By Margret McBurney, Esq.
KEEPING ASSESSMENTS as low as possible is something many community associations try to achieve to attract new property owners, maintain existing owners' satisfaction, and protect resale values. Yet this well-meaning goal can have dire consequences if it comes at the expense of ignoring a community's infrastructure needs.
Sometimes, community associations ignore infrastructure—the systems, facilities, and resources that underpin every community—because the potential problems aren't always visible to the naked eye. Other times, they may use infrastructure-designated reserve funds for other projects in an attempt to avoid a special assessment or a costly bank loan.
But here's the reality: The infrastructure bill always comes due. In its recent Breaking Point report, the Foundation for Community Association Research found that more than eight in 10 community association board members, managers, and contractors reported encountering an unplanned or unanticipated infrastructure issue over a three-year period.
Let's walk through three of the more common infrastructure problems and unpack steps to help avoid these pitfalls: physical structures, deferred maintenance, and low reserves.
Balcony and deck collapses have gained major media attention over the past few years due to some horrific events.
A balcony collapse on a multifamily building in Berkeley, Calif., in 2015 killed six people and left seven others severely injured. A few months later, a steel staircase collapsed on a Sacramento, Calif., apartment building and crushed to death a man walking beneath it. The beam where the stairs were attached was rotted around the mounts and failed.
In 2019, a balcony collapsed on a two-story condominium building in Mountain
View, Calif., injuring five people. Rotted framing components were the cause.
A few days after the Mountain View collapse, a two-story balcony collapsed on a Wildwood, N.J., condominium, injuring 19 people. Again, rotted framing was the suspected cause.
Many of these engineering failures occurred from the inside out. While these physical structures spotlight potential infrastructure risks, so too do some more common structures, including roofs, railings, and pools.
As a general rule, associations should complete a roof replacement every 20 years. But if your association oversees properties where storms containing hail, heavy ice, or high winds are more common, that replacement cycle could accelerate. Any damage to roofs, whether seen or unseen, can cost tens of thousands of dollars.
Engineering failures also carry liability concerns—the association could get sued directly by a unit owner who seeks to hold the association responsible for failure to maintain the premises.
Improperly maintained railings can loom as a major risk inside or outside of a community's properties, including on walkways, in stairwells, or in parking lots. A compromised railing can lead to slip-and-falls, ankle fractures, and back, neck, and knee injuries.
Another common trouble spot: pools. They bring inherent risks and an endless array of needs, from proper cleaning and inspection to filter and drain maintenance. Hazards such as drain entrapments and eviscerations in pools and spas must be routinely checked so they remain in accordance with the Virginia Graeme Baker Pool & Spa Safety Act.
The best way to mitigate infrastructure risks related to physical structures is to work with the right professionals. Hire only licensed, bonded, and financially secure contractors. Make sure they provide references—and don't forget to follow up with them. Ask contractors to designate a single point person to communicate with the board about any infrastructure issues. Include language in all contracts requiring contractors to perform routine walkthroughs, report any potential issues, and fix them. And require them to keep detailed records of any and all maintenance.
Different from structures, deferred maintenance includes items often found in a community's common areas, such as parking lots, walkways, lighting, and landscaping.
While they may not have walls and roofs, these areas bring their own set of challenges. Consider parking lots.
Like roofs, well-maintained parking lots can last 20 years or more. But if neglected, that lifespan could be cut in half. Adverse weather also reduces a parking lot's durability. So, if your community is in the Northeast U.S., where road salt, snow plows, and frigid temperatures cause asphalt to expand, contract, crack, and develop potholes, that lifespan will be shorter than if you're in the Southwest.
Even a small incident due to improperly maintained common areas can cause major headaches and high costs. A nasty parking lot pothole could damage vehicles. A poorly maintained grassy area may cause a slip-and-fall that requires surgery. A cracked or deteriorating sidewalk may lead to painful and expensive ankle injuries. Inadequate lighting also is, too often, a contributing factor to on-property accidents.
Hiring the right contractors plays a major role in mitigating deferred maintenance risks. So too does keeping adequate reserves so your association has the funds needed to perform ongoing upkeep of common areas.
In the Foundation's Breaking Point report, 70% of respondents reported maintaining property values was of primary importance. The best way to do so is to make sure the association has enough money in its reserve funds to properly maintain physical structures and common areas.
Infrastructure costs never go away, so depleting reserve funds to avoid issuing a special assessment will only pass on that cost to future homeowners. Not having enough reserves also exposes an association to lawsuits, including claims of a board neglecting its fiduciary responsibility to protect the association properly.
Board members—especially those newly elected—often wonder how much is “enough" when it comes to properly funding reserves. The best way to find out is to commission an infrastructure specialist (typically an engineer) to conduct a reserve study. Ask the specialist to inspect all common structures and areas, report any deficits and estimate the average remaining lifespan. Such studies help associations effectively develop a maintenance calendar and plan financially for future repairs and upgrades.
Your association should decide how often it will repeat a reserve study based on your expert's recommendations and your community's age and needs. California requires reserve studies once every three years.
In states where reserve studies are not required, many associations reach the conclusion to conduct one of their own because of unaddressed and costly repairs. Unexpected but necessary remediation of an unplanned capital project often requires either assessing homeowners a high special assessment or obligating the association to a long-term bank loan. Either way, homeowners eventually foot the bill.
The Breaking Point report indicates that 1 in 3 associations surveyed hired a reserve specialist.
Keep in mind, no matter how thorough a reserve study, how often common areas get inspected, or how skilled your contractors may be, there will still be unseen risks. Some items, such as rotting wood or insects, may not be visible to the naked eye. But conducting a reserve study is a great place to start.
When you join a community association board, delivering bad news might be the last thing you want to do. But if you suffer any of the three common infrastructure deficits we've discussed here, we recommend you talk about it with your homeowners immediately.
Be transparent with every person who lives in your community. Help them understand the nature of the problem and the basis for your decision. The more transparent association boards are with their homeowners, the more those homeowners will trust the board and its decisions. They also may help you find options—such as completing repairs in phases—that will help the association and all its property owners both now and in the future.
Don't let an infrastructure concern derail your community. Instead, take the necessary precautions to reduce risk and use any infrastructure issues as a stepping stone to create a better community.
Margret McBurney is an attorney and a vice president and program manager for community associations for Distinguished Programs, a national insurance program manager. www.distinguished.com