San Diego Union Tribune Has Article on the True Costs of Deferred Maintenance on HOA’s

Postponed repair work catching up with condos
by Laurie Weisberg
Dilapidated stairways, rickety decks, leaky roofs, moldy walls and corroded sewer pipes. These are the sort of structural headaches confronting scores of homeowner associations as costly repairs to older complexes drain their communal treasuries.

After years of deferred maintenance, compounded by tightfisted members’ unwillingness to pay higher monthly fees, condominium associations are facing a looming financial crisis, condo experts say.

“In order to maintain the assets, you have to have long-term thinking, but what we’ve seen is short-term people not planning for long-term futures,” said Karen Conlon, president of the California Association of Community Managers.

When repeated Band-Aid fixes no longer suffice, condominium owners find themselves on the hook for hefty special assessments, sometimes in the hundreds of thousands of dollars. Increasingly, homeowner groups are having to take out loans to soften the blow of high levies.

“Deferred and unfunded maintenance is a ticking time bomb because so many homeowner associations are unprepared for it,” longtime condo attorney Erik Basil said. “What sometimes happens is association members don’t want to contemplate having to write a $1,000 or $5,000 check, so they pretend there’s nothing wrong, and that’s what has occurred for the last 10 years.”

The problems associated with stalled repairs have worried Conlon’s association for some time and are being complicated by the slide in home values and the credit meltdown.

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Here’s my comments/opinion…
As if we didn’t already know this…condo’s suffer from a lack of funding for their reserve accounts for replacement and repairs to the common area’s-roofs, painting, wood replacement, DECKS, asphalt etc. Wow what a surprise! Boards refuse to fund their reserve accounts, because they don’t want to raise dues…and that’s why they ran, so that dues won’t go up! Well guess what…costs rise over time, and Boards refuse to maintain properly, allowing components to degrade so that they now need to be replaced.

Replacement of components is not cheaper than simply maintaining them to achieve their maximum life span. Consider…a typical 10′ x 8′ deck, all of 80 square feet, when properly built and waterproofed, with normal maintenance every 3 years, would cost around $3.00 per square foot to power wash, maybe make a few small repairs, and then apply a new top coat of pigmented sealer to continue protecting the waterproofing from UV degradation. That’s $240.00 total for maintenance. Over a 36 month period, that comes out to about $6.67 per month that should be saved in reserves for the future maintenance that the Board/Manager/Association knows needs to be done to that deck and every other deck in the complex.
So $240.00 every 3 years (we’re not adjusting for inflation in this example, but a reserve study provider would) means the deck would be resealed 10 times over the 30 year lifespan. That’s $2,400.00 in today’s dollars for maintenance.

Now take a deck the same size, leave it out in the sun exposed to UV for 5-10 years, don’t maintain it, don’t inspect it, just keep your head in the sand…and when you pull your head out of the sand, voila, one degraded, rotted deck is ready for replacement!

What does that cost? Well in my experience it comes out like this…demo old deck and framing, rebuild deck framing as required, apply new plywood to deck, re-stucco or install new siding, about $5,000. Then add the deck guy’s work-new flashing,new deck coatings, whatever else might be needed-drains/scuppers etc. Add around $1200 or so for this work… TOTAL REPLACEMENT COSTS each deck-$6,200.00. Giving the benefit of doubt, we’ll take the deck out to 10 years before it’s being replaced…that’s a total of $51.67 per month pro-rated over 120 months.

Seems it’s cheaper to maintain…but that’s just my opinion…