Problem Solved! For Co-ops and Condos

How to Create A “Best Case” Repair Program

Habitat Magazine Season 2 Episode 20

Board members of newly constructed condominiums often find themselves battling a sponsor over construction defects, leading many to wonder why does this happen so often?  Each building is different, but RAND Engineering & Architecture’s president, Stephen Varone, and engineer Roger Krupp point to several reasons why these defects seem to occur frequently. For boards figuring out how to address what needs to be fixed, Varone and Krupp offer some real-world solutions on how to take an expensive critical problem and turn it into an affordable nuisance. Habitat’s Carol Ott conducts the interview.

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Carol Ott: Welcome to Problem Solved, a conversation about challenges facing New York's Co-op and condo board directors. I'm Carol Ott of Habitat Magazine and with me today is Stephen Varone, president of RAND Engineering and Architecture, and Robert Krupp and engineer at RAND. 

Buildings age. And as they age, stuff crops up that needs fixing.

Often in middle age, say between 40 and 50 years, a building will develop parapet leaks. Stephen and Robert, you have been working with a, shall I call it, a Gen Z condominium built around 20 years ago, that is suffering from this problem way earlier than one would expect. Robert, can you share with us what is going on there?

Robert Krupp: Sure. So we were initially brought onto this building as part of the FISP program. That's the Facade Inspection Safety Program of New York City. We initially flagged it because we saw that the parapets started to have vertical cracks and openings between the masonry, which were certainly just atypical for the age of the building.

This flagged the building as unsafe. We put up the sidewalk shed, we made sure the public was safe, first and foremost, as is consistent with the rules. Second, we then tried to figure out what the problem was. And in doing so we went through with a probing program. That's where we opened up some of the walls to see the underlying conditions.

That's where some of our questions really started to pop up. This type of building is called a cavity wall, meaning there's actually a space between the external most face of the facade and the interior side and insulation or what you would see as your finish wall. That space should be properly waterproofed.

Water does make it in there as masonry is porous. But the problem is once you put this masonry up, there's really no way to visually confirm what that waterproofing system is detailed like, specifically around the edges and in the smaller components. And when we did these probes on this building, we found that the detailing was truly lacking on this building.

While there was waterproofing present, it wasn't installed in a way that was comprehensive and it didn't seem that the person who installed it truly understood the way water flowed. And as a result, we were seeing leaks far sooner than we should have been. 

Carol Ott: Let me just ask as a non-engineer. The building was built around 20 years ago. Whoever built these parapet walls, I presume had plans to follow that probably were properly executed. What happened between that and what actually was built? Stephen, you wanna jump in here? 

Stephen Varone: Unfortunately, more often than you would like to think buildings aren't necessarily built. The way that they were designed on paper, due to lack of proper oversight during the process, or even sometimes something can be code compliant and yet not looking out for relatively short expiration on things like water penetration and product failure and things like that. And unfortunately on the newer generation buildings, it's been a soapbox of mine for a long time, where you have, when you have a when you have a building model category where the idea is a developer's gonna come in, build it as part of an LLC, and then their liability is over in a few years. If someone doesn't catch problems, it tends to make for a much more problematic situation with, are things built for the long term? Or they're just built to not necessarily high defects, but only worry about defects if they're gonna show themselves while we're still selling units.

Carol Ott: New York City buildings are heavily regulated. We are searching for every possible thing that can go wrong with the building and impact the public. That's in existing building. Aren't newly built buildings the same? Does the same process happen with them?

Stephen Varone: If you think about it, when we have existing buildings basically what you're doing is checking in on existing building periodically, like for FISP with the now the garage repair program, which just started, or the new parapet law, which just started, and you're seeing, okay, have things deteriorated over time? Let's keep an eye on this periodically. It's a different process that's happening when something is built from scratch. And the irony is that on a typical repair program that RAND would be involved in, we might recommend that we go to the site twice a week to check on the repairs in progress, see that they're following the specs, see that the contractor's doing what they're supposed to be doing, resolve any issues, resolve any unforeseen conditions, any exposed things. On new construction, with the implementation of things like special inspections, you do have specialists going in. Like someone will go and just check for the welding or just check for the masonry ties.

But it's lacking that overarching view of, Hey, is everything matching the plans? Are there issues, like even just the same kind of things we would do on a construction project, on a repair project. Whereas often you have a lot of individual inspections happening, but a lack of coordinating oversight.

You've got coordinating oversight on things like site safety, where the requirement might be that a site safety manager has to be there 40 hours a week during construction. You have things like every single week a special inspection has to happen to check the tenant protection plan, to see if that's still in place to protect the residents or the occupants.

But there's no requirement that the architect that design the building be there 40 hours a week or 20 hours a week. There's like a limited number of inspections have to confirm were completed in order to sign off. And that list of inspections are far less than RAND would recommend we do as design architect on a typical repair project.

And in such an over-regulated city, this is an under-regulated. This somehow fell through the cracks and maybe now with all the special inspections in place, they think it's covering it. But again, those special inspections are very itemized and they're very narrow focused. 

Carol Ott: So it's almost as if a building that is being newly constructed has a different inspection regime or a different standard than an existing building that's doing repair work. 

Stephen Varone: Yeah, I think on new construction, the process is governed more by the developers' contracting team and the developer presuming the contractor's responsible if anything goes wrong. And less-- like on a typical repair project, if you are a board or an owner and you wanna have repairs done, usually you have an architect involved in the middle and you design it, you bid it out, you hire a general contractor, but that AE is seeing that the contractor's doing what he's supposed to be doing. Whereas a new construction, it's more likely to just be that relationship between the developer and the contractor, maybe a CM, maybe an owner's rep, but not that heavy involvement from the design architect. And I think the combination of that, and again, what I had alluded to before. If a building is being built so that it just survives long enough for all the units to be sold, that's a very different model than the days when the old time, old school landlords built developments and they retained ownership.

They didn't want leaks and problems to develop five years down the line because they would have to repair them as the owner. So they were built more, if I dare say so to last than they tend to be now. And now , as we always know, Robert, as soon as your design is a little bit out of the box, like I want to be a little more distinctive here with my curtain wall, or have this be a little bit more of an angle or something that's not the standard cookie cutter, we've seen it all a thousand times, it's more likely the contractor won't master installing it the way that those drawings show. 'Cause they go in and I'll do it the way I always do it. And then guess what? Now your relieving angle is jutting out. The bricks are too far over the relieving angle or the expansion joint was left out here, or too narrow.

Because the uniqueness of the design means you really had to be careful about what you were doing. And contractors like doing things for efficiency the same way. 

Carol Ott: And I guess in this condominium that you're working with, Robert, that's what you found: the waterproofing system wasn't perhaps what it should have been?

Robert Krupp: Yes. So to put it nicely there were some cheap materials that were installed. One example we saw a MasTec that was just applied, behind the bricks when we did a probe. And MasTec is a decent waterproofing material, but the issue with it is it's brittle. And it should be used in conjunction with other materials to help bridge gaps.

But in this case, it was, as Stephen stated, it was a really good material to last just long enough to sell the apartments or to last, say, 10 to 15 years before we started to see these issues popping up. 

Stephen Varone: Net quality control can be a big thing, Carol, because if we're designing something, we won't take on a design if the owner says, I want you to design this and then go away.

Design it and then just come back at the end and sign it off. Because in order to sign it off, we have had to have an adequate level of involvement that I can trust what happened and what we can't see anymore, what's closed up. We are in close contact with manufacturers on the latest products, the most longest lasting, the most effective, and products are being updated all the time. So we can go out of our way to specify, okay, we need you to use X, Y, Z on a flashing material, a metal tie material, whatever it might be. But a substitution can be made that's still technically code compliant, but has nowhere near the longevity. And it was done usually to save money, or was more available. So if we're involved in a project, actively involved, we would have to approve those substitutions. But if you really just have something running on automatic and it's designed, and then, yeah, you have special inspectors, but the materials can be swapped out basically by the developer's approval and the GC has more available, Hey, I could give you a discount here, hey, I can do this, and that quality can wind up suffering even if it's still technically code compliant. 

Carol Ott: For this condominium, what was the fallout from what happened when they were first built? Robert? 

Robert Krupp: Do you mean the fallout, or do you mean when we present to them the repair solution? 

Carol Ott: The fallout that they were dealing with, which is why they called you in. 

Robert Krupp: Got it. So we did have the FISP report and then Swoop initially brought us to the building. We were then alerted to a number of leaks throughout the building, almost systemic leaks. And the issue was no one could really make any rhyme or reason of them.

So RAND is not usually someone's first call when you have a leak; we're usually your last call or close to it. And the reason for that is because we do know what we're doing, but we're not the most available. We're not the handyman, we're not the plumber or the contractor that you have on retainer.

It's a whole separate process to bring us out. 

Stephen Varone: By the time they come to us, they've tried all those; it hasn't worked. Otherwise, why hire an architect engineer to figure out why you have a leak? 

Robert Krupp: And the leakage patterns that they were seeing seemed erratic.

So you would have a opening or a crack at, say, the eighth floor, but someone would be experienced a leak at the sixth floor. Or someone would have done a repair at the second floor and then you started to see water coming in at the first floor. And it wasn't until we opened up the probes and we started to looking at this with an engineering mindset that these things started to make sense.

We were able to start sketching out what the intended drainage profiles were and locations, and we were able to cross reference those with some of the cracks and deteriorations we were seeing. And then again, lay on top of the leak locations. And we started to see that it almost seemed that they skipped a floor with their drainage plane. You should put in a drainage plane every floor.

But they had done them every other floor. So you would've a crack on eight and you would then see the leak coming in on six. No way to put that together, but then to get in there and really take a look at it. 

Carol Ott: So here the board was really faced with fixing all of the parapets in order to stop their leaks?

Is that what was suggested? 

Robert Krupp: Our number one suggestion is always going to be a full repair. So when we see a systemic issue like that, we'd like to replace it all. It's the only real way to make sure that it all goes away and is done properly. However, we recognize that on a large building that is a large sum, and being engineers in the real world, we sometimes have to face real world constraints.

And in this case, finances were one of 'em. The initial cause that we proposed as beyond our initial scope was just, it was very large and the building was just not ready for it. And they kindly asked us, they kindly explained the situation, and I let them know that while this is not recommended, what we can do is give you an engineered approach.

And what that would be is give me a list of all of your leaks and let's see what we can do. Meaning let's take a look at each of these leaks individually. Let's see what sort of characteristics they have. Can we locate them to a probable infiltration location? Can we confirm it with a probe with a water test?

And then can we prescribe a repair? And with all this information presented to the board, we allowed them to make an educated decision on whether or not it is that they wanna proceed with that individual repair. 

Stephen Varone: Basically you were attacking the most chronic or the largest, most disruptive leaks, starting in that order and trying to minimize what was left when we were done.

Carol Ott: So I presume over a number of years, and particularly if you're constrained by a budget, at some point you've attacked the whole problem, is that correct? 

Robert Krupp: If you maintain a consistent engineer and you go back repair cycle after repair cycle and make sure that you are performing the same repairs, it's feasible.

But anytime you start to work piecemeal, it's just not as good as it would be otherwise. You certainly can come close, but it has its own problems. 

Stephen Varone: But if you change the leakage list from, we have these large leaks at these multiple locations, every single time we have precipitation, and now we didn't have the funds to replace the entire parapet, but with the program that we did, now we just have less severe leaks at fewer locations, only when we have a specific type of storm, say a nor'easter or when it's wind driven from a certain direction. I know I have that in my garage at home; if it's coming from the northeast, I better put the buckets under those garage windows. That's different from every time it rains my garage is wet.

Carol Ott: In your experience, how many times is a board faced with this decision? Where they just don't have the funds to do, really the proper engineering fix, and so they're gonna have to slow go at over a number of years. How common is this? 

Stephen Varone: It's pretty common.

I I think the FISP program, if you've got a FISP building, so over six story, most of that inventory needs a repair program every five or 10 years, of some kind, some magnitude. So there are often decisions made. Basically you have to get to a place where nothing is going to become unsafe between this report and the next report.

And a lot of times like, all right, this has got about seven years left, and why don't we kick this, put this in the next program, because by the time the seven years go, then we'll also do this and this. So we'll make it as cost effective as possible. 'Cause you don't wanna do things too much piecemeal, because particularly nowadays the scaffolding costs, the permitting costs, the special inspections, the site safety-- all these incidental costs are so enormous. This used to never be the case. But it's very often the case that the prep and incidental costs are more than the cost of the actual repairs that we're doing. So once you're there, you wanna do as much as you can possibly do at that time.

And yet, we understand that, even if the prep cost throws them over their budget, it's still money. We have to put things off as long as you do them in priority order and you don't run afoul of the DOB because you're leaving it in a place where something's gonna become unsafe for two or three years.

But yes, it's very common. The typical board has to manage their budget and their numbers in that way. And obviously often the critical decision becomes, the reserve fund can't handle this. It's either there's not enough or it's gonna be so crippled as to put us in a dangerous place.

And then obviously, it's a very big decision to say, are we going to do an assessment for this? So that is often the cutoff point where the board says we're gonna avoid doing an assessment. So the reserve fund is gonna get depleted and then it'll build up over years and then we can do more work again.

And that's a common scenario. 

Carol Ott: I'm just curious for this condominium, when you mentioned the soft costs being so large. Because they're doing it over time, the soft costs are gonna be significant. If you're fixing a leak on the middle of the building, don't you have to hang stuff?

Stephen Varone: Yeah. Here, when we're talking about parapets, you're doing it all from the roof level. The leak may be showing itself two floors below, but we don't necessarily have to access that area, so we're doing it all from the parapet. In certain cases it could be done depending on how far down we're going, but if once you start going below the roof level, then yes, you've gotta do it from the exterior side.

Carol Ott: Given the experience of this condominium, and I guess in general, what's your takeaway advice for boards as they consider how to move forward with repairs? 

Stephen Varone: Have all your options in front of you to know the pluses and the minuses of what can be value engineered, what are the risks of that, what are the benefits of that. Make sure you understand the soft costs and what's gonna come up every time you come back and attack it.

How much of the problem are you attacking? Will that be good enough for now? Which was the case in this example. It went from a critical problem to more of a nuisance problem that'll just have to be attacked over time. And I think that's just the reality of the co-op condo market.

But going back to what I was saying before, where one can argue, not just being cranky, old man by saying this, is that they're not built to last like they used to. And so there's an opinion that's out there that it's a safer bet to go in and buy into a building that's 20 years old.

'Cause a building that's 20 years old, it's already gone through the development process. The developer was around for any problems that showed up under the warranty period when they were still majority owner. The board probably brought in an engineer architect to do a study and find issues, maybe they made a deal with the developer.

We had buildings where the deal they made with the developer got them, let's say a million and a half dollars, but they had to spend two and a half million dollars, and it was either litigate or not litigate and take the million and a half, and then the million had to be an assessment. So if you're buying into a 4-year-old building, guess what? You're gonna be one of the people that gets the assessment. 

If you buy into a 20-year-old building, it's gone through all that already. And in theory, you've gotten yourself back to built to last because they went through that whole round of torture while the developer was still on the hook.

And so the problems have all shown themselves. And if you don't need that new building smell when you purchase, there's something to be said for something that's gone through the wars a little bit. And even just things like the cyclical inspections that are required. When we're going in doing the first FISP inspection on a building, it goes back to what I was saying before. With the lack of requirements on the inspection process during construction.

When we're doing that FISP inspection, that may be the closest facade inspection that's ever happened on that building. So the first cycle, Robert, you can confirm this. We go and look at first cycle buildings saying, really? You have all these problems? And a developer who will remain nameless, said, oh yeah we build a building SWARMP. SWARMP means Safe With A Repair and Maintenance Program. The definition of SWARMP is if you don't do anything for the next five years, this building will become unsafe. So if The attitude is , I'm okay if you find SWARMP things on a brand new building. Well, when we go into the first cycle of inspections, we find problems. And then we're less likely to find the problems on the second and third, round of inspections because we fixed them the first time around. So now we have the first cycle of garage inspections coming up. Remember the first cycle of FISP when it was first passed, buildings had never been inspected. I know it was in the code, technically, but how many owners were hiring engineers to come in?

Just check out my facade, gimme a complete report. Tell me what I need to do in the next five years. How many times? I can count it on one hand, but when the law's in place, now you have 15,000 buildings that have to be inspected in five years. So in the first cycle, we found so much stuff.

They're like, oh my word, this has been like this for 40 years. And that's unfortunately what we're encountering with garages. Now, the little difference with garages is that with new construction, it's a simpler process. Your exterior envelope can have all kinds of problems, but the garage, let's face it, most of them, they're underground.

It's only concrete. There are fewer things to go wrong. If they put the columns where they're supposed to be and the beams where they're supposed to be , lot less chance that you're gonna have problems showing up within five years. Maybe you got some cracks appearing. Oh, you're missing an expansion joint.

Fine. 

Carol Ott: What about in an older building? 

Stephen Varone: That's the difference. See, also with garages, they're not exposed to the elements like the exterior . The first time around on garages, 10-year-old buildings, we're not finding much. But the 50, 60-year-old garages, this is like that first cycle of FISP.

It's the first time through. We're finding all kinds of problems where you look and say, how could this have been left to be like this? Because there was no law saying every six years, you have to put in a report telling the DOB what the condition is. And no, putting a big metal drip pan over the leak with a gutter, a leader on the side is not a long-term approach.

Carol Ott: It is a solution. It is a quick fix. 

Stephen Varone: It's a kick the metal down the road approach. So yes, in the garage and get a little bit off topic . This first cycle, we're finding all kinds of issues. 

Carol Ott: So I guess bottom line as a takeaway for boards, whether you're a board of a new building or an old building, particularly if you're a new board member, if you find a problem, it doesn't have to be a hundred percent fixed. There has to be a maybe a hundred percent program. 

Stephen Varone: Correct. And an approach passed what'll happen one year from now and all that. So yes, it can be a success and it can be a game plan to say if money were no object, yes, we would do everything immediately at all times.

But if that's not the case, you just want to be smart how you do things. Plan them in a responsible manner. Plan them in as cost effective a manner as you can. Have a long-term plan, not only for your repair program. Have a capital reserve analysis.

How am I year by year? So if Robert is telling them, listen, if you're gonna spend $600,000 now. Based on what we're gonna leave there, you should have 500,000 planned for seven years from now. Okay. Is the income gonna come in over the next seven years so that you have the money to do that ?

And there aren't enough boards that think like that. There's no law in place that says, as a condo, we need a financial study every 10 years to see that you guys are in the black. And based on your expected income and expenses, you'll remain in the black, because you have an assessment of all your systems.

And these are the capital costs we think are gonna come over the next 15 years, and you're not gonna have any below zero place. And I think that's something that should exist. And it doesn't, it exists now in Florida because of what happened with Surfside, and now New Jersey is implementing it statewide, but New York, somehow, we don't have that.

We just have some boards that are proactive and they hire us for capital reserve analysis. But a lot of boards are like, listen, if the problem comes up, we'll figure out if we have the money and if we don't have the money, we don't have the money, and we'll do an assessment if we have to, or we'll do a bandaid job.

And I think that also sells the potential buyers short because you don't have that information when you're coming in to buy the apartment. And you could have two buildings side by side, and they're the same price and the same size apartment and all that, but you don't have the inside information of, yeah, this one has its house in order.

This one has all these looming issues that they haven't funded yet. But specifically your point it is about planning, making a best case scenario. And a success can be, we did the logical approach in as cost effective a manner as we could. Minimize the remaining problems with a game plan for how to attack them in the future.

Robert Krupp: That's our real world approach to the majority of the buildings we work with. Yes, that is. The only other thing that I had to add , as to what prospective buyers know. The DOB now online resources, it's publicly available information. And in that you can get the FISP report for any building within the five boroughs.

From there you can see has this building previously gone unsafe? Have they then revised it to do a safe status? You can look at the current report along with condition photos to get a general idea of what the building status or level or condition is. And most importantly for this conversation, there's actually a comment that the engineers are required to put in there that says whether or not and where leaks are being experienced through the building.

Carol Ott: And that is good to know. And with that, I wanna thank both of you very much for joining me this morning. 

Stephen Varone: You're very welcome. 

Robert Krupp: Thank you for having us.