What Does Difluoromonochloromethane Mean To Landlords And Tenants?

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Today, Ruminations will seem to be discussing difluoromonochloromethane. Though it might seem that way, we’re actually using it as a proxy for a more general “suggestion.” But, that will need to wait.

Difluoromonochloromethane has been a remarkably useful chemical compound. If you know about it at all, you probably know it as “R-22.” If you do, then you can skip right over the next sentence. R-22 is a hydrochlorofluorocarbon-based refrigerant used in about half of this country’s commercial air conditioning systems. If has some other, less common, uses but when it comes to HVAC, it is “king.” Down the road, however, it will be abdicating its office. The process began a number of years ago, but the closer we get to 2020, the clearer this will be.

This refrigerant is an ozone-depleting substance. Regardless of any reader’s position about climate change or global warming, no one thinks that destroying atmospheric ozone is a good thing. So, 30 years ago, following a series of meetings in Montreal, lots of countries, the United States included, signed an international treaty. To implement that treaty, those countries, including the United States, embarked on separate programs to end the use of ozone-depleting substances.

Here’s a short translation of what the United States did with respect to R-22 starting in 1993. Manufacture or import of equipment using R-22 refrigerant after 2009 was banned. Production or import of R-22 is banned after 2019. [By the way, by 2030, the entire class of chemical compounds known as hydrochlorofluorocarbons will no longer be manufactured in, or imported to, the United States.

Now, for most owners and tenants, the impending phase-out of the R-22 refrigerant will be a non-issue. Their HVAC equipment will continue to operate until such time as it needs to be replaced for reasons other than the unavailability of R-22. Newly manufactured R-22 will be available, though increasingly expensive. There will be stockpiles for some time after 2019. Also, R-22 can be re-used and there will be a supply of recovered, recycled, and reclaimed supplies. There will be restrictions on who can use recovered or reclaimed R-22, but the purified, reclaimed refrigerant will be available “off-the-shelf.” In addition, there are “legal” substitutes. Substitutes, though, are generally less efficient and more costly. Also, they often cause equipment damage or require changes to existing HVAC equipment because such equipment is not designed for other than R-22. At the end of the day, the price of R-22, whatever its source, will rise quickly as supplies are depleted.

Now that we all know too much about how the near-time ban on the manufacture or use of difluoromonochloromethane will affect commercial air-conditioning, why is this important to anyone other than HVAC suppliers and technicians? Why has Ruminations drawn us to this point on the page? That’s a good word. What is the “point” of this?

Here’s the reveal. Someone is going to pay for the fall-out from this R-22 stuff. Someone will be paying for increasingly scarce and expensive R-22. Someone will be paying to replace otherwise refurbishable HVAC equipment. As between landlords and tenants, who should that be? We’re not going to discuss that here. We’ve already shared our thoughts on how capital costs should be allocated. Those can be seen by clicking: HERE. So, what is Ruminations thinking about today? Here it is.

Large property owners and large tenants are well aware of the impending end of the R-22 era. They have “people” who know far more than what we’ve written today. But, what about the vast majority of property owners and users? We’re guessing that the first they will know about any of this will be when their HVAC contractor writes up that replacement estimate. [Unless, of course, they are advised by you, now that you have made it to this point in today’s blog posting or are advised with someone who has previously tripped across this information.]

Since we’re not going to repeat what we wrote in the posting for which we have provided a link, and since we haven’t written enough today, we are making the following suggestion. And, this suggestion goes way beyond the arcane news we’ve shared about the demise of R-22. Tenants – when you look at potential leased space, pay the piper – hire a professional property inspector. Professional inspectors know all of this stuff; general contractors don’t. You don’t. Your brother or sister-in-law may be a very nice person. He or she may “work” in construction. The advice might be free. But, while the price may be low, the cost could be high. If the proposed lease in front of you calls for you to pay for HVAC repairs or replacement, whether entirely or as a share of the landlord’s cost, you’ll want to know. Even if you are sure those costs will not be passed down to you, how about the “downtime” while a system isn’t pumping out that “cold” air like it used to, or is out of service? For tenants with bargaining power, consider requiring that the landlord replace existing HVAC units right now, before these issues arise. Or, as a compromise, set a date by which units must be replaced. One approach might be to abide by the manufacturer’s estimate of equipment life or the tax code’s depreciation schedule and insist that the HVAC equipment be replaced based on that information.

Now for today’s real suggestion. Don’t stop at HVAC equipment. PAY a professional to examine the premises. Yes, anyone can “walk” the space and notice a broken window or a light that doesn’t work. But, can you see if the insulation is up to par? If it isn’t, you’ll pay for that deficiency utility bill by utility bill. You might even be a little “chilly.” What about the water heater or the sewer lines? Is the power adequate for current or future needs?

This advice applies equally to those buying a property, especially those on a “budget,” reaching to pay for that “investment.” Penny wise and pound foolish! [Did any of us know that “this phrase alludes to British currency, in which a pound was once worth 240 pennies, or pence, and is now worth 100 pence”?]

None of today’s posting is intended to say: “don’t take the space; don’t buy the property.” Our bottom line is: “know what you are getting into – know more than the price – know the cost.”

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