FirstService Residential

ADVANTAGE

FALL 2017

FirstService Residential Teams with Department of Health to Provide Cooling Tower EducationFirstService Residential teamed up with the New York City Department of Health and Mental Hygiene (DOHMH) to offer a series of training seminars for property managers and building oper-ators covering Local Law 77 in August. “Improving Management and Compli-ance of Cooling Towers,” an intensive, two-hour seminar led by experts from

the DOHMH’s Office of Building Wa-ter Supply Oversight, Bureau of Envi-ronmental Sciences and Engineering, drew more than 500 attendees.

Local Law 77 requires registration, in-spection, cleaning, disinfection, testing and documentation tracking of cooling towers in New York City. It also requires building owners to create routine and long-term maintenance procedures for their towers. The law is the first proac-tive inspection program aimed at re-ducing the risk of a Legionella outbreak stemming from cooling towers in the United States.

Above, representatives from DOHMH’s Office of Building Water Supply Oversight, Bureau of Environmental Sciences and Engineering, educate attendees at FirstService Residential’s office.

Message from the President

Dan Wurtzel

Delivering on Our Promise to Provide Exceptional ServiceAt FirstService Res-idential, our mission is to provide excep-tional service and solutions that en-hance the value of every apartment and the lifestyle of ev-ery resident in every property we manage.

This edition of Advantage illustrates some of the ways we are delivering on this promise. Over the last few months, we:

uu Hosted a symposium with a panel of legal experts to educate our board members on ways to avoid legal liability exposures;

uu Provided hospitality-style customer service training to 500+ building employees to arm them with tools and strategies that will help to improve the level of service provided to residents;

uu Hosted a workshop on budgets and strategic planning to give our board members a behind-the-scenes look at the analysis, projections and over-all process our team performs be-fore a draft budget is presented;

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2 • FirstService Residential • ADVANTAGE

FirstService Residential hosted an interactive symposium on July 19, 2017 during which a panel of leading legal ex-perts examined ways that board members can minimize their liability exposure. Topics included common issues across the industry, including quality of life; service, emo-tional support and therapy animals; smoke, noise and odor complaints; requests to review corporate records; and real estate tax assessments, protests and the impact of abatements.

“When conducting business on behalf of the associa-tion, board members can create potential liability for their building as well as expose themselves to personal risk,” said Dan Wurtzel, president, FirstService Residen-tial. “Any perceived breach of fiduciary responsibilities—including allegations of wrongful acts, financial mis-management, negligence and errors in judgment—can lead to legal action. We organized this event to help our volunteer board members minimize and/or avoid claims that could have significant personal, professional and financial consequences.”

If you would like a summary of the topics discussed, please email us at news.ny@fsresidential.com.

(L-R) FirstService Residential President Dan Wurtzel and Managing Director Chris De Weaver with panelists Phyllis H. Weisberg, partner, Montgomery McCracken Walker & Rhoads; Adam D. Finkelstein, partner, Kagan Lubic Lepper Finkelstein & Gold; Dean M. Roberts, partner, Norris McLaughlin & Marcus and Benjamin C. Kirschenbaum, VP & general counsel, FirstService Residential.

NYC Mandates Buildings Dramatically Cut Greenhouse Gas EmissionsMayor de Blasio an-nounced in Septem-ber new mandates that will force build-ing owners to make sharp reductions in greenhouse gas (GHG) emissions. The new rules will oblige own-ers of buildings over 25,000 sq ft to meet fossil fuel caps.

To compel owners to meet these aggressive targets, the leg-islation will set annual penalties that increase with building size and the amount the buildings exceed the fossil fuel use targets. For example, a 30,000 sq ft building operating sub-stantially above its energy target would pay $60,000 for every year over the standard, starting in 2030. A one million square foot building operating well over its energy target would pay as much as $2,000,000 for every year over target. Failure to comply will also affect a building’s ability to receive future permits for major renovations.

How can your building be prepared for these new changes?

Our FS Energy subsidiary offers these tips:

1. Have an assessment done of the building’s heating plant by an experienced boiler company or boiler assessment engineering firm.

uu This assessment should include a condition analysis of the physical boiler and distribution system for both heating and domestic hot water (DHW).

uu Heating distribution waste needs to be addressed when heating plant components are replaced. Correcting inherent distribution problems will also increase resident comfort.

uu When replacing a boiler, verify the building’s sizing needs; many times boilers are larger than the building requires.

uu Evaluate splitting up DHW and heating to reduce waste from firing a large boiler during the summer for only DHW.

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Symposium Helps Board Members Avoid Liability Exposures

ADVANTAGE • FirstService Residential • 3

Ensuring Compliance with New FDNY Rules for Safety Signs on DoorsThe Fire Department of New York (FDNY) adopted new rules requiring multifami-ly dwellings to place reflective signs on all apartment and stairwell doors. The legislation, FDNY 3 RCNY §505-01 & 505-02, is intended to assist emergency re-sponders in locating apartments and determining where they are headed in a building when responding to a fire or other emergency.

Requirements specify the design of the new reflective signs as well as where they must be posted on apartment and stairwell doors and in lobby/hallway corridors.

Buildings with duplex and triplex apartments had to comply by March 30, 2017; buildings with only single-level apart-ments must comply by March 30, 2018. Buildings that are fully sprinklered do not have to comply.

To provide our board members with con-crete information regarding what they must do to comply with the law, FirstSer-vice Residential arranged to have an inde-pendent third-party fire protection com-pany perform an on-site inspect of each

building and prepare a detailed report.

“We felt the only fail-safe way to ensure our properties are complying with the new regulation was to have the spe-cific requirements for each building clearly outlined by a professional consultant,” says Dan Wurtzel, president, FirstService Residential.

Now that site surveys and inspection reports have been completed for all buildings, FirstService Residential is in the process of negotiating bulk pricing for ordering the emer-gency markings that are required by March 30, 2018.

Turning Tragedy into Teaching at Morningside HeightsWhen a fire at Morningside Heights Housing Corp. tragically claimed the lives of two elderly residents, FirstService Res-idential General Manager Jim Hayden set out to organize a town hall event to reinforce the importance of fire safety for the residents of this 980-unit cooperative.

Hayden cast a wide net to secure a slate of local politicians and subject matter experts that included the FDNY, the NYPD Public Safety and Crime Prevention units, City Coun-cilman Mark Levine and Manhattan Borough Presi-dent Gale Brewer. He also arranged to have vendors on hand for residents to purchase fire extinguishers and smoke detectors and obtain information about home-owners insurance.

“Jim and his staff did an excellent job with the fire safety town hall. It was well received by the community and was a nice showcase of how capable and helpful he and his team are,” said Tiana Norgren, board mem-ber. “Jim’s remarks were well thought out, as was the lineup of speakers he put together, and the informa-tion and equipment he made available shareholders.”

“Jim and his team managed to take a tragic event and turn it into a teachable moment,” said Dan Wurtzel, president, FirstService Residential. “By educating residents on the im-portance of fire safety, he aspired to ensure that this type of tragedy does not happen again.”

4 • FirstService Residential • ADVANTAGE

Energy Report Cards have been issued for more than 400 First-Service Residential properties. Spearheaded by FS Energy, our energy management subsidiary, the report cards have been generated annually for the last seven years to show our cli-ents how much energy their buildings are consuming, as well as the possibilities for improving their energy performance.

“History has shown that the more informed our clients are about their building’s environmental impact, the more em-powered they are to improve it,” says Dan Wurtzel, president, FirstService Residential. “By providing an Energy Report Card each year, we are providing a tool to help boards make decisions about the strategies they should initiate in their buildings, with the goal of becoming more energy efficient while reducing operating costs.”

Provided as a no-cost, value-added benefit, Energy Report Cards benchmark a building’s historic energy use and costs against similar buildings. They also chart a building’s carbon emissions and calculate potential annual savings from pro-spective efficiency measures.

“The reduction of expenses and increase in property value pro-vide buildings with both immediate and long-term savings,” says Tal Eyal, president, FS Energy. “A reduction of carbon emis-sions also leads to a healthier living environment for residents, as well as the surrounding community.”

Energy Report Cards use FS Energy’s proprietary benchmarking database which comprises over seven years’ worth of histori-cal energy usage, cost and typology information. A key aspect is the Building Energy Rating Guide (BERG), a score that gauges a building’s efficiency compared to similar properties. A lower score indicates more opportunities for improvement. The FS Energy team can develop a customized energy management strategy for your property.

Property managers participate in a training session to better understand the data contained in an Energy Report Card in order to lead a productive discussion with board members.

Energy Report Cards Reveal Potential Savings of $11.7 Million in Annual Energy Costs for Our Managed Properties

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NYC Greenhouse Gas Emissions

uu Control systems should be evaluated to allow for fine-tuned control of the heating plant to further reduce waste.

2. Plan & Save Early—Know how much funding the build-ing will need and start saving monthly for the replace-ment or upgrade of your heating plant equipment.

3. Continuous maintenance procedures should be im-plemented by building staff and third-party vendors to ensure your building is being monitored and serviced regularly to prevent loss of efficiency due to a lack of maintenance.

While the mandate will set the target, it leaves flexibility and time for building owners to make the necessary improve-

Are You Receiving Our Emails?We regularly send emails to our board members containing event invitations and updates on how we are improving our operations, services and offerings. To ensure that our emails do not land in your Spam or Junk folder, please add news.ny@fsresidential.com as a “trusted email address.”

ments that make the most sense for their building. For more information, please email info@fsenergyservices.com.

ADVANTAGE • FirstService Residential • 5

Innovative Training Program Helps Building Staff Deliver Five-Star Service Experience to ResidentsRecognizing the importance of providing an exceptional customer service experience to our clients, FirstService Residential launched an innovative training program for building staff in our managed properties.

To date, more than 500 staff from over 100 buildings have par-ticipated in the program, which actively engages participants in communication activities and provides useful tips to improve their performance. The course was created and led by Jaime Sikorski, a hospitality industry veteran with 20 years’ experience training front-line employees of luxury hotels.

“This customized training emphasizes the critical nuances of pro-viding great customer service in the context of our company’s core values, and uses team building exercises to make it a fun learning experience,” said Dan Wurtzel, president, FirstService Residen-tial. “Among other skills, participants learn techniques to help build confidence in effectively communicating with residents.”

Communication, both in quantity and quality, cannot only im-prove a situation, it can also enhance teamwork, processes, and accountability. The course stresses the importance of under-standing that the phrases we use are equally important as what our body language conveys while we are speaking.

“While we may not be able to say ‘yes’ to every request, we have a responsibility to avoid saying ‘no,’” explained Sikorski, a First-Service Residential general manager. “By being empathetic and working together with residents to discuss alternatives, a mutu-ally acceptable solution often can be found.”

Michael Urena, GM at University Towers, a 551 unit co-op, par-ticipated in the program with 20 members of his staff. “My team

was able to put into perspective the different ways we can assist our residents to feel good and show that we care,” said Urena. “Putting into practice the effective listening and com-munication techniques will improve our ability to create an all-around positive experience for residents.”

George Ferruzola, a security officer at University Towers, found the segment on effectively handling challenging situations par-ticularly helpful. “Residents do get upset from time to time, but I now have new skills to use when interacting with an impas-sioned resident in order to properly resolve the conflict.”

“The staff was very impressed with the strategies and tools they learned and has incorporated them into their interactions with our residents,” said Yvette Diaz-Moreno, managing director, The Kips Bay Towers Condominium.

New Heating Rules Effective October 1New legislation requires residential buildings to set overnight temperatures to 62 degrees during the October 1 to May 31 heating season regardless of the outside temperature.

This is a good opportunity to assess your heating system inefficiencies and determine if an energy management controller or oth-er heating distribution upgrades need to be made to pre-vent waste and ensure resident comfort.

“Most buildings can easily upgrade their energy manage-ment controller to include indoor air sensors throughout the building and other system monitoring points that will

send real-time feedback to the heating plant to help maximize system efficien-cy,” said Kelly Dougherty, director, energy management, FS Energy. “Energy man-agement controllers have come a long way. Real-time information can provide your operator with the information they

need to ensure the building is compliant with the law.”

Dougherty also recommends verifying that your boiler company has completed its annual cleaning. “If your pipes bang or clank, you likely have a heating distribution issue,” she added. “FS Energy can help.” For more information, email info@fsenergyservices.com.

6 • FirstService Residential • ADVANTAGE

Amid widespread confusion in the industry concerning the specific mandates established by the city, FirstService Residential formed a committee comprised of its senior property management executives, compliance team and members of the company’s FS Project Manage-ment and FS Energy subsidiaries. The group was charged with provid-ing recommendations that would keep residents safe from deadly bacteria, ensuring water-cooled HVAC systems are performing reli-ably and efficiently and making sure properties fulfill their compliance requirements.

Over the course of several months, the committee reviewed the law in explicit detail, consulted with 10 chemical treatment vendors and technology providers, re-viewed maintenance program and plans (MPPs) and spot checked buildings to review their compliance binders and equipment set-ups.

“It was eye-opening to see so many variations of imple-mentation—not only from building to building, but from vendor to vendor,” said committee chair Kelly Dougherty, director, energy management, FS Energy. “Given the extent of confusion uncovered by our committee, we unanimous-

ly determined a proactive approach was needed to correct the problem.”

The chief priority was to provide proper education which prompted FirstService Residential to host the educational seminars conducted by DOHMH. An invitation was ex-tended to the city’s resident man-ager organizations and to every residential and commercial opera-tor registered with DOHMH.

The committee also recommended that buildings consider upgrading to a real-time chemical data controller which provides the ability to con-tinuously monitor pH, conductively, temperature and biocide residual. “Monitoring the system in real time, and setting alert parameters, is an

inexpensive way to ensure a tower is consistently meeting compliance standards and also serves as a mechanism to react quickly if an issue is detected,” added Doherty.

Buildings with existing chemical feed equipment can easily upgrade to this controller. With over 120 cooling tower-equipped buildings in our management portfolio, FirstService Residential was able to negotiate a steep dis-count on this solution for our clients with Pulsafeeder and The Metro Group.

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Cooling Tower Education

With over 120 cooling tower-equipped build-ings in our management portfolio, FirstService Residential was able to negotiate a steep dis-count for clients on a real-time chemical data controller solution.

uu Issued Energy Report Cards for 400+ properties to provide our board members with a useful tool for devising a strategy that will improve the building’s efficiency while reducing operating costs;

uu Partnered with the NYC Dept. of Health to present cooling tower training to 500+ building operators to ensure the safety of our residents and compliance with Local Law 77;

uu Hosted an expo with over a dozen service providers to enable board members to speak with architects, engineers, designers and other experts about effectively managing capital improvement projects; and

uu Formed a partnership with Lemonade to mitigate po-tential exposures of our clients by offering a competitive, comprehensive insurance product for unit owners.

Our next board member event on Nov. 16 will be a panel dis-cussion on Directors & Officers (D&O) liability insurance (see page 8 for details). I hope to see you there.

Thank you for allowing us to serve you. Please do not hesi-tate to contact me to share your thoughts about our service and how we can continue to make a difference, every day, for you and your residents.

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President’s Message

ADVANTAGE • FirstService Residential • 7

FirstService Financial Helps Co-op Reduce Annual Debt Cost by 23 PercentArdsley Tenants Corporation, a 198 unit co-op, had an existing first mort-gage maturing January 1, 2018 with a principal balance of approximately $12 million.

Our affiliate, FirstService Financial, and the board had been discussing the building’s debt structure over the last several years. While the board wanted to take advantage of histori-cally low interest rates in 2015 and 2016, FirstService Financial de-termined the existing yield maintenance prepayment penalty was cost prohibitive at that time.

Approaching 2017, with the prepayment penalty significantly reduced and given the impending presidential election and national and international turmoil, the board was concerned with where financial markets and interest rates were heading.

Understanding the board’s concerns and long-term debt preference, and factoring in the building’s financial needs, FirstService Financial provided several options for consideration, including interest only loans, 30-40 year amortizing loans, and hybrid structures.

The board elected to refinance on a 15-year fixed term. The first two years are interest only; the loan converts to a 30-year

amortization structure in years 3 through 15.

Existing Situation:

uu Original First Mortgage: $14,000,000

uu Outstanding Balance: $12,000,000

uu Line of Credit: $2,000,000

uu Interest Rate: 5.85%

The transaction arranged by FirstService Financial resulted in these additional benefits for the co-op:

uu Locked in 4.22% rate on $12,900,000, 15-year fixed mortgage, incorporating a six-month forward rate lock to reduce risking material changes in market conditions.uu Reduces annual debt cost by 23%.uu New loan absorbed all closing costs and prepayment

penalties and provided approximately $500,000 in net proceeds to immediately increase cash reserves.

uu Ability to increase reserves by $425,000 per year over the next two years from reduction in annual debt service costs, with a potential for a total of $1.35 million subject to unanticipated capital requirements.

uu Principal reduction payments lowers debt obligation for future shareholders at maturity in 2032.

uu Closed when the prepayment penalty converted from an expensive yield maintenance to a one percent fixed penalty.

uu Replaced old line of credit with a new $2,000,000 line that can be used throughout the term for capital needs.

uu Extends debt maturity through 2032 increasing security and ability to budget long term.

uu Over 15 years, the co-op will pay off approximately $3.2 million in principal, reducing the principal balance by 25%.

“FirstService Financial’s proactive suggestions and feed-back over the last three years allowed us to accurately gauge the most appropriate time to move forward with re-financing our existing debt,” said Steve Martin, Ardsley trea-surer. “Their professional guidance throughout the process, lending expertise, and extensive track record was a fantastic benefit offered through FirstService Residential as our man-agement company.”

Can FirstService Financial’s programs benefit your property? Contact Jordan Muchnick at jmuchnick@firstservice.com or (484) 398-6042 to find out.

FirstService Financial assists our clients in fulfilling their financing requirements at the most competitive interest rates and terms available. The company has facilitated or assisted in loan placements in excess of $1.5 billion for our co-ops and condos. This transaction illustrates why many of our clients choose to participate in FirstService Financial’s programs, which provide added value based on the global purchasing power of our parent company, FirstService Corporation.

FirstServiceFinancial

Case Study

FirstService Financial

622 Third AvenueNew York, NY 10017

www.fsresidential.com

Have a comment about this newsletter? Send an email to news.ny@fsresidential.com.

FirstService Residential supports the highest social and environmental standards. We are contributing to conservation and responsible management by using FSC-certified paper and print products.

Protecting Your AssetsA Primer on Directors & Officers (D&O) Liability Insurance

AN EXCLUSIVE EVENT FOR FIRSTSERVICE RESIDENTIAL BOARD MEMBERS

Thursday, November 16 • 5:30 – 8:30PM

Wrongful Foreclosure • Breach of Contract • Employment Practices Breach of Fiduciary Duty • Non-employment Discrimination Liability

What types of claims are most common and what kind of coverage does your Directors & Officers (D&O) liability policy include? More importantly, what does it exclude? Are you adequately protected? Are there steps you can take to prevent or mitigate claims?

An invitation will be emailed to all board members in October.

FirstService Residential to Pilot Direct to Resident Insurance Program

2. Reinforcing the impor-tance of insurance cov-erage for both personal property and personal liability

3. Providing a practical understanding of in-surance from cover-age selection through claims process

Educated residents are less likely to engage in behavior/activities that lead to claims; howev-er, if there is a claim, they will be well prepared. Each component of the ed-ucational series will provide access to additional content on the Resident Insurance blog. Once on the site, resi-dents will find information on a variety of insurance and risk management related topics.

About LemonadeLemonade Insurance Company is an A-rated, admitted carrier. Their busi-ness model essentially eliminates the conflict of interest between the insur-ance company and the insured by tak-

ing a flat fee and leaving additional premium to pay claims. If there are no claims to pay, un-used premium is given to charities selected by the insured.

“Lemonade’s ability to incorporate technology into their processes and integrate with our sys-tems creates a seam-less and positive experi-ence for residents while

providing affordable and compre-hensive coverage,” says Dan Wurtzel, president, FirstService Residential.

As part of the current pilot phase, over 600 of our residents have benefitted from this partnership and obtained insurance policies through Lemonade. We anticipate a complete rollout to all properties in the remainder of 2017.

For more information about Lemonade, go to www.lemonade.com/fsresidential.

Our affiliate, FS Insurance Brokers, is a full-service insurance brokerage and receives commissions for the assistance in the development, placement, servicing and maintenance of this program.

In an effort to continuously enhance the value of every property and the lifestyle of every resident we serve, FirstService Residential is excited to announce a partnership with Lemonade Insurance Company to facilitate homeowners and renters insurance policies for residents within our managed properties.

The product offerings are designed to protect against claims of personal property damage or loss, and personal liability. The objective of the Resident Insurance Program is two-fold. First, it aims to mitigate the potential risks and exposures to our managed prop-erties by providing competitive and comprehensive insurance products for residents. Second, it provides an edu-cational platform of risk management tips and tools.

Educational SeriesThe key components of the education-al series include:

1. Educating residents on personal risk management best practices to reduce the likelihood of a loss