Eliminating Costly Amenities The Board Giveth and Taketh Away

When buyers purchase condo units, they purchase access to the condo's shared amenities, as well. Depending on the scale and financial demographics of the building, those amenities could be substantial.

For instance, during the real estate boom of the early 2000s, amenities like free continental breakfast and in-house pet spas were not uncommon; even in more modestly appointed condos, pools and gyms are often part of the package marketed to buyers. In a post-recession economy, however, some HOAs are asking themselves whether or not the popularity of deluxe amenities justifies their expense. After all, some buildings are faced with amenities that are costing money but not getting frequent use. Scaling back—or even eliminating some services or amenities—can save money, no doubt, but it's a tricky process…one that may have legal ramifications, too.

From Boom to Bust

Once upon a time—and not very long ago—condos did not offer amenities, unless those include elevators, functional heat, and opening windows. When, say, Al Capone was shopping for a new place to call home, living spaces were fairly basic. Though, with each successive economic boom, buildings offered a little more in the way of amenities. After the go-go ‘80s and the subsequent dot-com explosion, amenities became a way for smart developers to make their building more special…then every building had to have a weight room, pool, and staff masseuse. With the collapse of Lehman Brothers in 2008 and the ensuing economic recession, however, the pendulum began to swing in the other direction, and HOAs began to ask if all these bells and whistles were really necessary—because they certainly aren’t free.

“Developers, generally, put in play all these wonderful little amenities, and while the developer is there, they’re kind of offsetting the cost of those things, because they don’t want to sacrifice sales velocity,” says Kim Merrigan, CMCA, AMS, PCAM, and president of McGill Management, based in Arlington Heights. “Then, a board of directors comes along and takes over that community association, and they see all these amenities that really aren’t being funded properly, and they have to increase assessments to do that.”

Politically, federal entitlement programs are difficult to take away once people become accustomed to them…even one they don’t use much. The tennis court may just sit there gathering dust, but to convert it into something more usable, like a parking lot? You might as well amputate a limb. “They’re feel-good things,” Merrigan says. “Once they’re sold on them and once they get used to them, it’s really hard to remove them from the mix.” Not impossible, though…especially with certain types of amenities.

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