ADVANTAGE • FirstService Residential • 1

FirstService Residential

ADVANTAGE

FALL 2016

FirstService Residential Teams with Mayor’s Office to Offer Steam Heat Seminars to Improve Efficiency FirstService Residential and FS Energy teamed up with the Mayor’s Office of Sus-tainability and the NYC Retrofit Accelera-tor Program to offer training seminars for property managers and building operators covering one-pipe and two-pipe steam heat distribution systems. The seminars attract-ed more than 130 attendees.

“This is the latest initiative in our ongoing commitment to improving the efficiency of multifamily properties throughout New York City,” said Dan Wurtzel, president, FirstSer-vice Residential. “To provide as many build-ing operators as possible the opportunity to learn how to improve the efficiency of the

steam heat systems at their properties, we extended the invitation to members of the city’s superintendent and resident manager organizations.”

Representatives from the Mayor’s Office and Accelerator team were available in the FirstService Residential Learning Center following each session to answer attendees’ building-specific steam questions.

The seminars covered

uu Distribution basics and maintenance best practices

uu Identifying common problems and implementing operational improvements

uu Most common and feasible measures to optimize efficiency, reduce energy con-sumption and save money

uu What to expect when completing the steam portion of your LL87 study

uu Energy Retrofit Treasure Hunt: A com-petition to find the largest energy op-portunity in the FirstService Residential portfolio.

The NYC Retrofit Accelerator is a one-stop resource provided by the city to help multi-family buildings reduce operating costs and increase the sustainability of their proper-ties through energy and water upgrades.

For more information, contact Kelly Dougherty, Director of Energy Management, FS Energy, at (212) 324-9036 or kelly.dougherty@ fsenergyservices.com.

Message from the President

Dan Wurtzel

Our Commitment to Continuing Education and Professional DevelopmentAt FirstService Res-idential, continuing education is an es-sential ingredient that arms our prop-erty managers with the knowledge and skills necessary to effectively respond to the numerous challenges and complex demands of managing multifamily properties in New York City.

Our associates have access to a robust library of eLearning resources through FirstClass, our school of professional development. The program offers on-line courses, audio books, videos, and live, instructor-led webinars designed to help our team members advance their skills, improve their service delivery and achieve their personal career goals.

To ensure that our managers are well-in-formed on the latest industry develop-ments, FirstService Residential also reg-ularly hosts seminars and educational programs during which industry leaders share their knowledge on timely top-ics. Due to the number of managers we employ, these experts know they will be addressing a large, attentive audience.

Luke Surowiec, from the NYC Retrofit Accelerator team, explains the free advisory

services available to building owners to reduce their operating costs, increase the value of their

assets, and improve occupant comfort. continued on page 2

2 • FirstService Residential • ADVANTAGE

Letter from the Presidentcontinued from page 1

That’s why we are able to attract key industry leaders to address our teams directly. Recent seminars have covered

uu Amnesty for Violations: Attorney Tim Mitchell addressed Local Law 45 of 2016 which established a temporary program to settle out-standing Environmental Control Board (ECB) judgments issued by the Department of Buildings (DOB). Mitchell covered require-ments for amnesty, consequences for failure to correct outstanding judgments and violations the program does not cover, such as DOB civil penalties for boiler and elevator inspections and criminal/civil court judgments. The program runs from Sept. 12 through Dec. 12, 2016.

uu Human Rights Law: Ted Finkelstein from the NYC Commission on Hu-man Rights addressed laws that protect the rights of disabled individuals—such as the Amer-icans with Disabilities Act and the Federal Fair Housing Act. Finkelstein discussed how these laws specifically apply to multi-family properties in New York City, including the building owner’s responsibility for making modifications to accommodate such individuals.

uu Labor Relations: Attorney Robert S. Schwartz from the Realty Ad-visory Board on Labor Relations (RAB) spoke about matters relat-ed to staff whose employment is governed by the 2014 Apartment Building Agreement between the RAB and SEIU Local 32BJ. Topics included differences in wages and benefits for vacation relief employees, the Family and Med-ical Leave Act, reduction in force actions, best practices for pro-gressive (corrective) discipline, exemptions from transit benefit laws and 421(a) prevailing wage rate issues.

uu Quality of Life: Attorney Aaron Shmulewitz, from Belkin Burden Wenig & Goldman, covered the effective use of warning letters for resolving common neighbor disputes regarding noise, odors and other quality of life issues, challenges to enforcing house rules, breach of warranty of habitability, when to involve the building’s attorney and when to litigate. He also covered the importance of making a good faith effort to bring the issue to resolution, including when to engage an odor migration expert or acoustical engineer to investigate.

uu Energy Efficiency: Luke Surowiec, LEED AP, from the NYC Ret-rofit Accelerator Program, spoke about the city’s new program that provides owners and operators access to a team of build-ing experts who can provide independent, customized techni-cal assistance and advisory services—at no cost—to increase the value and sustainability of their properties through energy and water efficiency upgrades. You can learn more at https://retrofitaccelerator.cityofnewyork.us/.

uu Zero Waste: Jessica Schreiber from the NYC Bureau of Recy-cling and Sustainability spoke about the city’s e-cycleNYC, re-fashioNYC and organics collection programs.

FirstService Residential Program Enrollment

52

182

10

Buildings Enrolled

Buildings Enrolled

Buildings Enrolled

continued on page 3

55 Wall Street Embarks on $8.3 Million Project to Cut Energy Costs, Consumption and EmissionsThe Cipriani Club Residences, located at 55 Wall Street in Lower Manhattan, is making an $8.3 million investment in a multifaceted energy efficiency and cogeneration project. Once completed, the building stands to reduce its energy con-sumption and related emissions by 42 percent, as well as cut energy costs in half—saving $900,000 annually.

“This project is being financed with a $6.75 million loan from the New York City Energy Efficiency Corporation

(NYCEEC), a non-profit that develops financing solutions for clean energy projects,” said Chris

De Weaver, a managing director for FirstSer-vice Residential who helped to orchestrate

the project. “The loan is being provided as a ‘no upfront cost’ solution, not re-

quiring any project-level investment by the building.”

On top of the loan, the proj-ect qualifies for $1.6 million in rebates from the New

York State Energy Research and Development Au-

thority (NYSERDA) and Con Edison.

The project centers around a 750kW combined heat and power (CHP or cogeneration) system, which will generate electricity onsite and use excess heat from the process for heating and cooling. With onsite generation, CHP offers the building’s residents resiliency in the event of outages, im-portant in a neighborhood that was flooded after Hurricane Sandy. Cost reduction and energy efficiency measures in-clude new lighting, elevator upgrades, natural gas boilers and reliable, energy-saving variable frequency drives for major equipment.

“The NYCEEC loan allowed us to do all the recommended im-provements in our Local Law 87 energy audit,” said Gregory Brennan, president of the 55 Wall Street condominium asso-ciation. “In addition, their engineers helped us to better under-stand how to maximize our savings opportunities.”

55 Wall Street was converted to a 107-unit condominium in 2006. “We are taking a classic Greek Revival building and making it part of the new Green Revival,” said John Aiello, se-nior property manager for FirstService Residential, which has managed the building since 2014. “It’s great for our residents and for the building’s bottom line.”

Wurtzel to Teach Onboarding Course at CNYC Housing Conference Dan Wurtzel, president of FirstSer-vice Residential, will be teaching a course covering best practices for “Onboarding New Board Members” at The Council of New York Coopera-tives & Condominiums’ (CNYC) annual housing conference. The full-day conference—to be held at Baruch College in Manhattan on Sunday, November 13, 2016—features courses led by industry professionals that are designed to help board members better understand the business of managing their building. Many FirstService Residential board members have found this to be a valu-able educational event. Advance registration is required for attendance at classes. For more information, go to www.cnyc.com/ahc/welcome.php.

Letter from the Presidentcontinued from page 2

Continuing Education for Building PersonnelWe also know it’s equally important for your building personnel to have a thorough understanding of your property’s equipment and systems. Benefits include enhancements to safety, efficiency, system operations and resident comfort, as well as a reduction in maintenance costs and fewer service disruptions.

In addition to our recent Steam Heat Distribution seminar (see page one), we recently invited all superintendents and resident managers to attend one of six certified Occupational Safety and Health Administration (OSHA) training sessions. Led by a loss pre-vention specialist, the training broadened attendees’ knowledge of workplace safety and the recognition, avoidance and preven-tion of health hazards in their buildings.

In October, we have arranged for the NYPD’s Counterterrorism Di-vision to conduct a seminar for our managers and building staff on preparing for terrorist attacks, active shooters and other threats.

Continuing education is part of our commitment to making a dif-ference, every day, for you and your residents.

ADVANTAGE • FirstService Residential • 3

4 • FirstService Residential • ADVANTAGE

FirstService Financial closed 14 loans totaling $95 million for FirstService Residential condos and co-ops during the second quarter.

Financing Capital Improvement ProjectsHas your board set aside sufficient reserve funds? Studies show that 72 percent of association-governed communities are underfunded— a 12 percent increase from ten years ago*.

By Drew Ahrensdorf, Vice President, FirstService Financial

Many associations have not increased assessments at the pace required to ad-equately service an aging property. This deficiency has rendered some boards in-capable of funding unexpected expens-es, such as replacing major equipment or addressing structural or life-safety issues stemming from compliance with local laws.

Traditional Funding PathsWhen it comes time to fund a restoration job or a capital project that will significantly enhance the value of the property’s units, your governance board should look at these three traditional funding pathways.

1. Reserves: Boards should undertake a reserve study that will predict future replacement costs and the timeline for restoring all community common elements. These studies are critical in guiding boards towards implementing appropriate increases in assessments and ensuring the economic security of the as-sociation. Boards should look first to their reserve study and their reserve fund to determine the ability to fund a project without increasing assessments to their unit owners or share-holders or sacrificing the property’s financial stability.

2. Special Assessment: If your reserve funds aren’t enough to cover the cost of the capital project at hand, many board’s re-sort to imposing a one-time special assessment. Typically, a special assessment requires that all owners or shareholders

make an unsched-uled, one-time pay-ment to the associ-ation. This strategy is the answer to avoid incurring debt; how-ever, a special as-sessment can cause financial hardship for those who can’t afford a large payment over a short period of time. Prior to any decision to levy a special assessment, the board needs to factor in the association’s governing documents, state laws and the structure of the payments.

3. Bank Loan: Borrowing money for capital projects has become common practice in the community association industry. Un-like a special assessment, a bank loan allows owners to pay for the construction project over a long period of time. With interest rates at historic lows and a competitive banking land-scape driving down the cost of capital, accessing financing has become an attractive funding strategy.

Qualifying for a loan requires meeting various criteria set by a bank’s credit policy. The main factors that influence a credit deci-sion relate to delinquencies, the number of rented units, ownership concentration, developer involvement and the relative size of the projected assessment increase.

Typically, association loans are fixed rate, self-amortizing term loans that are structured one of two ways:

uu Fully-Funded Term Loan: This method allows the building to take all the loan proceeds at closing, and begin paying principal and interest in equal installments for the life of the loan (like a typical home mortgage). If the board knows exactly how much the project will cost and is sensitive to interest costs, this is the preferred method.

uu Non-Revolving Line of Credit Converting to a Term Loan: This method begins with a non-revolving line of credit, commonly called a “draw period.” During the draw period, the association draws down the funds necessary for ongoing capital work and pays interest-only payments on the outstanding amount. As the project nears completion and final invoices are submitted by the contractor, the association “terms out” the loan and begins paying both principal and interest to amortize the loan balance.

continued on page 6

* Association Reserves, Robert Nordlund, October 2013

ADVANTAGE • FirstService Residential • 5

Case Study

FS Project Management and FS Energy

ADVANTAGE • FirstService Residential • 5

Gas Conversion Significantly Reduces Utility Costs and Emissions for Upper West Side Co-op SITUATIONDanielle Apartment Corpora-tion, a 79-unit cooperative lo-cated at 140 West 71st Street in Manhattan, was burning highly-polluting heating oil #4, which New York City has mandated be phased-out by 2030. To comply with the city’s order to convert to cleaner fu-els, and in an effort to reduce the building’s carbon footprint, lower fuel expenses and better control heating distribution, the board reached out to FirstService Residential for guidance on determining if these goals would be achievable by converting their boilers to natural gas.

SOLUTIONFirstService Residential turned to its project management subsid-iary, FS Project Management, and to its energy advisory subsidiary, FS Energy, to conduct a feasibility study for the project. They en-gaged a team of contractors, as well as the local utility, Con Edison, to develop a comprehensive analysis of the costs, timeline, process and potential savings for the board to consider.

The feasibility study showed that by converting the boiler to natural gas, a 27% return on investment would be achieved, equaling an av-erage annual savings of $50,000. On top of that, the building would circumvent converting to oil #2 to comply with the city’s mandate— a cost estimated at $10,000.

The board voted to proceed and retained FS Project Management to ensure proper over-sight and timely completion. As the building’s representative, FS Project Management man-aged all aspects of the project from contract

n e g o t i a t i o n s , resident com-munications and contractor over-sight to utilities coordination and punch list com-pletion. Due to its industry rela-tionships and ne-gotiating power with contractors,

FS Project Management negotiated $34,000 in savings for the building, or 15% of the project costs.

OUTCOMEFS Energy and FS Project Management secured a $20,000 incen-tive grant through the New York State Energy Research and Devel-opment Authority (NYSERDA) which reduced the total project ex-pense to $171,470.

In two years, the building’s utility bills dropped by 192%, or $100,076 when compared to their 2013 utility expenses. The building has also saved an estimated 105 metric tons of CO2, the equivalent of 22 passenger vehicles driven for one year.

The building further increased system distribution efficiency by in-stalling 19 indoor air sensors throughout the building. By sending real-time temperature data to the boiler control system, balance and efficiency of the system was increased, saving approximately 5-10% of their fuel expenses annually.

“By converting the building’s boiler to natural gas, we were able to save $50,000 annually on our heating bill. This enabled us to re-duce the building expenses and keep maintenance costs in check,” says Shlomo Spritzer, board treasurer. “In addition, we now have the option to switch to oil #2 and be in compliance with the city’s regulations. And since natural gas is the cleanest-burning fossil fuel available, we can reduce carbon emissions by over 40%.”

PROJECT SUMMARY

Project Cost $191.470

NYSERDA Incentive $20,000

Cost to Building $171,470

2014 Utility Bill Savings (vs 2013 costs) $56,630

2015 Utility Bill Savings (vs 2013 costs) $100,076

Construction Timeline 8 months

Payback Period <15 months

COSTS AVOIDED

Savings from FSPM Contract Negotiations $34,000

Avoidance of Oil #4 to #2 Conversion Mandate $10,000

TOTAL $44,000

2013 2014 2015

Electric $16,688 $18,095 $15,461

Natural Gas $2,097 $17,476 $36,548

Fuel Oil $133,300 $59,884 $0

TOTAL $152,085 $95,455 $52,009

BEFORE

AFTER

6 • FirstService Residential • ADVANTAGE

This option is more expensive because principal is not being paid down during the interest-only draw period. However, many boards prefer the flexibility of borrowing only what they use, and are com-fortable paying a premium for that convenience.

Attractive Features and FlexibilityThere are many attractive features of association loans that give boards a tremendous amount of flexibility:

uu First, there are typically no prepayment penalties for making additional principal payments or paying the loan off entirely. In most cases, the only time a prepayment penalty applies is if the loan is refinanced with another lender.

uu Second, most banks will lend up to 10 years but increasingly banks are extending amortization to 15 or 20 years. This reduces the monthly payment and makes financing more affordable for unit owners or shareholders.

uu Third, closing costs are minimal for association loans. Since there is no physical collateral, the title and attorney fees are much lower than if real property was involved. The collateral of an association loan is the assignment of the assessment in-come (in the event of default, the bank steps in and receives the assessment income).

Bank loans are a creative way to establish a payment plan for own-ers or shareholders. Banks are willing to customize the financing structure to fit the needs of each project. As more and more banks service the community association industry, this drives down the cost of financing, enables better terms and conditions and pro-vides associations with more options.

If you anticipate a financing need in the near future, please speak with your property manager or FirstService Financial’s Drew Ahrensdorf at (212) 324-9081, to walk you through the process.

Financing Capital Improvementscontinued from page 4

Hoverboards: Should Your Bylaws Be Amended to Ban Them?The U.S. Consumer Product Safety Commission (CPSC) has re-called 500,000 hoverboards, also known as self-balancing scoot-ers. The lithium-ion battery packs on these devices pose a serious risk of overheating that can result in the devices smoking, catching fire and/or exploding.

There have been numerous reports in the media of individual apartments sustaining damage when a battery pack was left un-attended while charging. As such, several FirstService Residen-tial buildings have either banned hoverboards or imposed rules against them.

One co-op board recently adopted a house rule that strictly prohib-its the presence of hoverboards in the building. Another inserted this amendment into the house rule section of their bylaws:

“Hazardous Devices: No shareholder may use, store or permit the use of any material, device, apparatus, vehicle or other item which is considered highly combustible and/or poses a consid-erable risk of fire or other hazard or which has not met federal safety standards. This includes but is not limited to the use of hoverboards and any other motorized leisure vehicle or product which has been banned entirely or where use has been restricted under local jurisdictions.”

Should your co-op or condo board consider prohibiting the pres-ence of hoverboards on the property or the storage of such devices within individual units?

“If the board elects to amend the bylaws, rules and/or regulations to address the risk associated with these devices, it should consult with the building’s attorney,” says Benjamin Kirschenbaum, vice president and general counsel, FirstService Residential. “Any new rule must be adopted in a manner that will be enforceable against a resident who does not adhere to the rule.”

ADVANTAGE • FirstService Residential • 7

FirstService Residential Managing New York’s First Micro-Unit Apartment BuildingFirstService Residential has added the city’s first micro-unit apart-ment building to its management portfolio. Located in Kips Bay, Carmel Place is a nine-story development comprised of 55-units each measuring approximately 300 square feet.

“As the first housing design of its kind in New York City, Carmel Place serves as a groundbreaking prototype in size and infrastruc-ture that sets a new precedent for multifamily residential living,” says Dan Wurtzel, president, FirstService Residential.

Carmel Place features a community room with pool table and tele-vision, fitness center, roof deck with a grill and lounge and a virtual concierge, among other amenities. Select residences are serviced by Ollie, an amenity and lifestyle provider that includes weekly housekeeping by Hello Alfred, an app-based personal butler ser-vice, as well as access to activities and common areas at other buildings within the Ollie network.

“Carmel Place demonstrates that quality of living is not depen-dent on the size of the space in which one resides,” adds Wurtzel, “if that space is intelligently designed and supplemented by state-of-the art amenities.”

Pictured L-R: Frank Baber, Resident Manager; Gabor Sebestyen, Concierge; Drew Kanter, General Manager; Courtney Baur, Door Attendent; Thinzar Kyaw, Assistant Property Manager; and Ronny Cochachi, Concierge/Door Attendant.

A Night Owl BreakfastA Night Owl Breakfast was recently launched at 100 United Nations Plaza. The quarterly gatherings, organized by First-Service Residential General Manager Drew Kanter, provide an opportunity for the overnight staff and management to interact face-to-face and discuss ongoing building issues. FirstService Residential has managed the 237-unit condo since 2012.

FirstService Residential Publishes Hurricane Preparedness GuideThe potential for a hurricane to impact New York City is greatest from August to October. FirstService Residential has created a Hurricane Preparedness Guide—a tool filled with instructions, checklists and links to city resources—to help your building staff and residents prepare to weath-er any storm. Download it today at www.fsresidential.com/nyhurricaneguide.

8 • FirstService Residential • ADVANTAGE

622 Third AvenueNew York, NY 10017www.fsresidential.com

FirstService Residential Receives Awards from New York Building Managers AssociationFirstService Residential was named Management Company of the Year by the New York Building Managers Association (NYBMA) at the group’s 96th Annual Grand Ball. Founded in 1917, the NYBMA is the oldest organization comprised of resident managers and superintendents from across New York City.

In addition to the company-wide honor, several of our associates were presented with Honorary Member Awards in recognition of their support for the NYBMA.

(Pictured L-R): Keith Werny, president, CityLine Division; Maria Auletta, senior property manager; Tom Padilla, senior vice president; Tom Smajlaj, president, NYBMA, and his son; John MacGowan, managing director; Scott Casazza, former president, NYBMA. Missing from photo is Marc Kotler, senior vice president.

Advantage is published for board members and owners of properties managed by FirstService Residential. While every effort is made to achieve accuracy in this publication, it is not intended as advice to any property, and FirstService Residential shall not be liable for any damages resulting from reliance on the accuracy of information contained herein.

Have a comment about this newsletter? Send an email to news.ny@fsresidential.com.

FirstService Residential supports the highest social and environmental standards. We are contributing to conservation and responsible management by using FSC-certified paper and print products.

FirstService Residential’s Green MissionEnvironmental responsibility is a corporate value for FirstService Residential and our subsidiaries. By striving to set a green standard for the real estate industry, we aim to find opportunities—within our operations and for our clients—to develop innovative and cost effective solutions that promote environmentally sound practices.