Real Estate Forum - November/December 2009

The Green Pages
Saying Yes to Rehab

Energy efficiency is not just a catch phrase for multi- family owners; it is a goal that must be achieved in order to increase a property’s net operating income.

When it comes to older buildings, utilities are the source of most energy waste. Hot water heaters, washers and dryers, dishwashers and even toilets are manufactured to be far more efficient now than they were 20 years ago.

Property managers and owners need to be proactive when evaluating aging properties for energy-efficiency upgrades. Because utilities are the primary culprit in high energy costs, appliance retrofitting is a smart place to start.

When appliances that have been grandfathered in come up for repair, managers can make a determination to either fix the existing appliance or replace it with Energy Star or Green Star models. Energy Star-qualified products use any-

“Energy efficiency must be achieved in order to

increase a property’s

net operating income.”

THOMAS K. SHELTON

Western National Property Management

where from 10% to 15% less energy and water than standard models. While energy-efficient appliances may cost more to purchase, it is important to stay focused on the big picture, because the savings are greater over time. Therefore, a smart manager will show owners the cost of repair and usage of an older appliance over 10 years versus the cost and usage of a new appliance for that same time, in order to demonstrate future savings.

Hot water heaters and boilers present a dual challenge. Not only are they notorious energy users, but they also emit carbon monoxide, which is damaging to the ozone. However, newer boilers and hot water heaters currently have reduced emissions and are more ozone-friendly.

Increasing energy efficiency is not limited to the installation of newer appliances; updating lighting can also translate to sig-

nificant savings. By implementing simple sensors and timers in common areas, such as laundry and fitness rooms, costs are reduced significantly because the lights turn off when the area is not in use.

An upgrade as simple as changing out old incandescent lighting to compact florescent bulbs in the common areas in a multifamily property will result in a 50% to 60% cost reduction. Once the cost of upgrades is covered, the reduced energy expenditures go right to the bottom line, increasing NOI.

For example, at one property we manage, switching out 140 incandescent and sodium-vapor light fixtures resulted in a $5,780 savings in kilowatt usage annually. Adding computerized boiler-monitoring devices also resulted in an 11,250 annual gas therm reduction. At approximately $1.25 per therm, this is a savings of an additional $9,000 over the previous base year’s usage.

Water Wise
Water scarcity in Southern California has led to the rising cost of
water. Solutions to combat this cost can be as simple as upgrad-
ing to low-flow toilets, which use as little as 1. 6 gallons of water
per flush, as opposed to the seven gallons used by most toilets.

Smart irrigation controllers for landscaped areas are another good investment, since they monitor water levels by linking directly with weather services. These sophisticated systems have rain sensors and are able to track the dampness of the soil to eliminate over-watering.

Flex Your Power
Public utility companies are doing their part by providing rebate
programs. Every year, new programs are rolled out that offer a
variety of incentives that encourage multifamily owners to use
high-efficiency products.

In addition, California is also responsible for the highly effective “Flex Your Power” campaign. Launched in 2001, this program is a partnership among California utility companies, government agencies, businesses and residents to conserve energy by providing energy-saving tips and incentives.