Question: If the committee adopts a 10-year plan and programmed maintenance, what happens if, in the future, a new committee decides on a different set of goals? Do we start over again?
Answer: There is always going to be change.
Craig Welsh:
I split the terminology. I call a 10-year plan a forecast, and annual committee decisions are the budgets. If you have expenditures like renovations planned for the next few years, and then the plumbing blocks and other unexpected maintenance items pop up, there go the upgrades. Things change and the forecast changes.
When you sit down to look at your forecast every year, you set your budget. If the two don’t align, it’s probably time to update your forecast. While they align, life is good. Your levies are still going to work, your general plans are still going to work, and you can agree and set that budget. If they don’t align, it’s time to consider your costs. You need to be able to look into the future and say, “Yes, we’re going to have the money when we need it.”
Marcus Munstermann:
There is always going to be change. Let’s look at the decision for something like retrofitting EV chargers. If the decision has been made to allocate funds, it’s budgeted in the first instance and then the next committee comes along and says they don’t want to do that, those things are in flux anyway.
While the budget says that we’re putting aside twenty thousand dollars to spend on EV charging, you still have to have a discussion, motions, quotes, all of those things come into play. That will end up driving the outcome.
This post appears in the August 2024 edition of The NSW Strata Magazine.
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Conversely, if the Capital Works Fund has an abundance of accumulated funds because some of the common property projected annual repairs did not need rectifications for the projected 10-year Capital Works Plan.
Can some of the funds be transferred to the Administration Fund for purpose of a legal opinion expense involving unauthorised changes to the structure and appearance of common property by a tenant without having to return it to the Capital Works Plan Budget within the 3 month time frame?
One strata manager advised that it can be but they did not inform the committee that it needs to be returned within 3-months. What does the committee need to do about the lack of information / misinformed advice it received from the strata manager?
I had assumed that you (with the agreement of the owners corp who are acting on behalf of all owners) can do whatever you desire with the funds (such as the transfer) as long as you have the proper approvals in place (ie, ballots etc). Please note you can word the ballot as: to transfer $x to ??? fund on xx/xx/2021 to go towards …,,,
Or you can split ballot:-
To agree to the transfer xx
To agree for the funds to be spent on legal opinion expense xx
Please note as an owner, I would want to know the approximate costings of the legal exercise.
If you do have a surplus, another idea is have it in the bank to work for you (term deposit)
Hi,
I agree – it’s up to the owners corporation to determine how it wishes to deal with the spend and the transfer.
If the strata is continually running a surplus in the Administration Fund, can funds be permanently transferred into the Capital Works Fund by a general meeting resolution without the requirement for it to be repaid in the 3 month period. It must be emphasised that the transfer is not covering any shortfall.
Whilst the Administration levies have been reduced and the Capital levies increased to rebalance the likely fund requirements it would be ideal if the Administration fund surpluses could be transferred to the Capital Works fund to build up the funds for the account with the lesser accuracy for predicting the future requirements.
Hi Warren – there isn’t an ability to make that resolution as much as there should be….