For those who are skeptical about the funding plan for the siding replacement project, what follows is a detailed explanation of the calculation to estimate the number of years it will take to finance the siding replacement project. The calculation is based on these six numbers:
131 - the number of units in Callingwood Court
32350 - the cost per unit for the residing project from the residing report page 24
1400000 - the current amount in the capital reserve fund from the auditor's report
300000 - the fixed annual condo expenses from the budget
373 - the monthly condo fee
12 - the number of months in a year
The number of years it will take to finance the siding replacement project is calculated as follows where the dotted line means divide the calculated value on top line by the calculated value on the bottom line:
(32350 x 131) - 1400000
------------------------- = 10 years
(373 x 12 x 131) - 300000
The term (32350 x 131) is the total cost of the project. Subtracting the current amount in the reserve fund from this gives the amount of money that has to be added to the reserve fund in the future to pay for the project.
The term (373 x 12 x 131) is the total annual revenue from condo fees. Subtracting the fixed annual condo expenses from this gives the annual contribution to the reserve fund.
Finally the amount of money that has to be added to the reserve fund (top line) is divided by the annual contribution to the reserve fund (bottom line) to give the number of years it will take to finance the siding replacement project which is 10 years. If the project is spread out over three years then the project can start in the eighth year and be finished in the tenth year of the financing period.
Note that there is no special assessment in this calculation. The only number that is subject to discussion and a final decision by the owners is 32350, the cost per unit for the residing project. $32,350 is the estimated cost per unit for a siding replacement project using Hardie siding. If another siding material is chosen by 75% of the owners then this cost will change. And if this cost changes then the number of years it will take to finance the siding replacement project will change. What doesn't have to change is the monthly condo fee.
The calculation shown above is completely transparent. There is no special assessment and no increase in the monthly condo fee. So if any owner wants to challenge the soundness of the Board's funding plan then they should be prepared to point out the flaw in the calculation described here.
One final point has to be made. Callingwood Court Bylaw 14.(i) states that the Board must present the owners with a capital replacement funding plan at least once every five years and that the funding plan must be based on an independent capital replacement study. So before owners challenge the Board's judgment in the matter of a long-term funding plan, please keep in mind that the Board is constrained by the requirements of Bylaw 14.(i).
Paul W. Oxby, President
Board of Directors