An all-electric apartment building opens on the Near West Side
A new 15-unit apartment building exemplifies smart development by forgoing a gas connection and taking full advantage of financial incentives. Darshan Desai, in his first new construction development, is responding to construction costs by building all-electric homes in an Enterprise Zone in Chicago.
Darsh, as he’s called, said he wanted to develop an all-electric building “to simplify” the operations. “As a long term operator the idea was to take extra variables out of the equation. Add another utility that adds initial installation complexity and cost, and over time it becomes another utility to manage.”
The lot, at 204 S Leavitt St, has been vacant since at least 1989. Prior to that, the Central Free Methodist Church was located here.
Tenant comfort
Darsh also saw how on some utility bills, “sometimes half the fee is the ‘customer charge’, which is unrelated to how much energy someone is using.” I believe a lot of gas customers can attest and see $30 (and up) customer charges on their monthly bills, regardless of usage.
For the building’s prospective tenants, Darsh said he wanted the apartments to provide maximum comfort. “I knew that electric heat pumps, hybrid heat pump water heaters, and electric stoves were capable, all of that technology has advanced, but I also knew they had a benefit for the residents.”
Heating and cooling
Each unit is heated and cooled by its own Champion (a Johnson Controls brand) heat pump on the roof which provides steady and stable temperature control 24/7, and the Energy Star-rated casement windows (made locally by ClimateGuard) keep cold air from leaking in during the winter and cooled air from escaping during the summer. A smart fresh air ventilator in each apartment ensures air is fresh and filtered. Clothes drying is done with a heat pump dryer that uses heat in the ambient air to more cost-effectively and gently dry clothes, extending their life.
Tenants will cook using a non-combustible induction stovetop, ensuring safe air quality in the home. When I toured the building in January I suggested to Desai that he provide a welcome gift that includes an induction-compatible pan, even though it’s likely most households already use one. (Any pan that’s made of stainless steel, cast iron, or has a steel plate on the bottom will be compatible.)
Wayne Beals, a real estate broker who is unaffiliated with the building but sells all-electric homes on the South Side, said that “all-electric living is an upgrade. It’s healthier, simpler, safer, more economical, and more comfortable.”
Building the building
Darsh said designing and construction an all-electric building requires planning timelines differently. Construction should not end in the winter when the building is waiting to be energized; costly portable heating was being used to keep the building warm in December and January.
ComEd’s Electric Homes program offers up to $5,000 in cash per unit, provided that the building passes a blower door test and meets other standards. If a building is designed to meet the EPA’s Net Zero Energy Ready standards it will likely meet ComEd’s Electric Homes standard. Darsh’s building passed and ComEd sent a check for $60,000.
Managing the standards, certifications, properly documented tax returns, and blower door tests is a lot of work, and Darsh has some advice for other small builders going this route. Electric-only HVAC is nascent for a lot of engineers and contractors.
Darsh explained, “A perfect example was when I was looking to select heat pump equipment and I needed to find people who’ve installed heat pumps at this scale before. I didn’t feel like I had a good Rolodex I could call because it’s still nascent. “A lot of this stuff is new for MEP engineers, too, and there’s not enough experience out there”, he said.
The difficult moments were worth it, he said.
I’m seeing how people are reacting when they tour the apartments, and the excitement on their faces, reacting to the forward thinking aspect, is priceless. And as I explained the all-electric situation and the building’s high performance characteristics, it piques their interest that much more. They love the look and feel of it.
Paying for the project
Darsh plans to take full advantage of the Inflation Reduction Act and the project saved money through a local incentive program as well. The Enterprise Zones program is overseen by the city’s planning department. Among other incentives, projects in an Enterprise Zone can be exempted from the state’s 6.25 percent sales tax on construction materials costs — this translates to thousands of dollars in savings.
He estimated the project saved $100,000 in state sales tax; it could have been greater but not every contractor was willing to let Darsh purchase the materials themselves and then deduct the tax exemption cost from the contracts because of how that would impact the contractors’ accounting.
There are six zones in Chicago — covering about 201,000 properties — and 26 more across Chicagoland.
Use Chicago Cityscape’s Property Finder to locate properties in an Enterprise Zone by selecting the appropriate filter, or look up an address and review Incentives Checker to see if it’s an available incentive.
Lastly, the project is eligible for the 45L Energy Efficient Tax Credit (in the Inflation Reduction Act) which provides an incentive of $500 to $5,000 per home depending on standards met; and it’s eligible for the 179D Commercial Buildings Energy-Efficiency Tax Deduction (also in the Inflation Reduction Act). The building is also planned to obtain National Green Building Standard (NGBS) certification, making the property eligible for HUD’s Green Mortgage Insurance Premium Reduction program.
Learn more about 204 S Leavitt St
The building is currently leasing (take a look at the listing, or start a virtual tour). The last thing Darsh has to say: “I didn’t have any doubts that all-electric technology can provide a great experience. I felt comfortable taking that route in developing my first residence.”
