If you’re building a multifamily residential project or a multitenant commercial structure and your site is out of reach of natural gas service, you can still attract tenants with the benefits of gas. It’s as simple as contacting your local propane provider during the planning stages.
And just like with electric or natural gas service, your propane retailer can install individual unit meters and bill tenants for the propane they use each month. Builders and owners don’t have that option if they’re fueling their building with heating oil.
The benefits of metering a rental building are familiar to any owners who have installed individual unit meters on their building’s water supply. Instead of owners needing to devise a way to divvy up the costs of unequal water use among the tenants, or simply attempting to recoup the cost with higher rent, meters provide a surefire way to bill the exact cost of utilities to the tenants that use them.
“Meters give you the option to split up the costs to different buildings, different vendors, or different renters,” says Ward Sutherland, a general manager covering a portion of California for propane retailer Ferrellgas. “That way, each individual user is responsible for their own use. Some owners say, ‘Well, utilities are included in your rent.’ But you have people who are conservative, and you have people who are abusive. It may not be divided up exactly as it should be. This makes it pretty specific as to who is responsible for the use of what proportion of that gas.”
Builders and their clients should start thinking about bringing metered propane to their buildings at the beginning of their project, when the added costs for permits and underground work will be minimal, Sutherland says. “You may not know exactly what type of tenants you’re going to have in there. If someone comes in and decides they want to put a pizza parlor or a small deli restaurant – something that’s going to require gas cooking – having that option available instead of trying to retrofit something later on is tremendous.”
Beyond the benefits derived from gas cooking, offering energy-efficient and cost-saving propane-fueled space heating and water heating, instead of expensive electric heat pumps, will help attract prospective tenants and residents. “You would want to supply your gas to every potential customer there, whether they use it or not,” Sutherland says.
The project planning for a metered propane building is straightforward, says Jacques J. Remmell, vice president of compliance and marketing for Eastern Shore Gas in Ocean City, Md. “When we meet with the builder, we determine what the [British thermal unit, or Btu] load is for each unit, or what appliances he’s putting in each unit – heat, hot water, ranges, and so forth. Then we determine the underground gas line size and the meter size. The interior piping, from the outlet side of the meter in, is customer-owned.”
The propane company will also install the propane tank and meters, inspect appliances and plumbing, and safety-check the entire system.
In most cases, the propane retailer handles the customer billing and accounts and owns the propane in the tank, saving the owner money upfront. “If you have a 500-gallon tank, you don’t have to pay to have that thing filled up and sitting there until you use it,” Remmell says.
The propane retailer will also take care of regular inspections, leak checks, and maintenance; record keeping; state tax collections and regulatory compliance; and monthly fees and use permits. “It comes down to a very low-cost situation for either a contractor or property owner,” Sutherland says.
Reasons to Retrofit
While it’s ideal to plan for metered propane during the planning stages of a project, it’s always possible to retrofit a building with either meters or propane. If your leased building already has propane service, installing meters is straightforward and can have immediate payback for the owner, says Ray Galan, Southwest Regional Vice President for Ferrellgas in Reno, Nev.
“There’s a definite advantage for an owner to be able to say, ‘Hey, you’re using 300 gallons and the guy next to you is using 200 gallons a month, so I’m going to start billing accurately for it,'” Galan explains.
Switching a building from heating oil to propane can be a bit more complicated – you’ll have to find a location for the propane tank and install a heating system or appliances that run on gas – but it also comes with distinct benefits, Galan says.
“You’re going to have more efficient appliances,” he says. “It’s a cleaner-burning fuel. You’re still going to have a tank, but the tank doesn’t need to be right next to the building. It can be at a distance, so aesthetically it could be helpful as well.” Switching to propane in a commercial building can also help you attract new types of tenants, such as a pizza parlor owner who wants a gas-fueled oven.
And perhaps most important, tenants will pay for the utilities. The building owner will no longer need to foot the bill for an entire tank of heating oil and try to earn it back through higher rents.
If you’re ready to learn more about the cost, efficiency, and environmental advantages of fueling your buildings with propane, head over to the Propane Training Academy. The Propane Education & Research Council is always developing new NAHB-, USGBC-, NARI-, and AIA-approved training courses covering a broad range of propane-related topics, including propane’s many applications, installation options, and products.