Shoddy Construction Doubles Cost of Condo's Facade Repair

After a routine facade inspection mandated by the Facade Inspection and Safety Program (FISP), the board at a condo on the Upper East Side budgeted $550,000 for repairs on the front of the building. But once work began, the board was hit with an unexpected and unwelcome surprise. As a result, what had been a half-million-dollar project mushroomed into more than twice that. 

Why? When the contractor began work on the facade, it was found to be missing brick ties, the stabilizing metal bars that connect the inner and outer walls and prevent leaks and a potential collapse of the exterior "curtain" wall.

“Extensive inspections were required, and a specialized company was hired to use radar equipment to detect the presence of brick ties without removing each stone,” says Joshua Holzer, a senior vice president at the management company Maxwell-Kates. The building, constructed in the late 1960s and converted in the early 1980s, was well beyond the statute of limitations for any recourse against the original developer for slipshod work. The problem had been hiding in plain sight for decades.

“The (heightened) level of scrutiny mandated by the current FISP likely uncovered issues that had been overlooked in previous evaluations,” Holzer explains. As a result, new masonry needed to be installed and additional brick ties added. And the condo board had to figure out how to pay for the ballooning costs.

The board relied on a variety of funding methods. “We had to borrow further money from another bank and refinance,” Holzer says. Fortunately, the contractor also offered a no-interest payment plan, a reprieve that allowed the board to pay smaller amounts monthly instead of large lump sums, easing the financial burden on residents.

“This was crucial in managing cash flow,” Holzer says. “Rather than having to pay $250,000 a month, the amount was reduced to $30,000, which helped for budgeting purposes.” So did strategic cost-cutting. The building was staffed around the clock, but one of the cost-cutting strategies was to reduce the staff to two full-time members working 9 a.m. to 5 p.m. “It was unfortunate, but it was something that we really had to do,” Holzer says. “It allowed us to contribute their salaries towards the additional exterior work.” 

The building had a sidewalk shed in place  for more than three years, which was itself a hefty cost. When budgeting for facade work, especially under local laws requiring close inspections, it’s crucial to consider the possibility of additional, unexpected costs beyond the repairs themselves.

“If you’re going to borrow money, you want to anticipate the worst-case scenario,” Holzer says. When borrowing more money than initially estimated, it’s important to keep residents informed about increased costs. “Sometimes the price tag will scare the board, so you want to hold meetings to explain the issues and the necessary steps to address them,” he adds. Securing flexible payment plans with contractors and having access to credit can significantly ease the financial sting of these large projects. In addition, working with trusted contractors and engineers who understand the building’s specific needs and can offer favorable terms can make a significant difference in project management.

As this story illustrates, co-op and condo boards need to expect the unexpected when tackling major capital projects. You might discover that you've been living in a building that was constructed improperly 60 years ago. Though you didn't create the problem, it's up to you to solve it. And pay for it.