The Roosevelt Landings Project
Developer: Urban Greenfit, LLC
Owner: Urban American & Brookfield Real Estate Partners
Location: New York, NY
Urban Greenfit LLC wins the 2014 Financial Innovation Award for developing the Roosevelt Landings project in Roosevelt Island, N.Y. The development demonstrated financial innovation because it leveraged investor equity, city- and state-subsidized debt, utility company and state grants, and Federal Section 1603 grant funding through a leveraged special purpose vehicle (SPV) model.
The SPV model allowed the use of grants in lieu of tax credits. In addition, developers had many incentives for using a SPV financing structure. Most significantly, the SPV delivers investors a return in the high teens with monetized energy savings through a 10-year power purchase agreement (PPA) and energy services agreement (ESA). David Davenport, managing principal at Urban Greenfit, said that over 10 years, the project will generate a 19 percent cash-on-cash return of $3.18 million for the $1.8 million in equity invested. The SPV model also allowed the conversion of a high one-time capital expenditure into a manageable operating expense paid out over 10 years.
Davenport said the Roosevelt Landings Project was the largest energy retrofit of a residential building in New York City during the 2013-2014 period. The project was structured to improve the energy-delivery infrastructure and energy efficiency of the building, which will lead to reduced operating costs and a minimum capital expenditure from the owner.
The project includes the following clean energy features: installation and operation of a combined heat and power plant to provide electricity and thermal energy ; the replacement of aging boilers with energy-efficient hot water heaters; insulation of concrete slab floors that lie below many apartments; installation of air barriers to improve the building thermal envelope and reduce energy wasting air loss; and installation of programmable thermostats and window sensors, which will enable the building to better control heat to reduce energy use. Davenport said the new renewable energy systems will generate 15 percent of the building’s electricity and reduce the electric operating expense by 20 percent, for an expected annual savings of $3.2 million.
The financing package for the Roosevelt Landings project was $7.2 million, and included equity from the building owner, loans from the New York City Energy Efficiency Corporation (NYCEEC) and the New York State Energy Research and Development Authority (NYSERDA), and grants from Con Edison, the New York Energy and Research Development Authority (NYSERDA) and the federal government through the Section 1603 cash grant program.