Solar on the Side

5 min read

Omni retrofit saves half of water costs

Sunlight warms the water at the Ohav Shalom Seniors Apartments. A new solar heating system has cut its cost to heat domestic hot water at this high rise by two-thirds.

That’s a huge benefit for the affordable housing community, which first opened in 1974 in Albany, N.Y.

The solar system is part of a full renovation that should keep Ohav Shalom running smoothly for decades to come. “I am very enthusiastic about this technology,” says Duncan Barrett, chief operating officer for Omni Housing Development, an affordable housing developer based in Albany, N.Y.

Solar saves money
In February, Omni finished on the solar system, which is one of the last large pieces of a $33.5 million renovation at the 210-unit, 12-story community.

Water circulates through 1,600 square feet of solar panels bolted to the side of the building. Sunlight warms the water, which travels to a heat exchanger where it gives its warmth to fresh water that goes out to the apartments.

On a warm, 80-degree-Fahrenheit day, the system collects more than enough heat to bring the domestic hot water to 120 degrees. On cooler days or after sunset, the building has a conventional new hot water heater to finish the job.

Altogether, the new boiler and solar system will cut the building’s bill for domestic hot water by roughly two-thirds.

The old hot water system used about 12,000 therms of energy a year to heat its hot water, at a cost of more than $12,000 a year, according to solar developer ActiveSolar Development, based in Galway, N.Y. The new system only needs 8,600 therms to heat the domestic hot water for the apartments.

The solar system provides nearly half – 46.7% – of that heat energy. That works out to 4,016 therms of energy provided by the solar system, saving the building a projected $4,200 a year. If fuel costs spike again, the energy saved by the solar panels will become more valuable.

“Any variable cost we can suppress speaks to the long-term sustainability of the project,” says Barrett.

The installation was especially difficult, because the building had no room on the rooftop. The top of the Ohav Shalom was already taken up by other mechanical systems and five cell phone towers.

Instead, Omni bolted the solar system to the side of the apartment building.

The system cost about $132,000 to purchase and install. That’s a lot of money, compared to the savings of just a few thousand a year.

But generous incentive programs paid most of the cost. The New York State Energy Research and Development Authority paid about half of that cost with a $68,000 incentive. The federal energy tax credit, plus depreciation in the first year provided another $45,000. So Omni only had to pay $19,000 of its own money for the solar system.

“We are doing this on every project that we have going forward,” says Barrett.

The renovation at Ohav Shalom also fixed some serious problems.

Its apartments each had a small balcony with a sliding-glass door – the passing years turned these doors into leaky problems that made the building very expensive to heat in the winter and cool in the summer.

Omni enclosed the balconies. That solved the problem of the drafty, sliding doors. It also increased the size of a typical apartment at Ohav Shalom from 530 square feet to 560 square feet.

The renovation at Ohav Shalom took asbestos from the ceilings and floors of the apartments, added new

Energy Star appliances and lighting and, also, created a new community room and a wellness and social center for the seniors.

Strong need for housing
The apartments at Ohav Shalom are an important part of their community. Even before the renovation, only six of the 210 small, drafty apartments in the high-rise were vacant.

The apartment building stands next door to a synagogue, Congregation Ohav Shalom. A group of volunteers started the Congregation Ohav Shalom Housing Development Fund Co. Inc. (HDFC), a small affordable housing development company that only built this one project. In the decades since it opened, nearly all of the people who originally built the community have moved on to other things.

Omni spent years helping the heirs of the original developers create a plan to bring new capital to the community to pay for a renovation.

“We talked to them for six or seven years,” says Barrett.

The original financing included a low-interest, 40-year, Sec. 236 loan from the U.S. Department of Housing and Urban Development (HUD). By the time the owners of the old apartment building were done negotiating with Omni, the old Sec. 236 had finally reached the end of its term.

Project-based Sec. 8 rental subsidies still help pay the rents for low-income seniors who live at the property.

Finding the funding
Omni closed the financing to renovate Ohav Shalom in May 2015, and started construction soon afterwards.

The $30 million redevelopment received $15.6 million in financing from tax-exempt bonds issued by the State of New York Mortgage Agency (SONYMA). Chase has credit enhanced these bonds for the construction period at Ohav Shalom, and Chase is also servicing the loan. After the two-year construction period, SONYMA will issue a mortgage guarantee that replaces Chase’s letter of credit for the $11.4 million remaining balance of a tax-exempt, 30-year permanent loan.

Chase also paid $10.6 million for the 4% Low-Income Housing Tax Credits that came with Ohav Shalom’s tax-exempt bond financing. The price works out to 97.5 cents for a dollar of tax credit, which was a good price for LIHTCs in a smaller metro area, like Albany, when the financing closed in May 2015.

The seller also forgave $4.1 million in debt on the property. Soft financing from the New York Housing Finance Agency (HFA) and a deferred developer fee finished off the financing. Omni’s deferred fee will be paid as the property – including the solar system – operates smoothly.

“The HFA wants us to have some skin in the game,” says Barrett.