Government & Politics

New program promises savings for old Kansas City buildings needing energy upgrades

Matt Hanschu of Firelake Construction in Lenexa worked recently on a newly installed control system for a heating unit in the garage of the Wornall Plaza building, 310 W. 49th St. in Kansas City. The building was undergoing energy upgrades.
Matt Hanschu of Firelake Construction in Lenexa worked recently on a newly installed control system for a heating unit in the garage of the Wornall Plaza building, 310 W. 49th St. in Kansas City. The building was undergoing energy upgrades. The Kansas City Star

As a resident of the Wornall Plaza condominiums near the Country Club Plaza, Ken Bowman knew well that the building’s ancient boilers and lights were costing a small fortune to maintain.

They needed to be replaced, but the $670,000 cost for upgrades was daunting.

Then Wornall Plaza learned of a new program through Kansas City municipal government that provided low-interest financing. In fact, owners could essentially pay the loan back with the money they would save on their utility bills.

The new boilers, energy-efficient lights and other work have just been completed, and Wornall Plaza is projected to save $34,000 annually, which over time will cover the costs.

“It sounds too good to be true,” acknowledged Bowman, the board treasurer of the co-op at 310 W. 49th St.

But he said it has worked out as promised.

“We’re very happy with it.”

Wornall Plaza was the first Kansas City building to take advantage of the new Property Assessed Clean Energy (PACE) program, but City Council members Scott Wagner and John Sharp said other owners of commercial buildings with aging energy systems should look into what can be a great deal.

“That’s certainly an economic benefit for any business that takes advantage of it,” Wagner said.

Dennis Murphey, Kansas City’s chief environmental officer, acknowledged that it’s not always easy to get business owners to borrow money but said that in this instance, it’s worth exploring. They can borrow 100 percent of the cost and spread the payments over 15 to 17 years.

“It’s one of the very few expenses that allows you to get a return on investment before you sell it,” Murphey said. “You actually get a savings while you occupy the building.”

The city decided to affiliate with Missouri’s Clean Energy District more than a year ago because of the benefits to business, the environment and job creation.

Other area communities in the Clean Energy District include Jackson County, Independence, North Kansas City, Belton and Peculiar. All those communities offer ways for commercial property owners to finance energy efficiency and renewable energy projects through their property taxes, with long-term financing at reasonable rates.

Kansas City’s program provides an added incentive because the city got $4.6 million in Missouri energy conservation bonds, which allows it to help local businesses and their third-party lenders with a lower interest rate (about 4 percent versus the more typical 7 percent) on loans for their improvements.

For small-business owners, trying to get a bank loan can be extremely difficult, so with a third-party investor and the city’s help, this makes it affordable, Sharp said.

The loan must be supported by an energy audit to make sure the utility savings will offset the annual repayments that are made as a special property tax assessment.

In the case of Wornall Plaza, the board worked with Energy Solutions Professionals, an Overland Park company that does energy audits, recommends equipment replacements and helps clients secure financing.

Wornall Plaza’s boilers dated from the building’s opening in 1957 and clearly needed replacing, said Jeff Flathman, president of Energy Solutions Professionals. The building’s lighting was also outdated, and temperature controls in the parking garage were broken, so in some cases the garage was heated to 80 degrees in the winter, a huge energy waste.

Flathman said the new boilers are already saving 60 percent of the energy used by the old equipment and overall the project is expected to save 20 percent from the old systems.

“It allows older buildings to get new efficiencies and it’s an amazing program for that,” Bowman said. “I applaud the city for backing it.”

Wornall Plaza used $100,000 of its own reserves, so it ended up borrowing $571,000 through the PACE program. That leaves about $4 million left of Kansas City’s original $4.6 million in bond allocation.

Flathman said his company is working with other clients that may be able to take advantage of PACE, including the Oakwood Country Club, 9800 Grandview Road, which is undergoing an energy audit.

Unfortunately, the program is not available to single-family homeowners or residents of most Kansas City condominium buildings, in which each condo is individually owned. It was available at Wornall Plaza because that is a co-op where the property assessment is with the building, not each unit.

But Murphey and others said it is available for most commercial properties, offices and shopping centers and may be cost effective even for buildings that are just 25 to 30 years old but have outdated heating and cooling systems, lights and plumbing.

“We hope we’ll see a lot more of these projects in Kansas City in the months ahead,” Sharp said.

More information and contact phone numbers are at www.mced.mo.gov.

To reach Lynn Horsley, call 816-226-2058 or send email to lhorsley@kcstar.com.

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