Reserve studies are indispensible in planning for future association

expenditures. They typically predict the remaining life of specific equipment, provide projected replacement and maintenance costs, and—sometimes—calculate price increases based on inflation. “But they don’t always help managers and boards look at the bigger picture,” says Graceanne Welsh, ams, LEED Green Associate, client relations manager at Kipcon, an engineering firm specializing in community association reserve studies.

Now, through low-cost, com-prehensive evaluations, called energy audits, Welsh’s company and other

reserve advisors are showing manag-ers and associations not only how to save money on major expenditures over time but also how to put money back in associations’—and homeowners’—pockets from the outset.

BIG BILLS

Whether in high-rise condominiums, cooperatives, townhouse communities or single-family homes, energy is a major expense. According to the U.S. Department of Energy’s online Buildings Energy Data Book, residential spaces use nearly one quarter of all the energy consumed in the United States. Heating and cooling account for 54 percent of those costs.

11 NEW SECTION ExECuTIvE INSIGhTS News and information for senior management.

4 Take Note CAI news and upcoming events.

7 The Devil in the Details Avoiding wrongful foreclosure lawsuits.

9 Common Area There will be signs.

21 Condo Manager First impressions.

23 What’s Your Problem? Keeping tabs.

Power PlayEnergy audits can save associations big money By JuliE WarrEn

Illu

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n b

y P

HIl

Wr

IGG

lEs

Wo

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SEPTEMBER | OCTOBER 2012

COMMUNITYManaGErBEST PRACTICES AND CAREER STRATEGIES fROM CAI’S ASSOCIATION Of PROfESSIONAL COMMuNITY MANAGERS

»

NEW LOOK!EXPANDEDCONTENT!

“Utility costs are rising. In some cases they’re going up astronomically,” says Chuck McGinnis, director of strategic projects and building efficiency at the energy services company Johnson Con-trols. “And most boards don’t really know what to do about it other than to turn things off, (reset thermostats) or try to adopt new policies within the building. But those (measures) can only go so far.”

BIG SAvINGS As a more comprehensive measure, energy specialists like McGinnis, along with reserve consultants like Welsh, rec-ommend that associations undertake a low-cost energy audit in conjunction with their periodic reserve studies.

In addition to revealing areas of energy loss, like poor seals on windows and doors, insufficient insulation and inefficient lighting, an energy audit also can identify where big money is usually spent—HVAC systems, including boilers and chillers—and where big savings can be realized.

“We review all the physical compo-nents of a community as well as the rela-tionship between the replacement cost, the maintenance cost and the energy cost,” says Welsh. “We’re looking at … how to get better performance. If we can replace a component with one that’s more efficient and requires less mainte-nance, it’s going to help the association save money in the long run.”

Of course, energy audits can be help-

ful for single-family homeowners and in townhouse communities as well. But in large-scale associations with substantial common-area buildings, like clubhouses, and especially in condominiums and cooperatives with more than 50 units, an energy audit can save hundreds of thou-sands of dollars over the life of a specific piece of equipment, according to Welsh.

BIG REBATES An energy audit not only can identify when and what equipment should be replaced, it also can help an association find local, state and federal rebates to help offset some or all replacement costs, Welsh says.

The U.S. Department of Energy’s Database of State Incentives for Renew-ables & Efficiency (www.dsireusa.org) contains detailed information about sys-tems and components eligible for signifi-cant rebates and discounts. In some cases, the money returned or saved is substantial.

Rather than simply replacing equip-ment, Welsh says associations that use rebates when they upgrade can actually end up paying less for more efficient machines or systems.

“A like-for-like system replacement cost may be $175,000,” she says. “But with a more energy-efficient model, you may be looking at something in the range of $250,000. Because of the (available) rebates, the association would pay only a percentage of the more expensive item—

NON-CAI PrOfEssIONAL DEsIgNATIONs

z LEED Green Associate—a certification of the u.S. Green Building Council’s leadership in Energy and Environmental Design (lEED) program denoting basic knowledge of green design, construction and building operations. a lEED associate demonstrates green building expertise in non-technical fields of practice. z LEED AP—The lEED accredited Professional designation signifies an advanced depth of knowledge in green building practices and the ability to specialize in a particular lEED rating System, such as lEED aP Building and Maintenance, lEED aP neighborhood Development, lEED aP Homes, and several others.z P.E.—according to the website of the national Society of Professional Engineers, this abbreviation for Professional Engineer can only be used by those who have completed a four-year college degree in engineering from an accredited engineer-ing program, worked under a Professional Engineer for at least four years, passed two intensive competency exams and earned a license from their state’s licensure board. To retain their licenses, PEs must continually maintain and improve their skills throughout their careers.z PRA—The Professional reserve analyst credential, which requires substantial edu-cation and demonstrated performance, is granted by the association of Professional reserve analysts, an international trade organization for reserve study professionals.

Power Play, from page 1

CaI is having a remark-

able year. a record-break-

ing number of managers

have earned designations

since January, and the

number of CaI members— 32,085 at

last count—is still growing. and while

all membership categories have grown

steadily, the number of manager mem-

bers has increased the most—to more

than 11,000.

The annual Conference and exposi-

tion in may broke attendance records,

and registration for other annual meet-

ings—including the upcoming Ceo-

mC retreat—also have maintained that

trend. Thousands have taken CaI’s

online and classroom professional

development courses, purchased CaI

publications and participated in CaI

webinars. and CaI’s website has had

nearly 200,000 visitors seeking infor-

mation since the beginning of the year.

Just as impressive is that this steady

growth and interest in our industry

have taken place during a tough

economy. What’s most important, of

course, is that CaI experienced these

achievements because our members

worked together—to recruit new mem-

bers, attend courses and events, earn

designations, monitor legislation and

support each other. Details are avail-

able at www.caionline.org/annualre-

port and www.caionline.org/financials.

as we look forward to 2013, CaI can

continue to grow. It’s up to you.

lori loch-lee, cmca, ams, pcam 2012 aPCM Board Chair

Tallying Up

2 COMMuNITYManaGEr sEPtEMbEr | oCtobEr 2012

sEPtEMbEr | oCtobEr 2012 COMMuNITYManaGEr 3

sometimes as little as 25 to 50 percent.” Add that to the savings realized from

lower utility bills, and associations can save a lot of money.

fINANCING AvAILABLEMcGinnis explains that an audit often can help find financing for expensive items as well. “The lending can come from a number of different sources,” he says. “It could be from a local bank, a company that specializes in financing the association market or even from a local utility.” He also emphasizes that when a major capital investment is spread over 10 to 15 years, savings from lower utility bills often offset the annual principal and interest payment.

When John Savage and other board members of The Newport in Milwau-kee announced at a community meeting that the cooperative’s nearly $800,000 capital improvement project wasn’t going to cost residents a thing, he got a stand-ing ovation. “If this opportunity (for an energy audit) hadn’t come along, we’d

have had a spe-cial assessment,” says Savage, the board president.

The New-port was the first community in the country to participate in an energy ser-vices contract, which includes the audit and resulting upgrades, that guarantees—in writ-ing—energy savings that can offset the project’s financing. Savage and other board members opted for the arrange-ment when the building, constructed in 1961, was due for a reserve study update. “One of our biggest costs is utilities,” says Savage. “We’ve saved nearly $50,000 on utility bills in the first year.”

PROvEN EffECTIvEAlthough energy services contracts are new in the homeowners association market, McGinnis says they have been

effective in other markets for more than 30 years.

“It’s tried and true … in the federal government, state govern-ment, school districts, municipali-ties, higher education and indus-trial facilities,” he says. “We’re just starting to learn how (energy service contracts) can impact con-dominiums and co-ops.”

Welsh points out that while the volume of information about

energy savings and rebates can seem “overwhelming,” managers only need to know what’s available.

“Managers have been instrumental,” adds McGinnis, in recognizing oppor-tunities for conducting energy audits in associations. They also have a unique perspective, says Ted Salgado, pe, rs, pra, co-founder and principal at Reserve Advisors, a national reserve study pro-vider in Milwaukee, because they under-stand a building “in its entirety.” Julie Warren is editor of Community manager.

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