Why a high-rise housing association chose to upgrade its elevator with a loan from NCB
When an aging elevator in a high-rise apartment building needs repeated repairs, the smart question isn’t whether it’s time to replace it. It’s how to pay for a new one.
That’s the challenge the residents of the Council of Co-owners of 1510 Condominium faced in 2018. The elevator had been in use since 1972, when their eight-story, 40-unit building in Arlington, Virginia, had been constructed. Although it had been faithfully maintained, the elevator was reaching its service limit. Upgrading it would cost a hefty $350,000.
But the association’s finances were depleted after several major common-elements projects in 2017. Residents had already ponied up $20,000 each to replace heating, air conditioning and water systems as well as all windows and balcony doors. Asking for another $10,000 from each resident or to increase monthly condo fees “would not be a cheerful conversation,” remembers Carolyn Lloyd, association treasurer and an original unit owner.
Lloyd, however, learned 1510 Condominium was a good prospect for a renovation loan. Through its management company, Select Community Services, she got the names of several lenders. “As soon as I called Don Plank at NCB, it was clear to me that he understood the financial ebb and flow of associations, how budgets are constructed and the role that reserve studies play,” Lloyd says. “And, on a personal level, we just clicked.”
Association bylaws required a membership vote on the costly elevator modernization. It passed. The NCB loan closed in December, 2018. Actual work on the elevator begins in March. Residents won’t have elevator access until the project is completed this summer.
Having found a workable way to finance a major project, Lloyd offers advice to other housing associations. “Start early,” she urges. When completed, the elevator project will have taken more than a year. That included many board discussions over the project’s need and timing. It involved the bidding process, membership vote, loan paperwork and 12-week construction.
Lloyd also urges caution in considering a special assessment to fund a renovation. “A special assessment sounds like it’s easy, but it’s not,” she says. “It’s expensive to deal with. You have to keep nibbling at people to get their money in. It’s tedious for the board and management company.” Choosing to work with NCB was “a sensible, legitimate route for us,” adds Lloyd.
1510 Condominium will be able to service the NCB loan through a combination of unchanged condo fees and its regularly funded reserves account. “NCB’s terms were flexible and straightforward,” she says. “Don and NCB communicated well and clearly and made it easy to stay on track.”