Getting landlords to make energy efficiencies

August 15, 2013

(WBEZ/Susie An)
Sandeep and Carolyn Sood stand in the lobby of Jeffery Parkway Apartments, the building they own.

It hasn’t been difficult to get some homeowners to shell out the cash to make some energy upgrades on their homes. After all, they’re the ones paying for electricity and gas.

But when it comes to rental units, many property owners are reluctant to make those changes because they’re not the ones paying the utility bills. It’s the renters.

Some organizations are trying to change that.

Sandeep Sood and his wife own the Jeffery Parkway Apartments, a 55 unit, 7 story building. They acquired the South Side building four years ago.

“When we bought the building, it was in really bad shape. We had a lot of book management and construction to do on this building,” he said.

Sood showed me around the boiler room where insulated pipes run along the walls. He said the old boiler was huge and spewed out enormous amounts of heat.

“The first year we got this, we were able to retrofit a new stainless steel boiler. A little different design than your typical boiler. But we were able to increase our efficiencies by more than 60 percent with just this one measure,” he said.

This and other efficiency upgrades cost about $110,000. The Community Investment Corporation provided a low interest loan to help finance the bulk of the work.

“I think our total payback was within a year and half to two years on those invested funds. That’s a great return on investment. There are other buildings where you might get payback in 4-5 years depending on which improvements you chose. But on any horizon, the longer the horizon, you’re going to save more money,” he said.

Sood estimates monthly utility costs of water, electricity and gas combined are $50-60 per studio apartment.

It’s in his interest to make these upgrades here since utilities are lumped in with the rent. But it’s harder to get some landlords on board if they aren’t reaping the benefits.

“I would maybe call it a generational divide. We’re relatively young. But I’ve run into a lot of owners who are just resistant. Well, they’re a little shortsighted to what these improvements are going to bring to their building. They’re looking at it like cash out of their pocket,” he said.

Daniel Olson is the senior energy efficiency planner with the Chicago Metropolitan Agency for Planning. The agency’s mapped out a regional plan that identifies energy efficiency as one of the easier measures that can move the area toward sustainability. That includes things like upgrading to a high efficiency hot water heater, insulating buildings and simply changing light bulbs to compact fluorescent lights.

“Before you would ever want to do something big like solar panels or wind or anything like that, you want to take the first step in the loading order which is always energy efficiency,” Olson said.

He said if all the region’s residential units took up simple retrofits on gas alone, emissions could be cut by 15 percent. That’s about 345,000 cars off the road or 3.8 million fewer barrels of oil.

“When you have happy tenants who have lower bills. They are going to lower your vacancy rates, so that you actually keep your buildings full with tenants which will increase the funds you have available,” Olson said.

Since Peoples Gas and North Shore Gas began its savings programs in 2011, 19,000 residential customers have saved more than 10.5 million therms of natural gas consumption. That’s about 11,000 cars off the road.

160,000 residential Com Ed customers saved more than 4 million megawatt hours of energy since the start of its 2008 Smart Ideas program, saving more than $400 million on their bills.

About 40 percent of Cook County’s residential stock is multi-unit property. A significant part of that is renter occupied.

It’s that population the Center for Neighborhood Technology and the Community Investment Corporation is targeting with the Energy Savers program. It helped Sandeep Sood make upgrades to all his rental properties.

“Multifamily building owners have been harder to reach by efficiency programs. And that’s because they’re kind of stuck between a residential program and a commercial program. And typically the programs that are out there don’t meet their needs,” said Anne Evens, CNT executive director.

The program gives owners a free evaluation of their property, listing how much savings they’d get with recommended upgrades. It also offers various rebates and financial options.

“For a smaller apartment building, you could spend between $15-20,000 in order to get a 30 percent savings on your energy bill. And it’s typical to get those savings and payback your investments in 5 to 7 years.

Sood says his energy costs are down by 65 percent.

“I do care about the environment,” Sood said. “Now, when I’m put in the role of making business decisions and taking a risk on an investment property like this, I tend to think in dollars and cents. But there’s a lot of bad things you can do when you think only in dollars and cents. This you get both things. You’re increasing your efficiencies and you’re helping the environment.”

Sood said his tenants might not see the efficiencies, but they feel more comfortable.

Currently, all 55 of his units are occupied.

Michael Cotten, a retiree, lives in one of them. He’s been in the building for about 7 years, before Sood acquired it.

“It was more like a transient place. And I was glad when he took it over because I was thinking about moving,” he said.

Before upgrades were made, Cotten said, the heat would go out multiple times in the winter, but now he feels comfortable.

“Sandeep has done amazing things with this building. He’s really fixed it up,” Cotten said.

He said he’ll be sticking around for awhile.