Cutting Costs Without Cutting Value

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As the economy continues to flop about like a fish out of water, community associations are forced to find more ways to cut costs. Reports of the recession coming to an end have been heard, but we may not see the light in that tunnel for some time.
Rather than focusing on what can’t be changed, community association boards of directors can roll up their respective sleeves and take a fresh look at how their association operates. The goal is to reduce expenses to run the business but retain the value and equity of that business.
As foreclosures are still looming and lenders take far too long to initiate them, finding ways to operate more efficiently should become the new focus. Some associations have taken drastic measures to cut costs such as closing down amenities and reducing services. In some cases the boards are left with no other alternatives when their expenses far exceed their income because of high delinquencies and foreclosures.
Some of the cost saving steps that associations are taking, barring the extreme measures noted above, include reducing the expenses while continuing to make the community a desirable place in which to live. Some steps are minor and yield minor impacts, while others require a modest cash outlay and can yield significant outcomes. Boards should carefully review all ways that they can positively impact their association while reducing operating expenses. This would fall into that fiduciary duty category that requires all board members always to act in the best interests of the association and to protect the common elements and property values of each home/unit.
Step 1: Electricity
The first step that I recommend for any community with common area electricity usage would be to call your local service provider (the electric company) to come to your property to conduct an audit of your power usage and equipment. Most will provide this service at no cost, along with a written report on their findings and recommendations. We all know about changing light bulbs to CFL (compact fluorescent lights) that use much less power than the standard incandescent bulb. However, there are other alternatives that can save even more, and many fixtures can be retrofitted to accommodate the newer technology such as LED (light emitting diodes). The LEDs are more expensive per bulb than a CFL, but will last much longer and even less power.
Using solar-powered lights also has become very popular. These fixtures are fairly inexpensive, depending on the application. Whatever you decide, ensure that you are still providing adequate lighting for safety purposes.
More comprehensive solar applications have also become a hot topic, with many associations installing solar or photovoltaic panels in the common areas or on the rooftops of buildings to harness the sun’s energy and offset electrical expenses, including pool heaters and building HVAC systems. Be sure to investigate any rebates or tax benefits that the association may be eligible for related to energy savings improvements. They can often be significant both on the state and federal levels.
Step 2: Water
Reducing the frequency and length of time that your irrigation runs can make a noticeable difference in your water bills. Try running one less cycle per 24 hour period and run it overnight if you have high winds or significant evaporation issues. Adjusting heads to only spray the plants (not the asphalt and walkways) helps to reduce waste and expense.
Monitor your irrigation system for leaks. This is an ongoing and never-ending source of significant water loss and high water bills. If you suspect a system is suffers from major leaks, you may be money-ahead by hiring a leak detection company to find and repair these leaks. There are a variety of techniques used that are both fast and precise such as injecting helium into the lines and tracking the leaks by a sonar device. It’s a bit costly up front but usually results in significant savings.
Also, if your building is master-metered, set up a plan to inspect all toilets to ensure that they are not running when not in use. This may seem insignificant, but if you consider a condominium with 200 units with 2 toilets each, that is potentially a lot of water loss and unnecessary expense. The blue tabs used for testing are inexpensive as are toilet repair kits. Most importantly, you’ll see savings immediately.
Step 3: Buy In Bulk
Buying in bulk isn’t just for groceries anymore! If your association uses products that neighboring communities also use, consider sharing in the cost of delivery. Similarly, you might be able to coordinate with your these neighbors to obtain discounts for bulk purchases. These tactics can result in reduced overhead for things such as pool chemicals, green waste hauling, recycling, janitorial supplies, lawn and pool maintenance, etc.
Step 4: Renegotiate Contracts
Reviewing and renegotiating contracts can often prove to be mutually beneficial for both the association and the service provider. Consider asking for a discounted price from your provider to whom you have been loyal; it doesn’t hurt to ask! Remember that service providers need us as much as we need them and they might offer significant savings if they’re able to secure continuing business.
In order to realize maximum savings, be ready to consider a two or three year renewal agreement. This maybe the perfect union for both parties, the contractor has the comfort of a long term commitment, and you get the benefit of a reduction in costs. This is particularly successful with landscapers, tree trimmers, pool cleaning services, and janitorial services.
Step 5: Amenities
We all know that operating the swimming pool or Jacuzzi® can be one of the more costly amenities within a community. Closing them down is not generally well received by your owners; however, there are ways to reduce expenses, short in this area as well.
First, consider replacing existing pumps with a variable rate pool pump. These pumps have proven to save up to 50% on related power costs. They are highly efficient, and can be programmed to run at different speeds and times. Most variable rate pumps cost under $2,000 and the savings on electricity is immediate — it can often pay for itself in a few months time. If your pool is heated, turning down the temperature a few degrees can make a difference.
Installing ceiling fans in community facilities can help to keep areas cool and eliminate the need to run air conditioners. Similarly, they can work in conjunction with air conditioning units and still result in valuable savings. Try setting air conditioner thermostats up a few degrees and running a ceiling fan for greater savings.
Landscape modifications can also help reduce expenses. Cut back on the frequency of tree trimming (always considering any safety and liability issues these reductions could pose, especially with coconut palms). Adjusting mower blades higher and reducing the frequency lawns are mowed can save money as well. In areas that you are considering new plantings, be sure to research before you plant; look for plants that require little water, low maintenance, and are disease and weather tolerant. These considerations will make the ongoing maintenance easier, reducing lawn maintenance contract costs.
Consider holding community clean-up or beautification events. Take advantage of owners interested in helping by organizing a community clean up day, planting event, front entry refurbishment, etc. You can ask for volunteers and donations of plant material to make improvements to your association at little or no expense. This also garners a great sense of community and accomplishment. Be sure to check with your insurance agent to ensure you have the proper liability coverage for these types of activities.
If a property has available space, consider starting a plant nursery of sorts. Take cuttings from some of the existing plant; as they mature, they can be used throughout the property, saving the cost of purchasing new plants.
These are just a few of the great cost savings ideas that are out there. Until the economy recovers, you probably can come up with more creative ways to save and, at the same time, encourage your owners to become more involved. You may be surprised at the wealth of knowledge, resources, and great ideas your owners contribute.
Provided by AssociationTimes