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If your New York City co-op or condo board is stuck in a cycle of tackling one emergency after another, it can be difficult to be proactive about repairs. While facade work, window replacements, and energy efficiency measures are expensive, deferred maintenance almost always ends up costing more.\u00a0<\/p>\n
\u201cThere’s a cost for not being prepared,\u201d said Amalia Cuadra, senior director of engineering at EN-POWER GROUP, <\/a>an energy engineering and consulting firm. \u201cIf you are told you have to replace your boiler but you put it off and it goes out in January, that\u2019s a different type of capital project\u2014that becomes an emergency.\u201d\u00a0<\/p>\n Delayed capital repairs can be the result of project complexity, funding issues, or a board being overwhelmed. There are also hidden costs to putting off repairs including higher utility and operating costs, penalties for carbon emissions, insurance issues, and financing difficulties.\u00a0<\/p>\n Here are some of the costs co-ops and condos can avoid by being proactive about repairs.<\/p>\n When maintenance is deferred, minor issues can compound and quietly raise operating costs long before an obvious failure occurs. Major heating and cooling equipment all requires routine maintenance.\u00a0<\/p>\n \u201cWithout regular maintenance, equipment performance gradually deteriorates, leading to increased energy consumption, higher operating costs, and reduced equipment life,\u201d said Matthew Strobel, vice president of high-performance buildings at energy consultant Bright Power.\u00a0<\/a><\/p>\n Minor mechanical issues such as sensor failures or clogged filters can make systems run longer, short-cycle, or operate inefficiently.\u00a0<\/p>\n \u201cWhen minor issues are not tackled proactively, they not only accelerate wear and tear on equipment but can also increase utility consumption,\u201d Strobel said.\u00a0<\/p>\n As the mechanical elements of a building age, there\u2019s inevitably a cost associated with their on-going repairs. Take the building-wide riser repairs completed several years ago at 333 East 69th St. The 116-unit co-op was built in the early 1960s and the original condensate piping was deteriorating. \u201cEvery season we\u2019d have leaks and floors that needed to be replaced and there is a cost to that,\u201d said board president David Fortunoff.\u00a0<\/p>\n The project to replace the pipes was expensive and intrusive; walls needed to be opened up and later closed and huge lengths of new piping needed to be installed at a cost of around $3 million. However, by getting the work done ahead of a catastrophic leak the building avoided costs for water damage and was able to remove leak repairs from their operating budget.\u00a0<\/p>\n Higher energy consumption, particularly gas and oil, can affect carbon emission compliance under Local Law 97.\u00a0<\/p>\n \u201cNew York City buildings have to take into account LL97 penalties into their operating costs and that\u2019s a changing landscape,\u201d Cuadra said. \u201cIn five years you can go from having a $6,000 [penalty] to an $87,000 penalty per year,\u201d she added.<\/p>\n When performing energy audits, Punit Shah, vice president of building decarbonization at Bright Power,<\/a>\u00a0routinely uncovers issues that have quietly inflated energy use for years. The biggest culprits are missing insulation on steam piping; boiler controls set up incorrectly; boilers that fail combustion testing; ventilation fans not operating, and steam traps needing replacement.\u00a0<\/p>\n \u201cWhen buildings address these issues promptly, the efficiency of the systems improves,\u201d Shah said. \u201cWe\u2019ve seen properties cut fuel and electric consumption enough to materially reduce their projected Local Law 97 carbon penalties as a result,\u201d he said.\u00a0<\/p>\n For Strobel, having a maintenance plan that includes daily walkthroughs and annual tune-ups can help.<\/p>\n \u201cThe most effective step properties can take is to create a preventive maintenance plan that prioritizes repairs by risk and cost impact,\u201d he said.<\/p>\n Cuadra advocates for a capital plan that gives a co-op or condo board a clear direction to help avoid these rising costs.<\/p>\n \u201cA good capital plan should be able to clearly outline what the the cost of action and the cost of inaction are so they can make decisions,\u201d she said.\u00a0\u00a0<\/p>\n Replacing building components proactively can avoid emergency repairs. When a boiler fails in mid-winter, repairs become urgent. \u201cThere is nothing you can do about the fact that you just had to spend $40,000 repairing equipment that you are going to have to replace next summer,\u201d Cuadra said.<\/p>\n Unplanned or emergency repairs are often more expensive because a board does not control the timing. \u201cThey won\u2019t be able to shop around and compare bids,\u201d Cuadra said. Instead, a board is limited to the first or only contractor available to make repairs. And those repairs do not rule out eventual replacement of the failing equipment.\u00a0<\/p>\n Another consequence of deferred maintenance can include violations for failed systems. This has a cost associated with it but can also lead to financing problems. Stricter Freddie Mac and Fannie Mae lending guidelines<\/a> have led to more scrutiny of building maintenance and reserve funds. A building with deferred maintenance or a lack of reserves can become ineligible for conventional loans. These rules will become even more stringent in January 2027, when condo boards will need to increase their capital reserves<\/a> from a minimum of 10 percent to a minimum of 15 percent of the building\u2019s annual budget in order to remain compliant.<\/p>\n A related issue can involve building insurance problems. Deferred maintenance signals a higher risk to insurance carriers. This can lead to higher premiums, larger deductibles, coverage restrictions, and in some cases denials at renewal time.\u00a0<\/p>\n<\/div>\nHigher utility and operating costs<\/h3>\n
Local Law 97 penalties<\/h3>\n
Expensive emergency repairs<\/h3>\n
Financing problems and insurance issues<\/h3>\n