Brooks Tower FAQ for REALTORS® and real estate licensees
November 22, 2017
Most everyone has heard that Brooks Tower is considering a major renovation to the water systems in the building and that there is likely to be an assessment to pay for it. The purpose of this document is to provide answers to real estate brokers who may be handling transactions in the building. Brooks Tower offers a great living experience in the heart of downtown Denver with great location, amenities, and affordability.
What is the renovation being discussed?
The renovation has been affectionately known as “The Riser Project”. This project encompasses the 3 water systems that serve the building:
1. Hot and cold domestic water pipes
2. Sewer and waste pipes
3. Heating and air-conditioning (HVAC) pipes.
The pipes are contained in spaces throughout the building known as “risers” since they are open areas between units that run vertically throughout the building. Brooks Tower employs a fulltime maintenance staff that services and repairs the pipes in the building on a regular basis. After 50 years of use, many of the pipes have become too worn for repair and are more likely to fail without replacement. The water systems are critical to maintain a living environment; leaks and broken pipes affect both the point of failure and neighboring units below.
How much will it cost?
In April of 2017 a proposal was submitted to the board of directors for $45M. The board rejected this bid as overpriced for the building and of the understanding that more research was needed. More recent proposals have been received for $16-17M, however, the research is not complete yet. The answer right now is that there is no way to know a final figure, but the data would indicate the board is closer to that answer than a year ago.
When will a figure be known?
The board is in the final stages of a refined RFP (Request for Proposal) process for selection of an Owner’s Representative to further guide the process and work on behalf of the Homeowners Association. Completion of this was projected by November 1, 2017; further diligence was required, and this step should be completed by end of December. Once this is complete, the RFP process begins with contractors who will compete for the work as prescribed by the board. Normally, this would be a 60-180 day process whereby contractors would submit bids to the board. Once a contractor is selected, a final figure will be presented to the homeowners and the board for approval.
How will the assessment be paid?
The board will be looking at several different options. Some options that have been considered are extending payments over various periods of time, financing the project through an outside bank, and a
combination of both. Homeowners will be given a voice in the options presented and the board will use the input from public forums to develop strategies that will maintain the most affordable plans possible.
Will occupants be required to move out of their units for extended periods of time?
The original proposal projected 30-60 day periods where residents would be required to vacate. More recent data suggests displacement may be minimal as less disruptive construction techniques may be available.
Was modernization considered and are there better systems available to replace existing systems?
The Operations Committee developed a list of 9 different options for replacement. This list was shortened down over a 5-month period in 2017. The approach selected as the best option was replacement of the existing system with new material and equipment.
Is it possible that the board does not move forward with anything?
This has been considered, but rejected by the board and a majority of the homeowners have expressed a desire to move forward with the project. Currently, the average expense of repair and maintenance to keep the system running efficiently runs less than $100K annually. That pattern could continue, or failures could begin to increase; a large failure could create an uninhabitable building. With 566 residential units, it would be unwise to ignore the age of the systems and assume the risk of more failures; furthermore, assessments by 3rd party engineering firms have been unanimous in advising the board the system has exceeded its useful lifespan.
Since it is a 50-year old building, should other assessments be expected?
Brooks Tower maintains a reserve account to pay for regular repair and maintenance. In 2016, a complete engineering study was completed that identified the building needs for the long run. The budget has been established with a portion of each regular monthly payment going to pay for all other expected items (outside of The Riser Project) for the next 10 years as they reach the end of their projected use. Another reserve study would need to be completed prior to the end of the 10-year period to determine future budgets. At the time of this FAQ, however, the board has not approved the levying of a special assessment to assist in completing The Riser Project.
If one purchases a condo in Brooks Tower, who has the responsibility of paying the assessment?
The terms of payment of any HOA fees and assessments in Colorado are generally controlled by the CONTRACT TO BUY AND SELL REAL ESTATE. These terms are negotiable between Seller and Buyer. It is expected that agreements will be reached between Sellers and Buyers for terms acceptable to both which will provide for anticipated and declared assessments. If the Buyer does not agree in the contract to pay the previously levied HOA fees, then the default position under Colorado law is that the Seller is responsible for paying them as they were levied during the Seller’s period of ownership however this should be addressed in the contract.
REALTORS® and real estate licensees should provide HOA documents to potential Buyers and Sellers for a thorough understanding of Brooks Tower and The Riser Project.