When you tell a hard-nosed apartment developer or property manager that he's getting something for nothing, you'd better be prepared to back up your statement.
Stephen L. Griffin, property manager for Calabasas-based Griffin Homes, isn't paying a nickel for the heating, air conditioning and water heating operating costs and debt service at Griffin's new 200-unit Citrus Gardens Apartments in Fontana. Nor did Griffin Homes pay anything initially to have the space- and water-heating installed in the project.
The project's 22 free-standing "energy centers" that combine solar panels and gas-fired hydronic boilers are owned by Catalyst Thermal Energy Systems Corp., an Irvine-based subsidiary of $1.2-billion Catalyst Energy Development Corp., New York. The latter firm owns 23 power and steam facilities in 18 states and is active in co-generation.
This updated version of district heating--the use of a central power plant for a group of buildings--was developed over a period of more than 20 years by James R. Piper, a builder with an engineering background.
Piper calls the marketing concept for his system the "Freehold Plan" and said it saves developers of apartment projects as much as 3% to 4% on construction costs by eliminating individual furnaces and water heaters.
"There is such a thing as a free lunch for apartment developers like Griffin," he said at the door of one of his energy centers at the Fontana project. "A development like this is a natural for district heating because of its efficiency. The solar panels provide 20% of the energy, while the gas-fired hydronic boilers and pumps provide the other 80%."
Veteran plumbing contractor Michael C. Schutt, senior vice president in charge of field operations for Piper Hydro Inc., the firm's construction and maintenance subsidiary, first heard about the system late in 1984 when the 240-unit Laguna Shores apartment project in Las Vegas became one of the first developments to use Piper's Freehold concept.
Schutt was in charge of installing the system in the Las Vegas project and was so impressed with it that he moved to Orange County from Las Vegas to join Piper's firm.
Saved Money, Space
"As a plumbing contractor--a conservative occupation if there is one--I was skeptical about the system," Schutt admitted. "I did a lot of research, including looking at a development in Park City, Utah, that had the system, before putting my reputation on the line."
By eliminating individual water heaters and heating equipment in the units, the builder freed up space in each apartment, and--not incidentally--saved $170,000, Shutt said. He also saved $50,000 by not installing individual furnaces.
There was an added advantage in the Las Vegas project: "Because of alkali problems with water in Las Vegas, conventional water heaters last only three to five years," he said. "The boilers in the energy centers last longer and are easier to service because of their free-standing locations."
Under the 30-year contract with Piper's firm, Griffin Homes is effectively out of the energy business, making Piper's company like a mini-utility.
In addition to the 3% to 4% construction cost savings, Stephen Griffin happily notes that his company will save an additional 3% to 4% on operating costs for maintenance and upkeep of the system--maintenance-handled by Piper Hydro.
The system is more efficient than individual heating systems--by contract tenants pay Catalyst 10% to 30% less than they would pay the utility, according to Morgan Hancock, president of Piper Hydro Inc. She explained that Piper Hydro, a wholly owned subsidiary of Catalyst Thermal Energy Systems Corp., installs and operates the systems.
"Because we buy our energy from the local utility, our profits are contingent on the efficiency of our equipment and our work force," she said. Hancock is a licensed heating, air conditioning and plumbing contractor in California and Nevada.
Other Apartment Projects
Piper said his system works anywhere in North America where the electricity rate is 6 cents a kilowatt or higher.
"We have previously installed our system in Calgary, Canada, where it really gets cold," Piper said, adding that five projects with 759 apartment units are operating under the Freehold plan, three projects with 480 units are under construction and letters of intent for another 2,075 units have been received by the firm.
Before the recent elimination of tax incentives for solar and other forms of alternative energy, Piper sold his hydronic system to builders and developers. He developed the Freehold Plan to take up the slack caused by the elimination of energy conservation incentives.
Despite his love of Italian-made Ferrari sports cars--he has four of them--Piper believes in buying American when it comes to the components in his energy centers, which range from 18 to 40 feet long. The gas-fired boilers at the Fontana project are made in North Hollywood by Laars Teledyne and the pumps and control components are all quality crafted by Catalyst in the Southland, he said.