Co-ops coping with COVID-19: Capital replacements and repairs
Published July 28, 2021
Around the world, manufacturing and trade has been disrupted by Covid-19. Transportation bottlenecks, border hassles, shipping container shortages, slowdowns in material supplies and appliance manufacturing directly affected housing co-ops.
Except for emergencies, the ability of co-ops to undertake repairs was limited or shut down for long and unpredictable periods in many provinces. But some housing co-ops still moved forward with repairs and capital projects during the pandemic, by adopting more flexible timetables and paying close attention to the impact of increased costs.
Victoria Colby at Glen Mills Co-op in Georgetown, Ontario, and Janine McDonald (who manages Kawartha Village Co-op and Peterborough Co-op Homes, both in Peterborough, Ontario) offer their shared experiences.
Cost increases and more
Like all property owners, co-ops saw skyrocketing costs for common materials, including wood, shingles, insulation, and plumbing and heating supplies. These cost increases shook co-op budgets. With a big upswing in homeowner renovations, contractors and tradespeople were busy and harder to book. Thanks to Covid-19, even appliance deliveries could take up to four times as long as normal.
“We learned how to do things differently,” says Victoria Colby. “We had to re-think how to handle our big capital repairs, as well as day-to-day maintenance.”
At all three co-ops, interior repairs and renovations, except for emergency work, were simply put on hold.
With cost uncertainties, larger projects were postponed or split into smaller chunks. Glen Mills’ capital replacement work, based on a detailed Asset Management Plan prepared by CHF Canada, was changed from three years to four. Faced with uncertain prices to renovate roofs and attics in its 27 townhomes, the co-op split the larger project into a block-by-block approach, and will wait to see if prices go down in the future. For safety reasons, interior work was suspended; work will continue after the pandemic. Victoria notes that some material costs increased by 30% and 40% between 2020 and 2021.
“At the beginning, we were in shock mode,” says Janine McDonald. “It was hard to keep track of what was open, and what contractors and tradespeople could and couldn’t do.” Last year, Kawartha Village postponed replacing its fencing, and found the costs of materials about 30% higher when the project was reactivated in 2021.
Luckily, says Janine McDonald, most of Kawartha Village’s major capital repair work was completed before the pandemic. With a new mortgage arranged in 2018 through CHF Canada, the 80-unit co-op had finished its roof renovations, along with 50 new bathrooms and 17 of its kitchens. “We are now hoping to finish the rest next year in 2022,” she says, “but like everyone else in the world, we will have to wait and see.”
These co-op communities are forging ahead. “We definitely haven’t stopped. But we have been delayed, and have had to find workarounds,” says Victoria. “The members understand about cost increases, restrictions on tradespeople and delays in getting appliances,” she says. “But it is getting more frustrating as time goes on.”
Both managers point to increased exasperation among members. “It’s tough for members spending so much time at home,” says Janine McDonald. “Things in their homes that need fixing are staring them in the face all day and at the moment, they simply can’t be fixed.”
The two managers add that the co-ops’ boards and members recognized that future operating and capital budgets may have to accommodate higher expenses. Like other small businesses, these housing co-ops are moving ahead cautiously, watching for suppliers to return to normal, or at least a “new normal”.
Despite the pandemic, says Janine McDonald, “we’ve accomplished a lot; we keep moving forward – even if its more slowly.” Victoria Colby echoes that: “it is a worrisome and frustrating time, but we’re not stopping. Work just can’t happen as quickly as we’d like.”
CHF Canada also makes adjustments
What about CHF Canada’s own work helping co-ops with asset planning and refinancing?
Like the co-ops, the big changes at CHF Canada are timing and money. Ofelia Guanlao, CHF Canada’s Senior Program Manager, Asset Management Services, says that the large number of co-ops looking for building condition assessments (BCAs) and asset management plans hasn’t changed. “Co-ops know that now is the time for the improvements they need. We have just as much demand as ever,” she says. “But we are letting co-ops know it will take longer for our work to be completed.”
Unfortunately, the detailed professional inspections of home interiors needed for a BCA simply can’t be done without access to units. Some engineering firms, she says, are using member questionnaires and photographs to assess unit interiors as best they can.
CHF Canada’s planning team has handled cost uncertainty by adding large contingency amounts to projected capital budgets. “Before Covid-19, we would typically include eight percent of capital costs as contingency funds, to protect against nasty surprises. Today, we are using 18 percent, to insulate co-ops from unforeseen price increases.”
If co-ops’ operating costs remain higher, she says, housing charges may need to increase a little more than previously planned. “There’s no need for panic, but members should consider whether adding some money to their operating budgets will protect them and make sure that necessary repairs to their properties can be handled.”
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