Case Study

International Tailoring Company Building

Transformative hybrid electrification retrofit leveraging IRA tax credits

This case study was chosen as part of the Empire Building Challenge competition. Click here to learn more about the Empire Building Challenge competition.

Project Highlights

Energy Savings

80%

Completed retrofits reduce natural gas consumption by 80% and raise the building’s energy grade to a B or higher.

Cost Savings

Upgrades eliminate Local Law 97 fines and avoid escalating utility and maintenance costs tied to outdated systems.

Lessons Learned

This project established a resource-efficient pathway for decarbonization, enabling substantial energy savings without requiring a complex and costly envelope upgrade as a prerequisite – in fact, future envelope upgrades will enhance efficiency.

Step 1

Step 1: Examine Current Conditions

A baseline assessment is key to understanding current systems and performance, then identifying conditions, requirements or events that will trigger a decarbonization effort. The assessment looks across technical systems, asset strategy and sectoral factors.

Building System Conditions

Equipment nearing end-of-life
Comfort improvements
Indoor air quality improvements
Resilience upgrades
Efficiency improvements

Asset Conditions

Recapitalization
Carbon emissions limits

Market Conditions

Market demand changes
Policy changes
Infrastructure transitions

The decarbonization plan for ITCoB addressed critical building, asset, and market conditions. Constructed in 1920 and converted into residential lofts in 1980, the building faced challenges with aging, inefficient equipment and a poorly performing two-pipe hydronic HVAC system. Residents frequently experienced discomfort due to the system’s inability to provide simultaneous heating and cooling, especially during shoulder seasons. Market pressures, including Local Law 97 (LL97) fines and the building’s D-grade energy rating, necessitated a sustainable solution. The end-of-life status of key equipment created an opportunity to reimagine the energy systems rather than opting for in-kind replacements, leading to a plan leveraging a modern thermal network and hybrid systems to maximize efficiency and future-proof the building.

Complicating the project was the building’s poor thermal envelope, with leaky single-pane steel-frame windows requiring costly refurbishment to maintain aesthetics. Immediate electrification was prioritized as the HVAC equipment could not wait for envelope upgrades. The hybrid system provides a resource-efficient decarbonization pathway, operating effectively within current conditions while avoiding oversizing. Once the envelope is improved, the system will operate at even greater efficiency, supporting lower temperatures and enhancing long-term performance. This approach balances immediate needs with a sustainable vision for the future

Step 2

Step 2: Design Resource Efficient Solutions

Effective engineering integrates measures for reducing energy load, recovering wasted heat, and moving towards partial or full electrification. This increases operational efficiencies, optimizes energy peaks, and avoids oversized heating systems, thus alleviating space constraints and minimizing the cost of retrofits to decarbonize the building over time.

Existing Conditions

This diagram illustrates the building prior to the initiation of Strategic Decarbonization planning by the owners and their teams.

Click through the measures under “Building After” to understand the components of the building’s energy transition.

Sequence of Measures

2023

Building System Affected

heating
cooling
ventilation

International Tailoring Company Building before

International Tailoring Company Building after

Step 3

Step 3: Build the Business Case

Making a business case for strategic decarbonization requires thinking beyond a traditional energy audit approach or simple payback analysis. It assesses business-as-usual costs and risks against the costs and added value of phased decarbonization investments in the long-term.

Decarbonization Costs

$9.3M

Capital costs of decarbonization (e.g. total cost to install all measures)

Business-as-Usual Costs

$5.1M

Energy cost savings: 97k.

BAU cost of system replacement/upgrades: 5M.

Business-as-Usual Risks

$89,000

Avoided Local Law 97 or other regulatory fines

Decarbonization Value

$3.3M

Incentives

Net Present Value

7.3% IRR

The business case for the ITCoB’s decarbonization project balanced immediate capital costs with long-term operational savings and alignment with sustainability goals. Rather than following a business-as-usual approach of in-kind equipment replacement, the plan prioritized a transformative strategy to address systemic inefficiencies and long-term regulatory compliance. The analysis considered the marginal costs of decarbonization—such as transitioning to hybrid water-source heat pumps and a modern thermal network—against the projected savings from reducing natural gas consumption by over 80%, eliminating LL97 fines, and avoiding escalating utility and maintenance costs tied to outdated systems. Additionally, the ability to remain within the building’s current electrical infrastructure and rooftop footprint minimized upfront costs. This approach aligns with broader market trends favoring decarbonized, energy-efficient properties, enhancing asset value and resident appeal while achieving compliance with NYC’s carbon reduction mandates. By future-proofing the property, the decarbonization investment delivers significant financial and environmental returns compared to traditional capital planning.

Strategic Decarbonization Action Plan

An emissions decarbonization roadmap helps building owners visualize their future emissions reductions by outlining the CO2 reductions from selected energy conservation measures. This roadmap is designed with a phased approach, considering a 20- or 30-year timeline, and incorporates the evolving benefits of grid decarbonization, ensuring a comprehensive view of long-term environmental impact.

The decarbonization roadmap for the International Tailoring Company Building was developed through a detailed planning process focused on balancing sustainability goals with operational feasibility. The project began with a comprehensive assessment of the building’s energy systems, identifying inefficiencies and opportunities for modernization. Key decisions included transitioning the outdated two-pipe hydronic system to a low-temperature thermal network, integrating hybrid water-source heat pumps, and supplementing them with condensing boilers for resilience during extreme cold. Implementation was staged to minimize disruptions for residents, with a phased timeline that included equipment replacement, thermal network commissioning, and system optimization. Throughout the process, data-driven decision-making ensured that investments aligned with projected energy savings and carbon reductions. Reporting mechanisms were established to track progress toward eliminating LL97 fines and achieving compliance with NYC’s carbon reduction mandates, with the building positioned to exceed its 2050 targets. This phased, adaptive approach ensures both immediate and long-term benefits while aligning with broader decarbonization efforts. The future roadmap includes incremental improvements to the thermal envelope by encouraging a window project when an apartment is sold.