Editor’s note: This column was authored by my colleague Peter B. Miller, a reserve specialist with Miller Dodson Associates. He is a frequent author and lecturer on the subject of capital reserves.
Q.Our condominium association last raised our assessments in 2010, which left us with a small surplus above our annual expenses to fund our reserve account. With no assessment increases since then, but increasing expenses, we are no longer able to meet our operating expenses, much less contribute to reserves. We are debating whether to have an annual increase so we can cover each year’s operating expenses as well as a 10 percent reserve contribution, or just approve a larger one-time increase that will keep our monthly dues amount the same for the next five years.
A. Let’s break this question down into two parts: 1) the need for annual assessment increases and 2) maintaining adequate replacement reserve…
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