Brace yourself for the next cycle of New York City’s facade inspection program, because projects are becoming top heavy with soft costs. Take the initial inspection. In the past that could cost a 15-story co-op or condo $9,000, now it’s anywhere from $31,000 to $53,000. That’s only the start, and you haven’t even replaced one brick. In this episode, Eugene Ferrara, president of the consulting and engineering firm JMA Consultants, explains how to navigate this difficult, and costly, market. Eugene Ferrara is interviewed by Paula Chin for Habitat Magazine.
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[00:00:39] Paula Chin: Welcome to Problem Solved, a conversation about problems that have been solved in New York co-op and condo buildings. I'm Paula Chin, and my guest today is Gene Ferrara, president of the consulting and engineering firm JMA Consultants. Welcome, Gene.
Boards have been bracing themselves as they file and plan for the ninth cycle of the Facade Inspection Safety Program or FISP, and with good reason, since requirements are more strict and repairs are going to be more costly than ever. What kind of cost increases are we looking at?
[00:01:15] Gene Ferrara: They're substantial. To use an example, for a building that's 15 stories, you're looking at double or triple the numbers for your FISP inspection, anywhere from $31,000 to $53,000, where in the past you were looking at $9,000. Let's say last time the project cost was somewhere around $850,000, that project is now in excess of $1.2 million or more. Then insurance rates have gone up; permitting has gone up. Regulations from the Department of Buildings [DOB] have gone up, and enforcement from the DOB has gone up.
[00:01:52] Paula Chin: How much have supply chain issues contributed to the increases, and what kind of delays are you seeing as a result?
[00:02:01] Gene Ferrara: Unfortunately, just recently New York City (and the United States) got hit with a roofing supply issue; anything to do with oil-based products, anything to do with insulation, polyurethanes and so forth, have been backlogged. So if you need to do a roof project, you have insulation in that project, and you have to meet the new energy code, you could be 10 months out or more from the time you order your insulation to the time it arrives at your site.
And the reality here is that you can't really budget, so I tell boards, buy your projects as early as possible. Make sure your contractors are buying their products early on, and warn them that they're not going to be given any increases during the course of the project if they cannot prove that they had something out of their control. If you know how much insulation you need, you better be ordering it the first day you get that contract signed and lock in your numbers.
[00:02:53] Paula Chin: Are boards overall being realistic about planning and budgeting?
[00:02:58] Gene Ferrara: Right now, I see the number one problem is new board members are not capable of absorbing all the information that they need to manage their property. What I mean by that is you have the gas testing for the risers, you have energy code, energy audits, you have elevator upgrades, you have testing of the water tank. You have HVAC and the cooling tower. When they realize that they can't stop the increases in the maintenance and the assessments, the first question they ask is, what is the bare minimum I can do?
[00:03:34] Paula Chin: Given that you're seeing more unseasoned boards, what strategies, if any, have worked well in convincing them to take action?
[00:03:44] Gene Ferrara: You can try to educate them. You speak candidly. Just last month I had a board that had a job ready to go. It was $1.2 million. They hadn't done a job in 10 years and they knew that they had to take care of this, or at least the last board did. And they were balking. I said listen, do me a favor: while you're doing your thinking, could we start negotiating with one or two of the lower bidders, keeping them on the line and asking them for their best and final offer? We did it and the bidders sent back, "Our bids are good for seven days." Of course, the ninth day the board member calls me up and says, "I think we're ready to go." I make a phone call and I go to the contractor. He said, “We're ready to go. Gene, the reason why I said seven business days is the supply companies raise their rates the first of the month. I promise you, I will not raise my labor, but all the materials in the job basically have gone up eight percent.” And the board member goes, "I can't believe this." About 15 minutes later, he calls me back and he goes, "I'm sorry. Give me the best price you can and let's get started."
You're really honest with the people and you give them the right warnings. I feel the same pain in my own home. I postponed something because I was too damn busy trying to file the FISP reports. But I postponed something, so I went back to the contractor and he said, "I'm sorry now, but it's 10% more." I learned my own lesson twice.
[00:05:03] Paula Chin: Gene, this has been really informative. Thank you so much for joining us today.