If I understand your post...you (too much to always reference your husband, and I recommend who ever is responsible post) want to cover water damage.

What is “water damage”?

Suggestions to prevent further water damage, protect the pillar from water, I would want to see some photos.

I would start by stripping all of the decorative covering off to see what the real structural situation is.

Sorry but what you are suggesting is the wrong way to go about this. If you KNOW you have water damage, then you KNOW adding a THIRD LAYER of tile is the wrong way to deal with this.

I'm sorry but you have been left holding the bag. As the owner of the support/balcony, you will want to strip back what is there to find out HOW BAD this is. Lipstick on a pig that has already had a complete up-do and blow out AND baked in the oven isn't the way to go about finding out how pretty you can make something that is already 'over done'.

I've just seen a homeowner who 'ignored' proper building and safety requirements get sued AND charged with manslaughter because their balcony collapsed - seriously injuring an old man. He died of his injuries 3 days later.

Before we go much further...please post photos of what you can see.

Exterior plywood or other wood framing encased or covered with tile or stucco is prone to rot over time from water intrusion and lack of ventilation to the wood. At 20 years you are right in that window of time for these conditions. Also, please be cautious If your balcony deck surface where you step has tile over wood, because rotted floor decking can collapse under your feet. You have seen the warning signs. Don’t let your husband cover things up without an expert inspection.