Q&A: Sustainable Operations Practices From FirstService Residential

Kelly Dougherty, director of energy management at FS Energy, explains how the company handles expenses and maximizes operating budgets to enhance building efficiencies.
Kelly Dougherty, Director of Energy Management, FS Energy. Image courtesy of FirstService Residential
Kelly Dougherty, Director of Energy Management, FS Energy. Image courtesy of FirstService Residential

Developing and implementing long-term efficiency strategies to reduce energy use, emissions and costs can be challenging, especially with the legislation changing frequently.

As FS Energy’s director of energy management, Kelly Dougherty works with industry leaders and government agencies to keep property managers informed. FS Energy is FirstService Residential’s internal advisory subsidiary, created to provide recommendations for energy management strategies that enhance building efficiencies. Dougherty discussed with Multi-Housing News the practices FS Energy uses throughout its portfolio, the challenges she currently faces and what she believes will make a difference in the future for property operations and sustainability.   

What led FirstService Residential to start offering energy management solutions?

Dougherty: FirstService Residential’s foray into energy management dovetailed with the adoption of benchmarking initiatives by major markets at the turn of the decade. We manage expenses and maximize operating budgets for associations that rely on our expertise and counsel. We observed that most multifamily buildings were allocating 20 to 30 percent of their annual operating budget for utilities and energy. We saw the opportunity to help our clients reduce costs related to energy inefficiencies while fulfilling a social responsibility to safeguard the environment. 

FS Energy uses an energy database to track historical energy consumption and costs, establish benchmarking protocols by region and provide buildings with customized energy consumption/cost-reduction plans and retrofits that help increase their asset value and significantly lower carbon emissions.

Please give us more details about the energy benchmarking program. Figures show it has saved a total of $50 million in energy costs, while also reducing the carbon footprint of your NYC portfolio by 15 percent.

Dougherty: FirstService Residential New York was one of the first property management firms to sign up for the NYC Carbon Challenge and made a commitment to reduce the emissions from 14 million square feet of buildings by 30 percent by 2030. Our energy benchmarking program is founded on the belief that the more informed clients are about the environmental impacts, recent legislation and costs of their building, the more empowered they will be to implement energy-efficiency strategies into their decision-making processes.  

The FS data benchmarking database houses comprehensive historical data from hundreds of residences spanning a wide variety of building types. The database enables us to determine the Building Energy Rating Guide score—0 (lowest) to 10 (highest)—by measuring that building’s current and past energy performance against similar properties in the database. The information is then analyzed to create a customized report card for the asset, helping clients identify where the most cost-effective improvements can be made and which projects to pursue to make their property operate and perform more efficiently.

Additionally, we are assisting our customers in maintaining proper compliance as more municipalities throughout the U.S. and Canada implement energy benchmarking requirements.

Since 2016, FirstService Residential New York has converted more than half of its managed properties across the city to 100 percent renewable energy. Please describe to our readers how you did that.

Dougherty: FS Energy leverages the size of the FirstService Residential portfolio to partner with multiple energy services companies to get the best pricing for renewable energy. Another option is the opportunity to participate in the Renewable Energy Credit program, which permits buildings to directly support the renewable energy industry and offset a portion of their emissions.

Which are some of the preferred energy-related capital improvements in your managed portfolio and why? How about the most innovative ones, is there one that stands out?

Dougherty: FS Energy typically recommends energy projects that anticipate a return on investment of 20 percent or more. Even if some projects don’t meet that exact threshold, there are many benefits to upgrading older equipment to more efficient models or technology. Energy projects that we frequently recommend include LED lighting conversion, variable frequency drives on motors and pumps, energy management controls with indoor sensors, pipe insulation, electronically commutated motor replacements and temperature controls such as thermostatic radiator valves or external thermostats.

How does FirstService Residential apply its NYC environmental standards across markets?

Dougherty: We display our commitment to New York City environmental standards with recommendations specifically suited to each building throughout our portfolios in each market, educating our clients on best practices and solutions available to them. However, there is no cookie-cutter approach to this process. Each property and market is unique and requires expert advice to educate board members and property managers.

Which were the biggest challenges you’ve faced so far in NYC and how did you overcome them?

Dougherty: One of the biggest challenges we are currently facing is the introduction of the Climate Mobilization Act, a groundbreaking package of laws requiring buildings of 25,000 square feet and larger in New York City to reduce their building emissions by 40 percent before 2030 and by 80 percent before 2050. Beginning in 2025 and every year after, buildings affected by this law will be responsible for reporting their total aggregate greenhouse gas (GHG) emissions from the previous year to the city. Buildings that exceed their limit and do not take steps to cut emissions will be fined significantly.

FirstService Residential is helping steer clients in the right direction through education, providing them the opportunity to meet with industry experts and representatives from the Mayor’s Office of Sustainability to learn how to prepare for and adhere to the specific requirements. We are currently teaching our board members to utilize the internal resources at hand to budget for and create customized solutions to pursue energy retrofits that will enable them to comply with the new law. Additionally, we reference our comprehensive energy benchmarking database to show our clients how much GHG their building is emitting, what variables are within their control and how much they need to reduce their emissions to meet the limits set per building.

To what extent is the real estate industry engaging with policymakers on local resilience strategies?

Dougherty: Our experience in the real estate management sector is often sought out by city and state municipalities, as well as local utilities and other private and public entities. Subject matter experts from FS Energy and FirstService Residential often serve on technical review committees and think tanks to provide insight on how proposed energy legislation or incentive programs would affect homeowners and multifamily communities.

What are your thoughts on the future of sustainability and energy efficiency?

Dougherty: Real-time monitoring or “smart buildings” will help building operators become accountable for what is within their control and will help them do their part in keeping daily consumption, emissions and utility costs down as much as possible. Shifting away from a reliance on fossil fuels altogether, especially for heating and cooling systems, is on the horizon as more and more cities turn to emerging green electrical grids powered by renewable energies.

Eventually, decision-making strategies will not only take the best upfront costs into consideration, but also what is best for the environment—limited emissions—as well as for the long-term building operating budget. However, this behavioral change will take time for many owners and boards as they part ways with what made sense to do in the past.