As of last year, a state-sponsored bank committed more than $440 million for clean energy projects. But the program apparently isn’t very popular with New York City developers.
One reason is that by accepting funding from the state, building owners are potentially opening up their personal financial information to public records requests. Jonathan Flaherty, senior director of sustainability and utilities at Tishman Speyer, noted that for tax purposes, buildings aren’t incorporated as individual entities.
Instead, income is passed through to building owners, so that it’s taxed as individual income. So, when the owners apply for financing, they provide their personal tax information to the state, which could potentially be obtained through a Freedom of Information Law (FOIL) request.
“Guess what? They are not interested in making that information FOIL-able,” he said. “Even with the most well-intentioned government programs, if you don’t think through how that will actually utilized at the building level, you will regularly find that no one takes advantage of those dollars.”
In a statement, the New York State Energy Research and Development Authority, which oversees New York Green Bank, said that it closed “six energy efficiency transactions related to commercial, multi-family and single-home building consumers” as of the end of 2017. An agency spokesperson wouldn’t specify if any of these were in the city.
“NY Green Bank is always seeking new ways to facilitate greater market activity in the deployment of commercial energy efficiency technologies, including with private building owners,” the spokesperson said. “One example is the issuance of a recent request for proposal submissions which specifically targets commercial and multifamily property owners.”
A representative for New York Green Bank said that “competitively sensitive or an unwarranted invasion of personal privacy” are exempted FOIL requests, and that New York routinely handles such information and grants exemptions.
Flaherty was the keynote speaker at New York University Schack Institute of Real Estate’s Seventh Annual Conference on Sustainable Real Estate, which focused on the lending climate for energy efficient and sustainable projects. Panelists discussed the cost benefits of investing in energy-saving technology, such as the ability to hike rents, and noted the changing attitudes of institutional investors, like a Norwegian pension fund that requires evidence of sustainable practices.
Flaherty also noted the city’s ramped up efforts to dramatically cut down on greenhouse gas emissions in existing buildings by mandating efficiency upgrades and improvements. He said the changes will apply to more than 14,000 buildings, which will require billions of dollars in funding. But the city has left it up to individual building owners to figure out how to meet these new mandates.
“Ultimately, there’s going to need to be a boatload of capital that comes into that area, and where that capital comes from is completely unclear,” he said.