Owners and managers of New York City multifamily buildings face new challenges

I would like to start this article by thanking Nunzio Del Greco, CEO, board of governors, and all the members of The Bronx-Manhattan North Realtor Association for years of support and dedication to the real estate industry. Real estate has gone through perhaps the most difficult period in recent memory as a result of the economic turmoil of the past few years. The industry is looking for stabilization in property values and rents. Many owners of multi-family properties have begun to look for ways to control and reduce expenses, particularly fuel costs, while addressing the need to meet new regulatory requirements. As of July 1, 2012, it is anticipated that #6 fuel oil will be totally eliminated. Building owners may be required to upgrade existing fuel systems that currently burn #6 oil to be able to burn #4 or #2 oil. The approximate costs can run $5,000 or more depending on the work that needs to be done. With the government committed to reducing a third of U.S. oil imports by 2020, property owners may also look to convert to Natural Gas, which is a clean burning fuel and overall less costly than oil. The cost to convert to natural gas can start around $40,000 on average for small buildings to $300,000 on average for larger buildings. The stainless steel liner for the chimney can cost on average $10,000 per floor to burn natural gas. Regardless of which option they choose, owners of multiple buildings would most likely consider converting all of their buildings at once. At the same time, property owners will also be responsible for complying with Local Law 84, The NYC Benchmarking Law. This law, which is effective May 1, requires owners of all buildings over 50,000 s/f (both residential and commercial) to benchmark their buildings' energy and water use using 2010 Energy and Water Data for future comparison. Faced with these concurrent challenges, many property owners are turning to energy companies and consultants to help them reduce their energy costs at the same time keep the cost for upgrades or conversions reasonable. One such company, Original Energy, recently hosted an informational session for property owners about Local Law 84 and the necessary steps and costs to upgrade or convert existing fuel systems. Original Energy and other consultants will generally conduct an analysis of existing fuel systems and make recommendations to help property owners improve the efficiency of their systems reducing fuel costs over the long term. Most will also file the necessary forms with the building department and Con Edison if necessary. Upfront costs associated with fuel system upgrades is obviously a concern to most building owners. Banks will often provide financing for energy efficient upgrades over a 5 year period at competitive rates. Hudson Valley Bank, where I have been a senior vice president and relationship manager for the past nine years, has a wholly owned subsidiary, HVB Leasing Corp. which specializes in financing energy related retrofit projects for multi-family and commercial properties. HVB Leasing has extensive experience working with cooperatives, condominiums and commercial property energy retrofit projects. HVB Leasing was one of the largest NYSERDA Smart Loan program lenders in New York State until the program was discontinued. Hudson Valley Bank also recently launched a new Multi-Family Loan Program to assist property owners/managers with purchases or refinancing. Hudson Valley Bank currently offers financing with competitive rates and terms for those who qualify under the Multi-Family Program. Hudson Valley Bank is the largest independently-owned bank headquarters in Westchester County. We have served the banking needs of property managers, real estate developers and real estate investors for more than 38 years. If you would like to know more about our Multi-Family Loan Program and energy retrofit project financing options for your property, please call me. Anthony Mormile is the senior vice president and relationship manager at Hudson Valley Bank, N.A., Bronx, N.Y.