Real Estate Weekly
Image default
Featured Green Building

Landlords rail over plan to push fuel conversion plan forward

Landlords are calling on the City Council to delay a plan to force them to convert their building’s fuel as they continue to struggle through the coronavirus pandemic.

As part of its NYC Clean Heat Initiative that requires buildings to convert to cleaner fuels over a set timeline, the Council Committee on Environmental Protection is scheduled to hold a virtual public hearing tomorrow (Tuesday, Jan. 26) on a proposed bill (Intro. 980 of 2018) that would accelerate by five years the mandatory conversion of apartment buildings to No. 2 fuel oil or natural gas systems,

But the Rent Stabilization Association (RSA), a group that represents some 25,000 landlords of more than one million units of rent stabilized housing, said the cost of the changeover could crush their members already buckling under the weight of the pandemic.

“This potential mid-stream rule change is a financial weight that will crush cash-strapped landlords reeling from an all-time high in apartment vacancies, an all-time low in rent collection, and other devastating effects of the COVID-19 pandemic,” said Joe Strasburg, president of the RSA.

The city began the heating oil conversion process in 2010, mandating owners switch so-called dirty fuel oil in boilers to cleaner alternatives like No. 2 oil or natural gas, or both.

When the Council passed the original legislation (Local Law 43 of 2010), city lawmakers recognized the enormous costs associated with the conversion process in creating a healthier environment through the reduction of particulate matter and sulfur dioxide emissions.

The real estate industry partnered with the government in formulating a two-step timeline that would realistically meet the aims of the legislation by 2030.

According to the RSA, the plan to push up that timeline is “unrealistic, unattainable and unreasonable.”

JOE STRASBURG

“Now, during a pandemic – when the housing industry is collapsing, and landlords are struggling mightily to pay their property taxes, heating bills, and day-to-day maintenance and repairs because thousands of tenants aren’t paying rent, a situation now approaching one year – it is financially and logistically unrealistic, unattainable and unreasonable for the City Council to suddenly change the rules midway and make it mandatory for landlords to fast-track the conversions process five years earlier than originally required and planned,” Strasburg said.

“In the best of times, this would be economically onerous.  In the current climate, it would be crippling to owners.  If the pandemic doesn’t bury landlords, this proposal will.”

According to Strasburg, under the original law, landlords are required in the second phase of the process to convert from No. 4 fuel oil to either No. 2 fuel oil or to the natural gas options of a dual-fuel interruptible system or firm natural gas.

The group estimates the cost for a modest-size apartment building gas conversion could easily cost a half-million dollars or more.

“What little reserves landlords had, they have used to pay their property taxes and other bills because of diminished rent revenue,” said Strasburg. “Gas conversion relies on massive equipment modification of boilers, burners, gas lines, gas meter room construction, chimney liner and relocation, and other costs like oil tank and asbestos removal.  It also relies on logistical hurdles, such as access to apartments and dependency on gas suppliers and the city’s Department of Transportation – when streets need to be opened for new gas line installation.”

The City Council passed Local Law 43 of 2010 to replace No. 6 heating oil with cleaner grades of heating oil – No. 4 or 2, and eventually phase out their use for usage of natural gas.

By 2016, the city achieved one hundred percent compliance from 6,000 designated buildings on the elimination of No. 6 fuel oil.  All of the buildings required to perform the conversion went from using fuel oil No. 6 to No. 4 in the first phase of the conversion process – and, in some instances, to No. 2 or gas. 

Building owners have developed plans to continue in the second step of the conversion to the eventual No. 2 fuel oil or natural gas and are calling on the City Council to give them time to complete the conversion as New York looks to recover from the pandemic.

Said Strasburg, “Besides the financial implications of the pandemic, Albany lawmakers – in the middle of this process, in 2019 – put a cap on what landlords can recoup on building improvement costs.  In addition, the city’s Rent Guidelines Board ignores compliance costs when assessing rent increases.

“Everyone agrees it would be unconscionable to evict a tenant suffering from COVID-19.  It would be equally unconscionable to accelerate the fuel oil conversion process in the throes of a pandemic, when landlords are suffering unprecedented challenges and hardship to keep their buildings afloat so they can provide safe, quality housing for millions of New Yorkers.”

(Visited 1 times, 1 visits today)

Related posts

CIBS forms Committee to Advance Women in Real Estate

REW

WHO’S NEWS: Latest appointments, promotions

REW

JLL thinking inside the box when it comes to new office normal

REW