As Published in the February 11, 2000, Edition of the New York Post

Ever play Monopoly when you were a kid? It's a great game, and my parents used it to teach me about money and commerce. It didn't happen every time, and more than likely it was a rare occasion, but every once in a while you won. You owned the hotels and the railroads and even the utilities with their hard-to-calculate rents. All you had to do was wait for the other players to hit your properties and endure the misery. Yeah, it's a great game...

Well, the game's not over yet. Right now, a very powerful entity is trying to change New York real estate through the sheer force of economics. Con Edison is the entity and the question is whether this is an economic power play or just a snapshot of New York's march through time.

Here in New York, manual elevators in apartment buildings and many of the pumps that send water to rooftop tanks run on Direct Current (DC). The current that runs through the walls of your home and into your stereo, refrigerator and TV is AC or Alternating Current. The power that runs through most of Europe is DC.

One hundred years ago, most of New York ran on DC too, and in fact, there are many AC to DC rectifiers still functioning under the streets of New York. Rectifiers in the street take the AC and convert it to DC to power your building's systems and machinery. They are expensive to maintain and, as far as Con Ed is concerned, no longer economically feasible to operate.

As a result, Con Ed is increasing the rate for DC service as a means of forcing property owners to convert their systems to AC or install a rectifier.

Michael J. Wolfe is the president of Midboro Management, a firm that manages 55 co-ops, condos and rental buildings on the Upper East and West Sides. Wolfe's vast amount of experience equates to pro active and cost-saving measures for his clients.

"It's costly to maintain the rectifiers," asserts Mr. Wolfe, "so Con Ed made a business decision to make the continued use of DC an expensive proposition. They charge higher rates and a surcharge because they want property owners to use AC or, at the very least, install their own rectifier in their building to relieve Con Ed of the burden of maintaining the old equipment."

As a means of encouraging owners to convert to AC equipment, Con Edison is using the "carrot and stick" approach. The carrot is that they are offering rebates encouraging owners to change to AC equipment.

The stick, and it's a big one, is Con Ed will be increasing the DC surcharge, which is currently about $250 per month. The charge will eventually increase to $5,000 per year or $416 per month, a 277% increase.

That's not the worst of it -- the surcharge will increase every year.

For high-end co-ops with a monied tenancy, a $5,000 surcharge is no big deal. For smaller buildings where the margin of profits over expenses is not that great, this will be a problem.

Con Ed required building owners to file a form with them by March 15, 1999, stating the owner's anticipated cost to convert. Con Ed will evaluate this cost estimate and consider the distance from the nearest rectifier to the owner's building.

Since they're endeavoring to convert all properties off of the rectifier DC distribution line, the rebates increase the closer you get to the rectifier.

Inevitably, the cost to convert will become cost effective as the surcharge grows over time. One of the buildings that Mr. Wolfe manages has seven manual elevators with a cost to install rectifiers estimated at $39,000.

In this case, the property owner calculated the immediate cost of the conversion against the projected surcharge and decided that the conversion became cost effective after three to four years.

The typical cost to convert elevator machinery is in the range of $30,000 to $60,000 per elevator. Modern equipment is designed for AC use. However, the cost to replace is considerable and property owners will have to decide if it is less expensive to repair and rebuild rather than replace.

So stop what you are doing, New Yorkers, and take a look around. Your city is changing once again in one of those imperceptible ways that keep things here new.

Anybody remember Checker Cabs?