Capital Improvement Projects Making the Case to Owners

Lucky are the board members of co-ops and condos who are able to play a purely supervisory role, simplyoverseeing the work of the managing agent who has the serious job of taking care of the building. In the vast majority of cases, however, board members find themselves facing one crisis after anotherthe boiler breaks down, the air conditioning chiller fails, the roof leak keeps getting worseand maintenance expenses that are consistently over budget.

This predicament is made even more challenging by the fact that individual boards must not only decide what to do, and figure out how to pay for it (often without a lot of first-hand expertise or prior experience), but must also communicate the news to the other building residents. In a major repair situation, such news is most often presented as a fait accompli. Though it may not be their fault personally, board members are likely to be treated as the messenger bearing bad news to the king. And woe to the messenger who must bear the king's wrath!

The good news is that smart boards can avoid the above scenario. With some careful planning, a little strategizing and ongoing communications with shareholders, they can cease being mere caretakers of a property which is depreciating around them. They can head off these inevitable crises by planning ahead for capital improvements and, most importantly, selling the plan to the shareholders or unit owners.



Planning is Crucial

The first step in gaining approval for a capital improvement plan from building residents is to make sure the plan is a good one. This may seem simplistic, but a good plan will likely sell itself. Developed with input from the managing agent, the accountant, various design professionals and the residents themselves, a strong plan will present various options and will identify specific recommendations for capital improvements which will improve the building's performance in the most cost-effective way.

The board must be the driving force behind the planning effort. When the time comes, it will be that much easier to convince others of its merit, because board members will be thoroughly familiar with all the details and will be comfortable with the plans themselves. The first step should be to establish a board committee whose primary task is to brainstorm a list of all of those components, systems or materials for which the building is contracted that have been problematic, have caused the expenditure of excessive funds, have been the object of complaints or have, in any way, impacted the value or image of the property.

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