What is a capital improvement project? According to Investopedia, a capital improvement is “The addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property’s overall value or increases its useful life. Although the scale of the capital improvement can vary, capital improvements can be made by both individual homeowners and large-scale property owners.” What does that mean to you exactly?
If you live in a homeowners association, a capital improvement will be something along the lines of replacing an entry sign, replacing or adding perimeter fencing, adding a playground, paving, replacing entry gates, the list can go on and on. It is recommended that capital improvement projects be placed out for competitive bidding after settling on a design or plan. In some counties, building permits are required depending on what is being done and it will be up to the Board of Directors to determine who will be responsible, either the selected vendor or a member of the Board.
When dealing with town home or condominium associations, something to consider is contracting with an engineering and construction management firm. While it adds to the bottom line cost of the improvement, there are a number of reasons an association can benefit from the additional expense.
During the housing boom through the 2000’s, condominiums and town homes were being constructed at an incredibly fast rate to keep up with the demand. As a result, corners were cut and certain construction elements were missed. Municipal building inspectors were also under pressure to pass buildings and issue certificates of occupancy so these owners could take up residence in their new digs. The result was building defects rearing their ugly heads years after the builder left, and in some instances, declared bankruptcy and closed up shop. Examples of these building defects would be roofs not attached correctly, plumbing under slabs not draining, no fire sprinkler systems in attics, the list can go on and on.
Engaging the services of a construction management firm can make the difference in having a project run smoothly and one that is disruptive and drawn out. Some are sitting there scratching their heads wondering why the management company wouldn’t include that in their management fee. The answer is that most association management companies are business managers and are ill-equipped or knowledgeable enough to understand what all of it means. Multi-story buildings have many systems designed into them such as elevators, pumps and fire sprinkler systems that your association manager only has a cursory knowledge of. Ideally, spending the money on a construction management firm can improve the outcome of your project and the maintenance thereafter.