Board Paralysis: The Cost of Putting Off Building Maintenance

Inertia— the tendency of things at rest to stay at rest unless a force causes them to change — can be a board’s worst enemy. There’s good reason many are struggling: the amount of important decisions that have to be made, especially when it comes to compliance with the ever growing requirements of local laws, from cutting carbon emissions to facade, garage and gas-line inspections. “It's rare that you find board members who are engineers or architects or work in construction,” says Andy Marks, an executive vice president at Maxwell Kates. “It’s understandable that boards get paralyzed because they don’t have direct experience or knowledge. And it’s hard to find the time to go in depth into the issues, which could inform the decision-making.”

The High Cost of Avoiding Building Upkeep

The continual challenge of property maintenance adds to the burden. Whether it’s the roof, elevators or HVAC system, the high cost of infrastructure repairs, especially at aging buildings, can be daunting. But putting off projects, says Marks, can come back to bite you. “Boards think, ‘We’ll put that off because we don’t want to spend the money,’ but you’ll only end up digging yourself into a financial hole,” says Marks, who points out that repairs are inevitable, and the work will only get more expensive in the future.

In the worst case, failing to maintain a property can lead to disaster — something Marks has experienced firsthand. “I was on the board at my Upper East Side co-op, and we delayed maintaining our HVAC system for cost reasons,” he recalls. “On the one hand, it was good for everyone’s pocketbooks, but then we had a catastrophic water damage event when a pipe froze and burst and ended up flooding several floors, which was even more costly.” While disasters aren’t in a board’s control, “going ahead with maintenance expenditures that can prevent problems is,” he adds. “It’s always better not to be penny-wise and pound-foolish.”

Facing the Future

The best way to overcome board paralysis is creating a road map. “I can’t overstate the importance of planning,” Marks says. “Just like anything else, if you don't know where you're going, you're not going to be able to chart your course.” For boards, that means looking squarely at the projects that need to be done over the next three to five years. “You have to ask yourself what you’re going to spend money on and, of course, how you’re going to pay for it, whether it’s a loan or assessment,” he advises. “Just doing that one exercise creates clarity and a path forward.” And boards shouldn’t hesitate to lean on their property managers for help, Marks adds. “We can come in and kind of be the honest broker for the decision-making process. “Because things are so complex, the need to simplify is critical.” 

—Paula Chin