A Better Way..a similar exterior project done at a 64 unit townhome complex in Bloomington in 2022
The Bloomington project is different from ours and doesn't include all the deck and patio work, but installing composite materials and making actual necessary repairs to our decks and porches should not add $40,000/unit to our project costs. Many homeowners have had independent inspections of their decks recently and more had their decks inspected when they purchased in the last few years. In all of those separate independent inspections, we have seen nothing that would justify or explain what FirstService Residential/Encompass see as the need for 180 new footing replacements, 75 full post replacements, and an additional 15 decks needing completely new deck framing as Encompass is insisting. It is important to get unbiased opinions by companies not affiliated with FirstService Residential. We need to have smaller commercial contractors who can be competitive at doing the work needed at our complex review and assess our actual needs and give us quotes based on their findings. We cannot afford to overpay for this work and there is no reason we should have to. This entire project needs to be re-looked at with cost containment in mind and using an approach that puts homeowners first. If we go forward with the current plan set forth by FirstService Residential/Encompass and Paragon, we will be spending $75-$80k per unit before financing costs for improvements that will add approx. $15-$35k in value to our homes. This makes no sense and will put our entire community at risk since it will put many homeowners in a position where they owe more than their home is worth and more than they can afford to pay each month. These homeowners will have no way out but foreclosure, and that will come at a very steep price to all. **
The Problem...
Similar to us, Kingslee Heights in Bloomington had serious water intrusion issues caused by vertical cedar siding that was installed on their 64 units spread across 12 buildings and their large community clubhouse/pool house. Some of this siding was installed in the 1970's and the newest was installed in 1991. They had been trying to maintain the siding over the years, but the cost was becoming prohibitive and with additional issues caused by water intrusion, woodpecker holes, and related damage to sheathing, it was clear they should be looking at a more permanent solution. Costs for labor and materials were very high due to being in the middle of COVID-19, but they still felt it was worth searching for solutions that were cost-effective and financially feasible for homeowners.
The Solution - what the project consisted of:
LP Siding on all of their 64 units in 12 buildings and a large stand-alone community building, they did all sides on every single building
New 4X4 deck posts on decks and any deck modifications needed to install the siding were included as part of this project (the Hoa takes care of painting including the decks but residents are responsible for the rest of their deck upkeep as is the case in most townhome HOA's)
All soffits; fascia; 4” window trim around all the windows and doors; new garage door trim and door jambs; and gutters and downspouts
Privacy walls, upper privacy walls in LP siding, and composite materials on lower privacy walls, those located under decks
The Kingslee Heights Complex had the work completed from late May 2022 to September 2022. This was at a time when labor was in short supply and materials were also difficult to source and more costly due to COVID-19, but with careful planning and a very aggressive bidding process that required getting multiple quotes from appropriate-sized contractors, they were able to come in at a price that came out to around $32,000 a person and less for those who were able to pay in advance. The HOA estimated a decrease in monthly dues of around $46 a month that had previously gone towards painting since the siding would no longer need to be painted and repaired.
I asked the Chair of the resident committee which was set up to put the siding project together to give us some advice based on what they learned through the whole experience so we could benefit from their recent and applicable experience. I told him a little about how our project was progressing so far and the pricing we were looking at per unit, and what additional items our project included. Below is what he offered on how they made their exterior renovation project successful and a financially appropriate investment for all homeowners:
1. We controlled the process; we did not rely on our management company for anything other than general support. This means that we selected our own construction manager, to assist us in researching our options, in developing the RFP for contractors, evaluating the bids and awarding the bid to the best (not the lowest cost) contractor, and then, most importantly, to manage the entire construction process down to the end. This is a person that the Board hired, not the management company. It sounds to me like you are relying too much on your management company, and they are driving the whole process. Your Board, and an independent committee of owners like we did, should be driving the process, including selecting the contractor.
2. You mentioned a construction cost bid of $2.7M for 33 units, which sounds much too high. We have 64 units in 12 buildings, plus a large clubhouse, and we did every single building, including siding, soffits, fascia, window and garage door trim, and gutters and downspouts for about $2.1 M. Furthermore, we arranged our own financing. I am a finance professional, and I shopped our project around to over 12 local banks (again, not relying on the management company). All but one bank offered us a financing term of 10-15 years. But I found one bank that would do a 20-year financing if we pledged a mortgage on all of our common property (landscaping, club house, pool, tennis court, and private roads), which we did.
3. I strongly recommend that your Board, not the management company, hires it owns construction manager for the tasks I mentioned above. I would be happy to recommend the guy we used. He saved us a great deal of money, and helped ensure a very high quality end product. I also strongly recommend that you retain your own legal counsel, perhaps the law firm already representing your HOA. But you should select that firm, not the management company. Since the laws governing HOA management are intricate, this should be a law firm with a deep understanding of HOA law. I would be happy to recommend our law firm if you do not already have one.
4. Our Board put together a very strong and active outside committee of residents, which I co-chaired, and they gave us the responsibility and authority to run the project, with their final approval. We hosted a number of community meetings, we had a design presentation from one of our prospective contractors who showed digital images of possible siding designs and colors, we interviewed contractors and designers, we hosted Q&A on-line, and we conducted a very focused marketing campaign to get owners’ approval There was initially a significant amount of opposition to the project, led by a couple of owners, but we spent time with them convincing them of the need for the project. At the end of the process (which took many months), we had a strongly affirmative vote for the siding project, and also for giving a mortgage on our common property. It was a very open and collaborative process, and it worked.
5. At the beginning of the project, we made several important decisions. (a) it would be all or none; we would do every building, all at the same time (to save costs); (b) we agreed to charge every unit the same cost, regardless of size (the end units had more wall square footage than the interior units), so we took the entire cost divided by 64; (c) we decided that the HOA would be the borrower with the bank, not the individual homeowners (since the owners have different levels of financial capability); (d) the debt service on the loan would be passed on to the individual owners through their monthly association dues, equally per unit; although this resulted in a monthly dues higher than comparable townhome properties, we felt it was the simplest and fairest way to do such a large project. At the end, this project cost each individual unit around $32,00, which we felt was a reasonable price for such an extensive renovation. Furthermore, through our HOA, we were able to get the owners a 20-year financing, which otherwise no owner could possibly get on his/her own. We also got the bank to agree to allow periodic prepayments of portions of the loan, as individual owners may decide, at their option, to prepay their portion of the total bill, especially if they were planning to sell their unit.
6. The actual monthly dues impact for us is somewhere around $228/month per unit, on top of our regular dues. Again, this is due to very aggressive bidding (under our control), and a 20-year financing. What you are projecting sounds out of line.
7. In the end, after all the drama, the owners here are very satisfied, even those who initially opposed it. We are not aware of any owners who left the HOA because of an objection to the project. Although we did have the usual turnover for an HOA like us (old age, illness, death), ironically the ones who sold got a higher price for their units because their units, and the entire complex, looks much nicer now that the project is finished.