Small, 25 year old, self managed, 16 unit condo in Maine. Had self-made Repair and Replacement reserve plan identifying many future common area repair and replacement needs, estimated costs, timing, etc., which when recorded on spreadsheet and considering latest reserve fund balance, estimates of possible interest and increase in costs, resulted in the current annual contribution of $8,500.
Current balance around $26K. We cannot afford a professional reserve study. New Board of directors is in the process of scrapping that funding methodology and saying it would be sufficient to have a balance in Repair and Replacement Reserves of $3,000 per unit. They do not say how they arrived at that figure, nor how the annual contribution might be impacted, nor how the fund would be replenished as repairs and replacements take place. I have asked all of these questions in writing and received no reply.
This change seems to me to be a very ill advised, based on some sort of subjective determination grabbed out of the air. Does anyone use something similar to the $$$$ per unit idea who might be able to explain the concept? I need some ammunition because I smell a host of special assessments in the future if this idea is passed by the board. I suspect the new board, already cutting maintenance budget items, will be grabbing current reserve funds in an attempt to decrease monthly fees or avoid increases, both of which will ultimately destroy the value of the units. I seem to be the only one who cares about this, half the units are second homes, most others owned by the elderly.
