Eli Report is excited to provide the Annual Benchmark Report, the most advanced intelligence tool available to strata council members and property managers for budget review and capital planning. Here’s a guide to interpreting your Annual Benchmark Report:
Introduction
Interpreting your Annual Benchmark Report is an investment in your strata. The introduction sets out the comparison group that applies to your strata, sets out the criteria (year built, storeys, units) that were used to narrow the comparables, along with identifying the number of communities that they are in. We aim to have comparison groups that contain 10-30 strata buildings, but this will be dependent upon available data. A wider age range suggests that there are fewer buildings of this type and age.
Scorecard
The scorecard sets out 7 areas of comparison between strata communities which we believe are indicative of health. Values that are green are healthy indicators, those that are yellow indicate areas of possible improvement, and those that are red indicate areas of possible concern. The explanations are driven by the values:
Overview
The pie charts in the overview indicate the strata’s budget expenditures relative to the comparison group. The most critical budget elements for the long-term health of a community are Repair & Maintenance and Reserve Contriubtions. Given the clerical nature of some of their work, Management Fees form part of the General & Administrative portion, though it is typical for the manager to oversee and manage all aspects of maintenance (operating and capital items). Insurance and utilities budgets that are much higher than the comparison group could be of possible concern or potential savings.
Repair & Maintenance Breakdown
This section looks at the dollar expenditures of your strata compared to the comparison group average across several sub-categories of repair and maintenance line items to give you a better sense of where you are allocating this investment. There are no adjustments made for average units as those are broken down further in the Budget Details section.
Insurance Summary
The insurance summary section will demonstrate how much you are paying in premium relative to the comparison group, as well as how your deductibles compare. Generally speaking, lower deductibles are correlated with fewer losses, while premium may be driven by a mix of building age, condition, historic losses and replacement value.
Budget Details
Your Annual Benchmark Report will classify each line item from your strata and the comparison group as aligned to standardized income/expense categories. This is shown on an annual ‘per unit’ basis to allow facilitate line-by-line comparison, subject to the available resolution in the budgets as prepared by property managers and strata councils. When considering this you should look across the categories to account for how some stratas may put certain costs into broader categories, such as those that related to general repair and maintenance.
Contingency Reserve Funds
We start by comparing the reserve fund balance and latest annual contributions between your strata and the comparison group. The reserve adequacy measures are presented on both an ‘adjusted’ and ‘overall’ basis, with the adjusted reserve adequacy being the current reserve level relative to the present value of the next 30-years worth of capital expenses, and the overall reserve adequacy accounting for future reserve contributions with a number of assumptions that are listed in the report. The Recommended Contingency Fund Contribution identifies the current value of annual contribution that would eliminate the net levies over the next 30 years.
Projected Capital Expenditures
This table is a categorized reproduction of the capital forecast presented in your depreciation report, to the degree that categories can be applied based on the format of the engineering firm’s report. The Annual Benchmark Report takes those as given, and does not in any way account for variations in timing or cost as projected by the engineering firm. The more outdated your depreciation report, the more the timing and costs are likely to vary.
Special Levy Forecast
Eli Report uses a standard methodology to estimate future special levies. You may be familiar with the three scenarios that an engineering firm will typically present in a depreciation report, and ours is applied universally across all stratas. Assuming that the capital costs and timing is exactly as the engineering firm has proposed, the Annual Benchmark Report will layer the current CRF balance and latest annual reserve contributions (with assumptions about annual increases and interest) to present this table. The summary includes the amount of annual expenditure, the projected special levies, and those levies on a dollar-per-unit basis.
Potential Savings & Partner Offers
The Annual Benchmark Report highlights those items which your strata is dedication more of its annual budget to than the comparison group and presents potential savings opportunities. Some may be available to your strata by getting competitive quotes (insurance and many services), some may be concious decisions by your strata to have certain amenities (such as recreation facilities) or features (such as beautiful gardens), while others may require investment (such as an LED lighting project or sensors to reduce electricity, or a water flow management valve that could reduce water & sewer costs).
There may be other savings opportunities that are not displayed, but we would prefer not to see any strata cut corners on those line items which support the ongoing repair and maintenance of your community. You will have seen on the Budget Details page areas where your strata may be dedicating more money than the comparison group and may investigate those accordingly, though there will be variation among stratas between years based on the specific condition of each.
It is our belief that most stratas can find certain areas to optimize their budgets, and so we may also work with vendors to present opportunities to save money. If you can benefit from lower costs, and our partners can earn your business, that is a win-win.
Conclusion
The Annual Benchmark Report will evolve as we learn from stratas and property managers what matters to them. We want to see stratas and owners in multi-family communities thrive, and want to hear from you. If you have questions or feedback, email us at info@elireport.com, whether it is to suggest new features or to improve our description of interpreting your Annual Benchmark Report.
If you would like to order yours now, ensure you are registered as either a Strata Council member or a Property Manager and the Annual Benchmark Report option should be available to you at checkout. Sign up here.