The worms in the company kitchen might seem like an infestation problem – but at Cities Management Inc. (CMI), it's perfectly normal.
This management firm, which specializes in condo and homeowner associations, prides itself on being different from other multifamily management companies. Its most distinguishing feature is the company's commitment to "healthy building management" – management practices that reduce the environmental impact of multifamily properties.
CMI, led by CEO Kim Carlson, promotes ecologically sensitive practices in its more than 14,000 units in the Minnesota area, ranging from water and energy conservation to using less toxic solutions in cleaning and lawn care products.
The company practices what it preaches. "Kim has worked diligently to lead by example," says Danie Watson, president of The Watson Group and board member of Business for Social Responsibility, where Carlson serves on the board.
CMI's headquarters is the first "green" building in Minnesota, and the worms are part of the company's compost program. The company uses the compost in flowerpots. "It's a demonstration of how everything should work," says Carlson.
Accidental Business While Carlson always nurtured a passion for protecting the environment and the health of her friends and family, she never thought she would end up as an executive in the multifamily housing industry. It happened almost by accident.
When she graduated from college in 1981, she had trouble finding a job. Her friend's father, a developer, gave her a part-time summer job. While there, she decided to get her real estate license.
It was a time when the tax laws allowed people to invest in real estate for a negative cash flow, Carlson explains. Her boss was selling some smaller properties at the time and there was no management firm in place to run them.
Carlson believed she would be able to handle it, even though she knew nothing about property management. Within six months, she had 50 units under management, and she was starting a small business.
In 1986, she realized there were industry associations that she could join and learn from. She started taking classes to obtain her certified property manager designation.
"When I first started my business, something amazing happened," she says. "Larger management firms referred business to me." She took on the smaller properties that they didn't want to deal with, and her business grew. "Now I'm bigger than they are, because they kept feeding me things," she says.
While Carlson has maintained an interest in environmental issues since she was 10, the 41-year-old CEO does not see herself as an environmentalist. "I don't think that is a fair label," she says. "It's way too narrow." Carlson prefers a wide view of environmental consciousness, rooted in lifestyle.
The impetus for Carlson's healthy building management initiative came from the death of her favorite grandmother in 1992. "That gets you thinking about life, and what you're doing with your life. I decided my life should be more meaningful than about just making money," she explains. To Carlson, implementing this initiative meant a healthier way of living for the residents, her employees and their families.
"The key is to reduce the use of very toxic products," she says. "There's a thing out there called cancer and it's happening to more people. Certain chemicals cause cancer and we don't know how. This is a way we can control certain chemicals in our lives. It's a healthier way of living."
The Cost of Health CMI is committed to partnering with vendors that use products and methods that are friendly to the environment, says Bill Masche, president of Under Construction Services Inc., CMI's sister company which provides construction services. CMI purchases lumber only from certified forests, where lumber producers have a plan for harvesting and replanting trees.
With the energy crisis in California, energy-efficient products have become more popular, says Masche. While the company has always recommended the use of energy-efficient furnaces and boilers, Masche points out that the little things really make a big difference, such as energy-efficient lighting or tinted windows. These energy-efficient tools might cost more to install, but the benefits and the cost savings balance out in the end.
CMI didn't blindly start using environmentally friendly supplies. The company spent two years researching product availability and cost, explains Tim Broms, president of CMI.
Some management companies might balk at the cost of environmentally friendly products, like low volatile organic compound paint, but the cost is only about $1 to $2 more per gallon, explains Broms.
In the past, this type of water-based paint was thin, sometimes requiring two coats of paint for proper coverage. But now, the technology to make the paint has improved and one coat is sufficient, says Carlson.
Many of the environmentally friendly programs that CMI has implemented carry the same price tag as traditional products, says Michael R. Egelston, president of Sensible Earth Communities Inc. (SenEarthCo), a sister company that provides online management tools.
For instance, the lawn care program doesn't necessarily cost more; rather, it hinges on what people are willing to put up with, says Broms. Environmentally safe lawn products sometimes take up to three years to produce lush green grass, and during that time there are weeds.
"We have not chosen to go with the green alternative for lawn care," explains Dan Greenstein, vice president of Cedar Lake Shores Townhome Association, a client of CMI. "It's not because of the cost, but because of the amount of time it takes to get a lush green lawn."
However, the board has taken advantage of the CMI's online management tool, which is part of both CMI's commitment for a "paperless" work environment and its dedication to technology. While Carlson realizes that the company could never be 100 percent paperless, she is committed to cutting down on the use of paper – technology is one way of doing that.
A "Green" Office SenEarthCo's intranet system allows clients to access financial data, communicate with their property managers, contact board members and send news to association members online.
"The idea that one can look up account information, communicate with their property management company or make a maintenance work order with a 24-hour guaranteed response is unique," says Masche. "In addition, it offers direct debit of payments for association dues." CMI currently is testing the intranet system with some of its clients.
"The web site is fantastic," says Greenstein. "It makes our job much easier. We are able to communicate with both the association and CMI through the [intranet]. If we have news, we can do it through the web site. Association members can log on and respond to us at their convenience. Plus, we have immediate access to all of our financial information at any time we need it."
Lofty Goals Clients seek out CMI because of its healthy building initiative, says Carlson. "For some reason, clients believe that we are more trustworthy because of our initiative." Ironically, while the company is often hired because the client likes what it stands for, more times than not, when the management team suggests using some of the initiatives, the board of directors decides against it, says Carlson. The biggest barrier to getting clients to use the initiatives is a lack of education about the benefits and the costs. "When someone has done something the same way for 50 years, they don't want to change," says Carlson.
One of the major differences between managing a standard multifamily property and a common interest community is that you are working for 100 different bosses instead of a single property owner, says Carlson.
That leads directly to another challenge for CMI's management team: it can't make property management decisions across the board. Management companies often use the same procedures at every property. Not CMI. "We have to go along with what the client wants," says Carlson. Not every client is going to use the lawn care products or the energy-efficient light bulbs.
"In a rental property, your client is a business person or large company or partnership. There is no emotional interest in the property – just a financial interest," explains Broms. "The residents in our case are homeowners. It becomes an emotional experience that we are managing, rather than a business. We are constantly educating them on their role in the association."
Carlson suspects that there is a 30 percent penetration rate of clients that take advantage of the healthy building management program, but CMI has not calculated the numbers. Part of Carlson's five-year goal is to develop a system that measures the initiative's positive impact.
But that is just one part of what Carlson would like to do. Her ultimate goal is to achieve 100 percent penetration. And she's not just talking about the 14,000 units that the company has under management. Within the next five years, she would like to grow the management contracts to 1 million units. That means doubling in size every year.
To do so, Carlson believes the company needs to stay on the cutting edge of what's going on in the industry. But she believes CMI has an advantage. Generation Y is just staring to rent and is bigger then the baby boomers.
"This group of people has the same values that we have," she says. "They are concerned about the environment and their health. I think that will give us a competitive edge."
Carlson believes that SenEarthCo will play a huge role in the management of the new units. And while 1 million units in five years might seem like a lofty goal for a small, third-party management firm, Carlson doesn't stop there.
Her dream is to have a TV show highlighting healthy living and incorporating healthy business management. "I want to be able to change the property management industry in a positive way." Plus, with a show, her reach would expand outside the industry.
She believes that her generation of business leaders is interested in more than just a bottom line mentality. A healthy bottom line is "a by-product of good business, not the purpose of good business," she says. "Hopefully the new generation [of clients] understands that."
A Good Neighbor Being a good neighbor is part of the Cities Management Inc. (CMI) philosophy. The employees of this property management firm all take part in volunteer efforts. From mentoring programs at a local school, to cleaning up the neighborhood, this is a company that practices what it preaches. It stems from the CEO, Kim Carlson. "She takes a new, fresh look at things that tend to be fairly standardized and form-oriented," says Bill Masche, president of Under Construction Services Inc., CMI's construction-service sister company. Giving employees time off to volunteer is just one aspect of Carlson's philosophy. Her firm specializes in environmentally friendly management techniques and its corporate office has embraced the programs.
Almost everything in the office is made of recycled materials. Before CMI moved in, the 5,100-square-foot building was gutted and the company reused as much material as possible, including doors and windows. New walls were constructed to fit the existing windows and doors, explains Tim Broms, president of CMI. "What we couldn't use, we donated to The ReUse Center, a nonprofit business specializing in second-hand building materials," he says.
CMI went further than just reusing material. Instead of purchasing standard carpet, CMI installed carpet made of recycled soft drink bottles. In high traffic areas, CMI installed rubber walkways that were glued to the concrete with non-toxic glue. The rubber has a 50-year warranty, says Broms.
Office lighting is all energy-efficient iridescent lighting. CMI sold the original lighting to an electrician. Everything from the filing cabinets to the paneling was reused. In addition, CMI opened up the office so every workspace gets natural light.
The company also installed a shower in the office to encourage employees to bike, walk or inline skate to work, or even to exercise during lunch. The entire office only has one garbage can for about 30 employees, and that is for things that can't be recycled.
But the most unusual office tool is the worm bin. In this recycling method, food scraps are fed to the worms and they turn the waste into compost.
Carlson gives back to the community in additional ways. She has been a board member of the Minnesota Environmental Initiative for three years. She worked with the organization to develop guides for facility managers that give them options for environmentally sensitive management tools, says Mike Harley, executive director.
Carlson also is a chairperson for the Minnesota Multi Housing Association. "She has taken the lead to set up a technology conference for the association," says Mary Rippe, president of the Minnesota Multi Housing Association, "so all owners and mangers have the latest information about the technology impacting the industry and what will work best for them."
In addition, Carlson has helped published pamphlets on environmentally safe ways to manage a property and has spoken at several seminars on that topic, says Rippe.
"She is never satisfied with the status quo," says Rippe. "Carlson is striving to make things operate better and run more efficiently."