How Ancillary Services Improve Association Finances
Recently, a prominent Chicago high-rise association has had remarkable success in gradually adding ancillary services from FirstService Residential over a period of months. As the board of directors analyzed offerings by our ancillary companies and cost savings they offered, the board saw the benefit and added one ancillary service after another. The result has been great cost savings and board satisfaction during a time of many changes and decisions for the community.
What are ancillary services? At FirstService Residential, our expertise goes beyond managing communities. Our condos, co-ops, community associations and HOAs also need insurance, financial experts, energy efficiency experts and project managers for complex capital projects. Seeing the need for these additional professionals, we have put together affiliate companies to provide a range of cost-saving services not offered by alternative management firms.
Board members who are unfamiliar with these additional services may not know all the benefits of working with a resource-rich residential management company. Our affiliate companies are an invaluable team of experts on your side when you need them. Here’s how our Chicago condo association incorporated ancillary services into their community’s financial success.
How to Add Ancillary Services to Your Association
In 2021, this community association board wanted to analyze their insurance contracts and the offerings of FirstService Financial and Insurance (FFI) to see whether cost savings would be beneficial to them. The property manager brought in Sean Gaynor, Director of FFI, to walk through the benefits that FFI’s ancillary services could bring to them. They learned that since 1998, FirstService Financial has provided top-notch financial services for the communities managed by FirstService Residential. With a broad knowledge base, FFI experts provide advisory services, individually tailored financial solutions, and insurance product offerings to community associations, cooperatives and commercial buildings managed by FirstService Residential.Regional Director Erin Kearns says, “Sean Gaynor was able to speak directly to the board as an expert on this process, rather than passing along details to staff members. Having a financial professional present to the board made the directors extremely receptive to his ancillary services.” She adds, “Working with FFI means that our in-house insurance provider has the same priorities and goals as the rest of our company. They are invested in our success and the success of our properties. In addition, bringing in Sean Gaynor means that he knows how to talk to the board of directors and was able to sell them on this ancillary service.” The result was a savings of over $90,000 in premium.
Adding Up Utility Savings
The association's cable contract was also ready for renewal. When going through the bidding process, the board of directors saw the opportunity to leverage FirstService Residential’s ancillary services for savings. David Jandak, Vice President of Finance, attended a board meeting and presented a proposal that showed the value of our economy of scale and our energy buying capacity. These company advantages have helped our clients negotiate competitive rates with third-party Energy Supply Companies (ESCOs), which are an average of 10% lower than going through local utilities. When they participate in one the country’s largest gas and electric aggregation programs for multifamily buildings, our managed properties have saved millions of dollars in energy costs over the last decade, including nearly $700,000 in 2020 alone.After reviewing the cable utility savings information provided by Jandak, the board of directors did not ask for additional bids; they accepted the contract as proposed. This resulted in a contract with a reduction in the monthly unit price of $22.27 for a total savings of almost $350,000 over the life of the five-year contract.
In addition to advantageous buying power, our affiliate company can also provide comprehensive utility bill audits to identify any irregularities in billing or energy consumption. Inaccurate meter readings, administration fees, unusual consumption and other issues can add up to unnecessary charges, but they may not be obvious until they add up over months or years. After identifying any overpayments to the utility company, we can help associations recover the overage -- and some recoveries have reached six figures.
Improved Energy Contract
Finally, it was time to sign a new energy contract. Due to the excellent pricing and value they received on previous ancillary services contracts, the board reached out to Procurement Specialist John O’Shea to speak at the next board meeting to illustrate the benefits of FirstService Energy (FSE), the energy management and advisory subsidiary of FirstService Residential. These energy experts help associations and co-ops improve their buildings’ energy efficiency through solutions that reduce energy costs, consumption and emissions. They also offer a program leveraging the purchasing power of hundreds of our managed properties to successfully negotiate lower rates for natural gas and electricity."What’s notable about this energy contract renewal was the volatility of the market at the time,” states John O’Shea. “Over a five-week period, we saw the market rise 28%, drop 22%, rise 45% and then drop 28%.” Despite the volatility, they were able to secure a gas contract at 32% below the 12-month average utility rate, which translates to over $26,000 in savings per year. For the electric, FSE was able to secure a contract at 25% below the 12-month average utility rate, which translates to over $45,000 in savings per year.
FSE is different from other energy consultants in that they work to stabilize energy costs for the association while procuring low utility rates. While some companies look only for the short-term price, FSE believes that a balanced approach with short- and long-term planning is in the best interests of the community.