Condo Media - October 2017 - 56
The Region
MAINE
How Long Will That Last?
Set Aside Enough Funds to Meet Future Needs
[by Jack Carr, P.E., RS, LEED-AP]
Maine has more self-directed
condominiums than other states in
which I perform reserve fund studies. Perhaps it is due to Maine condos,
on average, tending to be smaller with
fewer amenities or just Yankee selfreliance otherwise known as thriftiness.
Whatever the reason, these condos have
avoided property manager services or
other professionals such as lawyers, accountants, or engineers to assist in their
community governance and financial
planning efforts.
Instead of suggesting this might not
be the best way to manage a condo
community, I thought I would share
some insight on how professionals
develop capital expenditure forecasts to
ensure the association is setting aside
enough funds to be able to meet future
needs. This is important for not only the
financial health of the community and
maintaining market value of the units,
but also to meet the fiduciary responsibilities of the board.
56
CONDOMEDIA
With that, I would like to pull back
the curtain to reveal the answer to the
most common question I am asked
by a new condo client. In my first
meeting with the board or committee
responsible for developing a reserve
fund budget, I am asked, "How long
will that last?" The building committee
members have a reasonably good idea
of what assets are held in common and
are the responsibility of the association
to maintain or replace. However, what
they are uncertain of is the expected
useful life of a common element (e.g.
wood deck, shingled roof, clapboard
siding, etc.).
EXPECTED USEFUL LIFE
OF COMPONENTS
There are many published sources
to determine the life expectancy of
typical condo components. They are
available online or in a printed form.
The most popular Expected Useful Life
(EUL) data can be found in Marshall
& Swift's Life Expectancy Guidelines,
U.S. Department of Housing and Urban
Development (HUD)'s EUL Tables, and
National Association of Home Builders
(NAHB)'s Study of Life Expectancy
of Home Components. The advantage
of these publications' data is they are
thought to be unbiased with no potential conflict of interest that could taint
recommendations from contractors or
other service providers.
Before the listed EUL data can be
applied to a condo list of common elements, the committee should determine
the life of the study. This could range
from 10 to 20 to 30 years in length.
When a commercial corporation
develops a capital expenditure plan,
they rarely look past 10 years as they
are focusing on shorter-term return
on investment criteria not suitable
for a condo. In the recent past, condos
typically used 20-year plans, however,
the current recommended reserve fund
study period is 30 years to encompass a
Condo Media - October 2017
Table of Contents for the Digital Edition of Condo Media - October 2017
Table of Contents
Condo Media - October 2017 - Intro
Condo Media - October 2017 - BB1
Condo Media - October 2017 - BB2
Condo Media - October 2017 - Cover1
Condo Media - October 2017 - Cover2
Condo Media - October 2017 - 1
Condo Media - October 2017 - 2
Condo Media - October 2017 - Table of Contents
Condo Media - October 2017 - 4
Condo Media - October 2017 - 5
Condo Media - October 2017 - 6
Condo Media - October 2017 - 7
Condo Media - October 2017 - 8
Condo Media - October 2017 - 9
Condo Media - October 2017 - 10
Condo Media - October 2017 - 11
Condo Media - October 2017 - 12
Condo Media - October 2017 - 13
Condo Media - October 2017 - 14
Condo Media - October 2017 - 15
Condo Media - October 2017 - 16
Condo Media - October 2017 - 17
Condo Media - October 2017 - 18
Condo Media - October 2017 - 19
Condo Media - October 2017 - 20
Condo Media - October 2017 - 21
Condo Media - October 2017 - 22
Condo Media - October 2017 - 23
Condo Media - October 2017 - 24
Condo Media - October 2017 - 25
Condo Media - October 2017 - 26
Condo Media - October 2017 - 27
Condo Media - October 2017 - 28
Condo Media - October 2017 - 29
Condo Media - October 2017 - 30
Condo Media - October 2017 - BB3
Condo Media - October 2017 - BB4
Condo Media - October 2017 - 31
Condo Media - October 2017 - 32
Condo Media - October 2017 - 33
Condo Media - October 2017 - 34
Condo Media - October 2017 - 35
Condo Media - October 2017 - 36
Condo Media - October 2017 - 37
Condo Media - October 2017 - 38
Condo Media - October 2017 - 39
Condo Media - October 2017 - 40
Condo Media - October 2017 - 41
Condo Media - October 2017 - 42
Condo Media - October 2017 - 43
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Condo Media - October 2017 - 46
Condo Media - October 2017 - 47
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Condo Media - October 2017 - 49
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Condo Media - October 2017 - 54
Condo Media - October 2017 - 55
Condo Media - October 2017 - 56
Condo Media - October 2017 - 57
Condo Media - October 2017 - 58
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Condo Media - October 2017 - 60
Condo Media - October 2017 - 61
Condo Media - October 2017 - 62
Condo Media - October 2017 - 63
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Condo Media - October 2017 - 65
Condo Media - October 2017 - 66
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Condo Media - October 2017 - 70
Condo Media - October 2017 - 71
Condo Media - October 2017 - 72
Condo Media - October 2017 - Cover3
Condo Media - October 2017 - Cover4
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