JERSEY CITY-It’s no secret that the cost of maintaining a building–whether commercial or residential–can be high, but thanks to new technologies there is now a host of ways to manage replacement, maintenance and energy costs, often referred to as value engineering. This was the theme here at Kipcon Inc. and Energy Squared LLC’s free educational symposium, held last Thursday at the Doubletree hotel.

The course was taught by three industry experts, starting with Kipcon president Mitchell H. Frumkin, a professional engineer, reserve specialist and a National Association of Home Builder’s Certified Green Professional; managing partner of Energy Squared Allan Samuels, a US Green Building Council Leadership in Energy and Environmental Design Accredited Professional; and Clive Samuels, a licensed professional engineer in 46 states.

Frumkin took the lead by discussing how to prepare a reserve study and explaining how it serves as the starting point for analyzing potential savings in maintenance and energy costs. “As we all try to navigate through the national economic crisis, community associations are not only structured to stay fiscally strong but also are in a position to help lead our country out of this troubled time,” he said. “These associations are in a unique position, having planned for this work through years of ongoing investments into their reserve funds for these expenditures.”

But first, he added, you need to understand what a reserve fund is. “In short, it is a systematic accumulation of funds to cover the costs of future major repairs and replacements of the common elements to assure that funds will be available when needed. Since these funds are segregated from the rest of the association’s budget, specifically for the purposes of performing these replacements, there is no reason why the association should delay this replacement work when it becomes necessary.”

A reserve study then is a budget planning tool that identifies the current status of the reserve fund, as well as a stable and equitable funding plan to offset the anticipated future major common area expenditures. According to Frumkin, the total reserves for all community associations in the US come in at $5 billion.

Essentially, there are three standards for a reserve study: the National Reserve Study Standards of Community Associations Institute, AICPA Audit and Accounting Guide for Common Interest Realty Associations; and Reserve Funds: How and Why Community Associations Invest Assets, published by CAI. “The study should be prepared by a reserve specialist or a licensed engineer, and it includes everything from a physical analysis, including component inventory, condition assessment and life and valuation estimates, to a financial analysis, which includes fund status and a funding plan,” explained Frumkin.

Today, funding is a top priority for every building manager. And there are several different funding plans available: full/proportional funding, baseline, threshold or statutory. “There are benefits to all four,” according to Frumkin, “but each association must base the decision on their budget, cash flow projections, amount of risk and updating frequency. But keep in mind, when deciding on adequate funding, it does not always mean full or proportional funding.”

After a reserve study is completed, it should be reviewed yearly, noted Frumkin. “You should also review the study whenever major expenditures are made. And it should be used not only as a budgetary tool, but as a planning one.”

Once property managers have completed a reserve study, it’s then time to make some decisions about maintenance and energy costs. For its part, Energy Squared offers an energy audit, which quantifies how much energy can be saved through the application of sustainable solutions. The company analyzes past utility bills and inspects all mechanical, electrical and plumbing equipment in addition to each of their specifications.

Other services offered include building modeling and simulation, which creates a digital version of buildings to calculate future energy consumption and costs on an hourly, daily and annualized basis; commissioning; mechanical and electrical system designs; a renewable energy feasibility study; life cycle evaluations; green verification; and design of control systems. Energy Squared will also complete and file rebate, incentive and tax credit applications with the appropriate government agencies.

The company laid out a variety of case studies, including an engineering evaluation performed on behalf of Ocean Cove Condo, a 20-year, multi-level condominium with “grossly over-sized existing units, kitchen exhaust that was returned to the apartments and excessive outside air delivered into the space,” according to Samuels. Energy Squared reduced the unit capacity from 300 tons to 175 tons, with an estimated cost reduction of over $175,000 and a 25% reduction in energy consumption.

While the average person is not in a position to purchase solar panels, there are a variety of inexpensive energy-saving changes that building managers can make, according to Kipcon. These range from air filters–which run around $10 each–to smart water heating from $500 to $700, plus $100 for installation. Building owners can even lease a set of solar panels. According to Frumkin, “Many solar leasing companies will install solar panels on your property free of charge and then bill you at a reduced rate for the power you use.” Other ways to optimize your assets include compact fluorescent lights, window treatments, sealing air leaks, lighting motion sensors, programmable thermostats, smart water heating and attic insulation.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Dig Deeper


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join now!

  • Free unlimited access to's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.