The Preferred Choice

Virginia condo association finds a way to finance much-needed repairs through NCB

Compared to the 18th century buildings that sit in nearby Washington, D.C., the high rise that houses the Highpointe Condominium Unit Owners Association is a youngster.

Highpointe’s 13-story structure, built in the 1960s, sits in the West End neighborhood of Alexandria, Va., eight miles from the nation’s capital. The 182-unit building offers its residents amenities that George Washington could only dream about: a pool, Jacuzzi, saunas, a tennis court.

But looks can be deceiving. About three years ago, Highpointe discovered it needed major repairs and renovations. The roof leaked. The separate parking garage, the elevators and the heating/cooling units demanded immediate work.

Under a special assessment of its owners, Highpointe set out to fix the property. Before the work could be completed, however, the association ran out of money. Under-funded in its reserves budget, Highpointe reached an impasse.

"We had to issue a stop order for the repair work," says George Gardner, vice president and condominium division director with Community Management Corporation (CMC), which manages the Highpointe property.

Desperately needing financial aid, Highpointe’s five-member board directed CMC to secure a loan to complete the property’s repairs. "Time was of the essence," Gardner remembers.

Jump ahead three years. Today, the Highpointe property is well on its way to restoration, thanks to financing from NCB. Payment on the $2.5 million the association borrowed for repairs will be spread out over 10 years.

The NCB option

Finding ways to fund much-needed deferred maintenance isn’t always obvious. Homeowner associations often think their only option is to require a large, one-time assessment that can burden homeowners’ finances. Or, they reconcile themselves to a very large increase in monthly association fees.

But Gardner and Highpointe’s legal counsel, Ken Ingram, had a third option: getting financing from NCB. Both men had worked with NCB before.

"CMC is one of the area’s largest condominium management companies," Gardner says. "We manage more than 200 community associations representing 55,000 units. We do a lot of loan placement for associations."

NCB had a good track record, Gardner recalled. He contacted NCB’s Karyn Mann, who, he remembers, responded quickly. Within days, Mann had worked out a $2.5 million financing deal.

But the decision to accept a loan of that size lay with Highpointe’s membership. Mann, Ingram, Gardner and CMC associate Ron Crandall met with High Pointe’s board to review the financing options, including the NCB loan.

"The board focused on the borrowing option, which became its preferred choice," Ingram recalls.

Membership weighs in

Securing the loan required a majority vote of Highpointe’s owners. Before voting, association members met to learn more. The meetings generated "considerable discussion," Gardner remembers. High Pointe owners, many of whom work for the federal government, wanted to know the whys and hows of the property’s current condition and the association’s finances. They asked about the financing alternatives that had been explored. Their concern was understandable. They had already been required to pay a special assessment two years before - and that hadn’t been enough to complete repairs.

"I attended a couple of association meetings, speaking to the board, management and membership to explain the situation and the loan repayment process," says Mann, a vice president in NCB’s Community Association Lending department. "Being there helped."

In the end, the majority of homeowners present at the June annual meeting elected - by an 80 percent margin -- to finance the property’s repairs with the NCB loan.

NCB and Highpointe set up the loan on a staggered schedule. The first two years represent a construction loan. During that period, homeowners will see a dues increase ranging from $30 to 77 a month, depending on the size of their unit. Those range from one to two bedrooms and 673 to 1,022 square feet. The units average in value about $225,000 each.

Over the final eight years, Highpointe homeowners will pay off the remaining loan with an additional $120 to $170 per month.

Back on track

Highpointe’s roof, garage and heating/cooling repairs will be completed this fall. Outdoor paving will commence next spring. The high rise is on its way to maintaining its value in Alexandria’s largest and fastest-growing neighborhood.

"The work will help with the marketability and viability of the association," says Mann. "It will sustain the association property for years to come."

For his part, Gardner is pleased to have worked once again with a financial partner that understands his customers. "NCB clearly met, and exceeded, our expectations," Gardner says. "Its performance was superb. Karyn Mann was very helpful, always right there with the answers."

"Because of its mission, NCB understands community association issues in ways most other lenders don’t," Ingram adds. "It knows the nature of the market and the issues. The bank was very responsive."


For more information on how NCB can help your homeowner association, contact NCB’s Karyn Mann at 800-766-2622.