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Developers Tap Into Natural Gas Utility Rebates and Incentives to Increase NOI

Though luxury apartments come in all shapes and sizes, a few amenities are must-haves: a washer and dryer, a dishwasher and of course, a gas stove. Having natural gas available for cooking and heating has long been considered the domain of luxury apartments. That’s because, in years past, including natural gas could exact a heavy up-front cost compared to electricity.

But beyond the up-front investment, natural gas is the far more affordable utility. According the American Gas Association, residential space heating and water heating cost analyses show that natural gas costs less to use than other major home energy sources. To move more developers toward energy efficiency, Washington Gas offers incentives and rebates to defray the overhead cost of meter, piping and equipment installation.

“Developers may see the initial cost numbers and rule out natural gas, not realizing that it’s much cheaper in the long term,” said Washington Gas Energy Efficiency Programs Supervisor Josh McClelland. “The idea behind our incentives and rebates is to work with developers to become their partners in the industry. We want to educate them about efficiency and make natural gas a more viable option for them.

Developers who replace their inefficient systems with high-efficient options may also see an increase in their NOI and property value. For example, The Donaldson Group, a full-service real estate management and investment company, was able to increase Cider Mill, its 864-unit garden style community’s NOI by over $1.3 million and property value by over $20 million. They accomplished this by utilizing Washington Gas’ incentives and rebates to convert their investment’s antiquated two-pipe central heating system to individually metered high-efficient gas heat and hot water systems.

Washington Gas offers rebates for high efficiency natural gas equipment in Maryland through EmPOWER Maryland, a state-sponsored program that was created to reduce energy consumption. In addition to the equipment rebates, Washington Gas also offers the Multifamily Incentive Program for multifamily developers and property owners who choose individual unit natural gas utility meters for their new construction and renovation projects. Incentive amounts vary by project, but developers have received $1,000 per unit on average and some have had their houseline installation costs covered completely.

“For developers who are building or renovating multifamily properties, the two programs can be combined,” said McClelland. “Developers can receive rebates when they buy and install energy-efficient natural gas equipment and potentially receive $1,000 per unit from the Multifamily Incentive Program. Our sales engineering team also provides complimentary interior pipe designs and partners with developers to find the best solution for the property.”

For building owners, installing natural gas is not just an investment in lower utility costs, but also in tenant experience, said McClelland. Offering gas-powered stoves, responsive and reliable heating in units can help building owners acquire and retain tenants.

“We’re seeing more and more buildings in the multifamily space deliver with electric instead of gas,” said Bozzuto Group President and CEO Toby Bozzuto. “We think that’s being done with the idea that it’s a cheaper alternative for the developer. In reality, it’s not cheaper for our customer, nor is it what they want.”

The EmPOWER Maryland Program was instituted in 2008 with the goal of reducing Maryland’s energy consumption by 15% by 2015. After great success, the program was extended in 2017. After petitioning the public service commissions in Maryland and Virginia, the Multifamily Incentive Program is now available in both states within Washington Gas’ jurisdiction.