Get ahead of maintenance needs for aging infrastructure

Aging buildings and systems along with rising maintenance costs to support them present a sizable challenge for property managers and associations. One quarter of Americans are part of a community association, and collectively, these properties are worth $9.2 trillion.^{Disclosure 1} Preserving that immense value and protecting it from loss hinges on carefully planned maintenance and upkeep.

Association leaders recognize the critical need to set aside money for maintenance and repair to protect their member’s investments. In 2020, they oversaw approximately $25.8 billion in reserve funds for repairs, replacements, and enhancements to common property. This touched on everything from replacing roofs and fixing swimming pools and elevators, to resurfacing streets, upgrading to meet environmental standards, and making changes to help communities become more energy efficient.^{Disclosure 1}

Unexpected and unfunded maintenance

Reserve funds aren’t always enough to handle problems that arise, and maintenance surprises—even for the best prepared—are common. A 2020 survey by the Foundation for Community Association Research found that four out of five respondents faced unanticipated infrastructure needs in the previous three years.^{Disclosure 2}

Thirty-six percent of survey respondents reported problems with plumbing or electrical systems, and nearly a third said they’d experienced issues with one of the following, none of which had been uncovered during the association’s most recent reserve study:^{Disclosure 2}

• Roofs or roof sheathings
• Building envelopes or structures
• Recreational facilities

Too often, unexpected structural problems and system failures lead to short-term superficial or temporary repairs that don’t adequately address the need for restoration or replacement. Then, the damage grows, along the safety risks and the potential costs for remediation.^{Disclosure 2}

But while 80% of respondents said adequate maintenance reserves were a critical need, only half thought their association had enough funds to handle an unanticipated repair or replacement of a major system or building component.^{Disclosure 2}

Assessing conditions and funding reserves

Four key steps can help your association board or property management company get ahead of unexpected problems and underfunded reserves to keep your association in good shape physically and financially.

Step 1 – Start with a healthy board. Boards have a responsibility to decide what’s necessary and clearly communicate maintenance requirements to residents. A strong, well-led board can boost your association’s chances of success in assessing property conditions and financing as well as in implementing remediation plans. Community managers need to recruit volunteers to sit on the association’s board who have clout in the community, are willing to face pushback that often accompanies unpopular decisions and are able to work with residents who are delinquent in paying assessments. 

Step 2 – Conduct a full reserve study to inform the community’s reserve financial analysis and funding plan. Make sure the reserve analysis is up to date and use less extensive periodic examinations to revise remaining useful life estimates and replacement costs for major components.

Step 3 – Set priorities with the association board or appropriate committee. Structural safety is an absolute necessity, but issues that could lead to water damage, electrical problems, pest infestation, or other problems can reduce property value and impact residents’ quality of life. Things like inoperable lighting systems, peeling paint, and deteriorating fences may not seem as urgent, but they can affect safety as well as marketability.

Step 4 – Engage leaders and prepare to communicate with boards and homeowners. Homeowners and association governing boards sometimes resist efforts to resolve maintenance needs, avoiding the financial cost and the community confrontations that can emerge from expensive projects. It can be a hard sell in many communities to convince residents to pay for maintenance issues that aren’t immediately critical or visible.

From assessment to outcome

Resolving long-neglected maintenance issues often requires significant assessments to ensure repairs are made safely and completely. Working with a lender that understands the unique borrowing needs of associations can be crucial in obtaining the necessary funds for repairs. Funding preventative maintenance reduces the risk of unexpected failures that require expensive repairs that can disrupt the community or even endanger residents.

In some cases, more assessments may not be the answer. Many older buildings lack a reserve to handle even basic repairs and don’t have residents willing to pay for major repairs. Property managers and association boards could be called upon to guide the community through the choice between repairs or replacement.

For communities that choose to repair or replace, hiring independent construction experts, engineers, and architects can offer a useful perspective on how to best address the problem. And though it may be painful, dealing with unexpected maintenance concerns can help educate community homeowners on the importance of preventative maintenance. After issues arising from aging infrastructure, communities frequently increase reserves, and many hire a reserve specialist to help prevent future problems.^{Disclosure 2}

Whatever your community’s age and maintenance needs, formulating an effective plan is essential to fulfilling the association’s legal obligations, fiduciary responsibilities, and lender requirements while enabling financial planning for a sustainable future.

Make plans and secure financing to keep your property up to date.

Truist Association Services has a dedicated team with more than 35 years of experience serving community associations. Contact us today so we can learn more about your plans and explore how our payment and financing solutions can help you do more. Call us at 888-722-6669, or visit us at Truist.com/AssociationServices.