Major servicing of central chiller plant equipment including compressor rebuilds, tube cleaning, refrigerant management, and control system recalibration.
Key Takeaways
| Lease Type | Recoverable? | Controllable? |
|---|---|---|
| NNN | Yes | No |
| Modified Gross | Yes | No |
| Full-Service Gross | No | No |
CapEx Risk: This line item is commonly used to disguise capital expenditures as operating expenses. Verify all invoices against GAAP standards.
Approximate budget share: 2-5% of total CAM pool.
HVAC chiller overhaul covers the major servicing of central chiller plant equipment that provides cooling to the entire building. A legitimate overhaul includes compressor rebuilds, condenser and evaporator tube cleaning, bearing replacement, refrigerant recovery and recharge, and control system recalibration. These services restore the existing equipment to optimal operating condition without replacing the asset itself. They are operating expenses recoverable through CAM. The dispute risk is substantial because a single chiller replacement can cost $200,000 to $500,000 or more. When a landlord performs a full chiller swap and labels it "chiller overhaul" on the reconciliation, tenants bear the entire cost in one year instead of paying an amortized share over the equipment's 20-25 year useful life. Tenants should review chiller costs annually, request the vendor scope of work for any charge that significantly exceeds prior years, and verify whether the work restored existing equipment or installed a new unit. The presence of a mechanical engineering firm in the vendor list is a strong indicator that the project involved capital-level design work.
Overcharge Risk
$5,000-$40,000/year
typical annual overcharge when this line item is disputed
Landlords pass through a full chiller replacement as "chiller overhaul" or "compressor maintenance," billing a $200,000+ capital expenditure as a single-year operating expense.
This line item is commonly used to disguise capital expenditures as operating expenses. Capital expenditures must be excluded from CAM or amortized over their useful life per GAAP. If you see unusually high or one-time charges in this category, request all invoices and scope-of-work documentation before paying.
| Legitimate Charge | Suspicious Charge |
|---|---|
| Annual compressor rebuild, tube cleaning, and refrigerant recharge on the existing chiller | Full chiller unit replacement billed as "annual chiller overhaul" |
| Bearing replacement and vibration analysis at scheduled maintenance intervals | A new chiller installation with mechanical engineering design fees in the maintenance line |
| Control system recalibration and sensor replacement on existing equipment | Chiller costs exceeding 5x the prior three-year average with no explanation |
Request vendor invoices and the scope of work. Distinguish between a compressor rebuild (potentially an operating expense if it restores existing equipment) and a full chiller replacement (capital expenditure). Chiller replacements must be amortized over the equipment's useful life of 20-25 years.
Check Your HVAC Chiller Overhaul Charges
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