Operating budgets are routinely reviewed and adjusted annually based on normal inflation and changing needs of the Association. Sterling prefers to utilize extensive budget notes to provide a description of each budget item. Budget notes help the membership to understand the financial needs of the Association and the level of projected services, improving community wide support.
Capital reserve studies and budgets are required by state laws under the Condominium and Planned Community Acts. Sterling has considerable experience in both the development and administration of capital reserve budgets and the administration of implementing the plans. A component often lacking in reserve studies is periodic maintenance of reserve components. A good operating budget and capital reserve maintenance program can have a significant effect on the life of various building components and reduce the potential for more costly repairs. A variety of approaches can be used by older communities in bringing their capital reserve funding to an appropriate level and to become compliant with current law. The Board will find the need to occasionally use architectural and engineering consultants to provide evaluations and plans for the maintenance and repair of some elements. Reserve studies should be more than simply listing components and calculating their projected replacement costs. A major responsibility of the Board of Directors is setting a standard to preserve property values by implementing a timely and quality maintenance and replacement program for their Association. Failure to meet a reasonable standard may have legal ramifications for Board members.
When Sterling prepares a capital reserve budget there is an opportunity for the Board to be involved in the process for a higher level of understanding. Records and calculations are within Sterling 's system and frequent updates and scenarios can be made available more readily and at considerably less cost than using an outside consultant to provide updates. The Board of Directors is ultimately responsible for approving all capital reserve studies and their involvement in the process can greatly improve their understanding of the reserve components, costs and maintenance/replacement schedule. The reserve study should also be presented in an easy to understand format with appropriate descriptions for each item.