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INTRODUCTION TO CAPITAL PLANNING JUNE 16, 2020 BRIAN JUNG, PROGRAM DELIVERY MANAGER JACK BOYLE, ASSET MANAGEMENT COORDINATOR
A safe, secure and affordable home for everyone.
Operating without a Capital Plan… “If you don’t plan, you are planning to fail…” Benjamin Franklin, 1706 - 1790
Operating without a Capital Plan… Current Annual Contribution: $25,000 $800,000 Capital Reserves Today
Operating without a Capital Plan… Current Annual Contribution: $25,000 $825,000 Capital Reserves Year 20
Operating without a Capital Plan… Current Annual Contribution: $25,000 Capital Expenditures Year 21 - Roof $150,000 $675,000 Capital Reserves Year 21
Operating without a Capital Plan… Current Annual Contribution: $25,000 Capital Expenditures Year 21 - Roof $150,000 Year 24 - Balconies $450,000 $300,000 Capital Reserves Year 24
Operating without a Capital Plan… 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
Operating without a Capital Plan… 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 -$50,000 Capital Reserves Year 28
Operating without a Capital Plan… 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 -$4,450,000 Capital Reserves Year 30
Today’s Goal Answer these questions: • What is a Capital Plan? • What is the purpose of a Capital Plan? • How do you create a Capital Plan? • How do you fund a Capital Plan? • Where can you get help with Capital Planning?
How do you get a Capital Plan? What? When? Cost? What is a Capital Plan?
What is a Capital Plan? Asset Management Tool
What is a Capital Plan? 1. List of building elements and liabilities that include capital repair & capital replacement projects (>$5k)
What is a Capital Plan? 1. List of building elements and liabilities that include capital repair & capital replacement projects (>$5k) 2. Schedule when these projects need to occur The schedule spans 30 years into the future. Most capital renewal projects will occur in this period.
What is a Capital Plan? 1. List of building elements and liabilities that include capital repair & capital replacement projects (>$5k) 2. Schedule when these projects need to occur 3. Project costs and funding strategies
What is a Capital Plan? What? When? Cost?
What does a Capital Plan look like? • Excel spreadsheet • Hardcopy spreadsheet • Dedicate software application
What is the purpose of a Capital Plan? 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
What is the purpose of a Capital Plan? 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
What is the purpose of a Capital Plan? 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 outcome of different decisions
How do you get a Capital Plan? What? When? Cost? How do you create a capital plan?
Asset Management Roadmap Portfolio Plan Capital Building Plan Condition Assessment
What is a Building Condition Assessment (BCA)? Educated opinion on the current condition of the building components which includes: • Description of building element’s current condition • Renewal, repairs or replacement cost & schedule • Covers a span of 25 to 30 years • Goal to maintain elements in good condition • Prioritizes actions
BCA: The Details • When to perform a BCA? – Building >10 years old – Repeat every 5 years to refresh BCA • Who performs the BCA? – BC Housing (with operating agreement) – Engineering Consultants – BCNPHA (without operating agreement)
BCA: The Site Visit • Assessment & Photo summary – Exterior of all buildings and site – Interior common and tenant space • Review historical information – Drawings – Maintenance records – Review building elements • Interview staff
BCA: Housing Provider’s Role • Provide access & tour auditor through the building • Bring up known problems; especially when not readily visible • Provide maintenance records, recent quotes & drawings • Have staff with historical knowledge available for interview
BCA: Formats • Report document
BCA: Formats • Report document • Excel spreadsheet
BCA: Formats • Report document • Excel spreadsheet • Dedicated application
BCA Tool: Asset Planner Data for BC Housing assessed sites: – Ameresco’s Asset Planner – Website: www.assetplanner.com Definitions: • Element → Building Component • Ac�on → Project
BCA: Building Element Details Building component type • Roof, • Siding, • Doors, • Cabinets and • Etc.
BCA: Building Element Details Replacement Cost: • The replacement value of the building component.
BCA: Building Element Details Last Major Action: • Time of last major repair or replacement
BCA: Building Element Details Overall Condition: • Good • Fair • Poor • Critical
Overall Condition* Overall Description Condition Element is performing adequately and no work is foreseen in the next 5+ Good years Element is operational but replacement or major repair action is Fair expected in 3-5 years Element requires replacement or major repair action in next 1-3 years Poor Element is past the point of economic repair or is not functioning and Critical should be replaced or repaired within 1 year *Source:Building Condition Assessment Guide for Asset Planner™ and iAuditor™ Version 2.0, June 2016, Ameresco
BCA: Action Action Type: • Replacement • Repair • Study • Maintenance • Install • Not Specific
BCA: Action Urgency of Action: • Urgent • High • Medium • Low
Urgency of Action* Urgency of Description Action Action cannot be deferred and is necessary to get element Urgent functioning again or avoid imminent failure Action cannot be deferred and will be necessary to ensure High continued element functionality for the next 1-3 years . Action can be deferred and/or will be necessary to ensure continued Medium element functionality for the next 3-5 years . Action can be deferred and/or will be necessary to ensure continued Low element functionality beyond 5 years *Source: Building Condition Assessment Guide for Asset Planner™ and iAuditor™ Version 2.0, June 2016, Ameresco
BCA: Action Details Action Year: • Recommended year to perform action
BCA: Action Details Repeat Interval: • How often action is repeated. • Example: roof gets replaced every 22 years.
BCA: Action Details Action Cost: • Accuracy: ± 25% • Not adjusted for inflation • Does not include soft costs
From BCA to Capital Plan • Adjust Renewal/Repair/Replacement costs • Adjust scheduled action year • Bundle or Unbundle projects • Determine if action is a capital or operational cost • Assign known funding to projects
Capital Planning Tools • BCNPHA Capital Planning Template
Tab 1: Capital Plan Details
Tab 1: Capital Plan Funding
Tour of BCNPHA Capital Planning Template Tab 2 – Capital Plan Worksheet
Tab 2: Scheduling and Bundling
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