New York's Cooperative and Condominium Community

Habitat Magazine Insider Guide



How to Properly Prepare an Effective Capital Plan

The Challenge

In order to maintain this 1,144-unit Long Island property, the board needed to develop a capital plan for, among other things, funding repairs to the driveways, sidings, and roofs.

The Solution

The board president was instrumental in setting up construction and finance committees to develop a capital plan for the next 20 years. It would show how they’re going to fund all of the improvements. We did a projection on how much we would need to raise and how much of the operating funds would go to reserves. We plotted out each year’s worth of improvements, what the board planned to do each year, and how much it would spend each year. Almost two years in preparation, the plan will be flexible enough to change each year, depending on what priorities come up.

The Lesson

Plan ahead. A lot of boards like to work by the seat of their pants. We learned over the years that it’s great not to raise the maintenance, but if you don’t raise your maintenance a little bit each year, at some point there’s going to be a day of reckoning. Prices go up and you can’t put your head in the sand. Some boards even like to raise maintenance one or two percent automatically, whether they need it or not.

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