Preparing Your HOA For A Future With Climate Change
We have all seen the headlines – a 20-year megadrought, fires throughout the Mountain West and Europe, and a growing number of heat waves in places unprepared for it. Climate change is no longer a future crisis, it’s at our very doorstep. Difficult choices must be made by nations, states, cities, and individuals to reduce our impact on the climate and to adapt for the changes already taking place now.
HOAs in Denver and throughout Colorado are not only being asked to report their energy use, but to lower it by 2030 or face significant penalties. Water restrictions announced this week by the Bureau of Reclamation will make their way upstream to Colorado, demanding we do way more with much less. And waste is on the ballot in Denver this year, demanding commercial and residential buildings provide recycling and compost.
At CAP Management, we believe homeowner associations are uniquely prepared to take collective action and address the climate challenges our communities face today. In addition to climate, rising energy prices (approximately 15% for electricity and 30% for natural gas) are impacting HOA budgets and demanding boards find energy savings to reduce costs. The good news is solutions are within reach and many communities are taking responsibility for their community’s impact.
Collective Action
Homeowner associations are inherently designed for collective action. The challenge with HOAs is often the time it takes to reach consensus, often resulting in little to no action. We have all seen this play out in our own nation with the recent passing of the Inflation Reduction Act. This bill was thought to be dead several times, but it’s passing marks the largest climate investment ($369 billion) ever made by the U.S. government, investing in clean energy, strengthening our national security, and lowering costs for individuals and families. For HOAs, this bill provides critical support:
- Provides a 30% “discount” (via direct payment) on solar installations for non-profits, providing a tax credit for the next 10 years that was once unavailable to HOAs
- Expands investments, tax credits, and rebates for energy efficiency technologies, including heat pumps, solar panels, electric vehicles, insulation, and more
In Denver, CAP has supported over 25 homeowner associations with their benchmarking requirements. Our team has met with every HOA board to explain the requirement to lower energy use to meet Denver’s target of reducing greenhouse gas emissions (GHG) 30% by 2030. While initially daunting, HOAs can (and must) find ways to lower (or adapt) their energy use, investing in electrification and renewable energy when possible. In our experience, HOAs who view climate adaptation as an opportunity to be proactive are far more successful than those who dismiss the realities we face.
Data-Driven Decision Making
The most important recommendation for HOA Boards is to invest in data. Energy audits (Level II ASHRAE) provide boards and communities with the data needed to make informed decisions on how to best reduce energy. Most audits cost approximately $5,000 – $10,000, but their value is in the guidance they provide, enabling your board to prioritize investments that will have the greatest impact and the shortest payback. While many homeowners have experience with these issues, we recommend an audit to provide objective guidance for your HOA. Audits often include the following as recommendations:
- Invest in heat pump systems to replace your AC and heating system
- Electrify boilers or invest in more energy efficient boilers for heating
- For individual units, shift to tankless water heaters
- Change all lighting to LED while installing motion sensors for common areas
- Install solar PV systems on the rooftop to create onsite energy for common areas
A good audit should not only provide HOAs with a list of energy efficiency measures, but must outline the cost of each investment, available tax credits or utility rebates, and payback periods with energy savings included. Boards then need to prioritize funding and choose the projects that lower energy costs in the long-term, reduce GHG emissions, and have the most favorable paybacks.
For water, partnering with your irrigation or landscaping company to identify needed repairs or updates is critical to get ahead of anticipated water restrictions. HOAs like Polo Club North have already begun to swap out plants demanding watering with more drought-tolerant, local plants adaptable to the shift in our climate in Colorado. Las Vegas has already banned grass turf (by 2027) and Arizona isn’t far behind with the demand to reduce their 2023 allocation of water from the Colorado River by 21%.
Time Waits For No One
Investing in climate adaptation is no longer an option for communities – it is required. The choice HOAs must make in this moment is whether to be proactive or reactive in their strategy. CAP Management has been investing in sustainable advising for HOAs for several years and are leading the way for many HOAs seeking guidance on climate solutions for their community. Whether it’s required or recommended, HOAs must be a part of the solution. CAP can be a partner in finding the solutions best for your HOA.