Show Me the Light (and Savings): Boston Developer Ramps Up Use of Solar Energy

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Tax Credit Advisor, May 2009: WinnDevelopment, a Boston-based developer, owner, and manager of affordable and market-rate apartments, is making a big push into use of renewable solar energy as part of a broader strategy to cut energy and water costs at its properties.

The solar initiative has proceeded in three stages so far. One was installation by Winn of a solar photovoltaic (i.e. electricity generating) system at one Winn-owned property as part of a rehabilitation project. Second was installation of solar at six Winn-owned apartment properties through WinnSolar LP, a new division of WinnDevelopment. Third was installation of solar at two Winn-owned properties by a third-party.

WinnDevelopment, a subsidiary of parent WinnCompanies, owns about 12,000 affordable- and market-rate apartments and manages another 60,000.

According to Heather Clark, Director of Green Building at WinnCompanies, through year-end 2008, solar systems had been installed in existing Winn-owned multifamily properties containing roughly 2,000 affordable apartments. Most installations occurred last year.

“Overall, we have over a megawatt of solar [generating capacity] now on our properties,” she said.

WinnDevelopment began by having solar energy equipment (i.e. solar panels and companion hardware) installed at two Winn properties by a third-party firm. This firm leases the rooftop space, owns and maintains the systems, and sells the generated electricity to each property at a reduced rate under a long-term contract.

The first installation was at Bowdoin Street Apartments, a 226-unit, 15-building low-income housing tax credit property in Malden, MA. A 77-kilowatt (kW) photovoltaic system furnishes electricity for half the needs of the common areas; a solar hot water system supplies part of the hot water needs.

Larger-Scale Transaction

In the larger, more recent transaction, WinnSolar LP completed installation of solar power systems on six Winn-owned family and senior apartment communities in Massachusetts and Connecticut. Most of the apartments are housing credit units.

WinnSolar owns and leases the solar equipment, sells the electricity to each property at a slightly below-market rate, and collects lease fees. It also collected rebates and developer’s fees, and syndicated the federal solar investment tax credits claimed on the solar energy systems to raise equity to help fund the costs of the equipment.

The federal solar tax credit is equal to 30% of the cost (including installation) of equipment that uses solar energy to produce electricity (i.e. solar photovoltaic panels), to heat or cool, to provide solar process heat (i.e. to heat water, other than swimming pools), or to power fiber optic lighting distribution systems. The entire credit amount is claimed in the first year, a five-year recapture period applies, and 85% of the equipment cost is depreciable over five years.

WinnSolar hired a Vermont-based firm, groSolar, to design and install the solar systems for the six properties. This aggregation – the systems have a total capacity of 820 kW – reduced the cost per property. In addition, use of a single partnership to own all the systems made the deal more appealing to the single investor that purchased all of the solar tax credits.

Winn received partial funding for the solar installations from the Connecticut Clean Energy Fund (CCEF) (http://www.ctcleanenergy. com) and Massachusetts Technology Collaborative (http://www.masstech. org). Roughly 68% of the costs for the four Connecticut properties were funded by $3.78 million in grants from CCEF’s Affordable Housing Initiative and On-Site Renewable Distributed Generation Program.

Clark indicated WinnSolar might expand to do solar installations on non-Winn owned properties.

Among the six Winn-owned properties with recent solar installations are:

  • Whaler’s Place, a $16.5 million historic rehabilitation development in New Bedford, MA containing 75 affordable apartments and rental townhomes for residents 55 or older. Whaler’s Place was once a part of the historic waterfront Whitman Mill. Originally built in 1894, the property over time housed a garment and textile factory and a wholesale store. The redevelopment was funded in part with equity generated by federal and state housing and historic tax credits.
  • Mill Pond Village, a 360-unit community on 47 acres in Broad Brook, CT containing a mix of 4% housing credit units and market-rate apartments.
  • Schoolhouse Apartments, a 400-unit senior apartment community in Waterbury, CT created from the renovation of five historic buildings – four former schools and the Waterbury Clock Company.