Eric Lecky

When It’s Time for a Repipe Capital improvement projects are worth the investment

ERIC LECKY

Does the idea of a capital improvement project for your condominium give your AOAO anxiety? Does your AOAO continue to put off capital improvement projects because they don’t know how to start the process, are unsure how the financing works or, most importantly, are they concerned about the long-term value and return on investment?

Prioritizing what needs work at your property can be a complex task, especially if you are dealing with competing priorities. Is it more urgent to replace the roof, upgrade the lighting in the parking garage, repair the elevator, fix spalling issues, resurface the pool or address potentially out-of-sight, out-ofmind projects like pipe replacement?

All of these projects carry different costs and yield a different return on investment. Some issues can remain unaddressed without causing undue damage down the line while others continue to generate higher risk the longer they are left untreated.

Unfortunately, most AOAOs and managers forget about their pipes because pipe repair seems like an easy enough fix as part of the overall maintenance budget. And let’s face it, replacing pipes isn’t nearly as “sexy” as a newly resurfaced pool or renovated lobby.

But here’s the rub when deciding how or when to choose which projects to tackle this year: If you have leaking pipes, the problem will not get better through patchwork repairs. Your maintenance costs will continue to increase, insurance claims will rise, time spent managing angry residents and overworked staff will grow, and your leaks will continue to get worse and worse.

And plumbing leaks are rarely an isolated problem. They typically indicate a much more systemic issue throughout the property. So simply choosing to repair instead of replacing can quickly escalate into a game of “whack-amole.” It’s one you can never win.

Planning for and investing in a capital improvement project, such as a repipe, does not have to be a huge headache. One of the first steps is to think ahead. Try to predict as best as you can, based on your building’s age and the useful life of your systems, the projects and work that will need to be completed in six months, one year, five years, or longer. Knowing what’s in your building, when it was installed and how it is aging are critical points of knowledge in evaluating how long you may have before needing to repair or replace your pipes.

If you have a Hawaii condo built in the 1960s or 1970s with cast-iron piping, you need to start planning and reserving now, even if you aren’t experiencing any leaks. Reserve studies frequently exclude pipe replacement, and if it is included they vary widely on what it may cost. In the case of a full-system repipe, starting to reserve 10–20 years ahead should not be out of the question.

But even with an assessment and careful planning, knowing when to pull the trigger on a large capital improvement project can be difficult. Answering critical questions about the timing of other maintenance projects and community investments, the impact of increased annual dues or a special assessment on unit owners and your ability to take out a loan to fund the project all weigh into the decision of when you need to take action.

Likewise, knowingly waiting on certain projects, like pipe replacement, may violate a board’s fiduciary responsibilities to maintain the building, resulting in residents suing their board for everything from leak damage costs to reduced property values when they try to sell.

For a solid return on investment, pipe replacement is one of the best capital improvement projects your community can undertake. Some of the specific benefits include the following: • Your insurance bills will go down. Many AOAOs repipe when their deductible is $25,000 to $30,000 per incident. After a repipe, that deductible is dramatically reduced to $3,000 to $5,000. • The overall repair costs decline because you are no longer managing incident by incident and repairing water damage. • You will be paying your building staff less overtime because they will no longer be managing middle-of-thenight plumbing issues or multiple leaks at once. • Your owner and resident satisfaction will dramatically increase and building reputation will go up. • Resale values will go up. Knowing that an older building has already undertaken a pipe replacement project makes that condominium go up in value. Prospective buyers will appreciate not having to worry about their pipes leaking, and brand-new pipes have a solid warranty in addition to a 40-50- year life span. ❖

Eric Lecky is an executive vice president with SageWater. Since 1988, SageWater has successfully replaced more than 35 million feet of pipe in over 100,000 occupied residences. Reach him at elecky@sagewater.com.