Cleveland landlord Landmark switches to green electricity

Jun 29, 2023

John Carney discusses how Landmark Management took the plunge into adding green electricity for its downtown Cleveland buildings and tenants.

John Carney, a member of the Carney family of Westlake that operates Landmark Management and its three downtown apartment buildings, emphasizes his seriousness when talking about a new initiative by the company on the electrical front.

"This is not a gimmick," Carney said in an interview. "And it's not only about money. It's about leaving my two young kids a better rock."

By that he means how he sees sustainability moves in hopes of reducing the carbon impact of the company and in playing at least a small part in combating climate change.

And that is by using the company's latest power contract with an energy supplier, Constellation, to opt out of so-called brown power sources to using renewable energy sources such as wind and solar. It did so by having Ohio Energy Management of Cleveland negotiate its latest power contract to provide only green energy options.

As a result, renewable energy now turns on the lights and other electrical services in the public areas of Landmark's buildings: the Shoreline on Lake Erie near downtown and the Bridgeview and Perry-Payne loft apartments in rehabilitated buildings in the Cleveland Warehouse District.

Moreover, Ohio Energy is creating a web page that Landmark can use to promote the same green electricity to its own tenants as an option for electricity. Carney did not want to guess how many tenants may follow suit. But he said he will report on it in the months ahead.

The bulk power contract that Landmark got also cut its energy bill by about 30% from what it would have been paying, according to James Ziegan, the owner of Ohio Energy Management. Ziegan said there are about four such bulk power producers nationally who provide bulk electricity.

"We try to keep it out of getting into politics," Ziegan said. "I focus on reduced spending, but (Carney) was very interested in pursuing this option."

It is also a small part of Ziegan's business, as 70% of his firm's revenue comes from helping businesses use bulk buying to lower their electricity bills or installing energy-saving devices such as LED lighting through their reduced energy costs. He said it provides an alternative to the other approaches for funding such capital investment, such as bank loans or finding the money in the business. Most of his business, 70%, is from leveraging energy improvements, and renewable energy sources make up about 30%.

Ziegan said the strategy allows companies to pursue a green option by contract rather than the more capital-intensive approach of investing in their own solar panels or windmills.

Going green through such a step is as much a decision of the heart as the head, observed Chuck Schulman, president of Carlyle Management of Beachwood, an apartment owner and manager with four decades of tenure in the industry.

"Most people who are investing in green energy are not doing it for altruistic reasons," Schulman said. "They're interested in it as long as the economic incentives are there. The feeling among many people is, 'If it works out, great.'"

It's also a question of apartment operators having to juggle many issues, so there is not much time left to survey less than typical options, he said.

A reason that energy has become a topic in the multifamily and commercial realty business generally is because energy has grown so expensive, Schulman said. Current programs are available because a handful of energy consultants such as Ohio Energy have provided them, and many people have spent decades working to get renewable energy to work in the marketplace, including installing solar and other devices.

The bulk-buying aspect of electricity is now common among big-league landlords as well as some individual consumers.

Doug Price, CEO of K&D Group of Willoughby, said K&D has pursued energy contracts and hedging policies for more than a decade.

"It's a question that just hasn't come up," Price said of pursuing green options in the contracts.

For the Carneys, it was a case of looking at energy options when the contract for one of its buildings, the Shoreline, came up for renewal. It also was an offshoot from having replaced older lighting systems in its 1990s-vintage rehab projects with more current LED lighting technology.

The family also wanted to take a long view. It might have saved a little more money by including brown energy options.

"We feel we're saving a lot of money anyway — let's pay a little more and go green," Carney said.