Bill Morris in Legal/Financial
The board, under the guidance of president Gilles Desrochers and manager Ryan Brown of Majestic Property Management Corp., came up with a novel solution. After determining that repairing all the roofs at once would cost $312,000 – about 20 percent less than the cost of staggering the work over several years – the board needed approval from a 75 percent "super-majority" of unit owners before they could take out a loan. If the authority to borrow was not granted, the board announced they would impose an assessment. In March of 2014, the requisite super-majority voted in favor of the loan.
Now comes the novel solution. Before borrowing any money, the board gave all unit owners the option of paying their share of the job up front, in an interest-free lump sum, or staggering their payments over 10 years, with an interest rate of 5.5 percent. About half opted to pay up front, which produced $137,000 in cash. That meant the condo had to borrow only $175,000 from Capital One Bank to get the job done.
(Owners of upstairs apartments in the two-story buildings were charged an additional $750 for each of their three skylights that needed to be replaced.)
The board encountered some stiff resistance when it first proposed redoing all the roofs. "There's always going to be resistance to spending money," says board president Desrochers, a school teacher who has served on the board for the past five years. "The resistance stemmed from the idea that some unit owners felt excluded from the decision-making process. So we clarified our position, and they understood that the best interest of the community was our concern."
"When this first came up, there was a lot of resistance," adds Brown, the property manager. "We were able to overcome it, and in the end I feel that the board was vindicated. As it turned out, there was roof deck damage in all twelve buildings. We didn't discover that until the roofers removed the existing roofing. That justified the project after the fact."
The work was performed by Division 7 Inc., a roofing company from Stonybrook, and Brown reports that the job, which ran from May to August of 2014, went smoothly. Instead of the original gravel shingles, the roofs are now covered with "architectural" shingles that carry a 50-year warranty.
Many large capital-improvement projects like this one are dogged by missteps and cost overruns. Hampton Vistas was smart, or lucky – or both. The board decided to do the work all at once, saving significant money (and the inconvenience that comes with any drawn-out construction project). The board got creative with the financing, saving more money on interest payments. And they hired a reliable contractor, who did quality work and finished the job on-time and on-budget. It was a win-win-win.
"In the end," says Brown, "the board's approach saved everybody money."
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?