Yalnes, Inc. Blog

Trimming Association Budgets By Auditing Utilities

On average, 25% of the budget of a “typical” Condominium Association goes to utilities.  “Typical”, for the purposes of this article, is an Association a) without a Master Association, which pays for some or all of utilities; b) that does not sub-meter water consumption and charge individual owners for their water use; and c) that does not contract for TV or Internet subscriptions for the benefit of the individual owners.   Twenty five percent is a substantial portion of the budget and is worth looking into on a much more detailed level.   We will review the most typical “common area” utility expenses Associations generally incur and ways to cut each one of them.

Water / Sewer – Associations often pay for water consumption for the entire Community, which includes use by individual Units and the common areas (irrigation systems, closed-loop hydronic HVAC systems, swimming pools, fire sprinkler systems, and more).

Tracking consumption and comparing it with prior years is one of the best things an Association can do.  Doing so will quickly reveal even a relatively minor plumbing leak (it is surprising how much water a “minor” leak will put down the drain).

Pro-active and ongoing communication to the residents, advising of the importance of checking their homes for leaks, will go a long way; however, there are a few things each Association can do to simply trim its expenses even without reducing the water consumption.

Water utilities have sewer charges, which are often based on water consumption.  Things like irrigation systems (roof top gardens, lawns, etc.) do not utilize the sewer systems, which is what sewer charges are designed to pay for.  Many buildings have separate meters for the irrigation and the fire systems; however, they are not always designated as such by the utility companies and thus get sewer charges.  If the Association has only one main water meter, sub-meters could be installed on the irrigation systems, closed-loop hydronic heating and cooling systems, and fire sprinklers.  Once installed and communicated to the water utility, those sub-meters will be removed from the utility’s sewer billing system.  Someone would need to take the readings and report them to the utility company.  Check with the utility provider in your area for the exact procedures as most utility companies have a process in place which allows exclusion of certain water consumption.

Telephone – How many phone lines does your Association have?  Are there two for each of the fire panels and two more for the elevators?  One more for the intercom?  At the rate of $30-$40 per phone line, the Association’s monthly phone bill will quickly surpass any “reasonable” amount an Association should pay for telephone service.  Most counties (and/or cities) require a primary and a backup line for the fire panels and the elevators.  The primary lines usually have to be dedicated to the equipment they are intended to serve, but secondary / backup phone lines can often times be “shared”.  Piggy backing the intercom and the secondary fire alarm phone lines will cut the Association’s expense substantially.

Radio transmission, at half the cost of a phone line, is also available from most fire alarm monitoring service providers.  Converting to radio transmission does require some up front capital, but it is quickly paid off by savings from the reduced number of phone lines.

Associations should also consider removing long distance functionalities from the intercoms.  While, many people now keep their same cell phone numbers when they move across the country, there are creative solutions where, with a few clicks of a mouse, a resident can have an internet based local phone number, which forwards to their out of state cell phone at a little or no cost to them.  Check your Association’s phone bill – the long distance charges may add up to ~ $20 / mo, which does not seem significant until it is multiplied by the number of phone lines the Association has.

Electricity – electricity is one of the hardest utilities to analyze and audit.  Assistance of engineers, energy savings consultants, and the expertise of electricians is almost always required.  There are, however, a few simple solutions such as replacing incandescent light bulbs with more energy efficient ones, installing motion sensors in the common area restrooms, keeping only half of the lights turned on in the corridors during off-peak hours, etc.  If the Association pays for electricity consumption within individual units, owners should be encouraged to use energy efficient appliances, install automatic programmable thermostats, and use energy efficient light bulbs.  A qualified consultant can perform an audit of your building’s energy efficiency and advise how long it would take to realize enough savings to cover the cost of replacing outdated windows, worn out door seals throughout the community, adding insulation where it is lacking, or taking other steps to reduce energy consumption.

Natural Gas – natural gas goes hand in hand with electricity.  Natural gas generally powers fireplaces and heaters and is also tough to audit for an inexperienced person.  Similar to dripping water faucets and leaking toilets, fireplace pilot lights, which are on 24 x 7, use a substantial amount of natural gas.  Reminding residents to keep the pilot lights off during summer months will go a long way towards reducing Association’s natural gas bill.

There are also multiple “green living” and environmentally-friendly solutions.  More and more Associations install solar panels, add sensors in the garages to run exhaust fans only when a certain level of carbon monoxide is reached, collect and re-use rain water for gardens and roof decks, encourage more recycling and composting rather than sending waste to the landfill (which is more expensive than recycling), etc.  Grants and rebates to alter the existing systems are often available from utility companies and local and federal governments.

A thorough review of Association’s utility bills can greatly reduce that 25% of expenses allocated to utilities.  Every Association should look into these opportunities and pass on the savings to each of the owners.

December 6, 2011 - Posted by Sergey A. Petrov, PCAM | Aging Associations, Budget, Planning