Where Water Efficiency Increases ROI
Part 3: Customize Water Use to Maximize Profits
By: Alon Shnitzer, Senior Managing Partner, ABI Multifamily & Thomas M. Brophy, Director of Research, ABI Multifamily
As a conclusion to our first, of many, water series, we thought it prudent to focus on those companies/products which specifically address water conservation. In light of the increases in sales price/unit amounts and historically low CAP rates, multifamily owners, now more than ever, are hard-pressed to find additional sources of revenue (or justification for increased rental rates) and sources for overall community savings.
As was stated in our previous post, Colonel Foresight | High Price of Construction Costs in Phoenix MSA, multifamily owners/developers/investors are rapidly turning to ‘Value Engineering’ in an attempt to mitigate overall construction costs, as well as, build downstream value via streamlined operations. While many of the current value-add/new construction project developers/owners are focusing on R-factors, unit finishes, and project amenities to increase rental rates, which are important aspects of any project, more can be done to limit a community’s fixed costs, in particular, consumptive water use.
Detailed below are two companies that we have found leading the charge to (1) reduce wasteful water use and (2) decrease overall community operation costs thereby increasing a project’s NOI. The two companies represented in our post, Restored Resources and IrriGreen, are not, by any means, the only two in their respective fields, however, they both have a focus on the multifamily industry albeit in different degrees.
Restored Resources is a Tucson-based distributor/contractor of water conservation products (specifically low-flow toilets and shower heads) with an emphasis on the multifamily housing industry. Unlike many contractors in the conservation market, Restored Resources, attempts to alleviate retrofitting costs by allowing owners to make payments based on projected savings amounts. As Peter Caiazzo, Manager of Restored Resources, states,
“Properties don’t always have the available cash flow for a big project or may be somewhat skeptical of the projected savings. As such, we at Restored Resources, will finance a significant portion, if not the entire job, and base the owners’ payments on the savings of the project. The payment then becomes an average of the savings annually and adjusted lower to add security, e.g. if a property is expected to save $3,500 per month, payments may be adjusted to $3,100 [to ensure ease of payment].”
Not only will Restored Resources internally finance the project, many cities, including Los Angeles, Tempe and Tucson, have rebate systems already in place for owners looking to upgrade their toilets and shower heads. In fact, many of the rebates offered cover the entire cost of the product replacement, excluding labor fees.
Included in this post is one case study performed by Restored Resources showing before and after water use/savings amounts. It is helpful to note that not all projects will realize the savings amounts as reflected in the study. In order to achieve maximum project savings, Restored Resources does a thorough investigation of previous water use amounts, as well as, an analysis of current property systems.
Lastly, and perhaps most importantly for existing property owners, is the question of project installation timeline. Apartment owners want to disturb their tenant base as little as possible, as such, Restored Resources installation program focuses on speed and efficiency with an average, total install time of no more than 15 minutes (toilet and showerhead replacement only). This equates to over 70+ retrofittings on a daily basis.
IrriGreen is a Minnesota-based start-up, which focuses exclusively on irrigation watering systems. Of all the products we reviewed for this article, the IrriGreen Genius™ Irrigation System is, by far, one of the most cutting-edge, and potentially game-changing, products we have ever seen. Although still early in its commercial launch, IrriGreen technology has the opportunity to challenge and change a product segment stuck in the past, namely sprinklers.
“The IrriGreen Genius Irrigation System applies digital technology to control the actual direction and distance of the sprays from each Genius Sprinkler,” states Gary Klinefelter, founder and CEO, IrriGreen, Inc.
“Inkjet printers do not shoot ink unevenly and haphazardly all over a page. They spray the right amount of ink in controlled patterns. We adapted digital technology and our patent-pending nozzle design from the high-tech, commercial printing industry. IrriGreen ‘prints’ precise patterns of water on a lawn.”
In current practice, conventional sprinkler systems are installed so the sprays overlap to ensure total area coverage. The result is continuous, wasteful and unnecessary watering, often exceeding 150% coverage. Whereas conventional irrigation systems require 40+ sprinkler heads and over 1500+ feet of underground pipe (based on a 12,000- 15,000-square-foot residential lot), IrriGreen requires only five (5) Genius sprinkler heads and 250 feet of pipe.
The linchpin of the IrriGreen system is its patent-pending digital control system, which matches watering patterns to the exact shape of the area being watered. By eliminating spray overlap and overwatering, owners of the system can realize up to 50% in annual water savings. The product, itself, features a digital valve-in-head, pop-up rotor with a low-flow, 14-stream, multi-trajectory nozzle. As the Genius™ Server monitors and dynamically adjusts stream volume, direction and distance, Genius Sprinklers conform watering patterns to the specific outline of each irrigation zone and maintain uniform water distribution at distances from 0-35 feet within each zone. (A video demonstrating the IrriGreen system is available below:)
IrriGreen is currently available in Minnesota, Wisconsin, Iowa, Pennsylvania and Florida, and the company is actively seeking qualified installation/distribution representatives in the Southwest. One of the leading IrriGreen installers in Minnesota, High Profile Grounds Maintenance, Inc., has already completed 30 installations with IrriGreen in 2014, the largest project to date being a 2.5-acre residential development. Additionally, Valley Way Village II, a townhome development in Apple Valley, Minnesota, has installed IrriGreen to water its 132 acres.