Tsunamis, earthquakes, tornadoes—these are just a few of the devastating disasters that have made headlines already in 2011 and created emergency situations that many never thought possible.
As the past year’s calamitous snowstorms, earthquakes, and even dreaded bedbug infestations have demonstrated, sometimes you just can’t plan for everything, and that’s especially true when you are living in a co-op or condo.
Any financially solvent co-op or condo association has both an operating budget to cover day-to-day expenses associated with running the building and a reserve fund that’s in place to pay for larger repairs and capital improvement projects. But what would happen if something devastating were to happen?
Smart boards will prepare and plan financially for a worst-case scenario, say the pros. Building some ‘wiggle room’ into a building’s budget can help fill the gaps between operating and capital expenses, and can spare residents from huge assessments and/or maintenance increases.
“Capital projects are typically defined as replacement projects as opposed to a maintenance project,” says William J Pyznar, PE, a principal with The Falcon Group, an engineering firm headquartered in Bridgewater. “Capital [replacement] projects are typically funding via reserves and maintenance projects are typically funded via operating funds.”