- No Qualification Page or even a mention of who did the report, except for the name of Don Myhre in the right hand footer of the Reserve Fund Analysis spreadsheet pages.
- On page numbered 3 (actual Page #54 of PDF) Adaquecy of Reserve Fund. It states that owners should contribute $66,008 to the reserve fund in 2016, increasing it by $20,880 in 2017 and 2018. Then increasing it by 5% a year until the year ending 2023. On the actual Page # 58 of the PDF a spreadsheet (Reserve Fund Analysis) it states that Reserve Fund Contributions should be $66,008 in 2016 and $83,520 in 2017. This is an increase of only $17,512, so the person who prepared this Reserve Fund Study can’t even do simple math. The actual amount of Reserve Fund Contributions should have been $86,888 for 2017 and $107,768 for 2018, increasing by 5% until the end of 2023.
- Have no idea where the reserve requirements numbers came from, except for a mention on Page 4 (actual page 66 of PDF), which states “Reserve Requirements: Reserve Funds required today, considering the effective age of components and improvements”. So without numbers being presented properly, I didn’t even bother trying to figure those numbers out. In previous Reserve Fund Studies, done by Wade Engineering, it was easy to figure the reserve requirements because they were put nicely in a spreadsheet. That’s not the case with this Reserve Fund Study though.
- On page numbered 4 (actual Page #53 of PDF) Recommendations. It states that “The Corporation should update the Reserve Fund Study every five (5) years.”. According to the current Condominium Act, the Reserve Fund Study MUST, again “MUST!!!!”, be updated every 5 years, this isn’t a suggestion, it’s a requirement. So, once more, the person who did this Reserve Fund Study doesn’t understand the Condominium laws of Alberta.
- Windows Assemblies – In the Reserve Component Section it states that “We suggest an allowance of $62,475 about every 12 years for any component replacement”. In the Reserve Fund Analysis this amount was only accounted for once. Using simple math, there are 2 twelve year periods in 25 years. The estimated costs over 25 years should have been $124,950 in 2016 dollars and not $62,475.
- Building Siding Provision – in the Reserve Component Section it states that “Suggest a Contingency Reserve of $29,646 for repairs to the stucco about every 3 years”. Again, using simple math there are 8 three year periods in 25 years. The estimated costs over 25 years should have be $237,168 in 2016 dollars and not $29,646.
- Same thing with Landscaping facilities – Should have been $60,000 in 2016 dollars, not $20,000 as accounted for.
- On page 5 (actual page 65 of the PDF)the inflation rate used in the reserve fund projection is 2%. The actual numbers the author comes up with are nowhere near what was disclosed on this page. The inflation adjusted future dollars for repair/replacement items are mostly over inflated. Again, using simple math, cost in 2016 dollars x (1+0.02)^(num of years) will give you the inflation adjusted future value of an item. I don’t know how the author came up with the numbers used on the Reserve Fund Analysis projecting spreadsheet, but how ever it was done….. It’s “WRONG!!!!.
- On page 2 (actual page 55 of PDF) it states a number of $3,279,626 for the Future Replacement Reserves or Costs. If you add up all the total expenditures by year it’s actually $3,841,767 a difference of $562,141
- Cost for 2016 reserve fund report was $4,095. Previously the reports done by Wade Engineering reports (2011)cost $6,132. So I guess you get what you pay for.
- After contacting REIC they stated “They don’t do reserve fund studies or reports“. So again, who did this one.
Recommendations.
The corporation needs to do a proper Reserve Fund Study/Report, by a Qualified group of people as soon as possible. The days of “If it ain’t broke, don’t fix it”, are over. That kind of thinking will lead to enormous replacement/repair costs down the road. Proper maintenance/Replacement of the Common property will, in the long run, cost each and every owner less while increasing the value of the units. These days, more and more buyers are looking for properly maintained properties with a healthy reserve fund, not “if it ain’t broke, don’t fix it” condos.
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