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The Reserve Fund is the Association’s savings account for major repairs and replacements. The amount of money in the account, combined with the rate at which we add money to it, provides for the work the Association does to maintain Park Tower and all its major parts and components.
A Reserve Study is a tool used by Boards and Condo Association’s throughout the industry, as a long-term planning tool to help manage a health Reserve Fund. It takes the current status of the reserve fund and identifies a path for budgeting the necessary income which would result in sufficient funds for repairs and replacements that are expected in coming years.
While the Board only passes a formal budget on an annual basis, one of those line items is the “Reserve Contribution”. You could say that the Reserve Study is a budget for that line item. Sort of, a budget within a budget. At a minimum, it is definitely one of the most important tools in helping the Board (and Committee’s such as PTCA’s Budget & Finance Committee) arrive at a sensible and responsible number for the Reserve Contribution. The end goal being to budget a figure which reasonably represents our present expected trajectory for the buildings coming physical needs.
Park Tower’s Reserve Study was prepared by an outside independent consultant, Reserve Advisors. They last completed this study in 2014, but because of a number of large projects that were completed and changes in some of our expectations, including other expenditures that may be considered, following recommendations from Management and the B&F Committee, the Board asked that they return and update the study.
The report contains an assessment of the physical condition of the common elements, structure and mechanical components throughout Park Tower. It identifies the useful life remaining and estimates the years during which specific components will require major repairs or replacement. It also looks at the cost of labor, parts and materials as well as considerations for the rate of inflation and interest the balance you are holding may make. The end result is estimates of what the repair and replacement costs may be come time for the work to be done over the next 30 to 40 years. This includes a timeline of events and estimated costs, and a bottom line recommendation for a contribution to your reserve each year in order to reasonably expect to have the funds you need to complete the projects anticipated.
Examples of such projects would include replacement of the roofs, plumbing riser replacements, boiler repairs and replacement, chiller and cooling tower repairs and replacements, hallway carpeting, window sealants, concrete and masonry repairs, and major pool repairs. And more…much more.
The end result is a report, which at the request of the Board is now posted at the above link. This will help the PTCA B&F Committee throughout the upcoming budget process as they gear up and prepare the budget for the 2017/2018 fiscal year.