ECA Reserve Study

On March 9, 2009, a representative from Reserve Advisors presented to a large gathering of Elizabethans in the west lobby the results of the study Reserve Advisors made based on a “visual, noninvasive inspection” completed November 14, 2008.

WHAT IS A RESERVE STUDY?

A Reserve Study is a budget-planning tool that identifies the current status of an association’s monetary reserve fund in order to create a “stable and equitable” Reserve Funding Plan to offset anticipated expenditures that might arise in the future. Often, a Reserve Study provides documentation for necessary increases in an association’s fees.

THE BOTTOM LINE

In the case of Elizabeth Condominium Association (ECA), this study indicates modest increases in the next two fiscal years, followed by increases for inflation for the years 2012 through 2024, then another modest decrease in 2025 followed by increases for inflation for the years 2026 to 2039.

HANDOUTS

A folder of documents is available from the ECA Management Office. This discussion here skims what was presented and it is highly recommended that each owner obtain the Reserve Advisors folder of information to fully understand the results of the study. The documents include:

1. A six-page Executive Summary
2. A seven-page Slide presentation
3. A four-page spreadsheet of ECA Reserve Expenditures (2010-2039)
4. A one-page spreadsheet of the recommended ECA Reserve Funding Plan (2010-2039)

STATED CONCERN

The Executive Summary states, “the unaudited cash status of the reserve fund, as of October 31, 2008, as reported by Management is $1,925,441. If the Association were to continue to fund reserves at its 2009 budgeted amount of $524,160, the reserve fund would incur a potential shortage by 2016.”

RESERVE EXPENDITURES ADDRESSED

The four-page spreadsheet of ECA Reserve Expenditures examined monetarily from 2010-2039, is broken down into the following general categories:

• Exterior Building Elements
This includes roofs, walls, windows, doors, balconies, canopies, skylights, light fixtures, and other exterior elements.

• Interior Building Elements
This includes renovations for the lobby & party room, hallway wall coverings, furniture, exercise equipment & renovations to exercise rooms, mailboxes, stairway wall maintenance, floor coverings, light fixtures, and other interior elements.

• Building Services Elements
This includes maintenance & replacement of major equipment related to heating & cooling, electrical systems, elevators, water pumps, security systems, trash chutes, etc.

• Property Site Elements
This relates to concrete, wooden, brick walk/driveways.

• Pool & Pool Room Elements
As stated.

• Garage Elements
As stated

FUTURE BUILDING REPAIR RECOMMENDATIONS

This spreadsheet also indicates what Reserve Advisors recommends as replacement dates for some of the elements discussed. One particular replacement date raised a lot of discussion from those attending the meeting.

Reserve Advisors, based on their “visual, noninvasive inspection” (this means they did not go inside any apartments), recommended that windows, doors, and metal panels begin a phased replacement starting in the year 2021. They stated that the original windows have a life expectancy of 45 to 55 years with 12 years remaining of serviceable use.

Given that some of the residents have already stated that their windows have deteriorated so much that curtains billow when the wind blows (and the wind comes through the interior sealing joints of the windows) and caulking is not a viable way to fix this problem, one wonders about the value of this study.