As communities grow older, so do their essential components—roofs, roads, plumbing systems, and other critical infrastructure. For homeowners’ associations (HOAs) managing older properties, aging infrastructure poses unique challenges that require strategic planning and decisive action. Ignoring these issues worsens the problem, leading to more costly repairs and potential safety concerns. Reserve planning tailored to older communities can help break this cycle, ensuring the long-term stability and sustainability of these neighborhoods.
This article explores the key challenges of managing aging infrastructure, the concept of the “deterioration rate,” and actionable strategies to fund repairs and address structural concerns effectively.
The Challenge of Aging Infrastructure
Aging infrastructure represents a ticking clock for many communities. Over time, materials degrade, systems fail, and deferred maintenance compounds into a more urgent—and often expensive—problem. For older communities, the costs of addressing years of wear and tear can become overwhelming, especially if reserves are underfunded or nonexistent.
Consider a 30-year-old association nursing its original roof beyond the end of its life. Regular repairs may delay replacement for a while, but soon you’ll be repairing repairs. Delaying replacement may seem to cost less in the short term, but eventually your older roof will leak so badly you’ll be forced into a replacement project. Then you’ll wish you had all that money you spent on those repairs to help pay for the new roof! Similar scenarios of waiting too long, resulting in damage, emergency repairs, and skyrocketing costs play out with other components like siding, roadways, and compromised structural elements. Delaying timely replacement only increases the complexity and cost.
Understanding the Deterioration Rate
To manage aging assets effectively, it’s essential to understand the concept of the “deterioration rate”—how quickly a component or system declines in condition over time. While newer assets may appear to deteriorate gradually, deterioration is steady and constant, like sand through an hourglass. Even so, aged assets lose an alarmingly higher fraction of their remaining useful life each year. They seem to get “older, quicker” near the end, leading many associations to be caught off guard.
Failure to account for unrelenting deterioration near the end of an asset’s life expectancy leads to greater risks, including unexpected failures and higher repair costs. Reserve studies that clearly acknowledge asset deterioration rates enable proactive planning for repairs, avoiding deferred maintenance issues.
Stopping the Cycle of Deferred Maintenance
To address aging infrastructure, HOAs must shift from reactive repairs to proactive planning. Boards of older communities should prioritize reserve funding and address underlying issues rather than opting for short-term fixes.
Key steps include:
- Conducting a Structural Assessment: Hiring a qualified structural inspector is crucial for understanding the current condition of key assets and identifying potential risks beyond the inspection provided in a Reserve Study. Inspections of foundations, roofs, plumbing systems, electrical systems, safety items, and other critical components can reveal underlying issues that may not be immediately visible.
- Updating the Reserve Study: An updated reserve study is essential for understanding long-term costs associated with maintaining aging infrastructure. Reserve studies for older communities should include closer evaluations of high-risk components and reliance on subject matter expert reports to establish realistic projections of future repair and replacement costs. Regular updates every three years—or more frequently for aging properties—ensure that funds will exist when needed, minimizing “surprises”.
- Developing a Realistic Funding Plan: Aging communities often require higher reserve transfers to address rapidly approaching repairs or replacements. While this may be a tough conversation with homeowners, it is necessary to prevent even more costly and disruptive emergency repairs and special assessments. Incremental increases in reserve funding, coupled with clear communication, can help garner homeowner support as you communicate “we’re in this together” as you fight the combined opponents of Mother Nature and Father Time.
Strategies for Addressing Aging Assets
Once the scope of the challenge is clear, boards can implement strategies to maintain and repair aging infrastructure effectively. These strategies include prioritizing urgent needs, planning for long-term sustainability, and leveraging professional expertise.
- Prioritize Urgent Repairs: Not all infrastructure issues carry the same level of urgency. Boards should prioritize repairs that address safety concerns, prevent further damage, or put insurance coverage or mortgage approvals at risk. For example, fixing a leaking roof or replacing a failing drainage system should take precedence over a long awaited lobby remodel.
- Plan for Long-Term Sustainability: Boards should develop multi-year plans for replacing major components, with funding schedules that account for inflation. A well-thought-out plan ensures financial preparedness and minimizes disruption to owners, with everyone paying their “fair share” over time.
- Leverage Professional Expertise: Managing aging infrastructure is a complex task that benefits from expert input. Structural engineers, reserve study providers, and specialized contractors can offer valuable insights into asset conditions and maintenance or replacement approaches. Collaborating with professionals helps boards make informed decisions and avoid costly mistakes.
Communicating with Homeowners
For older communities, gaining homeowner buy-in is critical to successfully addressing aging infrastructure. Transparent communication is essential for explaining the need for increased reserve funding and the cost of structural inspections or repairs. Stress that it is “our” community, and that it needs “our” care (and “our” money) to fight the unrelenting enemy of Mother Nature and Father Time.
Boards should emphasize the importance of maintaining property values and community safety and explain how proactive planning reduces the likelihood of costly emergency repairs and special assessments. Visual aids, such as photos of deteriorated components or graphs showing the cost of deterioration with and without maintenance can be especially effective in illustrating these points. Check with your Reserve Study provider who likely has some helpful photos and graphics to use in your presentations.
Breaking Free from Underfunding
Many older communities face the challenge of underfunded reserves due to years of low reserve funding or delayed projects that skyrocketed in cost. While addressing this issue may feel daunting, it is achievable through strategic planning, clear and transparent communication, and decisive action.
A gradual increase in reserve funding can help avoid the sticker shock of sudden large increases. Boards may also consider a hybrid model of modest special assessments to address urgent project needs while building up reserve funds for future projects. Utilizing reserve planning tools, like our online reserve calculator uPlanIt®, which models different funding scenarios, can help boards customize a sustainable and politically feasible path forward.
Underfunding is not a permanent condition. With a commitment to proactive planning and community engagement, older associations can regain financial stability and ensure the long-term health of their infrastructure. The data shows that responsible reserve funding is rewarded in significantly higher property values, because curb appeal is real.
The Role of Reserve Studies in Aging Communities
Reserve studies play a vital role in helping older communities manage their aging infrastructure. These studies provide a roadmap for maintaining and replacing critical assets, incorporating realistic cost projections and funding strategies. For aging communities, reserve studies should focus on high-priority components, preparing the property for these expensive repairs and replacements, and include recommendations for regular structural inspections.
Regularly updating reserve studies ensures that plans align with the current infrastructure condition and evolving repair and replacement costs.
Conclusion: Planning for the Future
Managing aging infrastructure is one of the most significant challenges for older communities, but it also provides an opportunity to create a sustainable path forward. Be aware – real estate ownership carries significant costs. By understanding the risks associated with aging assets, prioritizing reserve funding, and leveraging professional expertise, HOAs can stop the cycle of deferred maintenance and build a more secure future.
Proactive planning, informed by structural assessments and updated reserve studies, helps communities address today’s challenges while preparing for tomorrow’s needs. With a commitment to transparent communication and realistic funding, boards can ensure their aging neighborhoods remain safe, functional, and financially stable for years to come.