Spending decisions in shared-interest communities often reflect tension between competing priorities: Are we upgrading infrastructure, elements often invisible to the untrained eye, or are we leaning into aesthetics and high-value amenities, like a dazzling lobby or a state-of-the-art gym? Just as both necessities and luxuries can be produced in a balanced national economy, necessary infrastructure maintenance and upgrades can be balanced with more aesthetic projects to satisfy the needs of both.

A Balancing Act

Effective budgeting in a shared interest community is all about balance, but it’s also about priorities. Clearly, a welcoming lobby or clubhouse gives both residents and prospective buyers a positive impression of your community; that definitely matters, but a failing boiler or a pot-holed parking area requires more immediate attention.  

“The primary focus has to be to maintain the building,” says Dan Wollman, CEO of Gumley Haft, a management firm based in New York City, “which is a combination of things, including both physical infrastructure and aesthetics. You have to look at the picture in totality, and then prioritize needs and wants. If we haven’t refurbished the lobby in 30 years, but our boiler only has a year to last, we may have to do the boiler first—but the next project is definitely the lobby, unless of course there are more serious infrastructure items that pop up in the interim. The boiler always wins out.” 

And it pays for boards and management to be upfront with residents about these expenditures and how they’re prioritized. “When you need to improve infrastructure, people understand and are willing to pay,” says Wollman, “but when you spend $50,000 for lobby furniture, you’ll hear about it from many residents.”

Andy Marks, executive vice president of Maxwell-Kates, a management company also based in New York and a former co-op board president himself, says he’s well familiar with the challenge of doing budget triage for an entire community, and offers this advice to others: “Characterize the problem as ‘need-to-haves,’ and not vs., ‘nice-to-haves.’ This is how I handled it as a board president, and the way we present it to our clients. Planning is the key—not just annual budget planning, but a three-to-five year capital plan, or what I call a capital planning ‘roadmap.’”

Marks says that roadmap should include four distinct questions: One, what do we need to do, what’s the project? Two, what’s the timeline, and when does the project need to be completed? Three, how much will it cost? And four, how will we pay for it? Today, many communities are using reserve studies to help balance this scheduling and control the cost of both infrastructure and aesthetic projects.

“One of the biggest shifts affecting condominium communities today is long-term planning,” says Jessica Ruiz, senior vice president and head of southeast operations for AKAM Management with offices in Florida and New York. “Following changes in reserve funding requirements and increased scrutiny of aging buildings, boards are moving away from reacting to emergencies and toward proactive asset management. Communities that maintain comprehensive reserve studies, regularly update their capital plans, and communicate openly with residents are consistently making better decisions and avoiding the financial shocks that come with deferred maintenance. Ultimately, the most successful boards recognize that infrastructure and lifestyle are not competing priorities. They’re complementary investments. Residents want beautiful places to live, but those communities only remain desirable when the systems behind the walls, beneath the ground, and above the ceilings are equally well maintained.”

True as that is, boards have their work cut out for them when it comes time to pitch an expensive, potentially disruptive infrastructure project to the residents who must ultimately foot the bill. It’s much easier to get people excited about a roof lounge or game room. That’s because infrastructure is largely invisible; aesthetics aren’t, obviously. “But you do have to do infrastructure first,” says Scott Wolf, CEO of BRIGS, a management firm based in Massachusetts, “even if the owners want new carpet and a gym. We find that the best course for a board is to do a reserve study and work off of that. Additionally, have a regular maintenance program, so that perhaps the carpet gets shampooed more often, and doesn’t necessarily need to be replaced. Regular maintenance can slow deterioration and slow progress toward a big job. Proper planning and communicating with the ownership helps as well. Let them know the board knows something needs to be done and that it will be done on a pre-set schedule. They need to know the board is doing its job.”

What’s in the Docs?

In many communities, the decisions to undertake certain projects are dictated to some extent by what’s in the association’s or corporation’s governing documents.  

In a condominium, there is often a limit on how much can be spent without community approval unless a situation involves life safety. “We did a $4 million façade project at a major Manhattan condominium,” says Wollman. “There’s never an appetite for a 40-story facade job. The board was limited in its freedom to act by the bylaws, and had to sell the owners on the project. 

“The rules are completely different in co-ops,” he continues. “At the property I mentioned, for instance, they will never get the lobby refurnished because they will never get the required number of owners to agree to it. Big building aesthetics get kicked to the back when the only source of money is residents.”

The Venn Diagram

When do infrastructure and aesthetic projects overlap? Does it ever make economic sense to bundle them together? Well, sometimes and…sometimes.  Much depends on circumstance. So, say your community needs new walkway paving, and you also want to put your electrical lines into weather-resistant underground piping. Could both be done at the same time to avoid having to tear up the grounds twice? Similarly, if you need to install new fire doors, might it be a good time to upgrade hallway lighting and paint?

“There are not many projects that are both structural and lifestyle,” says Christopher Alker, senior vice president for AKAM. “However, a couple that come to mind are exterior windows, and traffic coating for parking structures. Old windows can be drafty, difficult to open, and a source of energy loss year-round. Bundling new window installation with Local Law exterior work takes advantage of scaffolding already being present, and saves money by not having to pay for multiple mobilizations.” 

Similarly, he says, “Traffic coating for parking structures decreases slip hazards and helps slow the deterioration of the concrete slabs from the water, ice, and dirt brought in by vehicles. Its application is typically paired with restriping of the garage for increased visibility of parking spaces and clearances.”

“Bundling projects can reduce mobilization costs, minimize disruption for residents, and often produce better pricing from contractors,” notes Ruiz. “This is often one of the smartest ways to manage capital projects. If contractors are already mobilized for a roof replacement, façade restoration, or waterproofing project, it may be cost-effective to complete related improvements at the same time. Some examples would be upgrading exterior lighting during façade restoration. Refreshing landscaping after waterproofing work. Modernizing lobby finishes while mechanical systems are being replaced. Improving accessibility features while renovating common areas.” 

Curb Appeal

While infrastructure maintenance and repairs must by necessity take precedence over other types of projects, the pros are quick to point out that how a building or association looks does indeed matter—and can have a very real impact on sales (and sales prices).

This writer can attest to this. During his time in a mid-size NYC co-op, the board put off upgrades to the hallways for 22 whole years, using the cost of necessary infrastructure repairs and replacements as an excuse for letting things go for so long. When the writer sold his apartment, multiple brokers explained that apartments in his building were selling at 15% less than comparable apartments in the area due to the tired, badly-lit hallways.

“First impressions matter,” says Ruiz. “A well-maintained entrance, attractive landscaping, modern lighting, and updated common areas create confidence in prospective buyers before they ever step inside a unit. Buyers often judge the overall health of a community by what they can see.”

“Upgrades to lighting often increase energy efficiency, so quantifying that savings is not difficult,” says Alker. “It can be more difficult to measure items that don’t fit into a spreadsheet. However, if a new lobby, landscaping, or amenity in the building allows the building to compete with area comps, then it may be worth the investment. But a trusted broker with knowledge of the area should review and confirm which upgrades will yield the most potential returns.” 

Ruiz agrees, adding that “boards should avoid assuming every cosmetic project generates a return on investment. The improvements that typically provide the greatest value are those that enhance curb appeal, improve energy efficiency, reduce maintenance costs, or modernize outdated spaces without becoming overly customized or extravagant.”

The Dangers of Miscommunication

Perhaps the most critical factor in balancing infrastructure and aesthetic projects is communication. And while we’ve established that the boiler should always win out over a new gym, the community should also always know what’s happening in their building or HOA, and why.

Marks feels strongly that the choice between infrastructure and aesthetics is where board-management transparency and sharing with the community becomes critical. “Once your board has a roadmap and a budgeting concept that takes things into account, sharing the thinking behind that plan helps to quell any unrest within the community. If your owners or shareholders wind up going out of pocket without any explanation, you’ll wind up with conspiracy theorists. As a board president, I always said we are all volunteers. We don’t get paid. The assessments affect me the same as you. Make sure you communicate effectively.”

It should be remembered that as a board member, you hold a fiduciary responsibility to your community for both its physical and fiscal safety. That means sometimes making unpopular decisions that may negatively impact (or just really annoy) individual residents for the good of the community as a whole.

A.J. Sidransky is a staff writer/reporter for New England Condominium, and a published novelist. He may be reached at alan@yrinc.com.