Keeping Up Appearances: Maintaining and Improving Common Amenities
Doug Sage, Principal
GSG Group, Inc.
Commonly owned amenities are features that enhance the desirability of property. They might not necessarily be considered an essential building component, but they are important building elements. As with any building element, amenities require maintenance and eventual replacement.
Types of association amenities can include athletic facilities (swimming pools, saunas, tennis courts, gyms), recreational areas (game rooms, club houses, theater rooms), site enhancement (roof decks, gardens, exterior furnishings), service features (information technology, solar panels), and luxury person services (concierge, food service, wine cellar). Each of these amenities requires maintenance and periodic repairs – even the concierge station requires maintenance. To let one of these assets fall to a state of disrepair or unsightliness affects the market value of lots and units by affecting the desirability of the community. An asset can quickly turn into a liability if not properly maintained or improved.
Understanding the difference between maintenance and an improvement is essential for proper planning and care, and can determine whether the board has authority to move the project forward.
Maintenance v. Improvements
What is the difference between maintaining and improving amenities? Maintenance prevents deterioration resulting from wear and tear, and a repair is usually a partial correction of the asset which restores it to its original state. It is important to maintain amenities for the enjoyment of the owners, to preserve value, attract new owners, and to reduce the association’s liability. A well-maintained tennis court is much more desirable than one with tattered nets and faded court lines.
An improvement, however, makes something better than it was originally or provides for something new in a more desirable form. Whereas changing a bad pump in a pool room is considered maintenance, the installation of a therapy spa would be an improvement. (Note that additions to the premises that stop or prevent damage or conform to current means of construction may be considered maintenance under the law).
Useful Life and Identifying the Need to Repair or Replace
In most cases, a well-prepared reserve study can guide an association as to when an amenity should incur major repairs or be replaced. As an additional source of information, your association’s maintenance plan will have the amenity’s key components identified for attention. If you suspect an amenity is not being cared for adequately, ask your association or facilities manager to explain the maintenance and repair schedule and be sure that expected costs within the schedule are similar to the line-item costs within the approved annual budget. The manager should understand the cost trajectory and when it is more cost effective to replace the component or the whole amenity. Vendors are another good source of information for managers and owners from which to determine the amenity condition and when it is expected to need attention. If in doubt, though, be sure to obtain a second opinion. Take the time to walk your buildings and grounds to assess the condition yourself. Although you might not have a background in architecture, engineering, and construction, trust your instincts and communicate your concerns to your manager as to whether the care has been appropriate for the amenity.
To determine whether an existing amenity should be improved, consider if it has become functionally obsolete, aesthetically tired or dated, misaligned with changing demographics or too expensive to maintain.
Look to similar buildings and complexes within your area for their amenities and real-estate transaction statistics. Amenities offered by neighboring buildings make those condominiums in greater demand. Talk to real estate brokers to learn what interest today’s buyers. Look to the newer complexes and communities to learn about the currently attractive amenities, and consider whether they are appropriate for your community.
The idea of a new or improved amenity needs to be researched and analyzed before presenting it to the association membership. Types of amenities vary, and so too does the approach toward association buy-in of the proposed improvement. For example, the preparatory work for a relatively inexpensive amenity, such as added playground equipment, will likely be much less than that of a swimming pool or solar panels. In both cases, though, there are common questions to be answered prior to seeking owner approval.
What is the initial cost?
What is the value added?
What are the life-cycle costs?
Will the amenity be allowed by the local jurisdictions?
How will it be funded?
What is the effect on the association’s insurance?
What legal implications will the improvement bring to the association?
The steps can occur relatively informally for an inexpensive amenity, but a more significant improvement can introduce required modifications to structure, egress, and other unforeseen impacts. Insurance coverage could also be affected. It is best to hire a consultant to provide expert guidance for a more significant improvement.
Most importantly, higher-cost improvements will typically require an owner vote. Check your governing documents to see if this requirement appears.
There are various methods available to gain owner support for an improvement. One example: A “Green Committee” chairman was to present to the association membership the idea of solar panels for the resort condominium buildings. Previous attempts a few years earlier had failed to muster the support needed to ratify the improvement. This chairman developed a plan for success. It included addressing head-on the issues of economic viability, panel ownership, functional compatibility and most importantly, appearance. There were other significant questions to resolve too, such as the likelihood of the local utility allowing for the purchase of excess power generated from the panels. The plan was well though-out with examples of the economic benefit, funding solutions, and maintenance solutions from full panel ownership. Simple-to-understand renderings and graphics were created to represent the life-cycle costs and payback.
With the plan in place, the committee reached out to certain owners to educate them on the process and answer the tough questions. Sub-committees were created to address individual-owner financial concerns. Finally, the committee was ready to formally present the idea to the association at the annual meeting, followed by a vote. The diligence and effort paid off and the owners voted to approve the installation. The installed panels have been producing power in excess of the projections ever since. There are many ways to gather support for important improvements, but most often one has to reach out to the naysayers and address their concerns head-on to win their support.
Legal Duty to Maintain and Repair
Typically, associations have a legal duty to maintain common amenities. For more information about your association’s specific responsibilities, look into your association’s governing documents to determine the requirements for maintaining and repairing the amenity. The governing documents most often require adopting an annual budget that sets yearly amounts anticipated for repairs and maintenance. Look at the annual budget or at the replacement reserves for funds allocated for major repairs or replacements. If the board is not taking steps to repair or replace the amenity, and if it is not addressed in the governing documents, then perhaps the governing documents should be amended to address the care of the amenity. Consult your association attorney for assistance, if questions remain.
Commonly owned amenities require inspections, maintenance and eventually replacement to keep the asset’s value. A good maintenance schedule will increase the chances for optimal performance. Preparation is key to enlisting member support of a good improvement idea. Know the difference between an improvement and the maintenance or replacement of an asset, as they carry different board responsibilities. Enlist the help of experts to determine the viability of the improvement as well as the budget and constructability.