CIRA Loans Help Condos Finance Big Projects

After he got trapped in one for 90 minutes, board president Stephen Mueller knew the time had come for his condominium association to do something about their building’s two failing elevators. Although essential for ferrying residents up and down the 15 stories at the Sequoia, a 135-unit condo in the West Village, the elevators were constantly breaking down. 

But the cost to replace them was daunting – about $800,000. Mueller, then the board treasurer, figured they would have to double or triple residents’ common charges for nine months to pay for the improvement all at once. Looking for a less painful option, he followed up on a colleague’s mention of a type of loan tailored specifically for condos making capital improvements. 

Called a Common Interest Realty Association, or CIRA, loan, the product enables condominiums and homeowner associations to spread the cost of a major improvement over a term as long as 12 years. After inquiring about the loan at North Fork Bank (since purchased by Capital One), Mueller was pleased to discover that the condo could finance the entire cost of the project at a competitive interest rate. 

“I thought, what’s the catch?” Mueller says. “It just seemed too good to be true.” 

It wasn’t. The Sequoia took out such a loan and finished paying it off in April 2017. The process went so smoothly, in fact, that Mueller persuaded members to finance two other $1 million-plus projects with CIRA loans. One loan is allowing the board to renovate and modernize operations in the property’s ’80s-era lobby; the other will cover unexpectedly expensive facade repairs required by Local Law 11. 

Although they’ve been around since 2003, CIRA loans are still not very widely known, although they are gaining popularity. A niche product for a handful of banks in New York, including Capital One and National Cooperative Bank, the loans provide a way for condos to pay for major capital needs over time, instead of saddling unit-owners with a hefty hike in common charges or draining building reserves.