Using Data for Better Portfolio Performance
- Mar 30, 2017
Developers of affordable rental housing have always focused on the mission of their enterprise. In recent years mission-oriented owners have increasingly focused on the financial management of individual properties and their overall portfolio as financial resources in the form of subsidies have declined and traditional financing costs have climbed. These forces combined with escalating costs of owning affordable rental housing are driving the new management paradigm.
For two decades, NeighborWorks America has been working with its members who own and develop rental housing on strategies to increase overall portfolio performance. We’ve enhanced courses at our NeighborWorks Training Institute on portfolio management, stepped up our offering of online training, and delivered specific peer-to-peer learning and strategizing opportunities designed to strengthen portfolios.
Better use of data to manage current and future utility costs is one area where NeighborWorks America has seen nonprofit developers “sharpen their pencils” and enthusiastically search for ways to wring savings from their portfolios.
Utility costs—everything from water usage to electricity and natural gas—can get away from a manager if not monitored closely on a regular basis, and are the most directly manageable variable cost within a rental home portfolio.
“Energy management begins with data; data collection and analysis are vital to everything that I do,” said Tabitha Harrison, the sustainability manager at Tenderloin Neighborhood Development Corporation (TNDC) in San Francisco. TNDC owns and manages 39 buildings in the Tenderloin and surrounding San Francisco neighborhoods. The smart management of existing utility expenses keeps costs down, helping save money that can be applied to TNDC’s core mission: providing affordable homes for 4,100 of San Francisco’s lowest income residents. According to Harrison, TNDC uses data as relentlessly as many of its tech industry neighbors.
Christian Caldarone of NeighborWorks Blackstone River Valley (NWBRV) echoed the importance of property and per-unit data. “That information drives our regular management oversight as well as capital improvement decisions in our individual properties. It also impacts our property development work considerably.”
So given the importance of utility consumption data for reducing existing costs and planning more efficient development, how does a nonprofit owner/developer get its hands on the best data, and what technology does it use to manipulate the data for management decisions?
Data Gathering and Benchmarking
The process starts with data gathering and benchmarking. The first partner to engage is the local utility company. “Our utility company is a very important partner in our efforts,” explained Harrison. She noted that having the ability to pull energy consumption data directly from the utility company’s website and feed it into a benchmarking platform saves money and time. The best platform for the job is one that gives a manager the capability to see how much electricity, gas, and water is being used at a particular property over time, in addition to comparing data from different properties within the total portfolio.
Data comparisons should take square footage of the units into account, as well as differences in the number of bedrooms. Apartments with different numbers of bedrooms could have similar square footage, but getting as specific as possible with the comparisons should be the manager’s objective.
It’s also important for managers to understand each building’s metering structure. If individual apartments are separately metered instead of tied into a master meter, owners will have to either gather individual utility data from their residents or (if possible) request aggregated data from their local utility. Harrison recommends that owners take the time to collect and record whole-building utility records wherever possible, rather than only tracking common-area meters.
Some owners may not have the ability to export electronic data from their utility company, but it’s still possible to “get paper bills and manually enter information into your benchmarking platform. It’s more time consuming and unfortunately prone to data entry mistakes, but good benchmarking is too important not to have the data,” Harrison said.
The bottom line is to assemble and execute a plan to comprehensively collect and continually analyze data because it pays off in the long run.
Applying Data on Behalf of New Development and Rehab
Using data from existing projects to inform the design of new developments is one way data pays off in the long run.
For example, Caldarone of NeighborWorks Blackstone River Valley explained, “We use utility data to measure the performance of our existing buildings and compare the results to our pre-development efficiency modeling in order to make the most informed construction and design decisions.”
This analysis helps NWBRV and other nonprofit developers work smarter with their engineers and architects to design new buildings that use less power and as a result, cost less over time, without sacrificing the comfort of their tenants.
It’s important to consider savings “over time.” Caldarone explained that the model may indicate that a certain design and set of heating and cooling systems will cost less than another. However, building to those specifications could cost more up-front. Good data helps development managers convince internal and external stakeholders that the higher up-front cost makes sense.
With the right utility tracking and reporting tools in place, owners of affordable rental housing can manage their properties toward stronger bottom lines.