“Perhaps thinking everything through to the end was not a healthy thing to do.”
—Arthur Koestler
I spent hours going through a condo’s engineering reports and the Reserve Fund Studies that I was given to review. I found many different ways of looking at the building’s structural and financial health and I found no good news in any of them.
The idea was to find one set of numbers that are powerful and clear enough to allow the concerned owners to understand how much trouble their condo may be in.
This is what I decided on. One table showing the engineering estimates to repair the underground parking garage.
2002
In 2002, the condo Board commissioned a “Survey of the Underground Garage”. In the first sentence, the engineers state that the garage is in good condition. They then go on to list 27 deficiencies that need to be repaired at a total cost of $1,083,200.
Using that year’s contributions to the Reserves, the condo would need 4.3 years of contributions to pay for those repairs.
2015
In 2015, the Board commissioned an “Evaluation for Garage Condition”. This time, the engineers start off by listing the defects. The total cost to repair all the deficiencies they found was $2,935,000.
Using that year’s contributions to the Reserves, the condo would need 8.8 years of contributions to pay for these repairs.
2019
Then I took a close look at the 2019 Reserve Fund Study. The latest estimated cost to repair the underground parking garage, many years down the road, rose to $9,613,009.
Using 2020’s yearly contributions to the Reserves, the condo would need 18.5 years of contributions to pay for the garage repairs.
So if the garage is going to get all the major repairs it needs, where will the money come from to pay for:
• the $400,000 for the swimming pool concrete & equipment repairs?
• the $1,000,000 required to replace the windows & balcony doors?
• the $400,000 required to replace the water risers?
• the $500,000 to repair the balconies?
• the $670,000 to replace the shear-wall cladding?
• the $250,000 for caulking?
• the $335,000 for a new roof?
• the $400,000 for the fire safety systems?
• the $264,000 to replace the heating boilers?
• the $102,000 to replace the air make-up unit?
• the $70,000 to upgrade the security systems?
• the $340,000 to replace the wallpaper and carpet?
• the hundreds of thousands needed to repair/replace all the smaller items?
There is approximately $2,500,000 in the Reserves now so that will help.
What was done in the past?
What the Boards have done in the past is to kick the can down the road and to raise the monthly fees.
Major repairs were deferred when the Board approved the 2016 Reserve Fund Study. In that year major repairs were pushed out and the Reserves portion of the monthly fees went up once again.
(The cost of pushing the garage repairs out further in the future? An extra $3 million.)
When you push the work out, the costs rise—sometimes dramatically.
As far as the Reserve Fund Studies calling for 1% and 2% future annual increases for the Reserves, since the corporation needs a fresh study every three years, the owners never got to enjoy those promised “inflation rate” increases.
The big questions
• When will the Reserves portion of the monthly fees stop rising so high?
• When will the monthly fees reach $1,200 or more a month?
(Dumb question. The fees are there already.)
• When will the underground garage get repaired? (Do I hear Never?)
• What news will the recommended “Envelope Condition Evaluation—Walls &
Balconies” study give?
• When will the Special Assessments start?
It may be best for the owners to remain in the dark. They will sleep better.