How to start an energy-saving campaign

Many board members and property managers would agree that utilities represent a tough challenge for their corporation. Not only do these expenses represent one of the largest shares of the condominium’s operating budget, but they continue to rise, forcing many corporations to raise maintenance fees year after year to cover the costs.

But for all the stress that they cause, utilities also represent the single largest potential source of savings. A condominium that does its homework and is willing to spend some money can shave tens of thousands of dollars or more off of its annual budget. This can mean a big difference in the services the condominium is able to offer to homeowners.

When thinking of energy savings most people immediately think of lighting upgrades. Lights are indeed a good way to save some energy, but to do more than scratch the surface it’s necessary to dig deeper.

Creating a plan

The best way to get started on an energy-saving campaign isn’t actually an energy-saving project at all. Create an inventory of everything in the building that consumes energy, determine how much can be saved by upgrading these items and how much each project will cost. This will serve as the board’s roadmap to saving energy. It will clearly show which items have the best payback and help the board plan its approach.

Almost every energy audit will recommend something called an energy management system, which is a great place to begin. These systems use a building’s current equipment and so may be a good choice for buildings that want to save energy but can’t afford to replace big items such as boilers or make-up air units.

Using an energy management system is like adding a brain to the building’s plumbing and HVAC systems. It keeps track of temperatures and pressures, and optimizes machines so that they use only as much energy as they need. It also allows mechanics to check the system remotely, which can save the corporation expensive visits when something goes wrong.

Choosing a project

After the board has its roadmap, and the building’s equipment is working as efficiently as possible, it’s time to tackle the real projects. The board will need to choose the projects that fit the corporation’s budget, but as a rule of thumb the best projects are the ones with the quickest return on investment. In other words, how much will the corporation save relative to the cost of the project? Many projects can pay for themselves in less than three years, and some in less than one, making them a great place to start.

Lighting

Back to lighting. This is one of the easiest projects to get done, and rapid advances in technology mean that it will likely save a corporation a lot of money even if it has done a lighting retrofit recently. LED lighting has worked well for parking garages, exterior lighting, and in some cases even hallway and stairway lights. In addition to significantly reducing energy use, LEDs last much longer than traditional lighting and contain no mercury. In parking garages it is often possible to use the existing fluorescent fixtures, which makes this as easy as changing the bulbs. Plus, like most energy-saving projects, the government offers rebates for doing the work.

Water

Another great place to look for savings is water use. Much of this occurs within the units, where residents are flushing money down the toilet. By providing owners with new low-flow faucets, shower heads and toilets free of charge, the corporation can save a substantial amount of money. Depending on the age of the building, this project can be a significant source of savings. (The older the building, the more likely it is to have older, less efficient fixtures.)

Mechanical

Pumps and fans are another good place to find savings. Many of them are running full time, and take a lot of power to do so. Adding variable frequency drives allows pumps to run at different speeds depending on need, which can lower electrical costs. Energy management systems link up with these drives, and they work together to save a corporation even more money.

The key to curbing energy use in a condominium is to create a plan that works for the corporation. Energy prices will continue to rise, but a board of directors that does its homework can do a lot to keep utility costs down and help reduce the building’s environmental footprint.

Avoiding spikes in condo expenses

How can boards avoid spikes in planned condo expenses set out in reserve fund studies?

The trick to creating a good reserve fund study is to include elements of both engineering and financial planning. The plan must be able to cover all of the necessary repairs and replacements that will come up, but must also be realistic and easy to follow.

The plan should always keep a high enough minimum balance in the reserve fund to cover unexpected breakdowns. Dropping the balance to lower levels can put the corporation at risk of being caught unable to pay for a sudden expense. However, if an engineer has called for the replacement of an item that could last for several more years, the corporation may end up overspending.

Oftentimes, the items that come up for replacement in the reserve fund study are based solely on predicted life expectancy. For example, a boiler may be due for replacement because it is only expected to last 20 years, when in reality it could last for another five to 10 years.

When items are planned according to life expectancy, all the items tend to come up for replacement around the same time. This can create a spike in the planned expenditures, and a corresponding dip in the fund’s balance.

A good plan will have an expense curve that is as level as possible, excluding the necessary increases to account for inflation. This can be achieved by moving items from year-to-year in an attempt to flatten the curve. Aesthetic items can easily be moved, but even machinery and structural projects can be shifted around if the corporation can prove that this is feasible. Ideally, the fund’s expense curve should avoid jumping up and down.

Avoiding these spikes can have profound effects on maintenance fees, as the board doesn’t have to increase fees or special assess to cover any one spike. This also creates a system in which the costs of maintaining the building are shared evenly by all owners, regardless of when they move into the building.

A good plan will help eliminate the need for special assessments, have the capacity to handle emergencies, keep owners happy with regular aesthetic improvements, and save the building money by ensuring that projects are only carried out when necessary.

It is strongly recommended that a board engage an engineering firm that is flexible and willing to work with the corporation to create a plan that’s right for its building.