Can vacant mall stores alleviate homelessness?

Yesterday’s Sears is tomorrow’s transitional housing facility.

Closed Macy's store at Landmark Mall, Alexandria, Virginia

We already know that shopping mall anchors gone belly-up can serve plenty of purposes in a second life: community college campuses, medical facilities, mega-churches and even public libraries. Transforming a defunct J.C. Penney into a destination grocery store like Whole Foods has proven to be a particularly attractive method of adaptive reuse, so much so that numerous flailing malls are being resuscitated with supermarket-based life support.

And here’s another idea: Turn them into affordable housing hubs for the homeless.

It’s a magnanimous but somewhat radical idea, especially depending on the status of the mall. In a scenario in which the rest of the mall is still active, housing for at-risk individuals where the Sears used to be could potentially drive some shoppers away.

When Los Angeles Times columnist Steve Lopez asked readers last year for their thoughts on the best use for a dying mall, many suggested housing for the homeless with on-site social services. He responds:

I like the thought, but practical realities present some limitations. Some malls are doing fine as is, but even among those that are struggling, the land is still worth a fortune. Owners would want top dollar whether they sell or rent out their land, and I’m not sure a tent city would pencil out.
Plus, changing the use of the land could require zoning changes, and that’s fraught with bureaucratic and political challenges, as well as possible neighborhood opposition.

But in malls that are either truly dead or on their way out, really why not put an empty department store to the most big-hearted kind of use, at least temporarily?

Landmark Mall, Alexandria, VirginiaAlexandria’s Landmark Mall was a big deal when it opened in the 1960s. It’s now awaiting a dramatic makeover … and housing homeless folks in the meantime. (Photo: Mark Wilson/Getty Images)

Virginia shelter finds unique temporary home

To prove Lopez to the contrary, you needn’t look further than Landmark Mall in Alexandria, Virginia, where a shuttered Macy’s has been reborn as a homeless shelter.

As grand redevelopment plans for the property continue to be ironed out, the developer has opted to donate the old Macy’s to Carpenter’s Shelter, a local homeless nonprofit, for a year and a half. (One of the original anchors, Sears, remains open for the time being and the mall itself has been used as a filming location.)

Several years back, Carpenter’s Shelter faced a quandary: Larger modernized facilities, complete with adjacent affordable housing units, were planned to be built for the nonprofit across town on the same site of the 60-bed emergency shelter that the organization had operated for the past two decades. It was an ideal situation — Carpenter’s Shelter wouldn’t have to move, it would just get really nice new digs in the exact same spot.

Yet with the so-called New Heights redevelopment project due to take 18 months to complete, Carpenter’s Shelter was in need of an interim home, and the just-closed Macy’s at Landmark Mall fit the bill. In addition to the largesse of property owner the Howard Hughes Corporation, Carpenter’s Shelter wound up in a dead mall because it was one of the only available areas in affordable housing-strapped Alexandria zoned to allow a homeless shelter.

It took 12 weeks for the organization to transform a section of the mannequin-stuffed department store shell into a habitable space. Fifteen months after Macy’s rang up its last purchase, the first residents of Carpenter’s Shelter moved in.

It’s a temporary arrangement, true, but also one helping to make a huge difference for homeless individuals who will be moving out of the Macy’s once Carpenter’s Shelters permanent new home is complete. (Some Carpenter Shelter residents are former employees of the very same Macy’s store.) And, more importantly, it opens up the real possibility of turning vacant anchor stores into much-needed homeless shelters and transitional housing hubs.

Dying mall in ConnecticutOnce invincible stalwarts of consumerism, mall anchor stores are closing at an exponential rate. At the same time, homelessness is on the rise. (Photo: Spencer Platt/Getty Images)

Explains the Washington Post:

The idea that spurred this transformation represents a new way of thinking that is bringing together three economic phenomena: the collapse of the brick-and-mortar retail industry, the disappearance of affordable housing in America’s boom towns, and the struggle to reduce homelessness, which remains as intractable as ever.

As the homelessness crisis mounts across the country, there’s a growing chorus of those who believe that repurposing empty mall anchors and big box stores for transitional housing is smart — there’s certainly an ample (and growing) inventory of them. And even if many dead malls will eventually be redeveloped into new mixed-use retail destinations, a large number of these projects, like Alexandria’s Landmark Mall, are years off. (Eventually, as is the trend with many shuttered enclosed shopping malls, the Landmark Mall will be reborn as an open-air “live-shop-dine urban village” complete with apartments and beaucoup public green space.)

Why not make the best of a whole lot of vacant square footage in the meantime?

“The fact is that there will be millions upon millions of square feet of retail space that are not going to be used over the next five years . . . and they can be used for all kinds of things,” Amanda Nicholson, a professor of retail practice at Syracuse University, tells the Post. “I think it would be an inspired idea.”

Re-Habit retail plaza, KTGY Architecture + Planning.A dead anchor store reborn at a regional shopping mall, as envisioned by KTGY Architecture + Planning. (Rendering: KTGY)

A step in the right direction (where the cosmetic counters used to be)

Anticipating that other shuttered mall owners might follow in the same benevolent path of Landmark Mall, the research and development arm of Los Angeles-based KTGY Architecture + Planning has conceived a conceptual blueprint for future Macy’s-turned-transitional housing facilities.

KTGY calls the concept Re-Habit, a “plan for repurposing obsolete big-box stores into essential uses, including smaller retail spaces, housing, employment, and support for homeless individuals.”

“With big box stores such as Macy’s, J.C. Penney and Sears closing in record numbers, repurposing such vacant spaces becomes increasingly necessary,” says Marissa Kasdan, a senior designer with KTGY. “At the same time, the housing affordability crisis and other factors are driving up demand to house and service homeless individuals. Re-Habit offers one adaptive-reuse solution for multiple problems.”

In the Re-Habit space envisioned by KTGY, an 86,000-square-foot anchor store has given way to a dynamic facility centered around a spacious courtyard and dining hall. There’s also a rooftop garden for resident use and three different sizes of “bed pods” — sleeping rooms of various sizes that become less communal in nature the longer a resident stays in an integrated support program. For example, a new arrival would start in a large bed pod shared by as many as 20 other residents. As the transition process continues, that resident can graduate to a smaller two-person bed pod that offers greater privacy and independence.

And in the true spirit of its retail roots, Re-Habit would feature a “retail plaza” including upscale thrift boutiques, coffee shops and other establishments staffed by residents as a means of providing job training and meaningful employment.

Re-Habit sleep pods, KTGY Architecture + Planning.Re-Habit includes a small handful of different sleeping arrangements for residents including communal ‘sleep pods.’ (Rendering: KTGY)

In conceiving Re-Habit, KTGY consulted with the Long Beach Rescue Mission to glean insight on how such a cavernous raw retail space could best redesigned to accommodate low-income and homeless individuals. What would a housing nonprofit want and need from it?

Robert Probst, the mission’s executive director, considers himself a fan. “I’m very excited about this idea,” he says. “Re-Habit, if run correctly, can be a self-contained environment, with people living, working and then moving into affordable housing. It would be a reward for people who are ready to change their lives.”

Kasdan of KTGY admits that many developers won’t be entirely gung-ho about the potential of resurrecting a dead anchor store as “self-supporting mixed-use transitional housing.” Still, as she explains, the idea has potential.

Re-Habit rooftop garden, KTGY Architecture + Planning.At a Re-Habit facility, residents would grow their own produce grown on the roof of an erstwhile department store. (Rendering: KTGY)

“For most big-box owners, this would not be their first choice for reuse. But on the flip side, many have asked us about new concepts for incorporating residential units into their developments. Re-Habit expands the reuse possibilities and allows everyone to consider communities’ larger needs.”

She adds: “Such a project does not need to appear as a ‘homeless shelter.’ By partnering with the right team of developers, social services, government entities and community groups, it’s possible to create an attractive environment that transforms obsolete space into a real asset.”

Just think, the same Sears appliance department where you bought a washer and dryer for your very first home could someday serve as the sleeping quarters for someone who has experienced a rough patch but is on the road to one day owning their own washer and dryer, too.

HOA Maintenance, Capital Improvements and Useful Life: Are You Prepared?

“Should we fix this component…or replace it entirely?”
“Is this maintenance job becoming a capital improvement?”
“How can we extend a component’s useful life?”

Do these questions sound familiar? The truth is everyone in your homeowners association (HOA) wants your property’s components to continue to function smoothly and look good. That requires undertaking necessary routine maintenance and repairs as well as capital improvement projects. Properly funding these two types of activities depends primarily on your knowledge of how they differ and how they work together and a deeper understanding of useful life and reserve studies.

To learn more about the importance of budgeting for maintenance and capital improvements, read on and complete the form below to download our helpful white paper,Pay Now or Pay (More) Later? Making the Most of Your Reserve Study and Maintenance Budget.

If you’re like many residents (and even board members) who live in HOAs across California, you may not understand every single thing about maintenance, capital improvements and useful life. Not to worry! We’re here to explain the relationship between maintenance and capital improvement projects and how you should partner with your California HOA management company to budget for them. And to make sure your management company is on the same page with you in terms of maintenance and budgeting projects, read our article, “React, Outsource, or Prevent? Find Your Association’s Maintenance Style.”

What’s Considered Maintenance?

As a refresher for you, day-to-day and preventative maintenance are activities that are meant to restore components to their original condition and prevent them from deteriorating any further. These activities should be funded in your budget as expenses under the “Repairs & Maintenance” (R&M) line item.

With proper maintenance, components have a better chance of reaching their expected useful life. For example, activities such as making repairs to your irrigation systems, landscaping, touching up the paint in your hallways, regular cleaning of your pool, changing lightbulbs and other tasks that your HOA property management company attends to frequently or on an ongoing basis are classified as maintenance jobs.

What’s Considered a Capital Improvement?

A major replacement or repair that will increase a component’s market value beyond its original or current state should be categorized as a capital improvement. Generally, you will undertake this type of project to reduce future operational costs (such as utility or maintenance costs) or to enhance your residents’ quality of service. For example, if you replace your building’s roof, upgrade to a more energy-efficient ventilation system or install LED lighting throughout your community, you are undertaking a capital improvement project.

Capital improvement projects should be funded from your reserves rather than from your operational budget. Since these projects are costly, your HOA management company needs to plan for them and collect money over time to pay for them. That’s where a reserve studycomes in. Having a qualified reserve study specialist conduct a study helps you determine which components will need to be replaced, how much more useful life they are likely to have, the estimated cost for the project and the annual amount of money your association needs to put into your reserve fund to pay for it.

How Do You Determine “Useful Life”?

The amount of time that a component will serve its original purpose is referred to as its “useful life.” “Every component has a useful life given to it by the manufacturer,” said Rodney Riepenhoff, reserve study specialist and corporate engineer for FirstService Residential.

Manufacturers estimate useful life based on certain assumptions about a component. However, factors like additional wear and tear, regulatory changes, environmental conditions or unexpected obsolescence can affect its actual useful life.

How Do You Make Sure Maintenance and Capital Improvements Work Together?

How closely your management company adheres to the manufacturer’s recommended maintenance schedule will significantly impact a component’s actual useful life. Riepenhoff points out, “Many communities do not do all the required maintenance, often because of the cost.”

In the long run, however, this can wind up costing the HOA more because it reduces the component’s useful life. The need to replace a component sooner than expected not only means reducing the return on investment (ROI) of that component, but it also means having an unexpected expense for the new component. More than likely, your HOA will not yet have enough in your reserve if the amount you’ve been putting aside was based on a later replacement date.

The lack of an updated reserve study is often to blame when an HOA is unaware that its preventative maintenance has been inadequate. “Or the HOA hires a third-party vendor that is not doing the necessary work, and they have no checks and balances in place,” said Riepenhoff.

How Do You Extend “Useful Life”?

Diligent maintenance can actually extend a component’s useful life. For instance, if replacing certain parts on a component allows it to function more efficiently or if your materials are of a higher quality, the component is likely to last longer than expected.

One Los Angeles high-rise association learned about the relationship between maintenance and capital expenditures the hard way. Inadequate guidance and support from its community management company resulted in years of neglected preventative maintenance at the 228-unit high-rise. This included unresolved water drainage issues from the pool and surrounding area, which caused numerous leaks into the parking lot below. Riepenhoff evaluated the issue when FirstService Residential took over the HOA management services. While resolving the drainage problem did require a $120,000-capital improvement project, this was $280,000 less than a previously recommended improvement. Additionally, the association now has a maintenance plan to help prevent costly damage to the community in the future.

Riepenhoff does warn that it’s possible to overdo maintenance. Some communities continue to maintain a component when it would be more cost effective to replace it. How do you know when it’s time to replace rather than maintain? Riepenhoff said, “When the yearly cost outweighs the replacement cost, it’s time to replace it.”

Can a Maintenance Job Become a Capital Expenditure?

There are definitely times when your HOA receives the unexpected news that a maintenance job is not enough to resolve an issue. A deeper look into the problem might uncover surprises that turn the job into a capital improvement project. For example, you may have had a leak in your roof that you assumed required a simple patching. However, when your roofers examined the problem, they found more widespread damage that requires a roof replacement. Originally, the maintenance job would have been funded out of your operational budget. Now, your HOA will need to pay for the project out of your reserve fund. (Hopefully, you have the necessary money in your reserves.)

Which Criteria Differentiates Maintenance From Capital Improvements?

When to categorize an expenditure as a “maintenance job” versus a “capital improvement project” is a case-by-case determination. Some factors you should consider include:

  • The component’s value
  • Your goal in performing the work
  • The scope of the work
  • The actual result
  • How the work will affect the component’s value, equity return and depreciation

Now that you have a better understanding of the purpose of maintenance and capital improvement work at your community, you can budget for your projects more effectively. Matching your maintenance plan to your capital improvements will help improve your community’s property value and enhance the comfort, safety and enjoyment of every resident.

These Bay Area cities are poised to break into the million-dollar home market

A screenshot from Redfin shows a 2 bed, 1 bath East Palo Alto home for sale for $898,000. Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. A quarter-century ago, it was the murder capital of the United States. (Courtesy of Zillow)

PUBLISHED:  | UPDATED: 

A quarter-century ago, it was the murder capital of the United States.

Now East Palo Alto is about to become the Bay Area’s latest city of million-dollar homes, a turnabout wrought by the region’s inexorable housing shortage.

Real estate website Zillow expects the median value for East Palo Alto property to rise from $964,000 to $1.1 million over the next year. Morgan Hill, Alameda, Newark and Daly City are other Bay Area cities expected to soon strike seven-figure values.

East Palo Alto Mayor Ruben Abrica saw a mixed blessing for his city crossing the $1 million threshold. The city collects more taxes to provide services, and many long-time home owners have reaped the benefits of selling in the hot market, he said. But federal statistics show only one-third of East Palo Alto homes are owner-occupied, leaving a large population of renters left out of the real estate boom.

“It is a very strong reminder that we have to keep doing everything we can to preserve housing for the middle class, the working class,”  said Abrica, who helped found the city in 1983. “That’s who we are.”

East Palo Alto will be joining an exclusive club in the U.S. — just under 200 communities in the country boast home values over $1 million. About one-third of those communities are in the Bay Area, with San Martin, Milpitas and San Jose recently added to the list.

The median home value nationally is $217,300, according to Zillow. The San Francisco and Oakland metro area has a median home value of $953,000, while the San Jose metro checks in at $1.3 million.

East Palo Alto has geographical advantages — set near the heart of Silicon Valley between wealthy Palo Alto and Menlo Park, easy access to U.S. 101 and Facebook’s expanding tech campus on its border.

But city educators say about 40 percent of the children in the Ravenswood City School District are considered homeless. The school district has expanded food pantry programs and built a free laundromat for needy families.

Previous

Vehicles belonging to homeless people relocated along Pulgas Ave. after being kicked out of Weeks St. in East Palo Alto, California, on Wednesday, Nov. 15, 2017. East Palo Alto police gave homeless people living in RVs and their cars less than 24 hours notice to vacate Weeks St. which is the site of the future Chan Zuckerberg Primary School. (Gary Reyes/ Bay Area News Group)

And the city’s violent history is never far enough past. It had the highest per capita murder rate in the country in 1992, when drug wars tindered violence in the small city and led to a homicide almost every week.

But the area has rapidly gentrified. Crime is down. Last year, the city had just one murder.

Omar Kinaan, an agent with Golden Gate Sotheby’s International, said buyers look to East Palo Alto for investment properties or good values. Bay Area home shoppers with $1 million to spend have fewer choices, he said.

“In our area,” Kinaan said, “it’s a challenging budget.”

Real estate agent Catherine Gortner started selling homes in East Palo Alto in 2003 to Stanford doctors and other professionals. Her mix of clients moving into University Square has become dominated by tech workers drawn by short commutes and bigger homes.Many families send their children to private schools or surrounding districts through a transfer lottery, she said.

Many of her original clients would have trouble affording East Palo Alto today, Gortner  said. “It’s not surprising,” she said. “It’s not just East Palo Alto — it’s everywhere. That’s why people are leaving the Bay Area.”

HOA Maintenance, Capital Improvements and Useful Life: Are You Prepared?

“Should we fix this component…or replace it entirely?”
“Is this maintenance job becoming a capital improvement?”
“How can we extend a component’s useful life?”

Do these questions sound familiar? The truth is everyone in your homeowners association (HOA) wants your property’s components to continue to function smoothly and look good. That requires undertaking necessary routine maintenance and repairs as well as capital improvement projects. Properly funding these two types of activities depends primarily on your knowledge of how they differ and how they work together and a deeper understanding of useful life and reserve studies.

To learn more about the importance of budgeting for maintenance and capital improvements, read on and complete the form below to download our helpful white paper,Pay Now or Pay (More) Later? Making the Most of Your Reserve Study and Maintenance Budget.

If you’re like many residents (and even board members) who live in HOAs across California, you may not understand every single thing about maintenance, capital improvements and useful life. Not to worry! We’re here to explain the relationship between maintenance and capital improvement projects and how you should partner with your California HOA management company to budget for them. And to make sure your management company is on the same page with you in terms of maintenance and budgeting projects, read our article, “React, Outsource, or Prevent? Find Your Association’s Maintenance Style.”

What’s Considered Maintenance?

As a refresher for you, day-to-day and preventative maintenance are activities that are meant to restore components to their original condition and prevent them from deteriorating any further. These activities should be funded in your budget as expenses under the “Repairs & Maintenance” (R&M) line item.

With proper maintenance, components have a better chance of reaching their expected useful life. For example, activities such as making repairs to your irrigation systems, landscaping, touching up the paint in your hallways, regular cleaning of your pool, changing lightbulbs and other tasks that your HOA property management company attends to frequently or on an ongoing basis are classified as maintenance jobs.

What’s Considered a Capital Improvement?

A major replacement or repair that will increase a component’s market value beyond its original or current state should be categorized as a capital improvement. Generally, you will undertake this type of project to reduce future operational costs (such as utility or maintenance costs) or to enhance your residents’ quality of service. For example, if you replace your building’s roof, upgrade to a more energy-efficient ventilation system or install LED lighting throughout your community, you are undertaking a capital improvement project.

Capital improvement projects should be funded from your reserves rather than from your operational budget. Since these projects are costly, your HOA management company needs to plan for them and collect money over time to pay for them. That’s where a reserve studycomes in. Having a qualified reserve study specialist conduct a study helps you determine which components will need to be replaced, how much more useful life they are likely to have, the estimated cost for the project and the annual amount of money your association needs to put into your reserve fund to pay for it.

How Do You Determine “Useful Life”?

The amount of time that a component will serve its original purpose is referred to as its “useful life.” “Every component has a useful life given to it by the manufacturer,” said Rodney Riepenhoff, reserve study specialist and corporate engineer for FirstService Residential.

Manufacturers estimate useful life based on certain assumptions about a component. However, factors like additional wear and tear, regulatory changes, environmental conditions or unexpected obsolescence can affect its actual useful life.

How Do You Make Sure Maintenance and Capital Improvements Work Together?

How closely your management company adheres to the manufacturer’s recommended maintenance schedule will significantly impact a component’s actual useful life. Riepenhoff points out, “Many communities do not do all the required maintenance, often because of the cost.”

In the long run, however, this can wind up costing the HOA more because it reduces the component’s useful life. The need to replace a component sooner than expected not only means reducing the return on investment (ROI) of that component, but it also means having an unexpected expense for the new component. More than likely, your HOA will not yet have enough in your reserve if the amount you’ve been putting aside was based on a later replacement date.

The lack of an updated reserve study is often to blame when an HOA is unaware that its preventative maintenance has been inadequate. “Or the HOA hires a third-party vendor that is not doing the necessary work, and they have no checks and balances in place,” said Riepenhoff.

How Do You Extend “Useful Life”?

Diligent maintenance can actually extend a component’s useful life. For instance, if replacing certain parts on a component allows it to function more efficiently or if your materials are of a higher quality, the component is likely to last longer than expected.

One Los Angeles high-rise association learned about the relationship between maintenance and capital expenditures the hard way. Inadequate guidance and support from its community management company resulted in years of neglected preventative maintenance at the 228-unit high-rise. This included unresolved water drainage issues from the pool and surrounding area, which caused numerous leaks into the parking lot below. Riepenhoff evaluated the issue when FirstService Residential took over the HOA management services. While resolving the drainage problem did require a $120,000-capital improvement project, this was $280,000 less than a previously recommended improvement. Additionally, the association now has a maintenance plan to help prevent costly damage to the community in the future.

Riepenhoff does warn that it’s possible to overdo maintenance. Some communities continue to maintain a component when it would be more cost effective to replace it. How do you know when it’s time to replace rather than maintain? Riepenhoff said, “When the yearly cost outweighs the replacement cost, it’s time to replace it.”

Can a Maintenance Job Become a Capital Expenditure?

There are definitely times when your HOA receives the unexpected news that a maintenance job is not enough to resolve an issue. A deeper look into the problem might uncover surprises that turn the job into a capital improvement project. For example, you may have had a leak in your roof that you assumed required a simple patching. However, when your roofers examined the problem, they found more widespread damage that requires a roof replacement. Originally, the maintenance job would have been funded out of your operational budget. Now, your HOA will need to pay for the project out of your reserve fund. (Hopefully, you have the necessary money in your reserves.)

Which Criteria Differentiates Maintenance From Capital Improvements?

When to categorize an expenditure as a “maintenance job” versus a “capital improvement project” is a case-by-case determination. Some factors you should consider include:

  • The component’s value
  • Your goal in performing the work
  • The scope of the work
  • The actual result
  • How the work will affect the component’s value, equity return and depreciation

Now that you have a better understanding of the purpose of maintenance and capital improvement work at your community, you can budget for your projects more effectively. Matching your maintenance plan to your capital improvements will help improve your community’s property value and enhance the comfort, safety and enjoyment of every resident.

HOA Maintenance, Capital Improvements and Useful Life: Are You Prepared?

“Should we fix this component…or replace it entirely?”
“Is this maintenance job becoming a capital improvement?”
“How can we extend a component’s useful life?”

Do these questions sound familiar? The truth is everyone in your homeowners association (HOA) wants your property’s components to continue to function smoothly and look good. That requires undertaking necessary routine maintenance and repairs as well as capital improvement projects. Properly funding these two types of activities depends primarily on your knowledge of how they differ and how they work together and a deeper understanding of useful life and reserve studies.

To learn more about the importance of budgeting for maintenance and capital improvements, read on and complete the form below to download our helpful white paper,Pay Now or Pay (More) Later? Making the Most of Your Reserve Study and Maintenance Budget.

If you’re like many residents (and even board members) who live in HOAs across California, you may not understand every single thing about maintenance, capital improvements and useful life. Not to worry! We’re here to explain the relationship between maintenance and capital improvement projects and how you should partner with your California HOA management company to budget for them. And to make sure your management company is on the same page with you in terms of maintenance and budgeting projects, read our article, “React, Outsource, or Prevent? Find Your Association’s Maintenance Style.”

What’s Considered Maintenance?

As a refresher for you, day-to-day and preventative maintenance are activities that are meant to restore components to their original condition and prevent them from deteriorating any further. These activities should be funded in your budget as expenses under the “Repairs & Maintenance” (R&M) line item.

With proper maintenance, components have a better chance of reaching their expected useful life. For example, activities such as making repairs to your irrigation systems, landscaping, touching up the paint in your hallways, regular cleaning of your pool, changing lightbulbs and other tasks that your HOA property management company attends to frequently or on an ongoing basis are classified as maintenance jobs.

What’s Considered a Capital Improvement?

A major replacement or repair that will increase a component’s market value beyond its original or current state should be categorized as a capital improvement. Generally, you will undertake this type of project to reduce future operational costs (such as utility or maintenance costs) or to enhance your residents’ quality of service. For example, if you replace your building’s roof, upgrade to a more energy-efficient ventilation system or install LED lighting throughout your community, you are undertaking a capital improvement project.

Capital improvement projects should be funded from your reserves rather than from your operational budget. Since these projects are costly, your HOA management company needs to plan for them and collect money over time to pay for them. That’s where a reserve studycomes in. Having a qualified reserve study specialist conduct a study helps you determine which components will need to be replaced, how much more useful life they are likely to have, the estimated cost for the project and the annual amount of money your association needs to put into your reserve fund to pay for it.

How Do You Determine “Useful Life”?

The amount of time that a component will serve its original purpose is referred to as its “useful life.” “Every component has a useful life given to it by the manufacturer,” said Rodney Riepenhoff, reserve study specialist and corporate engineer for FirstService Residential.

Manufacturers estimate useful life based on certain assumptions about a component. However, factors like additional wear and tear, regulatory changes, environmental conditions or unexpected obsolescence can affect its actual useful life.

How Do You Make Sure Maintenance and Capital Improvements Work Together?

How closely your management company adheres to the manufacturer’s recommended maintenance schedule will significantly impact a component’s actual useful life. Riepenhoff points out, “Many communities do not do all the required maintenance, often because of the cost.”

In the long run, however, this can wind up costing the HOA more because it reduces the component’s useful life. The need to replace a component sooner than expected not only means reducing the return on investment (ROI) of that component, but it also means having an unexpected expense for the new component. More than likely, your HOA will not yet have enough in your reserve if the amount you’ve been putting aside was based on a later replacement date.

The lack of an updated reserve study is often to blame when an HOA is unaware that its preventative maintenance has been inadequate. “Or the HOA hires a third-party vendor that is not doing the necessary work, and they have no checks and balances in place,” said Riepenhoff.

How Do You Extend “Useful Life”?

Diligent maintenance can actually extend a component’s useful life. For instance, if replacing certain parts on a component allows it to function more efficiently or if your materials are of a higher quality, the component is likely to last longer than expected.

One Los Angeles high-rise association learned about the relationship between maintenance and capital expenditures the hard way. Inadequate guidance and support from its community management company resulted in years of neglected preventative maintenance at the 228-unit high-rise. This included unresolved water drainage issues from the pool and surrounding area, which caused numerous leaks into the parking lot below. Riepenhoff evaluated the issue when FirstService Residential took over the HOA management services. While resolving the drainage problem did require a $120,000-capital improvement project, this was $280,000 less than a previously recommended improvement. Additionally, the association now has a maintenance plan to help prevent costly damage to the community in the future.

Riepenhoff does warn that it’s possible to overdo maintenance. Some communities continue to maintain a component when it would be more cost effective to replace it. How do you know when it’s time to replace rather than maintain? Riepenhoff said, “When the yearly cost outweighs the replacement cost, it’s time to replace it.”

Can a Maintenance Job Become a Capital Expenditure?

There are definitely times when your HOA receives the unexpected news that a maintenance job is not enough to resolve an issue. A deeper look into the problem might uncover surprises that turn the job into a capital improvement project. For example, you may have had a leak in your roof that you assumed required a simple patching. However, when your roofers examined the problem, they found more widespread damage that requires a roof replacement. Originally, the maintenance job would have been funded out of your operational budget. Now, your HOA will need to pay for the project out of your reserve fund. (Hopefully, you have the necessary money in your reserves.)

Which Criteria Differentiates Maintenance From Capital Improvements?

When to categorize an expenditure as a “maintenance job” versus a “capital improvement project” is a case-by-case determination. Some factors you should consider include:

  • The component’s value
  • Your goal in performing the work
  • The scope of the work
  • The actual result
  • How the work will affect the component’s value, equity return and depreciation

Now that you have a better understanding of the purpose of maintenance and capital improvement work at your community, you can budget for your projects more effectively. Matching your maintenance plan to your capital improvements will help improve your community’s property value and enhance the comfort, safety and enjoyment of every resident.

11 Questions to Evaluate Your HOA’s Maintenance Plan

How well do you know your association’s preventative maintenance (PM) plan? Whether your California HOA management company has a proactive or reactive maintenance style, having a solid PM program is critical to ensuring that your HOA doesn’t face surprise costs. A thoughtful and robust PM program can help prepare you for the future and give you a competitive edge in the community at large.

To make sure you and your management company are on the same page when it comes to preventative maintenance, sit down with them to discuss what steps they are taking. Complete the form below to download a complimentary guide to bring to your next meeting: 11 Questions to Assess the Health of Your HOA Maintenance Plan.

What do you need to know about your PM program? Start with these 11 questions.

1.  Do we even have a PM program?

It’s a no-brainer, right? Maybe so, but the first question you want to ask your HOA management company is whether they even have a preventative maintenance (PM) program? This gives you a basis for the rest of the conversation. If the answer is no or you’re not sure, speak to your management company about establishing one. If the answer is yes, follow up with additional questions to find out what that looks like.

2.  Is our PM program documented?

You likely already know this, but when it comes to association business, make sure you aren’t just dealing with verbal agreements. Everything should be documented digitally or in print, and that includes your PM program. This step is important because it ensures that everyone understands your maintenance schedule going forward. Your board of directors and manager may not be the same in a year (or five years), so having a written plan in place provides direction for future boards and managers.

3.  Are you taking our reserve study into account when planning maintenance?

Don’t confuse a reserve study with a PM program; the two are vastly different. But on the same note, they should also complement each other. Most importantly, the reserve study should be reviewed when developing a PM plan. Rodney Riepenhoff, corporate engineer at FirstService Residential, said, “Reviewing an association’s reserve study annually helps us ensure that a community’s preventative maintenance program matches equipment life expectancies.” He noted, “A timely review of the reserve study allows us to help associations mitigate surprise costs and save money.”

4.  Has an engineering specialist assessed our equipment and facilities?

Your HOA property management company should partner with a dedicated engineer to assess your equipment and facilities. Don’t rely on an amateur when you require the help of a professional. Partnering with a dedicated and experienced engineering specialist often leads to more informed solutions and cost savings for your HOA.

For instance, one 228-unit Los Angeles high-rise managed by FirstService Residential called in corporate engineer Riepenhoff to assess several ongoing water drainage issues. These issues had been affecting the pool area and causing multiple leaks into the parking lot below. Prior to FirstService Residential coming on board, the association had received an estimate of $400,000 to solve the water drainage issues. With a long list of other repairs and limited funds to work with, they were in need of a more cost-effective solution. Because Riepenhoff’s engineering expertise, he immediately identified the cause of the problem and found that it would require $280,000 less to fix it than the original assessment.

Because of Riepenhoff’s engineering expertise, he immediately identified the cause of the problem and found that it would require $280,000 less to fix it than the original assessment.

5.  What kinds of testing methods are we using?

To ensure that your PM plan is accurate and thorough, your engineering specialist should use a variety of testing methods to assess your facilities and equipment. For example, they should be using vibration analysis to measure the vibration of moving parts in machines to anticipate failures. This information can be used to help determine the condition of equipment like pumps and motors to help inform your PM program. It is also used to diagnose mechanical problems, including imbalance, misalignment, looseness, worn bearings, strain and resonance. Examples of other critical tests include plumbing stack inspection, laser shaft alignment, thermal imaging, sound testing, oil sampling and analysis and trends analysis.

Examples of other critical tests include plumbing stack inspection, laser shaft alignment, thermal imaging, sound testing, oil sampling and analysis and trends analysis. 

6.  How often are you inspecting facilities and equipment?

Your community’s maintenance schedule depends on the size and scope of your facilities and your association’s specific needs. How do you determine this schedule? Your management company should have an engineering specialist perform a quality assurance assessment or full inspection of all your components. After 30 days, they will be able to determine a baseline that can be used to determine how often maintenance and inspections will need to take place. The maintenance schedule should also support your reserve study; if the reserve study’s estimated timelines do not align with your PM program, there’s a good chance your program is outdated. Lastly, your maintenance schedule should remain fluid to accommodate emergencies, such as extreme weather.

7.  What are you doing to extend the useful life of equipment and facilities?

As mentioned in the article, “HOA Maintenance, Capital Improvements and Useful Life: Are You Prepared?” manufacturers often determine the useful life of components. But your management company and board can take actions to help extend a component’s useful life. On the flipside, a management company that doesn’t have a solid PM program in place may inadvertently be reducing a component’s useful life. That’s why it’s important to ask your management company if they are following a manufacturer’s recommended maintenance and what steps they are taking to improve useful life. They can extend useful life by instituting regular testing of equipment (per question five), investing in ongoing maintenance and replacing parts with better-quality or more efficient materials.

8.  What types of vendors do we work with?

You should work with an HOA property management company that only partners with preferred and highly vetted vendors. They should be seeking out multiple quotes for the purpose of getting the best price and highest quality for your association. To accomplish this, work with a management company that is experienced in your local market, has relationships with trusted vendors and is connected to a network of national support.

9.  What system is used to track maintenance projects?

A Computerized Maintenance Management System (CMMS) or some type of digital tracking system should be used to monitor maintenance projects and automate all of your schedule’s processes. To get the most out of a CMMS, your management company should consider the number of users needed, the location where the application is hosted, whether the CMMS can be accessed via mobile and if it tracks items like inventory, work requests and scheduled maintenance.

10.  What do you do when emergency maintenance issues occur?

No matter how well prepared you are, natural disasters and emergencies are a part of life. However, an experienced management company has procedures in place that prepare for unexpected emergencies. For starters, they should have documented staff training, exit strategy, equipment preparation and emergency protocol review. Your management company should have the knowledge and resources to deal with these unforeseen issues.

11.  Do our maintenance projects require a project manager?

Depending on the size of your community and the components within it, you may need to take on much larger maintenance projects or capital improvements. And it’s in your best interest to have the support of a dedicated project manager to help facilitate these projects. An experienced management company should offer project consulting services, where they provide support for a number of important tasks, like establishing the budget and guiding the bidding process.

How robust is our preventative maintenance plan?

Without a doubt, a thorough preventative maintenance plan can help mitigate unexpected costs and repairs, ultimately saving your association money. That’s why it’s important to have an in-depth conversation with your management company about the steps they are taking to ensure the health of your maintenance plan.

How an All-In-One Property Management Solution Can Drive Efficiency for Your Business

The on-demand marketplace has changed the way consumers interact with brands across all industries, including the residential rental property management and community association management sectors. Multifamily business models are shifting to meet evolving expectations. At the intersection of superior customer service and higher profit margins lies an all-in-one solution that enhances customer experiences and drives organizational performance.

Benefits of All-In-One Property Management Solutions

In a nutshell, all-in-one property management solutions provide quick, easy access via universal search to everything you need for managing your business from anywhere, at any time, from any device. Benefits you should expect from a complete property management software solution include:

An Intuitive Solution with Single Login Access

Technology enables managers to gather, organize and distribute relevant information to owners, investors, tenants, and board members (for community association managers) from the same device, streamlining communication while saving time.

Improved Data Accuracy

There’s no need to manually transfer spreadsheet data to accounting software; then manually transfer accounting details to customer statements. Aggregating data from multiple softwares or point solutions is a thing of the past with a complete property management solution. Replacing manual data entry throughout each step of your process with automated workflows ensures accurate, real-time data every time.

Empowering Employees with Mobility

With access to all areas of your business, including accounting, leasing, maintenance, and performance reports, from any device your entire team will be in the loop. Whether a leasing agent is looking up the status of a potential renter, or an administrative assistant is referencing the current status of a maintenance request for a customer – everyone will be seeing the most current, accurate data.

Improve Communication with Maintenance Team & Vendors

With an all-in-one property management system, your internal maintenance team and external vendors can stay on the same page. With easy access to maintenance requests and the ability to update them with current status, everyone stays in the loop, including the renters and homeowners so that the lines of communication remain open. Eliminating hand-written notes and messages regarding maintenance reduce errors to improve accuracy.

A Focus on The Customer

In today’s on-demand, high-expectations economy, property management professionals who consider each customer touch-point as a means to strengthen long-term relationships prioritize service. By consolidating all of your communication, notes, and property data into one system, property managers are able to more quickly and accurately work with renters, answer questions, and resolve issues. An all-in-one software solution improves customer service, thereby enhancing growth and profit potential with each engagement.

 

When Misguided Attempts to Keep HOA Fees Low Affect the Reserve Fund

Compass-map-pushpins

The reserve fund of a homeowners association is often misunderstood by members and sometimes the HOA board as well. Some see it as a slush fund that is to be used on a “rainy day”‘ when the association gets low on cash in the operating account. Others, although they may understand the need to have some measure of reserve cash, do not make the connection that reserve funds are being reserved for the particular components within the community that the association is responsible for, such as roads, roofing, siding, fencing, painting, and equipment replacement.

These misconceptions can often be compounded by the well-intentioned but misguided attempts by some to keep HOA fees as low as possible. When someone runs for the Board on the platform that they’re going to reduce fees to 1985 levels, the best advice is, “don’t drink that Kool-Aid…run the other way!” That candidate is living in a dream world, equivalent to someone who thinks that next month they’ll be able to drop the price of a gallon of gas to fifty cents and a loaf of bread to a quarter.

Misguided Members

Board members simply do not have that level of control over the expenses of their association because most expenses will be driven by the marketplace. They may want the handyman that will work for $6 per hour and a cold beverage, but good luck in getting them.

Although they may be able to cut expenses by conserving costs such as PG&E, sewer, water, garbage, insurance, equipment or hourly contractor rates, building materials and more are typically not going down and certainly not to 1985 levels. What is the solution for these shortsighted, misguided members? They cut adding to the reserve fund and perhaps neglect other amenities. The result would create a mess that others would have to clean up.

Fiduciary Duty

Board members have a fiduciary duty to ensure their homeowners association has adequate reserve funds. If a person is not willing to do this, then they should refrain from running for the Board. Thinking they would be doing a service to the association by keeping the fees low at any cost, they would actually be costing their association dearly. This is the pathway to special assessments, borrowing, and unpleasant emergency conditions.

Important Laws

Because of the tendency of too many Boards to inadequately set aside reserve funds for their  association, the State of California has continued to adopt laws that homeowners associations must follow in this regard.

A few of these include:

  • The requirement to have an on-site reserve fund study completed every three years
  • The need to have a plan to meet the future obligations of the association
  • The requirement each year to disclose the sufficiency of the reserve funds to meet the obligations of the association over a subsequent thirty year period.

The state of California has chosen to take the failure of too many Boards seriously. You should as well.

Become a Board member or support one who will protect your ownership interest by being committed to adequately funding your homeowners association reserve funds. You will sleep much better at night!

Empowering Technology to Avoid Landscape Losses

Empowering Technology to Avoid Landscape Losses

The drought that gripped the U.S. a few years ago may be over, but lessons learned to conserve water and landscape loss are very much applicable to today’s front and backyards.

Many municipalities continue to enforce weekly water restrictions as the nation recovers from shortages that left some reservoirs and lakes high and dry. Communities are attempting to preserve much of today’s plentiful water supplies by enforcing water conservation.

As water supplies dwindled around 2012, xeriscaping gained popularity to keep landscapes from looking burned and depleted. Grass and traditional plants were replaced by low-maintenance rock, decomposed granite and native foliage. Also Evapotranspiration (ET)-based irrigation technologyemerged to control the volume of watering.

While some of xeriscaped landscapes remain, a green lawn has become desirable again, especially now that water supplies are back to normal. But experts says that efficient irrigation practices are just as necessary as they were four or five years ago.

“During the drought, we learned a lot of landscape design principle changes,” said EarthworksPresident Chris Lee. “Even though we’re past the drought, a lot of cities still have the twice-weekly watering restrictions. We need to still be as efficient as possible in irrigating our lawns.”

ET-based controllers act like a thermostat for an apartment property’s sprinkler system, telling it when to turn on and off, while using local weather and landscape conditions to tailor watering schedules to actual conditions on the property. Instead of irrigating using a controller with a clock and a preset schedule, ET controllers allow watering schedules to better match plants’ water needs while minimizing runoff.

Duration, frequency, and soak times are set by several factors. Weather data combined with geographical location, sprinkler type, plant type, soil type, and a fine tuning option, enables the smart irrigation controller to irrigate with precision. Also, problems with output – such as a malfunctioning zone – can be identified through the flow sensor with a swipe of the screen or click of the mouse anytime, anywhere.

The technology is mobile friendly and systems can be controlled from anywhere, anytime.

Technology helps property managers get a grip on irrigation

A big benefit to ET-based controllers is minimizing overwatering, which is more prevalent in the summer, according to the Environmental Protection Agency. EPA says that 30 percent of all water consumed in the U.S. is used for outdoor purposes and that up to half is wasted during the summer because of evaporation, runoff or wind.

In 2012, Texas-based Weathermatic, a manufacturer of ET-based controllers, began a sustainability program and started reducing water consumption for property management companies. After three years, the average water usage of Weathermatic’s top five property management customers dropped 50 percent, said President and CEO Mike Mason. The savings were twice as much as California’s mandated 25 percent reduction in water usage around 2012.

Lee says the company is working with landscapers to help property management companies switch to the controllers so landlords can stay on top of water consumption. The technology won’t necessarily save a lot on the water bill but will help apply the right amount of moisture at the right time to keep plants and grass healthy.

“You’re not going to save a lot of money on your water bill but when you’re talking about money on the capital side because you’re not managing irrigation as efficiently as you can and you increase plant material loss, that’s where it will make an impact,” he said.

Making the best of water restrictions

The program, which starts in January, is particularly beneficial for property management companies who have multiple rental homes. High-end commercial grade controllers can run upwards of $5,000; typical residential controllers retail as high as $1,800. By working with select landscape companies, property managers can save on installation costs and get the benefit of ET-based controllers without outlaying a bunch of capital, Lee said.

Controllers can be programmed to manage city restrictions and integrate with sensors to identify variances in flow rate, an indicator that can lead to leak detection or equipment malfunction that prohibits adequate coverage. Flow sensors ultimately reveal whether or not the system is working correctly to avoid plant and grass loss, which can get expensive to replace.

The system will also shut down automatically during disasters and emergencies.

“When you only have a couple of shots a week to irrigate your property you need to know if the system is working properly,” Lee said. “Flow sensors look at consumption and tell if the system is coming on or not.”

The controllers can be especially beneficial for rental homes where residents manage the landscape irrigation. Ultimately, the landscape gets irrigated properly to avoid overwatering or under-watering, which affects plant life. The home’s front and backyards always look good, enhancing curb appeal and reducing the need to replace dead or damaged plants, which ultimately costs the landlord, Lee says.

“Cities aren’t going to relax their water restrictions,” he said. “They’re here to stay. Managing irrigation efficiently is going to continue to be critical, no matter the conditions outside. This technology is an opportunity for property managers to be efficient about how they water and ensure the landscape is healthy and looks good. It really does the thinking for you.”

Empowering Technology to Avoid Landscape Losses

Empowering Technology to Avoid Landscape Losses

The drought that gripped the U.S. a few years ago may be over, but lessons learned to conserve water and landscape loss are very much applicable to today’s front and backyards.

Many municipalities continue to enforce weekly water restrictions as the nation recovers from shortages that left some reservoirs and lakes high and dry. Communities are attempting to preserve much of today’s plentiful water supplies by enforcing water conservation.

As water supplies dwindled around 2012, xeriscaping gained popularity to keep landscapes from looking burned and depleted. Grass and traditional plants were replaced by low-maintenance rock, decomposed granite and native foliage. Also Evapotranspiration (ET)-based irrigation technologyemerged to control the volume of watering.

While some of xeriscaped landscapes remain, a green lawn has become desirable again, especially now that water supplies are back to normal. But experts says that efficient irrigation practices are just as necessary as they were four or five years ago.

“During the drought, we learned a lot of landscape design principle changes,” said EarthworksPresident Chris Lee. “Even though we’re past the drought, a lot of cities still have the twice-weekly watering restrictions. We need to still be as efficient as possible in irrigating our lawns.”

ET-based controllers act like a thermostat for an apartment property’s sprinkler system, telling it when to turn on and off, while using local weather and landscape conditions to tailor watering schedules to actual conditions on the property. Instead of irrigating using a controller with a clock and a preset schedule, ET controllers allow watering schedules to better match plants’ water needs while minimizing runoff.

Duration, frequency, and soak times are set by several factors. Weather data combined with geographical location, sprinkler type, plant type, soil type, and a fine tuning option, enables the smart irrigation controller to irrigate with precision. Also, problems with output – such as a malfunctioning zone – can be identified through the flow sensor with a swipe of the screen or click of the mouse anytime, anywhere.

The technology is mobile friendly and systems can be controlled from anywhere, anytime.

Technology helps property managers get a grip on irrigation

A big benefit to ET-based controllers is minimizing overwatering, which is more prevalent in the summer, according to the Environmental Protection Agency. EPA says that 30 percent of all water consumed in the U.S. is used for outdoor purposes and that up to half is wasted during the summer because of evaporation, runoff or wind.

In 2012, Texas-based Weathermatic, a manufacturer of ET-based controllers, began a sustainability program and started reducing water consumption for property management companies. After three years, the average water usage of Weathermatic’s top five property management customers dropped 50 percent, said President and CEO Mike Mason. The savings were twice as much as California’s mandated 25 percent reduction in water usage around 2012.

Lee says the company is working with landscapers to help property management companies switch to the controllers so landlords can stay on top of water consumption. The technology won’t necessarily save a lot on the water bill but will help apply the right amount of moisture at the right time to keep plants and grass healthy.

“You’re not going to save a lot of money on your water bill but when you’re talking about money on the capital side because you’re not managing irrigation as efficiently as you can and you increase plant material loss, that’s where it will make an impact,” he said.

Making the best of water restrictions

The program, which starts in January, is particularly beneficial for property management companies who have multiple rental homes. High-end commercial grade controllers can run upwards of $5,000; typical residential controllers retail as high as $1,800. By working with select landscape companies, property managers can save on installation costs and get the benefit of ET-based controllers without outlaying a bunch of capital, Lee said.

Controllers can be programmed to manage city restrictions and integrate with sensors to identify variances in flow rate, an indicator that can lead to leak detection or equipment malfunction that prohibits adequate coverage. Flow sensors ultimately reveal whether or not the system is working correctly to avoid plant and grass loss, which can get expensive to replace.

The system will also shut down automatically during disasters and emergencies.

“When you only have a couple of shots a week to irrigate your property you need to know if the system is working properly,” Lee said. “Flow sensors look at consumption and tell if the system is coming on or not.”

The controllers can be especially beneficial for rental homes where residents manage the landscape irrigation. Ultimately, the landscape gets irrigated properly to avoid overwatering or under-watering, which affects plant life. The home’s front and backyards always look good, enhancing curb appeal and reducing the need to replace dead or damaged plants, which ultimately costs the landlord, Lee says.

“Cities aren’t going to relax their water restrictions,” he said. “They’re here to stay. Managing irrigation efficiently is going to continue to be critical, no matter the conditions outside. This technology is an opportunity for property managers to be efficient about how they water and ensure the landscape is healthy and looks good. It really does the thinking for you.”