JANUARY 28, 2014 — Last week, the Seattle Times published an article “Seattle Public Utilities seeks steep rate hikes” that projects water/sewer rates to increase as much as 30% over the next 6 years. There are numerous on-going projects that include improving wastewater treatment facilities, improving solid-waste facilities, and EPA regulations that will account for the increase in rates. This decision will be discussed with customers at public utility meetings set to begin in February. Utility Director, Ray Hoffman, wants to determine what is most important to customers when it comes to their utility provider (ie: a focus on operational excellence or a focus on environmental protection). In the past, Seattle Public Utilities has introduced separate rate increases on an annual basis. They think that implementing a six year plan that encompasses all potential rate increases will be more customer friendly.
As a multifamily property owner, if you currently include water/sewer in the rent, you are in a precarious position. Submetering is the ideal protection against these rate increases. By passing through water/sewer rates to residents, you increase revenue without increasing rent as well as protect yourself from uncertainty surrounding rate increases.
Guardian Water & Power installs and monitors water submetering multi-unit residential and commercial properties. These systems typically connect individual meters through a radio frequency network that transmits readings once a day to Guardian’s national billing center. Guardian provides meter installation, maintenance and utility billing services for real estate investors in over 30 states, the District of Columbia and Canada. For more information about Guardian Water & Power and what we can do for you visit guardianwp.com or contact our Seattle office at 206-271-6913.
When Guardian contracts with a multifamily community to install water submeters and begin an individual utility billing program, one of the first reporting tools that the owner or manager receives is a breakdown of utility consumption per unit and the payment amount they should expect to collect from each resident. Since Guardian develops a property specific billing rate for each and every property, the total amount collected from Guardian bills should come within dollars of the property’s municipal water /sewer bill. We encourage our clients to compare their municipal water bills to their Guardian statement because a discrepancy could mean previously unaccounted for leaks upstream from the water submeters.
A discrepancy between what Guardian bills and what the municipality bills could also mean that common area water consumption is not being accounted for. A common area deduction (CAD) is a portion of your water/sewer expense that is not being measured by the individual submeters installed in each unit (e.g shared laundry facilities, swimming pool, clubhouse, etc). This CAD expense can easily be recovered by implementing a RUBS plan that allocates the CAD back to residents based on occupant count in each unit. The allocated cost is included on each resident’s Guardian bill and can add significant savings to your net operating income.
For more information on Guardian Water & Power and our low cost submetering and utility billing programs, click here or call 877-291-3141.
JANUARY 7, 2014 — New York City has an energy benchmarking law that requires large buildings to measure and record their energy and water use to be posted online by the city. Letter grades are then assigned to each building based on their usage per square foot.
Some owners of these buildings are taking note of their grades, and others are not. For example, a 200-unit apartment complex in Queens recently received a D grade. This building is looking into installing a submetering system in order to improve their score. They feel that if residents are made aware of their energy/water use through submetering technology, they will use less, thus improving their score.
On the opposite side of the coin, the owners of a 229-unit apartment building recently earned an A, but they do not put much stock in that grade. The condo board released a statement saying that they will be switching from oil to gas and that they would be doing this no matter what grade they received.
The intent of this law was to make NYC as a whole more energy efficient and to educate energy users. 75-80% of NYC’s carbon emissions come from buildings with the national average being 39%. Critics of the program point out that the current grading system does not take into account differences in building design such as what kind of tenant (residential or commercial) is occupying the building.
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As a multifamily property owner, you will be hard pressed to find another investment option that yields a quicker payback period (or a higher ROI) than submetering and the conversion of owner paid utilities to resident paid. Let’s say you are paying all the water and sewer expenses for your 50 unit apartment building, the average municipal water/sewer bill is $2000 a month and the complex is fully occupied. If you transition these water/sewer costs to residents by way of submetering or an allocated utility billing program such as RUBS, that’s a yearly increase to your Net Operating Income (NOI) of as much as $24,000! (12 months x $2000)
Real estate investors on average spend about $250 per unit to have their apartment complex retrofitted with Guardian’s state-of-the-art wireless submetering equipment and professional installation services. We can estimate set-up expenses to total approximately $12,500 for the 50 unit example above. This means the total system investment would be made up in as little as 7 months! ($2000 x 7 months = $14,000) . After the pay back period, the added cash flow streams each month from residents being billed for water consumption goes directly to your NOI.
You can run your own submetering Return On Investment (ROI) calculation by using our Rapid Response Quotation Tool that includes a customized three-year cash flow projection and modifiable worksheet.
Guardian Water & Power is a leading provider of submetering and utility cost recovery services for multifamily and commercial property owners. Guardian services include submetering system installation for water, gas and electric, billing and collection services, regulatory research, rate analysis, utility bill auditing, loss detection and control services. For more information email firstname.lastname@example.org or call 877-291-3141.