Maintenance - Budget Issues
Q. Our new condominium board has just finished an inspection of all of our property. We had not been impressed with the condition of the property and a commitment to better maintenance was part of our theme in getting elected. The prior board minutes show that there was little discussion of maintenance and there is no schedule of work to be done. What steps should be taken to deal with this situation? We need to do it without raising the money by special assessment.
A. You will need to set up a maintenance program covering the buildings, grounds, equipment and any recreational items. A good maintenance program requires the community association's Board of Directors to follow these steps:
1. Identify all items that require maintenance. This should have been done in a reserve study, preferably done by a professional. In the building, this will include the roof, painting, carpeting, balconies, etc. The manager, the Board of Directors, committees and outside consultants may be involved in the process. Systems that may be included in the maintenance program include:
· Structural systems
· Roofing systems
· Exterior components and finishes - including windows, caulking, stucco, and paint
· Elevators and escalators
· Electrical switchgear, lighting, power distribution, emergency generators
· Plumbing systems
· Fire sprinkler systems and pumps
· General housekeeping and janitorial
· Pavements and grounds
· Utilities
· Swimming pools and other amenities
There may be other items depending on the type of condominium, the definition of common elements and the assignment of maintenance responsibilities in the condominium’s declaration.
2. Analyze the information gathered. Determine what needs to be done to maintain each item. The carpet, for instance, needs to be regularly vacuumed, periodically shampooed and occasionally replaced. This means the board must decide who will do the work ‑ an employee or contractor.
3. Review the information and prepare the plan. This should be done in written form so everyone is clear on what is to be done, when and by whom. It should all be placed in a manual. The manuals help to prevent future Boards of Directors from deferring maintenance, causing expensive component breakdowns. At the end of the day, this results in fewer problems for the community
4. Put the plan to work. Supervise its implementation and institute checks to make sure the program is being done. Manuals are worthless if they aren’t implemented or used. Create a line item in your operating budget for common area building and grounds maintenance. This amount would be based upon the quantity of common area that requires maintenance. If you have a high-rise project, you will obviously have much more to maintain and, therefore, your budget will be higher than a typical condominium association community. Then, hire a maintenance contractor or employee to perform maintenance at your community on a weekly or monthly basis. This person will do all of the inspections called out in the manual. When doing the inspections, he should have a number of small maintenance tasks. It is important that these tasks be completed immediately. Large maintenance or repair tasks can be reported to the community manager or Board of Directors so they can understand what needs to be done and participate in the solution.
5. Evaluate how well the program is working. This should be done at least annually and adjustments should be made as required to ensure the maximum benefits from the program.
Assuming that your evaluation reveals a need for a lot of maintenance “catch-up” and it will “break the budget”, then you need to determine how to pay for it. Not doing the maintenance is not an option if your failure to do so now will result in significantly more expense later, which is often the case. Let’s assume you determine that to do all that is currently necessary you will need to collect $2500 per unit due to lack of reserves or other funds. If this amount is going to put financial stress on many of your unit owners you should consider a combination of a bank loan to the association and a payment plan for all owners. If you have been underfunding your reserves then you will simply have to increase the annual assessment to adequately fund your needs. This is required by law. Annual dues increases are a part of condominium life….. the condominium’s costs of living goes up just like the cost of living in your household. Even if you use a bank loan to make it easier on your unit owners, that loan has to be paid back and this factor alone will result in a dues increase.
Hopefully you can see that there are logical steps to be taken to deal with even the worst of situations. We recommend that you consult your association’s professional team of advisors to devise the best possible plan for your association based on your unique circumstances.