As condominium corporations begin planning for another budget year, many boards are reviewing their reserve fund studies and capital projects. While every board knows a reserve fund study is a legislative requirement, it's also one of the most valuable tools for making informed financial decisions.
Canmore-based lawyer Austin Ward sat down with Erin Berney and John Gilbert to discuss how condo boards can get the most value from a reserve fund study.
How should boards be using their reserve fund study?
Erin: Think of it as more than a compliance document. A reserve fund study should guide budgeting, maintenance planning, and capital spending decisions throughout the year. Boards that regularly reference their study are generally in a better position to prioritize projects, anticipate future costs, and communicate those decisions to owners.
Construction costs have changed significantly in recent years. Should boards be concerned?
John: Absolutely. Inflation, labour shortages, and fluctuating material costs have affected nearly every type of construction project. If your reserve fund study is based on outdated cost estimates, it may no longer reflect the true cost of future repairs and replacements. Boards should understand those risks and adjust their planning accordingly.
How should boards balance reserve fund contributions with owner expectations?
Erin: It's rarely an easy conversation. Nobody likes fee increases, but underfunding a reserve fund today often results in larger special assessments tomorrow. Boards have a responsibility to make decisions that support the long-term financial health of the corporation, even when those decisions aren't popular.
Can a board defer recommended projects to save money?
John: Sometimes, but those decisions should be made carefully. Delaying work may seem like a short-term cost savings, but it can also increase repair costs, reduce property values, shorten the lifespan of other building components, or create safety concerns. Before postponing a project, boards should understand both the financial and practical implications.
What should new board members know about reserve fund planning?
Erin: One of the best things a new board member can do is spend time reviewing the reserve fund study and reserve fund plan. Understanding what's coming over the next five, ten, or twenty years provides valuable context for budget discussions and helps boards make informed decisions rather than reacting to unexpected expenses.
What's your advice heading into budget season?
John: Use your reserve fund study as a decision-making tool, not just a document that sits on a shelf. Boards that regularly review it, ask questions, and align their budgets with long-term planning are often better positioned to avoid financial surprises and maintain the value of their communities.
