Condominium Reserve Fund Planners Inc.

Transcription

1 Condominium Reserve Fund Planners Inc. Reserve Fund Study York County Condominium Corporation No Reynolds Street Fredericton, NB E3A 0K7 Prepared for Board of Directors May 29, 2014

2 Table of Contents Cover Page 1 Table of Contents 2 Executive Summary Letter 3 Executive Summary of Facts and Conclusions 4 Cash Flow Table 5 Reserve Fund Study 8 Purpose of Reserve Fund Study 8 Reserve Fund Study Methodology 8 Planning Standards 8 General Conditions and Assumptions 8 Reserve Fund Projection Factors 9 Inflation Factors 9 Property Information 12 Building Plans and Property 12 Reserve Component Analysis and Estimated Costs 14 Reserve Fund Studies 14 Quality of Construction 14 Demolition and Disposal Costs 14 Harmonized Sales Tax 15 Contingency Reserves 15 Reserve Fund Component Descriptions and Analyses 15 Reserve Fund Component Estimates 77 Benchmark Analysis 77 Schedule of Reserve Fund Component Estimates 77 Schedule of Reserve Fund Estimates 78 Analyses of Reserve Fund Operations 79 Adequacy of Reserve Fund 81 Reserve Fund Management 30 Year Projections 82 Opening Cash Balance 82 Cash Flows 82 Opening Cash Funds 82 Cash Expenditures 82 Closing Cash Fund 82 Deficiency Analysis 82 Future Reserve Fund Management 83 Condominium Act, 2010 Plan for Future Funding 83 Projected Reserve Fund Expenditures 83 Copyright 84 Limiting Conditions 84 Certification 85 Plot Map 86 Survey 87 Charts 88 End of Report: Last Page 89 Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 2

3 Condominium Reserve Fund Planners Inc. Phil Williams CRP Telephone Inglewood Drive Cell Fredericton, NB E3B 2K6 September 11, 2014 York County Condominium Corporation No Reynolds Street Fredericton, NB E3A 0K7 Attn: Board of Directors, Re: York County Condominium Corporation No. 10 Pursuant to your request for a reserve fund study of the within described condominium project, Condominium Reserve Fund Planners has prepared and submits to you this report. The Reserve Fund Study describes the reserve fund concepts and major reserve fund items. It provides current and future replacement reserve estimates and recommends reserve fund actions. The Reserve Fund Study is a complex document and should be reviewed in detail and within the context of this report. We recommend that a reserve fund plan and strategy be adopted and implemented. The reserve fund is currently showing a small surplus from the fund opening. This surplus will be reduced in This will bring the fund into balance. The contribution will then continue on an annual basis as shown in the 30 year contribution. As outlined in this report, the current reserve fund and proposed contributions will ensure reserve funds are adequate to cover potential expenditures required to repair or replace common elements or assets of the corporation when needed. Condominium Reserve Fund Planners Inc. would be pleased to provide you with complete review and updating services for the reserve fund of the corporation, as required in the future. We appreciate the opportunity to perform this reserve fund study for you. If you have any questions, please do not hesitate to contact the undersigned. Respectfully submitted, Condominium Reserve Fund Planners Inc. Phil Williams, Certified Reserve Planner Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 3

4 Executive Summary of Facts and Conclusions This executive summary has been prepared as a quick reference of pertinent facts and estimates of this Reserve Fund Study, and it is provided as convenience only. Readers are advised to refer to the full text of this Reserve Fund Study for detailed information. Client York County Condominium Corporation Reynolds Street Att: The Board of Directors Management Company The Condominium is managed by the Board Fredericton NB E3A 0K7 Date of Study May 29, 2014 Condo Corporation Year End August 31, 2014 Subject Property York County Condominium Corporation Reynolds Street Fredericton NB E3A 0K7 Inflation Factor 1.40% Interest Rate 2.00% Significant Reserve Fund Estimates Current Replacement Cost $646,301 Future Replacement Costs $987,383 Current Reserve Fund Requirements $95,798 Future Reserve Fund Accumulation $162,736 Future Reserve Fund Requirements $824,647 Annual Reserve Fund Assessment $23,888 Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 4

5 Cash Flow Table Year Ending Opening Balance Cash Flow York County Condominium Corporation 10 Recommended Annual Contribution Special Assessment Estimated Inflation Adjusted Expenditures Estimated Interest Earned 31-Aug % Closing Balance 2014 $92,000 $8,900 0 $0 $1,600 $102, $102,500 $17,053 $0 $9,768 $2,050 $111, $111,835 $23,888 $30,389 $2,237 $107, $107,571 $23,888 $5,830 $2,151 $127, $127,780 $23,888 $0 $2,556 $154, $154,224 $23,888 $6,310 $3,084 $174, $174,886 $23,888 $2,825 $3,498 $199, $199,447 $23,888 $85,771 $3,989 $141, $141,553 $23,888 $18,221 $2,831 $150, $150,051 $23,888 $1,695 $3,001 $175, $175,245 $23,887 $0 $3,505 $202, $202,637 $23,889 $20,016 $4,053 $210, $210,564 $23,887 $5,773 $4,211 $232, $232,889 $23,889 $4,135 $4,658 $257, $257,301 $23,887 $6,718 $5,146 $279, $279,616 $23,889 $5,289 $5,592 $303, $303,809 $23,887 $165,712 $6,076 $168, $168,061 $23,889 $0 $3,361 $195, $195,311 $23,887 $13,718 $3,906 $209, $209,387 $23,889 $0 $4,188 $237, $237,464 $23,887 $10,598 $4,749 $255, $255,502 $23,889 $279,391 $5,110 $5, $5,110 $23,887 $4,078 $102 $25, $25,022 $23,889 $8,816 $500 $40, $40,595 $23,887 $15,877 $812 $49, $49,418 $23,889 $0 $988 $74, $74,295 $23,887 $96,201 $1,486 $3, $3,467 $23,889 $1,695 $69 $25, $25,731 $23,887 $29,333 $515 $20, $20,800 $23,889 $2,430 $416 $42,675 Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 5

6 Recommendations Due to its past performance, the reserve fund for York County Condominium Corporation 10 is showing a small surplus. This deficiency will be eliminated over time in order to meet the adequacy requirement set out in Section 38(1) and 40 (2) of the Condominium Act, Condominium Reserve Fund Planners Inc., recommendations, set out below and detailed in this report, will assist the corporation to achieve and maintain an adequate reserve fund. In our opinion, the current reserve fund balance, recommended annual contributions and earned investment income will adequately fund immediate and future reserve fund expenditures. The corporation should prepare and implement a long-term reserve fund strategy. Major repairs and replacements should be recorded in, and funded from, a reserve fund account. The reserve fund contribution will be $8,900 in 2014 and thereafter by the amounts detailed in the Cash Flow each subsequent year. The reserve fund should be fully invested in guaranteed securities, yielding at least 2.00% per annum. The corporation should make such expenditures, as necessary to maintain the property in optimum condition. The reserve fund should be reviewed every year to ensure that the underlying assumptions are still valid and that the estimates remain current. Typically the corporation should update the Reserve Fund Study every three (3) years. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 6

7 RESERVE FUND STUDY Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 7

8 Reserve Fund Study Purpose of Reserve Fund Study This Reserve Fund Study is a financial document. The purpose of a Reserve Fund Study is to provide cost estimates for various reserve components that are subject to major repairs and/or replacement over the lifetime of the property, and to estimate the funding required for such major repairs and replacement in accordance with the provisions of Section 38(1) and 40 (2) of the Condominium Act, This reserve fund study applies as of May 29, Reserve Fund Study Methodology A Reserve Fund Study is a financial document, which provides the basis for funding major repairs and replacement of the common elements and assets of the corporation. This Reserve Fund Study comprises the following elements: 1. it identifies the reserve components and assesses their quality, normal life span, and present condition; 2. it estimates the remaining serviceable years for each of the reserve components and proposes a time schedule for repairs and/or replacement; 3. it provides current replacement cost estimates including the cost of removing worn-out items and special safety provisions; 4. it projects the future value of current replacement costs at an appropriate and compounded inflation rate; 5. it projects the future value of current reserve funds compounded at a long term interest rate; 6. it calculates current reserve fund contributions required and to be invested in interest bearing securities in order to fund future reserve fund expenditures. The Reserve Fund Study is a practical guide to assist the Board of Directors to plan budgets and maintenance programs. Condominium Reserve Fund Inc. Planning Standards Regulation 23 (1) under the Condominium Act, 2010, requires that a reserve fund consist of a physical analysis and a financial analysis. General Conditions and Assumptions Reserve fund estimates are subjective, and they are based on an understanding of the life cycle of building components and experience gained from observing buildings. It must be appreciated that reserve fund budgeting and projections are not exact sciences. They are, at best, prudent provisions for all possible contingencies, if, as and when they arise. Reserve fund requirements are subject to change and must be reviewed and modified over time, not less than every three years. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 8

9 Reserve Fund Projection Factors The Regulation 23/01 under the Condominium Act, 2010, requires that the financial analysis include the following: (a) an inventory of each item of the common elements and assets of the corporation that requires, or is expected to require within 30 years, after the date of the study substantial repair or replacement, if the cost of replacement is $500 or more; and (b) an assessment that provides the following information for each item in the inventory: I. The actual approximate year of acquisition of the item II. The actual estimated age of the item III. The normal life expectancy of the item IV. The estimated year of the substantial repair or replacement of the item V. The estimated cost of the substantial repair or the replacement of the item as of the date of the study and VI. The percentage of the cost of the substantial repair of the replacement of the item available to be covered by the reserved fund, and the adjusted cost resulting from the application of that percentage. What is required is an objective basis for any estimates of inflation factors and interest rates. Inflation factors and interest rates must be derived from an economic analysis of the marketplace. The estimated inflation factor and the selected interest rate are powerful factors in projecting reserve fund contributions and requirements. They can vary dramatically over time and must be periodically reviewed to ensure their relevance and accuracy. Although the Regulations require a reserve fund plan to be projected over a period of at least 30 consecutive years, a long-term horizon in every respect, reserve fund projection factors can only be based on short-term economic conditions because of their volatility over time. The reserve fund projection factors must be periodically reviewed and adjusted in accordance with changing economic conditions as part of the reserve fund updating process, as mandated by the Regulations. Inflation Factors Inflation measurement in reserve fund projections must be based on construction indices rather than the widely quoted Consumer Price Index (CPI), which measures the cost of a basket of consumer goods, not construction costs. The most widely recognized construction cost services providing periodic cost indices are R.S. Means and Marshall & Swift / Boeckh. Investment income can be a significant and increasing source of revenue for reserve funds, and therefore, it is imperative that reserve funds are continuously and prudently invested. Reserve fund investments must be directly or indirectly guaranteed by governments. Bank deposits and various investment instruments are insured by the Canada Deposit Insurance Corporation up to a maximum of $100,000, covering principal and interest. The ability of condominium corporations to earn the highest rate of interest available in the marketplace, given the restricted conditions of investments, depends on the expertise of financial management and the amount of available funds for investment. Therefore, the reserve fund planner must consider management policies, the historical investment performance and the size of the reserve fund available for investment. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 9

10 In selecting an appropriate interest rate for reserve fund investments for a particular condominium corporation, the balance of the reserve fund is the most critical consideration as it dictates investment options and their corresponding interest rates. Investment opportunities are widely advertised, ranging from bank deposits, term deposits and guaranteed investment certificates (GICs) to money market instruments and government bonds. Prudent reserve fund investment requires that investments are reasonably matched with anticipated reserve fund expenditures, ensuring reserve fund liquidity. Therefore, funds should be invested in a laddered portfolio, which ensures that reserve funds are available when needed. Some management firms use their purchasing power by directing business to a particular financial institution to negotiate favorable interest rates for all their clients. This approach may benefit the smaller corporations and is an important consideration when selecting an appropriate interest rate. The benchmark calculations and the reserve fund projections are based on the assumption that reserve fund contributions are constantly and continuously invested. RS Means Building Valuation Software RS Means provides replacement cost data and software for many different types of construction and publishes updates every quarter. RS Means continually researches union and non-union wage rates for 85 different trades as well as materials costs for over 20,000 different construction assemblies. Utilizing a representative sample of buildings across the three major types, the replacement cost can be calculated for various years and further averaged to attain a percentage increase over time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 10

11 Inflation Rate Calculation Source Years Number of Years Average Annual Rate of Inflation Bank of Canada % Statistics Canada - New Brunswick - CPI Statistics Canada - Canada - CPI % % Median 1.40% In reviewing inflation rates, the median rate of 1.40% for annual inflation in calculating the future replacement costs is used hereinafter. Interest Rate Calculation Up to $100,000 $100,000 to $250,000 RBC - One Year Cashable GIC 0.75% 0.75% RBC - Five Year Cashable GIC 1.85% 1.85% ING - GIC One Year 1.25% 1.25% ING - GIC Five Year 2.50% 2.50% TD - One Year Cashable GIC 0.75% 0.75% TD - Five Year Cashable GIC 1.45% 1.45% Median 1.43% Interest Rate Used 2.00% Considering the investment opportunities available in the subject instance, and a recommended management policy of investing in secured guaranteed investments, a 2.00% interest rate is used in calculating the future investment performance of the Corporation s reserve fund. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 11

12 Property Information York County Condominium Corporation No Reynolds Street Fredericton, NB E3A 0K7 Designed and constructed in 2005, the condominium project consists of a 36 unit 3 storey low rise condominium apartment building. The overall construction, materials and workmanship are of good apartment quality. The property is in good condition. Currently the Corporation Board manages the property. Building Plans and Property Data Plans were used for quantifying building components and other improvements. The buildings and site improvements were inspected. Various construction details, facilities, equipment installations and improvements have been noted for consideration in the cost estimates herein. The following data and information has been compiled from the available plans, and the inspection of the buildings and improvements. The data has been calculated using dimensions taken from the plans. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 12

13 Building Plans Project Name Engineer Plans Supplied 185 Reynolds Street Michael Phillips Elevations Floor Plans Plumbing and Ventilation Structural Cross Sections Plan Date October 13, 2004 Property Statistics Wall, Floor, Stair, Elevator, Balcony and Elevator Details Site Area 109,703 Square Feet Building Coverage 18,285 Square Feet Paved Area 76,668 Square Feet Landscaped Area 14,750 Square Feet Building Height 3 Storeys Building Gross Floor Area 54,855 Square Feet Units 36 Units Site Services 1 System Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 13

14 Reserve Component Analysis and Estimated Costs The property was inspected for the purposes of preparing this report on May 29, 2014, by Phil Williams, CRP. Reserve Fund Studies This is an update of the Reserve Fund Study done in March of The Life Span Analysis culminates in component life span estimates, as follows: 1. Normal Life Span 2. Each reserve component is analyzed in terms of component type, quality of construction, statistical records and normal life experience. 3. Observed Condition Analysis: This is the critical analysis of a reserve component and consists of determining the effective age of the reserve component within its normal life cycle based on the observed condition of the reserve component. The validity of this analysis depends on the experience of the reserve fund planner or analyst, as this is a subjective estimate rather than an objective assessment. 4. Remaining Life Span: Given a normal life span estimate and a sound estimate of the effective age, the remaining life span of a reserve component is determined by subtracting the observed condition estimate from the normal life span estimate. This does not mean that reserve expenditures should only be made at the end of the remaining life. Reserve expenditures should and must be made during the remaining life span to maintain building components and facilities in good condition. Quality of Construction Replacement cost estimates are based on the assumption of using quality materials, as specified or built, or in the case of older developments, as required under current building code regulations, at contractors' prices, using union labour and current construction techniques, and including contractors' overhead and profit. The costs of repairs and/or replacements of many reserve components are invariably higher than original building costs when contractors have considerable latitude in planning their work and can utilize economies of scale to keep costs within construction budgets. In contrast, repair work must frequently be performed in an expedient manner with proper safety precautions and within certain constraints. Cost estimates take into account such additional costs as special construction, safety installations, limited access, noise abatements, and the convenience of the occupants Demolition and Disposal Costs The estimates herein include provisions for demolition and disposal costs including dumping fees. These costs have been rising in recent years. Particularly, dumping of certain materials has become problematic and very costly. It appears that certain codes and environmental regulations will become more stringent in future years, all of which will further increase disposal costs. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 14

15 Harmonized Sales Tax The Harmonized Sales Tax ("HST") applies to all repairs and replacements including disposal costs. Therefore, these costs are included in the reserve fund estimates hereinafter. Contingency Reserves It is frequently impossible to forecast the incidence of repairs or replacements of various reserve components, particularly, major components, such as road pavement, sewer and water systems. Therefore, reserve estimates are of a contingency nature, and as such, they are subject to changing conditions and repair experience over time. Reserve Fund Component Descriptions and Analyses The following lists each reserve fund component and provides the following information: Description Reserve Fund expenditure history Potential Deterioration Life Span Analysis Current Repair or Replacement Costs Deficiency Analysis Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 15

16 COMPONENTS Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 16

17 Reserve Component Building - Substructure Physical Description This component covers all of the poured slab and frost wall below ground. Financial Analysis There has been no expenditure on this element to date. Potential Deterioration Condition Analysis Potential deterioration includes water penetration, breakdown from the freeze and thaw cycles can spall exposed concrete. The foundation is now in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 65 Years 0 Years 65 Years Unit Quantity And Cost Estimates Unit Quantity 1 Poured Slab Unit Cost Estimate $5, Allowance Current Repair or Replacement Cost Estimate $5, Estimated Year of Major Repair or Replacement Deficiency Analysis 2070 There is none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 17

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19 Reserve Component Exterior Walls Physical Description The primary cladding of the exterior walls is vinyl siding. Financial Analysis There has been no expenditure on this element. Potential Deterioration Potential methods of deterioration include: surface cracking that can lead to water penetration, surface staining (aesthetics). Expansion join sealant can deteriorate. Impact damage from high winds. Blocked drainage can lead to cracking and water penetration. Condition Analysis The siding is in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 50 Years 5 Years 45 Years Unit Quantity And Cost Estimates Unit Quantity 15,400 Sq.ft. Unit Cost Estimate $3.25 Per Sq.ft. Current Repair or Replacement Cost Estimate $50, Estimated Year of Major Repair or Replacement Deficiency Analysis 2050 None noted Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 19

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21 Reserve Component Balconies Physical Description The decks are 6 ft x 15 ft pressure treated wooden decks. The decks on the ground floor are concrete patios. Financial Analysis There has been no expenditure on this element to date. Potential Deterioration Potential deterioration is from general wear and tear, water penetration, salt and ice materials and freeze and thaw cycles. Condition Analysis The decks are currently in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 35 Years 5 Years 30 Years Unit Quantity And Cost Estimates Unit Quantity 3,456 Sq.Ft. Unit Cost Estimate $4.50 Sq.Ft. Current Repair or Replacement Cost Estimate $15, Estimated Year of Major Repair or Replacement Deficiency Analysis 2035 There is none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 21

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23 Reserve Component Railings Physical Description Financial Analysis The railings of the balconies are aluminum. They are attached to the balconies by plates and screws. There has been no expenditure on this element. Potential Deterioration Condition Analysis Potential deterioration includes break down of connections to decking, wear and tear, freeze and thaw cycle. The railings were replaced in 2009 with vinyl clad railings and are in good condition. Life Cycle Analysis Date of Acquisition 2009 Normal Life Span Effective Age Remaining Life Span 50 Years 1 Years 49 Years Unit Quantity And Cost Estimates Unit Quantity 1,008 Linear Feet Unit Cost Estimate $15.00 Per Linear Foot Current Repair or Replacement Cost Estimate $15, Estimated Year of Major Repair or Replacement Deficiency Analysis 2058 There is none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 23

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25 Reserve Component Physical Description Financial Analysis Potential Deterioration Condition Analysis Window Assemblies The windows are casement, windout windows. This reserve provision covers all the windows including frames and accessories. There has been no expenditure on this element to date. The funds are allocated for replacement of the windows, individual window panes and glass inserts. In areas of high exposure to the elements, seal failure is the most significant issue and frames that open are subject to wear and tear on the mechanism. These items are subject to regular maintenance and replacing of caulking. The windows are in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 30 Years 5 Years 25 Years Unit Quantity And Cost Estimates Unit Quantity 122 Units Unit Cost Estimate $ Per Unit Current Repair or Replacement Cost Estimate $96, Estimated Year of Major Repair or Replacement Deficiency Analysis 2030 There is none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 25

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27 Reserve Component Physical Description Financial Analysis Potential Deterioration Balcony Doors The balcony doors are Masonite, manufactured by St. Romulad, P.Q. They are Fire Thermal and acoustic. 20 minute rated doors. There has been no expenditure on this element to date. The reserve funds in this element are for the replacement of the hinges, handles and the doors. Repair and maintenance resulting from misuse, daily wear and tear as required. Code changes may initiate a replacement of a door or door mechanism prior to the item requiring replacement as a result of normal wear and tear. Poor initial installation, impact. Hardware (handles, locks, hinges), closures will wear out with use over time. Condition Analysis The doors are in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 40 Years 5 Years 35 Years Unit Quantity And Cost Estimates Unit Quantity 36 Doors Unit Cost Estimate $1, Per Door Current Repair or Replacement Cost Estimate $40, Estimated Year of Major Repair or Replacement Deficiency Analysis 2040 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 27

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29 Reserve Component Physical Description Financial Analysis Potential Deterioration Condition Analysis Service Doors The service doors lead to hallways, stairwells and electrical, mechanical and all utility rooms. These doors are fire rated doors. The reserve in this element is for painting and replacing the fire bars on the doors, and replacement of doors as required. Repair and maintenance resulting from misuse, vandalism, daily wear and tear as required. Code changes may initiate a replacement of a door or door mechanism prior to the item requiring replacement as a result of normal wear and tear. Poor initial installation, impact. Hardware (handles, locks, hinges), closures will wear out with use over time. The service doors are in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 40 Years 3 Years 37 Years Unit Quantity And Cost Estimates Unit Quantity 11 Doors Unit Cost Estimate $ Per door Current Repair or Replacement Cost Estimate $9, Estimated Year of Major Repair or Replacement Deficiency Analysis 2042 There is none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 29

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31 Reserve Component Suite Doors Physical Description Financial Analysis The suite doors are masonite and metal Warnock Hershey by Jeldwen with dead bolt, fire rated 20 minutes. There has been no expenditure on this element to date. The Reserve funds in this element are for replacement of the hinges, handles and the doors. Potential Deterioration Condition Analysis Repair and maintenance resulting from misuse, daily wear and tear as required. Code changes may initiate a replacement of a door or door mechanism prior to the item requiring replacement as a result of normal wear and tear. Poor initial installation, impact. Hardware (handles, locks, hinges), closures will wear out with use over time. The doors are in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 45 Years 3 Years 42 Years Unit Quantity And Cost Estimates Unit Quantity 38 Units Unit Cost Estimate $ Per Unit Current Repair or Replacement Cost Estimate $30, Estimated Year of Major Repair or Replacement Deficiency Analysis 2047 There is none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 31

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33 Reserve Component Roofing & Drainage Construction Physical Description Financial Analysis Potential Deterioration Condition Analysis The roof is a 25 year roof that is aging normally. Expenditure has been for general maintenance. Exposure or tearing cause premature failures of the product. Over time the product will deteriorate with age and lose flexibility resulting in shrinkage and cracking. The condition would be considered good and the roof is aging normally. A good maintenance program will prolong the life of the roof. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 25 Years 9 Years 16 Years Unit Quantity And Cost Estimates Unit Quantity 20,355 sq.ft. Unit Cost Estimate $3.00 Roof Current Repair or Replacement Cost Estimate $61, Estimated Year of Major Repair or Replacement Deficiency Analysis 2021 None at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 33

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35 Reserve Component Interior Flooring Physical Description Financial Analysis Potential Deterioration Condition Analysis Carpeting is located throughout the building corridors and the stairwells. The carpet in the hallways is good quality apartment carpet. The carpeting in the stairwells is standard quality indoor apartment carpeting. There has been no expenditure on this element. Carpets fade, stain and wear from traffic. Costs for replacement carpet can vary considerably according to the quality and application techniques selected. Replacement of interior finishes becomes necessary when wear and tear becomes excessive and/or to meet the expectations of owners regarding maintaining acceptable aesthetic qualities. The flooring is in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 14 Years 3 Years 11 Years Unit Quantity And Cost Estimates Unit Quantity 6,300 All floors Unit Cost Estimate $3.00 per square foot Current Repair or Replacement Cost Estimate $18, Estimated Year of Major Repair or Replacement Deficiency Analysis 2016 It is recommended when replacing carpet that carpet tiles be a consideration. This allows for easy maintenance and prolongs the life of the flooring. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 35

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37 Reserve Component Physical Description Financial Analysis Potential Deterioration Condition Analysis Painting This component considers the painting of stairwells, hallways and all common elements. Two stairwells have already been painted. Common hallways have a paint finish. General wear and tear, damage from move in and move out and vandalism can be potential causes of deterioration. Aesthetics and style changes also typically dictate when this component is replaced as well as deterioration. Frequently the painting is done on a rotating basis, one floor at a time. The painting is in average condition. Most deterioration shows on the main floor and main stairwell as this is the heaviest traffic area of the building. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 10/12/2014 Years Years Years Unit Quantity And Cost Estimates Unit Quantity 1 Allowance Unit Cost Estimate Current Repair or Replacement Cost Estimate Estimated Year of Major Repair or Replacement Deficiency Analysis $10, allowance $10, , 2016, 2017 The painting will be done on a rotating basis. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 37

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39 Reserve Component Lobby and Reception Physical Description Financial Analysis Potential Deterioration Condition Analysis The reserve in this element is for the lobby and entrance renovation. The lobby has ceramic flooring and is tastefully decorated with some wall decorations and furniture. The lobby was recently upgraded. This is likely the highest traffic area of the building. This area is considered most prone to wear and tear as well as impact damage. This is also the main access for owners and visitors alike. Aesthetics are typically the deciding factor for lobby renovations. The lobby is in good condition. Life Cycle Analysis Date of Acquisition 2014 Normal Life Span Effective Age Remaining Life Span 15 Years 1 Years 14 Years Unit Quantity And Cost Estimates Unit Quantity 400 Sq Ft. Unit Cost Estimate $5.00 Per Sq. Ft. Current Repair or Replacement Cost Estimate $2, Estimated Year of Major Repair or Replacement Deficiency Analysis 2028 None noted. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 39

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41 Reserve Component Air Exchange System Physical Description Financial Analysis Potential Deterioration Condition Analysis There are two units for all floors and common areas. The units are NU-AIR Model NU759. Serial No DD. Serviced by Air Tech. This reserve provision is a contingency fund and is not intended to completely replace the systems. A good maintenance program and attention to filter cleaning and changing will prolong the life of these units. All air systems are in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 40 Years 5 Years 35 Years Unit Quantity And Cost Estimates Unit Quantity 2 Units Unit Cost Estimate $8, Allowance Current Repair or Replacement Cost Estimate $16, Estimated Year of Major Repair or Replacement Deficiency Analysis 2040 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 41

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43 Reserve Component Garbage Shed Physical Description The garbage shed is a prefabricated building. Financial Analysis The shed was replaced in Potential Deterioration General wear and tear impact from items being thrown into the shed. Freeze and thaw cycles can add to deterioration. Condition Analysis The Garbage shed is currently in good condition. Life Cycle Analysis Date of Acquisition 2014 Normal Life Span Effective Age Remaining Life Span 15 Years 0 Years 15 Years Unit Quantity And Cost Estimates Unit Quantity 1 Shed Unit Cost Estimate $2, Per Shed Current Repair or Replacement Cost Estimate $2, Estimated Year of Major Repair or Replacement Deficiency Analysis 2029 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 43

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45 Reserve Component Plumbing System Physical Description Financial Analysis We are assuming that the domestic cold water piping is copper and PVC. The water headers distribute the domestic hot and cold water to the risers and the suites. An allowance has been provided for the replacement cold water supply risers and piping. Individual repairs are assumed to be handled by the owners. Potential Deterioration Condition Analysis Corrosion of piping due to water impurities causes thinning and eventual failure of piping. There is also wear and tear on mechanical seals and packings due to friction. Pressure reducing valves require periodic maintenance and domestic water risers require periodic replacement. The domestic water system is assumed to be in good operating condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 20 Years 3 Years 17 Years Unit Quantity And Cost Estimates Unit Quantity 1 Allowance Unit Cost Estimate $5, Allowance Current Repair or Replacement Cost Estimate $5, Estimated Year of Major Repair or Replacement Deficiency Analysis 2022 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 45

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47 Reserve Component Electrical Distribution Physical Description Financial Analysis Potential Deterioration Condition Analysis This component includes the electrical power main feed, distribution systems, distribution panels and end devices. It is Cutler-Hammer 1200 amps main board. Type PL There has been no expenditure on this element. Potential deterioration is caused by overloading, improper phase balance, single phasing or power failure causes heat from built up resistance to possible damage insulation or melt conductors. Improper or loose connections could also shorten life or melt conductors. The electrical system is assumed to be in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 30 Years 3 Years 27 Years Unit Quantity And Cost Estimates Unit Quantity 1 System Unit Cost Estimate $5, Per System Current Repair or Replacement Cost Estimate $5, Estimated Year of Major Repair or Replacement Deficiency Analysis 2032 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 47

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49 Reserve Component Electric Lighting Physical Description Financial Analysis Potential Deterioration Condition Analysis This component includes all the lighting in the common areas of the building. There has been no expenditure on this element to date. Esthetics, more efficient lighting becoming available and owner s requirements will be the driving factor in the replacement of this element. Ongoing maintenance of the emergency and exit lights will prolong their lives. The lighting is in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 20 Years 3 Years 17 Years Unit Quantity And Cost Estimates Unit Quantity Unit Cost Estimate 60 Lights $ Allowance Current Repair or Replacement Cost Estimate $6, Estimated Year of Major Repair or Replacement Deficiency Analysis 2022 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 49

50 Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 50

51 Reserve Component Access Control and Security Systems Physical Description Financial Analysis Potential Deterioration Condition Analysis ACCESS CONTROL SYSTEMS: The access board is a Micron push button board with telephone connection to the apartments. Provides owners with secured access to the building. It also allows the owner to control access of non owners to the building. There has been no expenditure on this element to date. Changes in building code requirements, advances in technology making the current systems obsolete. Cheaper more efficient systems becoming available. The access controls work well. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 25 Years 5 Years 20 Years Unit Quantity And Cost Estimates Unit Quantity 1 System Unit Cost Estimate $3, System Current Repair or Replacement Cost Estimate $3, Estimated Year of Major Repair or Replacement Deficiency Analysis 2025 There is none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 51

52 Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 52

53 Reserve Component Life Safety System Fire Alarm System Physical Description Financial Analysis Potential Deterioration Condition Analysis The Fire Alarm panel is a Fire Shield addressable system. Smoke and heat detectors and audible devices are located in the corridors, stairwells and service areas. The annunciator panel is located in the entrance vestibule of the building. The system is maintained by Quality Sound & Alarm. An allowance has been provided for the complete replacement of the fire alarm panel, replacement of the detection system. Changes in building code requirements, advances in technology making the current systems obsolete. Cheaper more efficient systems becoming available. The fire alarm system is assumed in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 25 Years 5 Years 20 Years Unit Quantity And Cost Estimates Unit Quantity 1 System Unit Cost Estimate $4, Allowance Current Repair or Replacement Cost Estimate $4, Estimated Year of Major Repair or Replacement Deficiency Analysis 2025 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 53

54 Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 54

55 Reserve Component Eavestroughs & Downspouts Physical Description Financial Analysis Potential Deterioration Condition Analysis This element is often replaced or upgraded at the same time as the roof. It is typical soffit and eaves trough material. This element is repaired on an ongoing basis. Potential deterioration is from general wear and tear. This element can crack and be displaced by ice and snow during the freeze and thaw cycle. Annual maintenance will prolong the life of this element. The soffits and eaves are in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 25 Years 9 Years 16 Years Unit Quantity And Cost Estimates Unit Quantity 1 System Unit Cost Estimate $7, Per System Current Repair or Replacement Cost Estimate $7, Estimated Year of Major Repair or Replacement Deficiency Analysis 2021 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 55

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57 Reserve Component Caulking Physical Description Financial Analysis Potential Deterioration Caulking is the flexible material that seals the gaps between dissimilar materials and allows for expansion and contraction while sealing out the outside elements such as water, rain, heat and cold. Weather stripping is the material applied around the windows and doors and is designed to provide a seal between moving parts. Building caulking and silicone are applied around windows, exterior door frames, roof flashing, rooftop equipment, metal curtain panels, parapet walls, etc. The component also includes the weather stripping around moving components such as windows and doors. There has not been any reserve expenditures on this component. Potential deterioration is predominantly from age and exposure to the elements. UV radiation and water are key contributors to the breakdown of this component. Caulking relies on flexibility to maintain seals between building materials and is attacked and gradually succumbs to sunlight, rain and temperature fluctuations. The caulking, weatherproofing and painting should be inspected periodically. Condition Analysis The caulking is due to be renewed in Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 10 Years 0 Years 10 Years Unit Quantity And Cost Estimates Unit Quantity 1 Allowance Unit Cost Estimate $5, Per Allowance Current Repair or Replacement Cost Estimate $5, Estimated Year of Major Repair or Replacement Deficiency Analysis 2015 This element requires work. Often this is done on a floor by floor basis. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 57

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59 Reserve Component Entrance Doors Physical Description This element covers the entrance doors to the building. The doors are standard entrance doors with glass inserts. Financial Analysis Potential Deterioration Condition Analysis There has been no expenditure on this element Poor installation, oxidation of exterior doors due to exposure to ice melting products, abnormal wear and tear, misuse, such as impact. Hardware, handles, locks, hinges, closures, will wear with use overtime. The entrance doors are in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 40 Years 7 Years 33 Years Unit Quantity And Cost Estimates Unit Quantity 5 Doors Unit Cost Estimate $1, Per Door Current Repair or Replacement Cost Estimate $8, Estimated Year of Major Repair or Replacement Deficiency Analysis 2038 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 59

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61 Reserve Component Exercise Room Physical Description Financial Analysis Potential Deterioration Condition Analysis This component is for the required repairs or replacements of all equipment and fixtures making up the exercise room. The finish is paint and carpets. There has been no expenditure on this element. Negligence, misuse, wear and tear and age or aesthetic requirements on the machines and new technology. Aesthetic requirements of the owners. The room is in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 15 Years 1 Years 14 Years Unit Quantity And Cost Estimates Unit Quantity 742 Sq. Ft. Unit Cost Estimate $3.50 Per Sq. Ft. Current Repair or Replacement Cost Estimate $2, Estimated Year of Major Repair or Replacement Deficiency Analysis 2019 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 61

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63 Reserve Component Multi Purpose Room Physical Description Financial Analysis Potential Deterioration Condition Analysis This component is for the required repairs or replacements of all furnishings and fixtures making up the multipurpose. This room has a half bath, furnishing such as tables, soft seating and meeting table with chairs. The finishes are paint and carpets. There has been no expenditure on this element. Deterioration occurs from wear and tear, negligence and age or aesthetic requirements of the owners. The area is in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 15 Years 1 Years 14 Years Unit Quantity And Cost Estimates Unit Quantity 742 Sq. Ft. Unit Cost Estimate $3.50 Per Sq.Ft. Current Repair or Replacement Cost Estimate $2, Estimated Year of Major Repair or Replacement Deficiency Analysis 2019 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 63

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65 Reserve Component Elevator Cab Renovation Physical Description Financial Analysis Potential Deterioration Condition Analysis The elevator is a Thysson Krupp 2500lb 15 person capacity. Interior of the elevator cab includes panels (walls) ceilings, handrails kick plates, ceramic flooring and control panel. There has been no expenditure on this element. Abnormal wear and tear, misuse of the elevator, damage due to occupants moving items in and out of the cab. Owner requirements for cab upgrades is often a factor in the expenditure on this component. The elevator cab is in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 30 Years 3 Years 27 Years Unit Quantity And Cost Estimates Unit Quantity 1 Cab Unit Cost Estimate $3, Per Cab Current Repair or Replacement Cost Estimate $3, Estimated Year of Major Repair or Replacement Deficiency Analysis 2032 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 65

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67 Reserve Component Elevator Equipment Replacement Physical Description Financial Analysis Potential Deterioration Condition Analysis The elevator is a Thysson-Krupp. 2500lb 15 person capacity with a TAC20 Hydraulic lift system. There has been no expenditure on this element. There is a service contract in place. These components are susceptible to mechanical and electrical failures that will increase in frequency as the equipment gets older and wears out. However, good maintenance routines and preventative maintenance is a key to maintaining long service for this equipment. The elevators are one of the keys to a quality building as frequent breakdowns and entrapments are very frustrating for owners. The elevator is in good condition. There is a regular service/maintenance programme in place. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 45 Years 3 Years 42 Years Unit Quantity And Cost Estimates Unit Quantity 1 Elevator Unit Cost Estimate $45, Allowance Current Repair or Replacement Cost Estimate $45, Estimated Year of Major Repair or Replacement Deficiency Analysis 2047 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 67

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69 Reserve Component Dryer Vent Physical Description Financial Analysis Potential Deterioration Condition Analysis This reserve is for the cleaning of the dryer vents on a regular basis. The vents have been cleaned at a cost of $4000. They will now be reserved for over a six year period. The build up of lint, dirt and dust can be a fire hazard. The vents are currently in good condition. Life Cycle Analysis Date of Acquisition 2011 Normal Life Span Effective Age Remaining Life Span 6 Years 1 Years 5 Years Unit Quantity And Cost Estimates Unit Quantity Unit Cost Estimate 1 System $4, Per System Current Repair or Replacement Cost Estimate $4, Estimated Year of Major Repair or Replacement Deficiency Analysis 2016 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 69

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71 Reserve Component Paving and Curbs Physical Description Financial Analysis Potential Deterioration Condition Analysis The reserve fund provision is for the asphalt paving of the entrance lane and parking area and the concrete curbs and walkways. There has been no expenditure on this element. Asphalt paving is susceptible to loss of flexibility and substrate erosion resulting in cracking and sinking that allows water penetration. Concrete curbs are susceptible to impact damage. The parking lot is in average condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 35 Years 5 Years 30 Years Unit Quantity And Cost Estimates Unit Quantity 76,668 Sq. Ft. Unit Cost Estimate $2.10 Per Sq. Ft. Current Repair or Replacement Cost Estimate $161, Estimated Year of Major Repair or Replacement Deficiency Analysis 2035 The parking lot should be examined on an annual basis for cracking and heaving. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 71

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73 Reserve Component Site Services Physical Description Financial Analysis Potential Deterioration Condition Analysis Buried piping providing storm and sanitary water discharge potable water supply. Concrete pipe material is usually used for the storm sewer system. Catch basins are located throughout the site to direct surface drainage to the storm sewers. There has been no expenditure on this element. Compaction around piping will cause settling which can lead to pipe breakage at weak points such as joints. The site services are considered to be in good working condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 35 Years 3 Years 32 Years Unit Quantity And Cost Estimates Unit Quantity 1 System Unit Cost Estimate $3, Per System Current Repair or Replacement Cost Estimate $3, Estimated Year of Major Repair or Replacement Deficiency Analysis 2037 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 73

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75 Reserve Component Landscaping Physical Description Financial Analysis Potential Deterioration Condition Analysis The landscaping consists of grass, beds and mature trees. This element is maintained on an ongoing basis. Deterioration occurs from neglect and over growth of the gardens. Expenditure on this element is often an aesthetic requirement from the owners. The landscaping is in good condition. Life Cycle Analysis Date of Acquisition 2005 Normal Life Span Effective Age Remaining Life Span 25 Years 0 Years 25 Years Unit Quantity And Cost Estimates Unit Quantity 1 Allowance Unit Cost Estimate $5, Allowance Current Repair or Replacement Cost Estimate $5, Estimated Year of Major Repair or Replacement Deficiency Analysis 2030 There are none at this time. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 75

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77 Reserve Fund Component Estimates Benchmark Analysis The analysis shows the physical aspects of the various reserve components, including the life cycle analysis and the cost estimates on a single spreadsheet for convenient examination and easy reference. The cost estimates are pursuant to prudent reserve fund practices, which provide for inflationary cost increases over time and interest income from reserve fund investments. The reserve fund estimates have been prepared without regard to the current financial position of the corporation or the current reserve fund contributions by unit owners, and as such, they represent the optimum reserve fund operation, which assumes that the corporation has continuously assessed adequate reserve funding from the beginning. This Benchmark Analysis is the foundation of the Reserve Fund Planning as it provides the basis for comparison to the actual reserve fund operation. The Benchmark Analysis provides the standard for reserve fund planning and property maintenance, and as such, it is a valuable management and maintenance resource document. The foregoing program represents the practical application of reserve fund budget planning and management. When applied, as outlined, the reserve fund will cover anticipated reserve fund expenditures and any contingencies. Schedule of Reserve Fund Component Estimates The following Schedule of Reserve Fund Component Estimates shows detailed computations for the various reserve items using the projection factors explained in Reserve Fund Study Methodology section of this report: Long-term inflation rate 1.40% Long-term interest rate 2.00% Due to rounding automatically executed by computer, there may be minor discrepancies in the data, which are not deemed significant Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 77

78 Summary of Reserve Fund Estimates The Reserve Fund position and estimated requirements of York County Condominium Corporation 10 are as follows: Current Replacement Cost $ 646,301 (which are provisions for all major repairs and replacements at current prices) Future Replacement Costs $ 987,383 (which are provisions for all major repair and replacement costs in the future at the end of the expected life span) Current Reserve Fund Requirements $ 95,798 (which are reserve fund estimates based on the notion of effective age and should have been contributed by unit owners) Future Reserve Fund Accumulation $ 162,736 (which are the current reserve fund requirements together with interest compounded over the remaining life span) Future Reserve Fund Requirements $ 824,647 (which are to be funded by unit owners payments to the reserve fund plus any interest earned) Annual Reserve Fund Assessment $ 23,888 (which are the annual reserve fund payments to be made by unit owners) In accordance with these estimates, the corporation should have $95,798 in its reserve fund at the end of its current fiscal year, and the assessed annual payments or contributions to the reserve fund by unit owners should be $23,888 based on the stated assumptions. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 78

79 Analyses of Reserve Fund Operations Analysis of Reserve Fund Operations Reviewing and analyzing the reserve fund operation of Statement of Financial Position as at August 31, 2013 In reviewing and analyzing the reserve fund operation of the Condominium Corporation, we have examined the statements for 2011 to The Board of Directors prepared the budget. Corporation s Financial Statements Information available indicates that there will be a contribution of $23,888 to the reserve fund and that there are no transfers from the operating fund to the reserve fund during the current year. The contribution of $23,888 is to be funded from the condominium fees. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 79

80 Benchmark Deficiency Analysis The Benchmark Deficiency Analysis shows the difference between the actual reserve fund balance and the current reserve fund requirement, as calculated in the Benchmark Analysis. The current reserve fund requirement is an estimate of a fully funded reserve fund, based on the Benchmark calculation. The Benchmark Deficiency Analysis has been developed as a guide for property managers and the board of directors to ensure that the reserve fund is neither under-funded nor overfunded. The Reserve Fund of is showing a large shortfall at the end of the 2014 fiscal year, as shown below: Year End August 31, 2014 Opening Balance September 1, 2014 $ 92,000 Current Budgeted Reserve Fund Contribution for the Year 2014 $ 8,900 Refinancing Loan $ - Tax-Free Interest Income (to be Earned on the Reserve Fund) 2014 $ 1,600 Less: Repayment of Financing Loan $ - Less: Estimated Reserve Fund Expenditures for Fiscal Year 2014 $ - Projected Reserve Fund Balance As of August 31, 2015 $ 102,500 Estimated Reserve Fund Requirements after Expenditures in 2014 $ 95,798 Estimated Reserve Fund Deficiency/Surplus $ 6,702 The surplus will be eliminated over time, as shown in 30 Year Reserve Fund, Cash Flow Projections, and Deficiency Analysis hereinafter. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 80

81 Adequacy of Reserve Fund Adequacy of Reserve Fund may be defined as the reserve fund balance together with regular contributions and investment income, which constitutes sufficient cash resources available for all possible and potential reserve fund expenditures, required repairing or replacing common elements or assets of the corporation when needed. Section 40 (5) of the Condominium Act states that: If the amount of the reserve fund of a corporation referred to in Subsection (1) is less than the amount required within the period of time recommended in the study, the corporation shall assess and collect the owners contributions to the reserve fund in an amount that would result in the fund meeting the minimum funding recommendations of the reserve fund study. The most direct and stringent measure of the adequacy of reserve fund is the reserve fund deficiency analysis, whereby the actual closing reserve fund balance is compared with the currently required reserve fund balance, as estimated by a competent reserve fund planner. Any significant difference between the actual reserve fund balance and the required reserve fund balance will show the amount of a reserve fund surplus or reserve fund deficiency (shortfall). A reserve fund surplus, particularly when such surplus is increased by excessive reserve fund contributions, means that unit owners have contributed too much to the reserve fund, a situation which should be corrected to eliminate such reserve fund surplus. A reserve fund deficit or shortfall indicates that unit owners have not contributed enough to the reserve fund, causing the discrepancy between a fully funded reserve fund and the actual reserve fund balance. The adequacy of a reserve fund does not require the test of an estimated fully funded reserve fund. The test as to the adequacy of a reserve fund should be sufficient cash resources to fund all potential repairs and replacements at the time the repairs are required, including unforeseen events and contingencies. Therefore, a reserve fund deficiency or shortfall does not automatically mean that the reserve fund is not adequate. It is the judgment of the reserve fund planner to conclude whether the reserve fund is adequate or not. In our opinion, the current reserve fund and proposed contributions for this Condominium Corporation require adherence to the recommendations listed in this report to remain adequate for future reserve fund expenditures. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 81

82 Reserve Fund Management 30 Year Projections The Reserve Fund - Projected Cash Flow and Deficiency Analysis presents a 30 year reserve fund projection showing cash positions, cash flows and cash expenditures in a form and detail, which conforms to financial statement presentation of reserve fund operations. Opening Cash Balance This is the reserve fund position at the beginning of each and every fiscal year showing the cash resources available, which consist of (1) bank deposits, (2) qualified investments, and (3) accrued interest earned. Cash Flows These are the regular reserve fund contributions, special assessments, and interest income based on 2% of the opening balance. Opening Cash Funds These represent the total cash resources available in any fiscal year and include the current year's cash flow. Cash Expenditures These are annual expenditures listed in the categories established by the Reserve Fund Study. Records or ledger accounts of these expenditure categories should be kept showing reserve fund allocations and charges in a chronological order for control and reference. Closing Cash Fund This is the reserve fund position at the end of each and every fiscal year, which is carried forward to the next year. Deficiency Analysis The Reserve Deficiency has been projected by formula taking into account the inflation factor, interest rates and reserve fund expenditures. Therefore, any reserve fund expenditures will not affect the reserve fund deficiency because such expenditures will also affect the reserve requirements. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 82

83 Future Reserve Fund Management Condominium Act, Plan for Future Funding The Board of Directors can vary the recommended funding. Projected Reserve Fund Expenditures The projected or proposed reserve fund expenditures in the 30 Year Projections are mere guides in terms of timing, based on the remaining life span analysis. Reserve fund expenditures should readily be varied to conform to actual management and maintenance plans, and therefore, they should not be dogmatically interpreted. In essence, reserve fund expenditures are the responsibility of management, and any targeted expenditures guidelines only. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 83

84 Copyright All rights reserved. No part of this report shall be reproduced or used in any form by any means, graphic, electronic or mechanical, including photocopying, recording, typing or information storage and retrieval, without the written permission of the author. Notwithstanding the foregoing, the applicant herein has permission to reproduce the report in whole or in part for the legitimate purposes of providing information to the board of directors, unit owners and others, who have an interest in the project. Specifically, the applicant has permission to provide insurance appraisal and reserve fund study information in disclosure documents, such as a status certificate. Limiting Conditions This Report Is Subject To The Following Limiting Conditions: The architectural plans were provided for this study. The building is deemed to have been constructed and finished in accordance with such plans and specifications, unless otherwise noted. Sketches, drawings, diagrams, photographs, if any, presented in this report are included for the sole purpose of illustration. No legal survey, soil tests, engineering investigations, detailed quantity survey compilations, nor exhaustive physical examinations have been made. Accordingly, no responsibility is assumed concerning these matters or other technical and engineering techniques, which would be required to discover any inherent or hidden condition of the property. In order to arrive at supportable replacement cost estimates, it was found necessary to utilize both documented and other cost data. A concerted effort has been put forth to verify the accuracy of the information contained herein. Accordingly, the information is believed to be reliable and correct, and it has been gathered to standard professional procedures, but no guarantee as to the accuracy of the data is implied. The distribution of cost and other estimates in this report apply only under the programme of utilization as identified in this report. The estimates herein must not be used in conjunction with any other appraisal or reserve fund study and may be invalid if so used. The client to whom this report is addressed may use it in deliberations affecting the subject property only, and in so doing, the report must not be abstracted; it must be used in its entirety. Possession of this report or any copy thereof does not carry with it the right of publication nor may it be used for any purpose by anyone but the applicant without the written consent of the author, and in any event, only with the proper qualifications. The agreed compensation for services rendered in preparing this report does not include fees for consultations and/or arbitrations, if any. Should personal appearances be required in connection with this report, additional fees will have to be negotiated. Unless otherwise noted, all estimates are expressed in Canadian currency. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 84

85 Certification We hereby certify that we are prescribed persons empowered to conduct reserve fund studies, as stipulated in Regulation 24 (1) Subsection (2) under the Condominium Act, 2010, and that Phil Williams has personally inspected the within described property, and that she personally examined the building plans and/or documents as identified herein. To the best of our knowledge and belief, the information and data used herein are true and correct. We have no interest, present or prospective, in the property or its management. Neither the employment to prepare this Reserve Fund Study nor the compensation is contingent on the amount of the reserve fund estimates reported. Moreover, we are solely responsible for the reserve fund estimates reported herein. The Reserve Fund Study was prepared in conformity with the Reserve Fund Study Standards, published by the Real Estate Institute of Canada, and it complies with the Condominium Act, 2010, and Regulation 23 (1). Phil Williams Certified Reserve Fund Planner 2011 Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 85

86 Plot Map Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 86

87 Survey Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 87

88 Charts Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 88

89 Charts End of Report This is the last page of this report. Copyright, Condominium Reserve Fund Planners Inc, All Rights Reserved. Page 89