Long-term Maintenance – Counting the Cost of the Future

Do you own a building or are you thinking of buying? Ownership comes with both blessings and responsibilities that need to be accounted for. Ongoing maintenance is a significant responsibility that requires planning and investment. Failure to maintain property assets can significantly compromise the financial health of a church, and thereby its missional impact in the Kingdom.

Case Study

In 2018 we helped one of our borrowers navigate a difficult financial period. Alongside assessing options for cutting expenses, launching new income streams and subdividing surplus land, we assessed their forward maintenance obligations on their building. We commissioned a forward-maintenance plan from Colliers International to assess what impact this would have on their finances going forward. It came back with a whopping $1.2 million over the next 10 years, with $371,000 in the first year due to works which had been neglected for some time and an air conditioning system which needed replacement. In the tragic case of this church, the deferred maintenance obligations were the final blow which ultimately saw the church needing to sell and relocate. Had the maintenance been completed when due, or specific funds set aside for upcoming improvements, there would have been a chance the church could have stayed in its desired premises.

The maintenance projection for the church above is illustrated in the graph below:

Practical Tips

· Get a forward-maintenance plan (“FMP”) commissioned by a professional provider. There are a range of providers who can assist with this.

· Ensure maintenance is reviewed at a governance level. Trustees/elders should receive a copy of the FMP and regularly review this to ensure obligations are being met.

· Conduct thorough due diligence when buying a building.

· Take your FMP and build it into your budget. Everything from carpets, ventilation systems, windows and roofs have a finite life and will need replacing at some stage. Put money aside each month into a designated fund for these costs.

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