In a place like Chicago, it wouldn’t be surprising for your high-rise condominium association to face an unplanned capital expense due to weather events beyond your control. After all, powerful storms and wind gusts across the city have occasionally been responsible for destroying roofs and windows. Such an event might make it necessary to impose a special assessment for needed repairs. However, your association should never have to rely on a special assessment for a capital expense that could have been foreseen – or even prevented.
“During the recession, many associations put off preventative maintenance and minor repairs, and they are now paying for those delays – literally,” says Robert Meyer, director of engineering services at FirstService Residential. “Systems and equipment that should have lasted another five or 10 years are failing prematurely because they haven’t been properly maintained.”
Meyer points out that older buildings are especially susceptible to equipment failures without proper preventative maintenance. “Chicago has a long history of high-rise construction,” he explains. “In fact, the skyscraper originated here in Chicago. And those vintage residential towers surrounding the downtown area can be very appealing to prospective buyers if they are well maintained.” Meyer adds that buyers will look elsewhere if a building seems to be in disrepair. “Now that new condo construction is slowly starting to make a comeback in the downtown area, older buildings are facing new competition.”
Meyer acknowledges that some condo associations may be reluctant to increase their operational budget in order to follow an appropriate preventative maintenance
program. “But over time, you’ll actually be spending less because your equipment will last longer,” he explains.
Another budget necessity is putting money into a reserve fund
each year for anticipated capital improvements. A capital improvement is generally a repair or replacement that increases the value of a system or piece of equipment or that extends its useful life. “Unlike regular preventative maintenance, capital improvements can be very costly,” says Meyer, “which is why it’s important to build up your reserves for these expenses over several years.”
Here are some other tips that Meyer suggests for keeping your building running well and your association’s finances in the black:
1. Stick to the manufacturer’s maintenance schedule.
Most manufacturers will lay out a prescribed maintenance schedule in their equipment manuals. “In addition to preventing early failures, sticking to the schedule ensures that any warranties remain in effect,” explains Meyer.
2. Get an updated reserve study – and follow it.
A reserve study establishes the estimated useful life of your systems and equipment so that you will know when you are likely to need to spend money for replacements or major repairs. It also helps you budget the amount of money you need to put in your reserves each year to afford the expense. According to Meyer, “This takes the guesswork out of future spending on high-cost improvements.”
If it’s been more the three to five years since your last reserve study, now is the time to get a new one. Make sure that the person conducting the reserve study is an experienced engineer. “Remember that your ability to pay for future improvements is completely dependent on the accuracy of that study.”
3. Give your equipment the long life it deserves.
Keep up with your preventative maintenance schedule and your equipment is likely to last at least as long as the estimate in your reserve study. However, if you fail to follow the schedule, you’re likely to see your equipment fail prematurely as well. Keep in mind that a shortened useful life not only results in getting less bang for your buck on that piece of equipment. It also means spending money before you’ve put aside enough in your reserves to cover the cost.
4. Don’t assume that replacements have to be identical to old equipment.
Depending on how long ago your old system was installed, many advances may have been developed. Do your homework, and consider an upgrade – even if it is a bit more costly. The added efficiency or useful life of an upgraded system is likely to make up for the initial cost in the long run. Also, check with ComEd and your natural gas company (Peoples Gas or NiCor Gas) to find out if you may be able to recoup some of that cost through rebates they offer for retrofitting with new, more efficient equipment.
5. Keep detailed records.
Since warranties depend on regular maintenance, be sure that your maintenance crew or third-party contractor is logging every inspection, repair or improvement with dates. Incorporate calendar alerts so that you stick to your schedule. For budgeting purposes, keep tabs of any work being performed, why it’s being done and the impact on the asset’s value and useful life.
It may not be easy to budget accurately for maintenance and capital improvements. However, the impact on property values and resident lifestyles will certainly make it worthwhile. A professional condominium management company can make the task a lot less painful, provide reliable maintenance staff and recommend engineers with expertise in conducting reserve studies.
To learn more about how you can benefit from an experienced high-rise condo management company
, contact FirstService Residential, the leading condominium management company in Chicagoland.
Find out what it takes to successfully manage maintenance projects. Download our infographic, “Guide to Managing Your Maintenance Projects” today.