My question is really how concerned should we be about the current balance of the Capital Works Fund and any other useful comments people may have
Thank you
Yes, you should be concerned.
Some ten-year plans are not worth the paper they are written on. My owners corporation had a ten-year capital works plan. It was written by consultants, who walked up and down the driveway and made a list of jobs to do. e.g. repaint the garage doors, replace window fittings, maintenance pipework … Then they assigned a cost to each job. They determined a date for doing each job. They added inflation if it is going to be done in a future year. Then they calculated how much money we need to save each year to pay for these jobs in the future. That amount became the capital works component of our strata levy.
This is a reasonable approach. The biggest problem was that the money was NEVER spent on these planned jobs. The money was spent whenever a disgruntled owner demanded a repair (which was not always common property).
An owners corporation must have the discipline to keep the capital works money SEPARATE from the day to day administrative (maintenance) money.
There are two components of your strata levy:
Administrative fund: At the start of the year, you work out how much you need to cover things like insurance, electricity, water, building manager, pool maintenance, gardening, insurance excess for claims, elevator maintenance, “general repairs” etc.
Capital works fund: is only for the big jobs listed in your capital works plan. This is the money you don’t spend until it is time to do the big jobs in the capital works plan.
About “general repairs”
One of these funds should also allocate money for “general repairs” for when someone calls to fix something. You should not be dipping in to the money set aside for the capital works plan.
At the end of they year, you can look back on what you spent on “general repairs” and determine if that figure should be changed for the next year’s budget.
At a guess, almost every strata plan is dipping into its capital works fund money for “general repairs” or to pay for shortfalls in its administrative fund budget. That is why they will never have the money to do the big jobs in their capital works plan.