Habitat Magazine
Many cash-strapped co-op and condo boards are reluctant to spend money, even on such inevitable expenses as facade repairs, window replacements and energy-efficiency measures. Those boards usually learn that being cheap — deferring maintenance — can get very expensive.
“There’s a cost for not being prepared,” Amalia Cuadra, senior director of engineering at EN-POWER GROUP, an energy engineering and consulting firm, tells Brick Underground. “If you are told you have to replace your boiler but you put it off and it goes out in January, that’s a different type of capital project — that becomes an emergency.”
There are also hidden costs to putting off repairs. Here are four of the costs boards can avoid by being proactive rather than reactive.
Local Law 97 Penalties. Higher energy consumption, particularly of fossil fuels, can boost a building’s carbon emissions and complicate compliance with the city’s strict climate law, Local Law 97.
“New York City buildings have to take into account LL97 penalties into their operating costs and that’s a changing landscape,” Cuadra says. “In five years you can go from having a $6,000 [penalty] to an $87,000 penalty per year.”
Cuadra advocates for a capital plan that gives a co-op or condo board a clear direction to help avoid these rising costs. “A good capital plan should be able to clearly outline what the the cost of action and the cost of inaction are so they can make decisions,” she says.
When performing energy audits, Punit Shah, vice president of building decarbonization at Bright Power, routinely uncovers issues that have quietly inflated energy use for years. The biggest culprits are missing insulation on steam piping; boiler controls set up incorrectly; boilers that fail combustion testing; ventilation fans not operating, and steam traps needing replacement.
“When buildings address these issues promptly, the efficiency of the systems improves,” Shah says. “We’ve seen properties cut fuel and electric consumption enough to materially reduce their projected Local Law 97 carbon penalties.”
Utility and Operating Costs. When maintenance is deferred, minor issues can compound and quietly raise operating costs long before an catastrophic failure occurs. Major heating and cooling equipment all requires routine maintenance.
“Without regular maintenance, equipment performance gradually deteriorates, leading to increased energy consumption, higher operating costs, and reduced equipment life,” says Matthew Strobel, vice president of high-performance buildings at energy consultant Bright Power. “When minor issues are not tackled proactively, they not only accelerate wear and tear on equipment but can also increase utility consumption.”
Emergency Repairs. Unplanned or emergency repairs are often more expensive because a board does not control the timing. When a boiler fails in mid-winter, repairs become urgent. “There is nothing you can do about the fact that you just had to spend $40,000 repairing equipment that you are going to have to replace next summer,” Cuadra says. “They won’t be able to shop around and compare bids.”
Financing and Insurance. Deferred maintenance can trigger violations for failed systems, which can lead to financing problems. As a result of stricter Freddie Mac and Fannie Mae lending guidelines, a building with deferred maintenance or a lack of reserves can become ineligible for conventional loans. These rules will become even more stringent in January 2027, when condo boards will need to increase their capital reserves from a minimum of 10% to a minimum of 15% of the building’s annual budget in order to remain compliant.
And finally, even the most far-sighted boards are feeling pain from today’s hard insurance market. Deferred maintenance can worsen the pain, leading to higher premiums, larger deductibles, coverage restrictions and, in some cases, denials at renewal time.