Published in the ECHO Journal, March 2009
As board members and managing agents have discovered over the last two years, energy costs have become a runaway item that has put stress on keeping assessments down. Despite recent falling oil prices, energy costs are at record levels and are forecast to stay there for the near future. Normally reserve studies do not become heavily involved with operating budgets, but progress with new products and new technologies are changing that situation.
Before going further with specific suggestions, we need to discuss the pressing need for Reserve consultants to work more closely than ever with the managing agent and the board treasurer. Many choices regarding the reserve study now have significant impact upon the operating budget in terms of energy usage. Even cosmetic decisions such as the roof color have implications on the air conditioning costs for an association. This is even more important when analyzing the type of roof, replacing electrical/mechanical systems, swimming pool and domestic hot water heating, and window glazing. All these items have major impacts upon the energy consumption for the association.
Therefore, it is crucial that the reserve consultant consider the full long-run cost of each component. The usual “like for like” replacement may be the lowest short-run cost and still have the largest long-run cost when viewed over the full life of the component and including the implications for energy consumption. A good example is the composition and color of the roof, especially where there are high temperatures and the association has flat roofs. Newer, high reflective and lighter colored roofs may cost more initially, but they last longer and produce immediate energy savings.
If a study of the energy savings shows a positive cash flow over the life of the component, then the board should consider early replacement of such reserve components. Examples of components that offer opportunities include:
- Replacing heat pumps and boilers with solar hot water panels for both swimming pools and domestic hot water usage. Many associations are using the tops of trellises and carports as collection areas for the panels. Some have even designated open areas for installation of the panels.
- Survey all the pumps and electrical motors and replace older, inefficient components with newer, variable speed motors connected to load demand controls.
- Have calculations performed before replacing windows and sliding glass doors. Such options as thermal paned glazing, high-E glazing, and reflective coatings are proving very successful. South- and west-facing glazing is especially vulnerable to heat build up, and even installing awnings may yield substantial savings.
- Review existing air conditioning installations to calculate potential savings that may be gained by upgrading to newer high SEER (Seasonal Energy Efficiency Ratio) rated systems. If roof mounted systems are used, coordinate the roof and air conditioning replacements to obtain better savings.
- Replace parking lot lighting, security lights, and common area/hallway light fixtures with newer compact fluorescent and even LED (light emitting diodes) systems.
- Check water usage and consider more drip irrigation (which also cuts down on dry rot problems), and better planting schedules with drought resistant plants. More efficient sprinkler controls are also available to minimize water usage during rains.
- While most associations are non-profit corporations, investment groups are emerging that will package solar voltaic systems in return for federal and state tax credits and a share in the energy savings. This may reduce or almost eliminate the initial cost of the system, while significantly lowering the electrical costs to the association and may even produce surplus energy for sale to local utility companies or neighboring associations.
All of these issues are emerging as important consideration for the reserve study, especially in this climate of budget tightening by members of the association and the continued high cost of energy. We recommend you work with your reserve consultant, managing agent, and an in-house group within your association. By coordinating these efforts, you can hold the line on growing energy costs and help keep the assessments at the lowest level consistent with good conservation policies.
Tom Douma is the president of SRI, an ECHO member company that performs reserve studies in California and Hawaii. He is a frequent speaker at ECHO seminars.