Condo Media - December 2020 - 36

The Region

MAINE

The Future
of Reserve
Fund Studies
Enhanced Options Can Offer More Detail
[by Jack Carr, P.E., RS, LEED-AP]

What is your condo's future? Many
condo boards may believe the standard
reserve fund study will provide the
information necessary for a solid
financial future for their community.
This traditional tool has served well for
many associations, but more and more
associations are now using a more sophisticated plan, namely, an enhanced
reserve fund study. With the use of an
enhanced reserve study, the board has
more than a replacement in-kind option
to consider but also the possibility of
upgrades of common elements to take
advantage of modern materials or more
energy efficient components.
CONSULTANT EXPERTISE
In the past, boards only sought the
counsel of accountants and attorneys
for their reserve fund needs. Now more
boards than ever are seeking help from

could perform a life-cycle analysis on
the HVAC system in the community.
This study could determine that by introducing high-efficient units, the community will save 100 kilowatt-hours per
month over replacing the current heat
pumps with a similar unit. At Central
Maine Power's current rates, this would
provide the association with a presentworth savings over the 20-year reserve
fund life of $3,540 per unit. In most
cases, the upgrade will pay for itself
within a reasonable time.
ONGOING ROUTINE
MAINTENANCE
Routine maintenance is something
many of us put off until it is too late.
Whether it be your own car or even
your own body, it is easier to procrastinate and fix things only when there are
significant problems. The same is true

The most important aspect of a well-developed reserve
study and its resultant maintenance plan is that it is used.
engineers, architects, and contractors
as well. The purpose of this expanded or
broadened search for information is to
add consultants who know what needs
to be done to cost-effectively maintain a
building, and most importantly, how to
get it done at the right price.
For example, under an enhanced
study, your Reserve Specialist (RS)

36

CONDOMEDIA December 2020

for condominium associations. The
pressure to keep maintenance expenses
down, coupled with delinquent members or vacant units, means routine
maintenance is often neglected.
However, since the board has a fiduciary responsibility to manage reserve
funds wisely, maintenance items should
not be overlooked. Proper maintenance

can often dramatically extend the life of
common element building components.
A few examples come to mind.
O Pavement deterioration. Failure to
maintain walkways can lead to tripping
hazards and related liability, not to
mention poor curb appeal to buyers.
O Inadequate ventilation. This is
a common problem. Inadequate
ventilation causes moisture problems
and overheating roof materials.
Both are conditions that will lead to
premature component failure and
unhealthy indoor air becoming more
of an issue in these troubled times.
O Decks railings and connections.
Often, deck details such as improper
ledger fastening or lack of flashing
are such that they may encourage rot.
Failure can be dangerous.
Because maintenance has such a significant effect on the useful life of building
components, it becomes an important
consideration in the reserve study.
So called " useful life " tables are helpful,
but only provide average values for components. Proper maintenance can affect
the useful life of some components by
50 percent or more.
This variability must be incorporated
into any properly done enhanced reserve
study. If building elements are to wear out
prematurely, there may not be enough
money to cover their replacement. The
implications of underfunding are obvious.
Similarly, if these same elements can
be determined to last longer than the
average, the reserve may be overfunded.
Overfunding is almost as troublesome
as underfunding. It represents less than
optimum use of unit owners' personal
resources. Property values may decline
if maintenance costs are unrealistically
high. The money saved through proper
funding may pay for the reserve study -
and then some.
BENEFITS OF
ENHANCED REPORTS
A competently prepared reserve study
can do more than prevent over or



Condo Media - December 2020

Table of Contents for the Digital Edition of Condo Media - December 2020

Condo Media - December 2020 - Cover1
Condo Media - December 2020 - Cover2
Condo Media - December 2020 - 1
Condo Media - December 2020 - 2
Condo Media - December 2020 - 3
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Condo Media - December 2020 - Cover4
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