New Propane Cost Allocation
At the Meadowstone Lodge annual homeowners association meeting last April, 2006, the Board resolved to allocate propane utility bills to individual owners based on individual use of hot water. After a significant effort to calibrate the water meters for each unit, the HOA is now able to allocate the costs associated with domestic hot water and baseboard heat to each unit. Enclosed, please find the September and October propane utility bill for your unit. Payments are to be returned to the KCA office at the following address:
Propane Cost Allocation Discussion:
Each unit at Meadowstone Lodge uses propane to fuel the cooking range, fireplace and to heat domestic hot water for showers and the hot water baseboard radiators. To date, homeowners of the Larkspur building have only been direct billed for the propane used for cooking and running their gas fireplaces. The propane used to heat the Larkspur building boilers, which provide domestic hot water and baseboard hot water heat was not charged back to each Larkspur unit. Instead, these charges have been absorbed by the HOA and paid through the HOA monthly assessment fees. In effect, your hot water and baseboard heating costs were paid by the HOA using funds collected through HOA assessments.
Fortunately, like in the Aspen building, the Larkspur building is instrumented with individual hot water meters that measure both the domestic hot water and the baseboard heating water consumed at the unit level. The Board passed a resolution in April to use these meters to bill homeowners directly for each unit's propane use. KCA staff spent the past several months calibrating the individual unit meters to insure we had a reasonably accurate method to convert the amount of hot water consumed by each unit to a unit level propane cost allocation. This effort has been completed and is reflected in the enclosed monthly bills for September and October.
Whether or not your unit consumes any domestic hot water or baseboard heating water, the heating system must be maintained in a quiescent operating state so that hot water will be available on demand. This base cost of propane has been determined to be $55.19/month for each unit. If you do not consume any hot water, your unit will be billed the baseline amount of $55.19 each month to keep the system up and running. If your use exceeds this baseline level then the propane costs are allocated to your unit based on the amount of hot water that your unit has consumed in any given month.
Will This Allocation Raise or Lower My Costs?
Previous to this new propane accounting allocation method, all propane costs were aggregated with the other common building expenses and allocated to each unit in the same manner as all other common HOA costs. This prior allocation was not based on your individual unit use of domestic hot water or baseboard heat. The new allocation method, as approved by the Board, more fairly assigns the propane costs based on your individual unit consumption of hot water from the building's hot water boilers. In the short term, your overall costs will increase as the as these propane costs are being billed to you directly in addition to your standard HOA assessments.
Shouldn't Our HOA Assessments Decrease with this New Allocation Method?
Yes, in the long term. After we operate under this new scheme for a sufficient period of time to build up our HOA building reserves, we do expect to reduce the HOA assessments. Please keep in mind that over the last several months we have made significant investments into the building's energy control systems and additionally made repairs to fix the damage from last winter's ice buildup on the roof eaves. We do anticipate a significant savings in our energy costs associated with the introduction of the YAMAS energy control systems. We will report the savings as they are realized. In the short term, however, any excess funds will be used to pay for our capital improvements and raise our building reserves to appropriate levels.
We are striving to achieve our common goal of reducing operating costs and hope that this new propane allocation method provides another incentive for conservation of propane/hot water use. Please remember to keep your thermostat on but at a low setting when you are not using your unit.
Please feel free to contact me if you have any questions.
Treasurer, Meadowstone Lodge HOA