NY State Geothermal Tax Credit & Sales Tax Exemption Bills on Gov Cuomo’s Desk

The following comes from Bill Nowak, Executive Director of NY-Geo, Please Act:

Governor Cuomo has called the geothermal tax credit (S2905) and sales tax exemption (S4279) bills to his desk. He has until Friday, November 20th to sign them or veto them. It is our understanding that we probably won’t find out until the 20th.


These bills fit NY State’s needs perfectly as they give the state a tool to lower greenhouse gas emissions and peak demand while cutting heating and air conditioning bills for New Yorkers.  At the same time the Governor has often vetoed bills that may impact state revenues when they are passed after the budget has been set (as these were). That means YOUR CALL can make the difference between success and failure on this initiative.

I’ve attached a few items that explain these bills, list advantages of geothermal heating and cooling, and document that the bills will have A minimal revenue impact.

Here’s the lowdown on calling the Governor:

Please take a quick minute today to leave a message with Governor Cuomo at (518) 474-1041. Ask him to sign S2905 (geothermal tax credit) and S4279 (geo sales tax exemption), both of which were passed unanimously by the legislature. We CAN move away from burning fossil fuels to heat our homes and buildings!


If you speak with an aide they’ll just listen politely and ask for your zip code.

As you are probably aware, the 2015 New York State Energy Plan notes that 35% of New York’s fossil fuel greenhouse gas emissions come from “on-site combustion” – mainly heating homes and buildings by burning  oil, gas and propane.  We can eliminate these emissions by switching to geothermal heating and cooling, which uses the ground beneath us as a heat source in the winter and as a cooling heat sink in the summer.

In this year’s legislative session both the NY Senate and Assembly UNANIMOUSLY passed these bills to give geothermal heat pumps the same tax treatment as solar panels.


Put your message in your own words or go with this suggestion  “Please tell Governor Cuomo to support renewable energy by signing S-2905, the geothermal tax credit and S-4279, the geothermal sales tax exemption.  Geothermal heating and cooling will cut greenhouse gas emissions, create jobs, lower utility bills and cut peak demand”.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal , LinkedIn and at our Facebook page!


VRF is Unique Solution for Historic Tribeca Landmark

The Wool Exchange, 1896. Later the American Thread Building.

260 West Broadway Today

260 West Broadway Today










Listed on the National Register of Historic Places, the eleven story building at 260 West Broadway was built by the New York Wool Warehouse Company as the New York Wool Exchange in 1894-1896. Designed by William B. Tubby in the Renaissance revival style, the building was advanced in the simplicity of its overall design. The Wool Warehouse Company, a business venture by a group of wool men, sought to create not only a building exclusively for the wool trades but also an actual trading organization, the Wool Exchange, with the intent of wresting control of the wool trade from Boston. Both the Wool Warehouse and company and the bank that supported it failed in 1898.

In 1907, the American Thread Company occupied the building and since the 1920’s the building has been known as the American Thread Building.  The building was later converted to residential and commercial condominiums in the early 1980s.

Today its impressive, broad facades curving from Beach Street into West Broadway make the former New York Wool Exchange a distinguished downtown landmark fronting Tribeca Park.

In 2012 Air Ideal Inc. had been the HVAC contracting company that had been providing service and maintenance for the existing cooling tower and condenser water system that served the commercial offices and some of the residential spaces in the building. After the system reached its life expectancy it was struggling with water quality, pipe integrity and chemical treatment issues.  John Ottaviano, Air Ideal’s President, recommended that the old water cooled system be replaced with a new VRF system.  A VRF system was presented as the ideal solution because of the long refrigerant line runs required throughout the building and because one of the building’s priorities was to have all outdoor equipment located on the roof of the 11 story building. The building board also wanted to have the capability of billing condominium owners for their individual electric power consumption based upon usage. The board requested a system that could be expanded as more owners decided that they wanted HVAC systems and better environmental control that would enhance their residential resale values.

As the building is located in a very busy area in Tribeca in lower Manhattan, Air Ideal also wanted to have the ability to provide a remote monitoring capability that would allow it to view any problems that might be corrected without dispatching service technicians to diagnose the issues.  Individual condominium owners wanted the ability to select indoor units that could satisfy a multitude of different applications since each loft style condominium is unique in size, layout and design. Mitsubishi City-Multi was presented to the board as the product that had the flexibility to meet these unique criteria.  Subsequently, New York City developed stringent inspection and cleaning requirements for all cooling towers because of the recent legionella outbreak and the elimination of the cooling tower became a major benefit for the building leadership, its liability and its residents’ health concerns. Replacement of the existing cooling tower and the condenser water risers had been a consideration, but the costs for such far exceeded that of the ultimate solution.

After much consideration, the board selected Air Ideal’s proposal for the Mitsubishi City-Multi System with Phase I consisting of 94 ton of outdoor equipment and 102 tons of indoor equipment (43 units). The control system would consist of an AE-200A central controller with electronic sub-meters and AG-2000 software for tenant billing and monitoring capability. As the building did not require simultaneous heating and cooling (there was a building hydronic heating system to remain), the Y series was selected to reduce the overall project costs. The project would become a collaborative effort between Air Ideal, the building’s leadership and staff, individual condominium owners, the building management company (Orsid Realty) and the project managers (IP Group and Jonathan Rose Associates).

The project was started in December, 2014 and completed in August of 2015. The system has been operating without service issue to date and the building is happy enough with the outcome that there is a desire to expand the system with capacity to potentially encompass the entire building (A proposed Phase II would add approximately 81 tons).

Mitsubishi City-Multi heat pumps on the roof of 260 West Broadway with the Freedom Tower in the background

Mitsubishi City-Multi heat pumps on the roof of 260 West Broadway with the Freedom Tower in the background

As always, to keep up to date with what’s new in HVAC technology, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

VRF HVAC Market In NYC Poised for Significant Growth

American Thread VRFThe combination of new FEMA flood insurance requirements, aging chiller and cooling tower plants, fears of legionella contamination and illness, a surging real estate market and increased population density are converging to create a perfect storm for VRF growth in the New York metropolitan area and beyond. Currently, we are involved in several multi-tenant VRF projects in Manhattan including two condominium projects converting from older traditional HVAC systems. The modular nature of VRF, its efficiency at part load and the ability to install long refrigerant line lengths from rooftop mounted equipment without oil return problems has made them the new system of choice for green urban design.

New FEMA regulations are providing significant pressure to relocate mechanical rooms which have historically been relegated to basements and sub-basements. Depending upon the market value of a building and it’s relationship to construction alteration costs, many projects located within the 100 year flood plain may be required to relocate mechanicals. VRF uniquely provides a cost effective method of relocating heating and air conditioning utilities to available roof locations in low, mid and high rise buildings in these area. This combined with the plethora of indoor unit applications for surface mounted, concealed, wall, floor or horizontal locations makes VRF perfectly suited for these types of installations.

The main design criteria, besides equipment location, will be refrigerant piping riser location, access availability and ventilation index requirements. VRF units have not typically been suited to applications with high latent loads and significant fresh air ventilation requirements, but with the advent of new lines of Energy Recovery Ventilators, this problem may be solved. Combining  a VRF system with an ERV for fresh air intake requirements now makes them more suitable for schools, public spaces and applications where significant ventilation is required.

One concern in the design and planning of VRF systems is the criteria laid out in ASHRAE Standards 15 and 34. Standard 15 was created to provide guidance for safety concerns in large refrigeration plants using ammonia and other early refrigerants. Over time, the scope of the Standard has been expanded to cover most refrigerants and systems, but the technology and features inherent in VRF systems have not been specifically addressed.  The overall purpose of ASHRAE Standard 34 is “…to establish a simple means of referring to common refrigerants… It also establishes a uniform system for assigning reference numbers, safety classifications, and refrigerant concentration limits to refrigerants. The standard also identifies requirements to apply for designations and safety classifications for refrigerants. The refrigerant concentration limit, in air, determined in accordance with this standard and intended to reduce the risks of acute toxicity, asphyxiation and flammability hazards in normally occupied, enclosed spaces” 

The concentration limit for R410A has been set at 26 lb/Mcf (thousand cubic feet). Engineers need to consider this limitation when designing and submitting plans for VRF system unit locations serving smaller occupied spaces. There are several ways that the cubic area of these spaces can be enhanced and enlarged by allowing free air return, transfer grilles and door undercuts to fall within the realms of these calculations. The standard enumerates similar concerns for the refrigerant piping locations. For a further interpretation of these standards see this Mitsubishi City-multi bulletin.

As always, to keep up to date with what’s new in HVAC technology, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!


NY State Legislature Passes Geothermal Tax Credit

The New York State Assembly and Senate have passed the Geothermal Tax Credit bill A2177A (A2177A-2015). This bill allows for a 25% state income tax credit up to a maximum of $5000 for a new geothermal HVAC system. It now is before Governor Andrew Cuomo for signature and adoption or veto.

Next up is NY State Assembly Bill  A5508 for NY State Sales Tax exemption on all geothermal HVAC equipment sales ( A5508). These exemptions coupled with the already existing 30% Federal Resdiential Renewable Energy Tax Credit on geothermal systems will combine to make new geothermal installations much more competitive with fossil fuel systems for new installation and retrofits. These bills are making geothermal HVAC more affordable for New York State consumers and providing all of the same incentives available to the solar industry, which has proliferated since the inception of these incentives.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal , LinkedIn and at our Facebook page!

How Sandy and Flood-Resistant Codes Impact HVAC in NYC (and Beyond)

The reverberations from construction code revisions as a result of Hurricane Sandy are now being felt for HVAC installations in New York City. Have you tried to file for installation of an HVAC system in lower Manhattan lately?  If so, you may have been pulled for audit to assure compliance with Appendix G – Flood Resistant Construction if your installation cost is greater than $40,000 and/or considered a substantial improvement to the property.

“Every alteration application in a special flood hazard area that is not classified as substantially damaged or as a substantial improvement, and has an estimated cost of over $40,000, must include calculations of buildings’ market value and relevant documentation. For more information, see 1 RCNY 3606-01, FEMA’s Substantial Improvement/Substantial Damage Desk Reference and/or FEMA’s Substantial Damage Estimator Tool.

The vast majority of properties in lower Manhattan below Canal St. are in affected flood zones. The City has thrown an additional wad of red tape into the permit application process to ferret out any buildings that do not comply with FEMA’s new flood standards in order to compel them to bring themselves in line with new flood-resistant construction codes that call for the relocation of any utilities (HVAC included) that are located below the new flood map’s Base Flood Elevation (BFE). For most buildings, this will not be a problem as long as the cumulative construction costs are less than 50% of the market value of the building:

“Substantial Improvement: The applicant must compare the cumulative construction cost of the alteration work, regardless of the time necessary to complete the work, and all other alterations and repairs during this timeframe, to the market value of the building prior to Hurricane Sandy (calculated per 1 RCNY 3606-01). If the cumulative construction costs equal or exceed 50 percent of the market value of the building, then the building MUST comply with the flood zone regulations for new buildings in Appendix G, even if the owner does not want to elevate the building.”

However, this does not relieve the applicant and/or contractor from providing the additional plans showing the flood zone location, the additional calculations to show that the work does not exceed the 50% rule, and mechanical plans showing that all equipment being installed is above the DFE (Design Flood Elevation), which in some instances is the BFE + 2 feet. Those who replace HVAC equipment located in basements in lower Manhattan and other designated flood zone areas do so at their own peril. Machinery and equipment servicing a building must be elevated to or above the base flood elevation in many designated flood zones. To find out if your building or home is in a designated flood zone and find out what your Base Flood Elevation is, refer to FEMA’s BFE Address Look-up Tool. For more information on flood zone construction filing requirements in New York City, see the NYC Department of Buildings Bulletin for Architects and Engineers. As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal , LinkedIn and at our Facebook page!

Consumer Beware – Geothermal Hacks Abound

Unfortunately, as this News 12 expose’ reveals, not all geothermal HVAC installers are looking out for their customers’ best interests.  Geothermal HVAC Installer Scams Consumers

We have received a spate of phone calls from potential customers regarding the alleged unscrupulous activities of a competitor whose prices and promised incentives seemed to be too good to be true. Unfortunately, downpayments were not held in escrow, as per local consumer affairs laws, and many trusting, green-minded consumers have been left with nothing to show for their investment. Even worse, some who have had there installations started now have no recourse because their projects were started and now the contractor in question is reported to be in bankruptcy proceedings.

Although we have received numerous calls asking us to take over installations in progress, it is a difficult decision for us. Although we want to help consumers who may have been duped, in many instances they have no record of what has been installed. There are no plans and no detailed proposal or specifications. As a result, we have no idea what has been installed as a ground loop heat exchanger. Without knowledge of the bore depths, piping size and material, manifold sizing or grout used, it is impossible for us to determine whether or not what has been installed can be used for its intended purpose. Simply connecting to terminated piping isn’t an option since we have no idea what capacity could be achieved, what Reynolds numbers are involved, what the pressure drop for pumping requirements is and what thermal conductivity was figured. Not only does this open up the potential for liability and future warranty issues, it also leaves concern for potential environmental impact.

This also creates a massive public relations problem for our industry and a proven technology. It is our hope that these consumers can find relief and that we can find a way to help them. However, this does reinforce the fact that consumers need to do their homework and check with the Department of Consumer Affairs and /or the Better Business Bureau before doing business with any home improvement contractor.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

IRS Deals Major Blow to Geothermal Market

Here in the northeast, the recent price erosion of natural gas due to hydrofracturing has made it more difficult to sell geothermal by ROI payback analysis alone. It was still a home run against oil comparisons when including the 30% Federal Renewable Energy Tax Credit. In a major blow to the industry, the IRS recently issued “Notice 2013-70 titled “Q&A on Tax Credits for Sections 25C and 25D“. This notice serves to clarify certain parameters and questions regarding the 25C and 25D Renewable Energy Tax Credits. Specifically, the following passages effectively reduce the Section 25D tax credits to a point where geothermal systems cannot be sold by the financial benefits alone using many of the financial formulas currently in use:

Geothermal Heat Pump Property.

Q-31: A taxpayer contacts a seller to inquire about the installation of a geothermal heat
pump to heat his home. The seller/installer informs the taxpayer that the following items
must be installed in addition to the geothermal heat pump: heat exchange equipment in
the ground outside of the house, a distribution system for the home, and a back-up
emergency heating or cooling system. Which of these costs, if any, are eligible for the
§ 25D credit?

A-31: Only the cost of the heat exchange equipment in the ground outside the house
can be eligible for the § 25D credit. The costs for the distribution system for the home
and a back-up emergency heating or cooling system are not eligible for the credit
because they are not incurred for qualified geothermal heat pump property. Section
25D(d)(5)(B) defines qualified geothermal heat pump property as any equipment that (1)
uses the ground or ground water as a thermal energy source to heat the dwelling unit or – 12 –
as a thermal energy sink to cool such dwelling unit, and (2) meets the requirements of
the Energy Star program in effect at the time that the expenditure for such equipment is
made. Section 25D(e)(1) provides that expenditures for piping and wiring to
interconnect qualified property to a dwelling unit are eligible for the § 25D credit.
However, nothing in § 25D extends the credit to other auxiliary equipment such as
distribution systems within the dwelling unit or backup emergency heating and cooling


Rebates generally represent a reduction in the purchase price or
cost of property, and the taxpayer must exclude the amount of the rebate from the
amount of the qualified expenditure on which the taxpayer calculates the tax credit. In
general, in order for a receipt of funds to be considered a nontaxable rebate, the rebate
must be based on or related to the cost of the property; the rebate must be received
from someone having a reasonable nexus to the sale of the property, for example, the
manufacturer, distributor, or seller/installer; and the rebate must not represent payment
or compensation for services.

So, not only is the IRS taking away the ability to take a tax credit on the duct distribution system installed as a necessary part of the majority of geothermal heat pump installations, it appears to also eliminate radiant floor distribution systems as well. Depending upon your interpretation here, only the ground loop, connecting primary loop, geothermal heat pump and electrical wiring for the system actually qualify for the tax credit. To add insult injury, Utility Rebates must also be figured against the tax credit value.

Until now, I don’t know of a residential customer who has not claimed these items via Form 5695. How the IRS plans to enforce this determination and/or clarification moving forward is another story. You can easily foresee inflated ground loop and equipment installation segments with a $1.00 ductwork marketing special from contractors looking to bend the rules or create loopholes. A major and essential component for the operation of  any energy efficient system has apparently been eliminated from consideration. Unfortunately, this may be a serious job for the tax lawyers and lobbyists to try to reverse which may have to high a price tag for a burgeoning industry represented by IGSHPA and the Geothermal Exchange Organization. Between these two organizations there is neither the staff nor the PAC fund necessary to mount the political backlash necessary to reverse such a decision. Perhaps if they were to join forces with ACCA, ASHRAE and other industry organizations that are affected, there might be the necessary political clout to quash such a narrow interpretation.

As always, to keep up to date with what’s new in HVAC technology and energy, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!