Project case study
Cooling for the first time: 175 heat pumps at the Towers at Speer, 95% paid by stacked rebates
An income-qualified Denver apartment building had hot water radiant heat and no cooling. Converting its heating loop to serve high-efficiency heat pumps gave every apartment heating and cooling, earned an ENERGY STAR score of 95, and put the building six years ahead of its 2030 Energize Denver target.
At a glance
- 172apartments with cooling for the first time
- 94.8%of the $1,513,470 project paid by Denver and Xcel Energy rebates
- $78,470owner out of pocket, offset by the estimated 179D deduction
- 95ENERGY STAR score, top 5% of multifamily buildings nationwide
- 41.3kBtu/ft² site EUI, 36.6% better than the national median
- 6 yearsahead of the 2030 Energize Denver final target
Why it matters for residents
The Towers at Speer is a Denver Equity Priority Building: it serves income-qualified households. Until this project, its 1982 hot water radiant system could only heat. Families had no building cooling through Denver's summer heat.
Denver's Equity Priority Buildings rebate rate exists for buildings like this one. It made a deep retrofit affordable for the owner. As a result, a heating-only building now gives every apartment efficient, quiet heating and cooling, at almost no net cost to the owner and with no rent-driving capital bill.
Outcomes
| Outcome | Result |
|---|---|
| Resident comfort | All apartments gained cooling; heating and cooling now come from a high-efficiency water-source heat pump in each unit |
| ENERGY STAR score | 95 / 100 (top 5% nationwide for multifamily); first-time certification in 2025 |
| Site EUI (year ending 2024) | 41.3 kBtu/ft²/yr, 36.6% better than the national median of 65.2 |
| Energize Denver compliance | 2.9 kBtu/ft² below the 2030 final target of 44.2; compliant six years ahead of schedule |
| Equipment installed | 175 water-source heat pumps (Engineered Comfort D44VH-12, EER 15.7, COP 5.1, ECM motors) |
| Gross project cost | $1,513,470 |
| Stacked incentives captured | $1,435,000 (Denver C.A.S.R. + Xcel Energy), 94.8% of project cost |
| Owner net out of pocket | $78,470 (5.2% of gross) |
| Section 179D deduction (2024 tax year) | About $132,824 potential* |
| Net position to owner | About $54,000 net positive (incentives + 179D exceed project cost)* |
* The 179D figure is an engineering estimate presented as a planning value. The actual deduction depends on the certified energy savings percentage and on prevailing-wage and apprenticeship documentation.
1. Project overview
In 2024 the Towers at Speer was a well-maintained 1982 mid-rise. Its central hot water system delivered radiant heat only, and apartments had no cooling. At the same time, Denver was setting the building's performance targets under the Energize Denver Building Performance Standard, and Colorado's Regulation 28 set parallel state benchmarking obligations.
The owner, Capital Realty Group, could keep the heating-only system and face rising compliance pressure. The other path was to modernize: capture Denver's Climate Action, Sustainability and Resiliency (C.A.S.R.) electrification rebates and Xcel Energy's Colorado Heat Pump Discount.
Miles engineered the second path. The building's hot water loop was converted into a heating and cooling loop serving 175 new high-efficiency Engineered Comfort D44VH-12 water-source heat pumps (cooling EER 15.70, heating COP 5.10, ECM blowers). Maize Mechanical installed them under a single coordinated permit and rebate package. Work was completed in October 2024, and ENERGY STAR certification followed in early 2025.
Building snapshot
- Property
- The Towers at Speer Apartments
- Address
- 1255 Galapago Street, Denver, CO 80204
- Denver Building ID
- 3055
- Type
- Multifamily, mid-rise, 8 stories
- Units
- 172 apartments
- Floor area
- 117,544 ft²
- Year built
- 1982
- Owner
- Capital Realty Group
- HVAC before
- Central hot water radiant heat; no cooling
- HVAC after
- Central water loop serving a water-source heat pump in each unit; condensing boilers (98.3% AFUE) heat the loop and cooling towers reject heat
- Climate zone
- ASHRAE 5B (Denver)
2. The ASHRAE Level 2 audit
The work started with an ASHRAE Level 2 energy audit under ANSI/ASHRAE/ACCA Standard 211-2018. The audit set the energy baseline and identified the highest-value energy conservation measures (ECMs). It also produced the documentation needed for the Section 179D deduction, ENERGY STAR certification and Energize Denver reporting (Building Energy Audit Template submission for Building ID 3055).
The building already had a strong efficiency floor: condensing boilers replaced in 2021, double-pane windows from 2019, and LED lighting throughout. The biggest opportunity was converting the heating-only loop to serve heat pumps. That one step added cooling to every apartment and opened up Denver's electrification rebates.
Measures identified
The audit recommended 11 ECMs in three priority bands. The heat pump conversion ran as its own retrofit because of its scope. Alongside it, the audit recommended:
- Operational fixes: cooling tower outdoor air temperature sensor calibration and fan control logic correction
- Capital projects with paybacks under five years: outdoor air intake controls, a condenser pump VFD, a cooling tower bypass economizer and combined lighting controls
- Longer-horizon measures: a white membrane cool roof and rooftop solar PV
The full portfolio represents more than 2.0 GWh of annual savings potential and $175,419 in available utility incentives if pursued in full.
3. The headline measure: a 175-unit heat pump conversion
The largest measure was converting the building from heating-only radiant heat to water-source heat pumps. The central hot water loop, with its condensing boilers and cooling towers for heat rejection, now serves a high-EER, high-COP heat pump with an ECM blower in every apartment.
Why it qualified for Denver's rebate
The project qualified for Denver's C.A.S.R. heat pump rebate because it replaced heating-only radiant heat with high-efficiency heat pumps that heat and cool. That fits Denver's strategy of moving building loads to electric heat pumps as the grid decarbonizes. Each kWh saved at a unit also trims loop pumping and cooling tower fan energy.
The building received the Equity Priority Buildings (EPB) rate of $7,200 per heat pump, well above the standard rate. The EPB designation reflects Denver's priority on buildings that serve income-qualified residents. It makes deep electrification affordable in workforce and naturally occurring affordable housing like the Towers at Speer.
Equipment
- Manufacturer
- Engineered Comfort (Nailor subsidiary)
- Model
- Serenity Vertical Stack 44VH, size 12 (1 ton)
- AHRI reference
- #213272740 (08/28/2024)
- Cooling
- 12,400 Btuh nominal, EER 15.70
- Heating
- 14,500 Btuh nominal, COP 5.10
- Blower
- Variable-speed ECM, low fan power, quieter in the unit
- Compressor
- Single rotary, double-isolation mounting
- Refrigerant
- Factory-sealed, pre-charged circuit
- Loop range
- 60 to 90 °F building condenser water
- Quantity
- 175 (one per apartment plus common areas)
4. The financial story: how $1.51 million became $78,470
What makes this project worth repeating across Denver's multifamily stock is the funding stack. Four sources were sequenced so each covered a non-overlapping share of the cost.
| Source | Mechanism | Amount | % of cost |
|---|---|---|---|
| Denver C.A.S.R. | Heat pump rebate, Equity Priority Buildings rate ($7,200 × 175) | $1,260,000 | 83.3% |
| Xcel Energy | Colorado Heat Pump Discount ($1,000 × 175) | $175,000 | 11.6% |
| IRS §179D | Energy Efficient Commercial Buildings Deduction, 2024 tax year, partial estimate at $1.13/ft²* | ~$132,824 | 8.8% |
| Owner equity | Net due to the contractor at closeout | $78,470 | 5.2% |
| Total | Sources against the $1.51M gross project | $1,646,294 | 108.8% |
After the 179D deduction, the owner comes out about $54,000 ahead. In financial terms the retrofit produced more value than it consumed.
* Conservative case. With prevailing-wage and apprenticeship documentation, the 2024 maximum rises to $5.65/ft², up to $664,124 for this 117,544 ft² building. The final value depends on the certified energy savings percentage and labor compliance documentation.
Why the stacking worked
- Denver C.A.S.R. rebated the equipment and installation invoice at a fixed per-unit rate.
- Xcel Energy's Heat Pump Discount applied to the same units under a separate, ratepayer-funded program approved by the Public Utilities Commission, not the Denver general fund.
- IRS §179D is a federal income tax deduction tied to building-level EUI reduction, independent of cash incentives and computed on the cost basis after rebates.
- Owner equity covered the residual cost (permits, planning, contingency) below the rebate caps.
5. ENERGY STAR certification (score 95)
In March 2025 the Towers at Speer earned its first ENERGY STAR certification with a score of 95, placing it in the top 5% of multifamily housing nationwide. Miles prepared and stamped EPA Form 5900-197 for Capital Realty Group.
| ENERGY STAR score | 95 / 100 |
| Site EUI | 41.3 kBtu/ft²/yr |
| Source EUI | 85.8 kBtu/ft²/yr |
| National median site EUI (multifamily) | 65.2 kBtu/ft²/yr |
| Better than median | 36.6% |
| Total GHG emissions | 534.9 t CO₂e/yr |
| Year ending | December 31, 2024 |
6. Energize Denver and Colorado Regulation 28 compliance
The building is covered by Denver's Building Performance Standard (Building ID 3055) and by Colorado's Regulation 28, which applies to buildings of 50,000 ft² and up. Both use weather-normalized site EUI as the compliance metric and step targets down through 2030.
| Milestone | Target year | Required site EUI | Reporting year |
|---|---|---|---|
| Baseline | 2019 | 63.7 kBtu/ft² | 2020 |
| 1st target | 2025 | 54.8 kBtu/ft² | 2026 |
| 2nd target | 2027 | 49.5 kBtu/ft² | 2028 |
| Final target | 2030 | 44.2 kBtu/ft² | 2031 |
| Towers at Speer (actual) | Year ending 2024 | 41.3 kBtu/ft² | Already compliant |
Alternate compliance pathways: insurance, not necessity
Energize Denver offers three alternate compliance pathways (Electrification Credit, Target Adjustment and Timeline Adjustment) for buildings that can't reach their targets economically. Many buildings of this vintage rely on them. The Towers at Speer doesn't need them: the heat pump conversion plus the earlier boiler, window and LED upgrades beat every milestone outright. Denver's Performance Requirements Lookup Tool shows the building in "Pre-Evaluation" status with no pathway applications needed.
7. Section 179D federal tax deduction
Miles prepared the IRS Form 7205 documentation supporting Capital Realty Group's 179D claim for tax year 2024. The package includes the ASHRAE Level 2 audit narrative, the qualified individual certification, the computed EUI reduction under the Inflation Reduction Act's rules, and verification of the 117,544 ft² floor area.
- Base deduction (no prevailing wage or apprenticeship): $0.57/ft² at 25% savings, rising $0.02/ft² per point, capped at $1.13/ft² at 53%.
- Bonus deduction (with prevailing wage and apprenticeship): $2.83/ft² at 25%, rising $0.11/ft² per point, capped at $5.65/ft² at 53%.
- For this building: $132,824 in the conservative case, up to $664,124 in the maximum case.
8. Outcomes for residents, owner and operator
Residents
- Cooling for the first time. Every apartment now has its own heat pump that heats and cools.
- Quieter operation. Double-isolation compressor mounts and ECM blowers keep sound low in the living space.
- Better humidity control. Variable ECM airflow dehumidifies at lower fan speeds.
- More even temperatures. Modern controls and better part-load performance reduce cycling.
Owner
- Planned, batched install. All 175 units under one permit and rebate package.
- Compliance certainty. Six years ahead of the 2030 Energize Denver target and well ahead of Regulation 28.
- Net positive cash flow. Stacked incentives and 179D exceed the project cost, improving NOI and asset value.
- ENERGY STAR brand value. A 95-score property supports tenant marketing and lender ESG conversations.
Operator
- 5-year extended warranty (1 year standard plus 4 years purchased).
- Serial-number-logged units for warranty tracking.
- ECM motors that tolerate dust and undersized filters better than PSC motors.
- Stainless drain pans with overflow sensors, and one equipment platform across all apartments.
9. Assumptions and limitations
- The 179D deduction is estimated at the partial rate of $1.13/ft² for tax year 2024. The final value depends on the certified EUI reduction and on whether prevailing-wage and apprenticeship requirements are met. A licensed professional's final tax certification is required before claiming it.
- The $7,200 Equity Priority Buildings rate is the amount on the contractor's invoice. The owner's qualifying basis was confirmed at the C.A.S.R. application stage and is on file with the program.
- The projected post-retrofit EUI in Figure 5 (38 to 40 kBtu/ft²/yr) is an engineering estimate based on the rated efficiency of the new units.
- The ENERGY STAR score of 95 is based on the year ending December 31, 2024, which includes about 11 weeks of post-retrofit operation. The full 2025 year will be the first complete heating and cooling season with the new system.
- Cost figures are as invoiced at closeout. Operating cost savings, 12-month measurement and verification (IPMVP Option B or D) and resident survey results will be reported separately. Comfort improvements described here are based on equipment characteristics, not survey data.
10. Project team
- Building owner
- Capital Realty Group
- Energy auditor and engineer of record
- Miles Hayes
- Mechanical contractor
- Maize Mechanical, Thornton, CO
- Equipment
- Engineered Comfort (Nailor Industries)
- Building automation
- TCS Basys Controls, Ubiquity Cloud platform
- Incentives
- Denver C.A.S.R. Heat Pump Rebate (Equity Priority Buildings rate); Xcel Energy Colorado Heat Pump Discount; IRS §179D
- Frameworks
- ASHRAE Standard 211-2018; Energize Denver BPS; Colorado AQCC Regulation 28; ENERGY STAR Portfolio Manager
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