we recommended a set of retro commissioning measures that would really help them improve the performance of the existing boiler and distribution system.

We also recommended a package of measures that have less than three to five-year payback, wherein their investment will result in energy savings, but also carbon reduction. in the next phase is what we call electrification readiness, which is where you would want to evaluate the existing envelope and implement load-reducing measures, which will help you electrify the property, both on the domestic hot water and heating cooling side.

followed by the final phase of electrification implementation, which is when you convert your heating and domestic hot water through either partial electrification or full electrification, whichever suits best.

Emily Myers (03:54)
Okay, and importantly, what's the cost and can they tap into incentives for this?

Punit Shah (03:58)
Right. So the package of measures that we are recommending with a lower kind of a quicker payback, we were looking at an investment of $200,000 and savings of about 35 to $40,000 generated by the energy savings. And we were estimating an incentive of about 40 to $50,000. So the payback essentially for the quick turnaround measures was three and a half to four years.

In the next phase where we are talking about measures like window replacement or upgrading the electrical infrastructure and also improving their ventilation, we are looking at a higher investment, obviously, because those are capital projects. Right. So we're looking at about two and a half to three million dollars in investment with incentives covering up to three hundred fifty to four hundred thousand dollars. The payback is

definitely longer there, but we are also talking about preparing the building for electrification in the longer term.

Emily Myers (04:54)
Okay. And so the first phase costing about 200,000, you said, boiler controls, low flow plumbing fixtures, lighting, exhaust fan, timer controls, that kind of thing. What impact will that have on the penalties in 2030?

Punit Shah (05:01)
Mm-hmm.

Right, so we are expecting that for the 2030 cycle, it would significantly reduce the fines from $100,000 down to about 18 or $20,000, right? Because any measures you implement that reduces your natural gas consumption has a higher value in that cycle, which leaves a very small portion of the fines to either tackle through the second phase of electrification readiness, or in some cases, it may just make

financial sense to pay the fines for the first year or so as you're still preparing your building with the larger capital projects.

Emily Myers (05:45)
Okay, and so can you just clarify how Bright Power is involved? You are engineers and you're doing the feasibility study, are then bringing in vendors?

Punit Shah (05:54)
Yes, so we focus on providing a holistic approach and we focus on providing services that really help our properties and clients take the building from where they are right now to a full decarbonization, right? So in our first kind of service, we are talking about providing auditing service or feasibility studies wherein we can help buildings plan their approach towards decarbonization and addressing their Local Law 97 fines.

As we help the buildings prepare their package of measures, we also provide what we call consulting services, wherein we would help them set up the bid package. We would help them identify the appropriate contractors. We would help them select the contractors and then act as the owner's rep throughout the construction process, working with the building and the contractors to make sure that the measures are installed.

to the best intent and realizing optimal energy savings, right? And then we follow it up with an MNV process or a functional performance testing to make sure that the systems are installed as desired. And incentive procurement also is part of that service wherein we will make sure that all available incentives are kind of maximized and the cost is kept as low as possible.

Emily Myers (07:09)
Okay, and so for this building, obviously full electrification is feasible, but there are buildings perhaps where it isn't feasible in the sense that, you know, bringing in that capacity is just way too expensive.

Punit Shah (07:22)
Right, you're absolutely right. one of the things that I have observed in the hundreds of buildings I've been to is electrification is not applicable or a good solution for a good number of existing buildings. In that case, the building should focus on identifying how close for electrification they can get in terms of either its domestic

hot water electrification or hybrid electrification also, right? If you still continue to rely on the fossil fuel driven boilers, but cannot fully convert, there are hybrid heat pumps that do not require major upgrades to their electrical infrastructure, but can offset the heating load to electrification in a major way. So the property should kind of consider again, a phased approach of reducing the load first and then see how they can achieve.

as close to electrification as possible, either through partial electrification or hybrid electrification.

Emily Myers (08:15)
Okay, so even if full electrification isn't possible, electrification readiness is a sensible approach because it prepares your building by spending dollars on infrastructure to achieve a reduction in load, which is going to benefit regardless of whether you reach full electrification. Is that a good summing up?

Punit Shah (08:34)
Absolutely.

It is, it is. And I would also go ahead and say that as properties are preparing to invest, they should ask whether the money that they're investing how is it benefiting the building's approach towards Local Law 97, If you're installing an equipment, if it's going to be redundant or not applicable in the next four to five years or four to eight years, if you can work to electrification, then you might want to consider a different approach. So

Any measure, any investment that is going introducing the loads in a quicker payback to extend your existing equipment is a great investment, in my opinion.

Emily Myers (09:09)
So, perhaps you've touched on it, but what are the biggest takeaways then from this project that other boards should be thinking about?

Punit Shah (09:16)
Yeah, so one of the biggest takeaways is to start early, right? In my opinion, engaging a consultant or a trusted advisor who can help you plan and approach as early as possible is key, right? Even if we are talking 2030, essentially, properties have only until 2028 to get the measures installed because the energy consumed in 2029 is going to impact the fines in 2030,

Coming up with a plan of action for the next four years and phasing it out is key. And identifying existing resources, whether it's technology for electrification or planning for implementing large capital projects early on is key. So those are like the two major points. And the final one I would say is understanding how your electrification journey for this building, for your building is and how you can

approach it in a phased manner. And again, not trying to grab a big bite, but just breaking it into pieces and making progress one step at a time.

Emily Myers (10:18)
Wow, lots of good information there. Thank you so much, Punit.

Punit Shah (10:22)
Thank you for having me.

Emily Myers (10:23)
Punit Shah, Vice President of Existing Buildings at the engineering consultancy firm, Bright Power.