Will new heating oil rules bankrupt co-ops?

Here's a story from this week's Riverdale Review.

By Brendan McHugh 

The metal sleeve runs all the way
down to the boiler in the basement.
It cost $90,000.

It started as an environmental issue and it’s now become an affordable housing problem. 

A new city-mandated rule requires all residential buildings to switch from No. 6 heating oil to at least No. 4—a cleaner, more expensive oil—by 2015, but then to No. 2 or natural gas by 2030.

Environmental activists across the city celebrated the mandate, but for Riverdale, the mandate will end up costing thousands. 

“You hear about a boiler conversion, but for the rest of the building, it’s a big expense,” said Community Board 8 housing committee chairman Thomas Durham. 

His building, at the corner of Waldo Avenue and Manhattan College Parkway, is one of hundreds in Riverdale that burns No. 6. At least it did, until this summer when the building underwent a conversion from No. 6 to a duel system of natural gas and No. 2 oil. If Con Edison shuts down the gas line, Durham’s building still wanted to have a heat source, hence the backup No. 2.

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Durham said the cost of the boiler is only the tip of the iceberg. Other expenses such as street work, pipes, a chimney sleeve and more can lead to a higher cost—all of which is taken on by landlords, building occupants or co-op shareholders. 

The cost of Durham’s building’s chimney sleeve was $90,000. The chimney did not pass an integrity test, which tests the ability to withhold gas. The chimney was still able to hold smoke. 

Stephen Budihas, president of the Association of Riverdale Cooperatives and Condominiums (ARC), is trying to do whatever he can to ease the costs. 

He’s pleaded with elected officials and city agencies, asking them to offer tax incentives and abatements for switching to the cleaner, more expensive oil or gas. 

ARC has over 130 buildings in the 10463 and 10471 zip codes, and Budihas said over 70 percent of buildings are coops in the area. One idea he has been working on has been convincing Con Edison to treat buildings on the same block as one entity during conversions. That means that when Con Edison has to dig up the street to replace the pipes, they will work on multiple buildings at once, significantly cutting costs. 

“Those costs are going to be hitting us forever,” he said, noting that the amount of No. 4 oil it takes to heat a building is much more than what it takes for No. 6 to heat the same building. 

The current cost per gallon for No. 4 heating oil is about 55 cents more than No. 6. 

Budihas said the long-term costs stemming from this are “giant. Absolutely giant,” and the people of New York “have to have a plan for that, now.” 

Unfortunately, he’s been ignored left and right. State government officials told him to talk to the city. City officials told him to speak with the state. 

New York State Energy Research and Development Authority ran out of funding that was meant to help buildings convert. Con Edison has a small rebate program, but not enough to convert the entire city by 2015. 

City Councilman G. Oliver Koppell is open to extending the 2015 deadline and discussion possible tax incentives, according to a member of his staff, though it’s still just in the discussion phases. 

One City Council insider said buildings may just be able to ignore the deadline altogether, saying the penalties for not converting in time haven’t been clearly laid out yet. 

However, Durham touched upon that as a risky move, saying when someone is in charge of a 100 family building, taking the chance that the government won’t come in and shut down the heat in the dead of winter is too dangerous. 

Community Board 8 is working with Budihas, elected officials and housing experts to put together a forum—tentatively scheduled for the middle of December—to discuss the heating oil conversion and the hidden costs it will have on buildings and residents.