ASSET MANAGEMENT

SECURITY

Security First

AFFORDABLE HOUSING FINANCE • May 2008

BY DANA ENFINGER

Security measures are likely to save you more than peace of mind even if no crime is ever committed on your property. Residents who feel safe at your apartment complex are less likely to move.

Apartment communities with moderate rents tend to have higher turnover, according to data from the National Multi Housing Council. Many of these properties experience annual tenant turnover rates of more than 50 percent. The higher your turnover, the more it costs you—whether you are looking for new residents or addressing the wear and tear related to high turnover.

Additionally, having a good security plan could help you be more competitive in the battle for low-income housing tax credits (LIHTCs).

What are the best security measures to protect your properties? That depends on how big your security budget is and the specifics of each multifamily asset you may have in your portfolio.

“It’s best to remember the basics, and one of them is good resident screening,” said Patrick Conn, president of property management for the Charles Dunn Co., a real estate firm based in Los Angeles. “Outsiders should always be more of a threat than the insiders, meaning your residents.”

Crime-free lease addendums

Conn encouraged apartment owners and managers to have potential residents fill out a crime-free lease addendum, particularly if the complex is located in an area known for criminal activity. This may also help affordable owners and managers get rid of a criminal element at the property or keep the newly revitalized community free from any criminal activity.

The addendum states that if a resident is involved in any criminal activity the resident can be evicted. This document is one facet of the Crime Free Multi-Housing Program, which was first successfully developed in Mesa, Ariz., in 1992. Approximately 2,000 cities and several counties in 44 states have adopted the program, which was created to reduce crime at apartment properties.

For instance, the 70-unit Ellis Manor averaged about 160 police calls per month in 2002 and 2003. With stronger eviction practices in place since 2004, calls to police from the property, owned by the Glassboro (N.J.) Housing Authority have fallen to an average of just seven per month.

Owners and managers may need to seek legal advice to determine how to implement stronger eviction policies at their communities.

Adequate lighting is another essential security measure. This means enough lighting to make building numbers visible at night and allow anyone nearby to identify a possible threat from 100 feet. Entrances to any access gates and units should have plenty of light, said Mark Szittai, senior sales executive with Network Multifamily Security Corp., a security firm based in Irving, Texas. Szittai works with market-rate and affordable multifamily clients in Alabama, Florida, Georgia, North Carolina, and South Carolina.

Popular devices

Szittai said that one popular security device, controlled access gates, may not be worth the expense for the costs incurred to maintain them.

“A gate around a property may be good in that you can see into the property, but a controlled-access gate tends to require a lot of maintenance. That expense can eat into your bottom line, and it isn’t going to keep the bad guys off your property.”

Intrusion alarms in individual units may be a good idea for even a LIHTC project.

“We have the ability to figure individual alarms into the financing, and there’s an option where owners of LIHTC projects can pay the bulk of the contract in the initial construction phase,” said Szittai. “The cost of a monitoring system is about $25 to $30 a month.”

The possibility may exist for developers to get extra points from the LIHTC allocating agency if alarm monitoring is part of the project’s package.

With new wireless technology developed by Network Multifamily and General Electric, units no longer need to be equipped with a landline to use an alarm-monitoring device.