Legendary UCLA college basketball coach John Wooden once
opined: “The failure to act is often the biggest failure of all.”
And yet, when it comes to considering privatizing utilities in
their multifamily properties, that is the route many owners take.
Unfortunately, in this case, there is a genuine opportunity cost
that comes with doing nothing.
Deciding to privatize the utility infrastructure in a community is
one each owner must make for themselves. The rub, however,
is many do not consider this option at all. Perhaps that is due
to misinformation and a lack of understanding as to how the
process works and, more importantly, how it can work for
you. Common objections around privatizing include “It seems
too good to be true” and “It just isn’t worth the hassle.” These
concerns run rampant despite property owners consistently
expressing frustrations with host utilities.
So, should you seriously consider owning your utility
infrastructure? Is it too good to be true? Is it worth the hassle?
In this short article, we offer a quick overview of a few key
benefits and share what you may have to gain by electing to
go this route. The fact is that the benefits of privatization for
property owners are much greater than most realize, and the
ability to employ them in their communities is much easier than
they anticipate. As a result, a wide range of communities is
employing this tool.
Privatization is customizable to your property’s needs.
Every community is unique. It has its own architectural layout and design, its own
financial opportunities, and its own community spaces. It has its own personality.
To some, utility privatization feels like a one-size-fits-all offering, but nothing could
be further from the truth. Customizable solutions can be designed for a specific
community to meet specific needs or challenges and are readily available when
you partner with experienced, high-quality energy providers.
Such a partnership not only results in the best possible solutions for your
property, but it can also put you in touch with a company whose very existence is
dependent upon creating a positive relationship with you, your property managers,
and your residents. Further, the best of these providers has years of experience
working and have worked with dozens of multifamily properties and host
utilities. As a result, the process of owning your own infrastructure is surprisingly
seamless and easy.
Privatization adds speed and flexibility.
The host utility is a reliable resource when it comes to generating and delivering
power. But when they also own the infrastructure, they are not incentivized to act
in your best interest. This is not a result of maliciousness, but in serving the needs
of the infrastructure owner, which, in this case, is the host utility themselves. This
leaves property owners with very limited control or flexibility as to how, where, and
when power lines and meter banks are placed. As the property owner, you will be
expected to work around the host utility’s expectations and schedules.
Privatizing puts more of these decisions in your hands. When you own the
infrastructure, you have greater flexibility to place these features where they are
most beneficial to the specific architectural and functional design of the property.
You will also find that the entire process can happen much more expediently when
you are working with a top-tier provider.
Privatization offers big financial advantages.
Typically, the most inviting of all the pluses are the large financial benefits a
property owner can realize through privatization of their utility infrastructure.
These economic advantages are particularly powerful when discussing
new construction projects, where the typical out-of-pocket cost for the
infrastructure, such as through cost-in-aid-of-construction (CIAC) fees, can
often be completely avoided. In fact, Nationwide Energy Partner customers
generally pay nothing out of pocket for their electrical infrastructure and
receive additional funds in the form of door fees.
These additional dollars and cents can help keep a project on budget or
be used for virtually any purpose you, as the property owner, desire.
This includes boosting your bottom line, financing enhancements to
help meet ESG goals, enriching your community, managing unexpected
costs, offsetting rental enticements, and many more. It is your money.
But new communities are not the only ones who benefit. The economics
of the privatization model offers a recurring commission that creates
an ongoing revenue stream for owners, as well as enhanced NOI.
Operational benefits exist in such areas as account transfers, where
privatization can make resident turnover a bit easier than what might
be the case when working with the host utility. Plus, providers like
Nationwide Energy Partners are incentivized to work for you and your
property. The result is a better overall experience for property managers
and residents.
Privatization is not too good to be true.
Maybe you are thinking this really does seem to be too good to be true.
You are still skeptical. You are not alone; this is a common reaction,
particularly when the details are not clearly understood. For communities
who do the research, however, the message is clear. Privatization is a
legitimate, tested avenue to provide property owners with the ability to
leverage the utility infrastructure by turning it into another asset for their
community. Consider that you have most likely already paid for that
infrastructure in your community, or you will be paying for it, so why not
own it and reap the rewards?