A $200M Solar Project Offers Rent-Stabilized Landlords A Rooftop Repair Lifeline

Rent-stabilized landlords have struggled in recent years to finance repairs to their buildings as their expenses have skyrocketed. Now, they face an extra strain on their balance sheets as Local Law 97 fines are set to kick in.

But as cash-strapped landlords across New York City stare down penalties linked to its greenhouse gas emissions law, a renewable energy company is spending $200M to help rent-stabilized buildings meet their carbon dioxide-reduction targets.

Under overcast skies Tuesday morning, Fieldston Power showcased scores of solar panels it recently installed on a rent-stabilized Bronx portfolio — the first among the 1,000 buildings where it has inked deals to lease and reinforce rooftops to help rent-stabilized owners decarbonize.

“Solar itself is not exactly complicated, and what we've built here isn't really all that new,” Fieldston co-founder and partner Adam Zucker said. “The reality is that this innovation largely lies within our financing structure.”

Landlords whose buildings are more than 25K SF, and where more than 35% of units are rent-regulated, had to submit their first emissions reports to the city last May under Local Law 97.

Those buildings also have to submit reports showing that their emissions are under 2030 emissions limits, calculated on a per-building basis by independent experts, or show that they have carried out a series of 13 measures including fixing leaks and installing indoor and outdoor temperature sensors.

Failing to meet those deadlines means a $10K fine per building.

But Chestnut Holdings, a rent-stabilized landlord that owns roughly 7,000 units between the Bronx and upper Manhattan, will avoid some of those fines because of the deal it struck with Fieldston, the energy developer said.

The first of Fieldston’s rooftop solar networks includes the roof of 2676 Grand Concourse, an 80-unit rent-stabilized Kingsbridge building owned by Chestnut. The property is one of 71 Chestnut buildings where Fieldston has just powered up its solar panels, Zucker said.

It cost $16M to install all of the panels, $353K of which was spent on 2676 Grand Concourse's rooftop. The project is just the first cohort for the energy developer, which has a $200M investment pipeline.

Over the next three and a half years, Fieldston plans to use that investment to create solar rooftops in 1,000 rent-stabilized properties, Fieldston co-founder and partner Alexander Weisberg said. Its planned rollouts also include several New York City Housing Authority properties in the Bronx, including the 783-unit Sedgwick Houses.

The power company targeted rent-stabilized properties in the Bronx because it recognized the need in one of “the most overlooked corners of our city,” Zucker said. The Bronx has the city’s largest concentration of rent-stabilized units, with four neighborhoods experiencing the most severe net operating income declines of the entire city.

Fieldston’s model works by leasing rooftops from landlords and then replacing aging roofs so they can support the weight of solar panels that it installs.

The power company then sells the solar-generated energy back to Con Edison in exchange for bill credits, which go back to “energy-burdened” tenants who spend more than 6% of their disposable income on utilities in the form of a 20% discount on their monthly bill.

In exchange, owners like Chestnut get new roof warranties and property tax abatements while reducing the building’s emissions enough to bring them in line with Local Law 97 requirements. Complying with Local Law 97 also nets landlords a property tax abatement, according to Fieldston.

Operating costs in the buildings that house NYC’s one million rent-stabilized apartments have soared in recent years, with utility costs spiking by 5.6% last year alone to account for 10.9% of overall building costs, according to the Rent Guidelines Board’s most recent report.

“New York City housing stock is definitely aging, and our energy infrastructure needs pretty important upgrades,” Zucker said. “The energy-related capital improvements that are being asked of them are really just increasingly difficult to finance.”

Fieldston’s model slightly mitigates utility costs, Chestnut Executive Director of Operations David Schorr told Bisnow by phone Tuesday afternoon. Additionally, getting the tax abatement and getting new roofing that Chestnut doesn’t have to pay for helps buildings run better, he said. 

“I can't really quantify the financial savings that we would see from not having leaks, but leaks can be very expensive,” Schorr said. “We think that having solar on rooftops is not only good for landlords, it's good for tenants, it's good for the environment.”

But Fieldston’s model, which funds its program through a mixture of public and private financing, may have an end date.

Although it receives incentives from the U.S. Department of Energy and grants from the New York State Research and Development Authority for renewable energy projects that benefit low-income residents, it also relied on the solar benefits previously established under the federal Inflation Reduction Act.

Fieldston managed to purchase the 72,000 solar panels and 70,000 inverters and optimizers it needs for its planned expansion by the end of last year, when the IRA’s solar tax credits expired.

Fieldston's founders said efforts from state lawmakers to mitigate the loss of the IRA will help it find its future path. Earlier this year, legislators proposed a bill that would give affordable housing owners cash toward installing solar panels and increased budget commitments to solar energy programs.

But that may not be enough, U.S. Rep. Ritchie Torres told Bisnow on the Kingsbridge rooftop Tuesday.

“There's no substitute for federal incentives,” he said. “Solar is the most rapidly scalable deployable energy source, so the physical capacity is there. The question is, do we as a city and state and country have the political will?”