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Common Property and Uncommon Thinking

Common Property and Uncommon Thinking

Article written by Phil Proctor, P.E., Criterium-Proctor Engineers, Augusta, GA

 
When associations think of reserve studies, many times it’s out of necessity. Reserve studies are certainly that in many cases, but can also serve as the foundation of an effective long-range plan that maximizes the dues of all members. Many times we get caught in the practice of doing what we’ve always done.
 
A professionally prepared reserve study provides the board with valuable insight into the current condition of and repairs needed to the common elements. In addition, the study will prioritize repairs and establish a replacement schedule that the board can use to build an adequate reserve fund. Having a solid plan for the community’s future provides both immediate and long-term benefits.
 
By taking steps to ensure safe, legal management of the community, boards are heading off costly special assessments and emergency repairs that are often preventable.
 
An experienced engineer will consider all of the common elements, not just the urgent matters, assess a life expectancy for each and assist the board in implementing a financial plan for the replacement of these items as they wear out. But why stop there? Why just a simple replacement. The reserve study is the opportune time to implement a strategic plan to position the association to provide value for its members. Look at taking the time to replace and/or improve common property in a manner that’s smart... here’s a simple example.
 
Recently I was preparing a reserve study of a club and meeting with the Tennis Head Pro and discussing his maintenance plan. This club has 13 courts, with seven being clay. He described his desired maintenance plan for the clay courts as being: 
  • Lift and top dress one court each year – seven year rotation
  • Top dress each court each year 
This club has had better than average revenues compared to peers, but is still suffering compared to revenues a few years ago. Nonetheless, he has been forced to reduce his plan to save money.
 
While his plan using the seven year rotation is simple and easy to forecast, it does not maximize the club’s money. My response was “why not plan for lifting four courts together and three courts together, each separated by a few years?” This would allow an estimated savings of 15% per court by bundling them together, but not take all of the courts out of play at the same time. From the pro’s point of view it makes his budget look “lumpy” in those years, but combined with a deliberate plan that encompasses the entire club, it can be smoothed out from the overall club expense perspective. Even if the club’s budget was “lumpy”, a proper reserve plan and study would allocate and preserve the funds for those peak years.
 
Think about bundling across the whole array of common facilities in an association or club:  Lighting, Roads, Landscaping, Irrigation, Roofing, and on and on…
 
Bundling also allows associations and clubs to make system-wide improvements at the same time as a normal replacement. We’ve seen recently the impact of higher energy prices, but more is yet to come. Newer and/or better technologies can be implemented on a community-wide basis that have the potential to add value to your community:  improved roofing, unit envelope improvements, higher efficiency lighting, etc.
 
Let’s say for example that 100 kilowatt-hours is saved per month for a unit that is provided electrical power by SCE&G. The present-worth of the savings over 20 years is $3,340. The question to ask now is:  which items are we replacing in the near future that can be enhanced or bundled to save energy and provide the savings over their lifespan to justify their incremental cost? Work with your engineer on your next reserve study to answer those questions and set your community up to have that extra value in your property.
 
With the challenges these days to our budgets, proper planning can help sustain and improve our communities to the standards we expect.
 
Phil Proctor, P.E. is the owner of Criterium-Proctor Engineers in Augusta, Georgia, an affiliate of Criterium Engineers. Criterium Engineers has been providing comprehensive building consulting and engineering services since 1957 and has three other offices serving the state of South Carolina.

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