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INTRODUCTION TO CAPITAL PLANNING JUNE 16, 2020 BRIAN JUNG, PROGRAM DELIVERY MANAGER JACK BOYLE, ASSET MANAGEMENT COORDINATOR
“If you don’t plan, you are planning to fail…”
Benjamin Franklin, 1706 - 1790
$800,000
Capital Reserves Today Current Annual Contribution: $25,000
$825,000
Capital Reserves Year 20 Current Annual Contribution: $25,000
Current Annual Contribution: $25,000 Capital Expenditures Year 21 - Roof $150,000
$675,000
Capital Reserves Year 21
Current Annual Contribution: $25,000 Capital Expenditures Year 21 - Roof $150,000 Year 24 - Balconies $450,000
$300,000
Capital Reserves Year 24
Current Annual Contribution: $25,000 Capital Expenditures Year 21 - Roof $150,000 Year 24 - Balconies $450,000 Year 27 - Windows $300,000
$75,000
Capital Reserves Year 27
Current Annual Contribution: $25,000 Capital Expenditures Year 21 - Roof $150,000 Year 24 - Balconies $450,000 Year 27 - Windows $300,000 Year 28 - Boiler $150,000
Capital Reserves Year 28
Current Annual Contribution: $25,000 Capital Expenditures Year 21 - Roof $150,000 Year 24 - Balconies $450,000 Year 27 - Windows $300,000 Year 28 - Boiler $150,000 Year 30 - Building Envelope $4,500,000
Capital Reserves Year 30
Answer these questions:
What is a Capital Plan?
repair & capital replacement projects (>$5k)
repair & capital replacement projects (>$5k)
The schedule spans 30 years into the future. Most capital renewal projects will occur in this period.
repair & capital replacement projects (>$5k)
application
Financial: – Identify & address potential funding shortfalls or surpluses – Identify required annual contribution – Identify funding source - grants, rebates, investments & etc. Minimize Emergencies: – Replace equipment before failure to minimize collateral damage and costly repairs – Minimize disruptions to tenants
Capital Projects: – Better prices through competitive bid process – Readiness to funding when available – Increase efficiencies by scheduling & sequencing projects – Develop funding strategies to enhance assets
Decision support tool: – Quantify building condition with Facility Condition Index – Develop Portfolio Plan to help guide the organization to meet its future needs – Perform “What-if” analysis to better understand the
How do you create a capital plan?
Capital Plan Portfolio Plan Building Condition Assessment
Educated opinion on the current condition of the building components which includes:
– Building >10 years old – Repeat every 5 years to refresh BCA
– BC Housing (with operating agreement) – Engineering Consultants – BCNPHA (without operating agreement)
– Exterior of all buildings and site – Interior common and tenant space
– Drawings – Maintenance records – Review building elements
through the building
especially when not readily visible
recent quotes & drawings
knowledge available for interview
Data for BC Housing assessed sites: – Ameresco’s Asset Planner – Website: www.assetplanner.com Definitions:
Building component type
Replacement Cost:
the building component.
Last Major Action:
Overall Condition:
Overall Condition Description Good Element is performing adequately and no work is foreseen in the next 5+ years Fair Element is operational but replacement or major repair action is expected in 3-5 years Poor Element requires replacement or major repair action in next 1-3 years Critical Element is past the point of economic repair or is not functioning and should be replaced or repaired within 1 year
*Source:Building Condition Assessment Guide for Asset Planner™ and iAuditor™ Version 2.0, June 2016, Ameresco
Action Type:
Urgency of Action:
Urgency of Action Description Urgent Action cannot be deferred and is necessary to get element functioning again or avoid imminent failure High Action cannot be deferred and will be necessary to ensure continued element functionality for the next 1-3 years. Medium Action can be deferred and/or will be necessary to ensure continued element functionality for the next 3-5 years. Low Action can be deferred and/or will be necessary to ensure continued element functionality beyond 5 years
*Source: Building Condition Assessment Guide for Asset Planner™ and iAuditor™ Version 2.0, June 2016, Ameresco
Action Year:
perform action
Repeat Interval:
repeated.
replaced every 22 years.
Action Cost:
costs
Tab 2 – Capital Plan Worksheet
BCNPHA Capital Planning Template Version 2.0, COMING SOON! New features: – Project cost inflation – Inflation rate – Project summary page – Cash flow page – Dynamic facility condition index
Replacement Planning Manual – https://www.cmhc-schl.gc.ca/en/maintaining-and- managing/managing-affordable-housing/housing- management-hub/capital-replacement-planning
MAJOR CAPITAL WORK: 2018 TO 2022 PROJECT YEAR COST Membrane Condition Study (includes test holes) 2018 $7000 Domestic Water Pipe Assessment 2018 $7000 Targeted Repairs to Pedestrian Walkways 2019 $40,000 Playground Fall Protection 2019 $32,000 Building Envelope Project 2020 $3,280,000 Membrane Replacement (UG Parkade) 2020 $600,000 Furnace Replacement/Repipe Project 2021 $400,000 Sanitary and Storm Sewer Pipe Assessment 2021 $15,000 Parking Lot Repairs 2022 $70,000
– Identify condition of building elements (components) – Identify when to replace/renew/repair building elements – Identify cost to replace/renew/repair building elements
– Use BCA data to plan replacement/renewal/repair projects with costs exceed $5000 – Identify funding sources for projects – Develop executive project summary
– Measures level of deferred maintenance
$ Replace windows $ Replace roof shingles $ Replace plumbing $ Replace siding $ Painting
$ Whole building Replacement Value
Condition Scale Meaning Good 0 – 5% No problem Fair 5 – 10% Ok, if work is completed to maintain building Poor 10 – 30% Must complete necessary work to maintain building and not let it slip into Critical Critical >30% Need to make a large investment or consider
building.
Building reaches a critical FCI by 2027 if no money is spent to address actions.
Addressing the actions improves the FCI Critical FCI shifted to 2034 if no further spending happens after 2024.
Portfolio plan is based on an analysis of current conditions, all future needs and a sustainable transition plan to meet those needs.*
Current State Portfolio Planning Desired Future State
*Source: Portfolio Solutions, Planning for the Future, BCNPHA RENT May 26, 2016, BC Housing
How do you fund a Capital Plan?
What causes the most anxiety for Capital Planners? …funding the Capital Plan
This is especially true when there is a funding shortfall…
– Capital Renewal Funding (CRF)
– Energy Efficiency Retrofit Program (EERP)
– Green Municipal Fund – Financing up to $10 million up to 80% of project cost – Grant from 25% to 50% of total financing – based on energy savings
– Preservation funding – applicable studies – Seed funding – applicable studies, planning fees and etc. – Co-Investment Fund – Repair and Renewal Stream
Program (SHRSP) – $5k rebate: Energy study rebate – $7k rebate: Engineering design & construction management rebate – Rebate vary: Equipment rebates: mechanical, lighting, envelop and controls
– Short-term investments – Long-term investments
allocate to capital work
businesses
Faith Based Organizations
Trusts and Foundations
Contact BCNPHA for:
– Capital Planning 100 Capital Planning Fundamentals – Sept. 2020 – Capital Planning 101 Introduction to Capital Planning – June 22
– BCNPHA BCA Service (fee for service) – BCNPHA Capital Planning Service (fee for service)
– BCNPHA, Manager of Capital Planning – 778.945.2158 – warren@bcnpha.ca
– BCNPHA, Program Delivery Manager – 778.945.2157 – brianj@bcnpha.ca
Brian Jung Program Delivery Manager
BC Non-Profit Housing Association 220 – 1651 Commercial Drive, Vancouver, BC V5L 3Y3 TEL 604.291.2600 Direct 778.945.2157 FAX 604.291.2636 brianj@bcnpha.ca