Sinking fund plan

If I recall correctly, there's not even a penalty for failing to produce a 10 year sinking fund plan.

Several years ago, I hassled our (now former) strata manager and EC about producing a sinking fund plan. It was only when I re-joined our EC late last year that I discovered the plan had not only been produced, but it bore no relationship to the maintenance needs of our building, was produced with no consultation and none of the owners – including EC members – knew anything about it.

Ours is now one of those unit complexes Mr Strata referred to as 'poor suckers' who have to raise a special levy or seek strata finance to do too much neglected maintenance.

As I understand it, we're meant to review our sinking fund plans every 5 years. If you want to make it a useful document, I'd say consult residents and do some site inspections. Then distribute the thing to all owners with some plain English explanation. Better still, discuss it at your AGM.

I know it sounds like I'm stating the obvious, but I've found most unit owners have limited understanding about the role of their OC. If they were better informed, then there may be less disagreements about what needs to be done and how much money you have to raise to do it.

clive2000 said:

Needless to say, our 15 year plan is lightweight and doesn’t allow for much work to be done until well over the half way mark, even though we are having issues in year 4. It is not worth the paper it is written on.

Does it nominate particular years for particular tasks to be performed? Our previous sinking fund plan was prepared in house by a previous treasurer. Our current on was prepared professionally. The earlier plan said we would resurface roads (for example) in a particular year. The later plan used an annual cost of ownership of a certain number of square meters of asphalt.

According to the earlier plan you would say we were quite a few years overdue for resurfacing because it didn’t happen in the life of that plan. However, the work is simply not needed yet and probably isn’t needed for another 10 years. We have done a few very minor patches at very minor expense and there simply is no more work required.

Still, partly because of the different presentation of the plans, we had some owners convinced that the EC was neglecting maintenance and somehow not putting enough aside. A reality check on the professional plan showed that over the period it would accumulate about the right amount for what the job cost last time we did it after accounting for inflation and also it was consistent with a quote an owner obtained.

Nonetheless, in spite of being I’m sure more diligent than most, we had a few owners stirring up angst who refused to believe we were being reasonable. Sometimes it is tough on the most diligent ECs, especially in a large complex where it is hard to get around to talk to everyone, if some are determined to undermine.

On the original question, I can see no reason why a good 10 year plan would not include planning to save up about half the anticipated cost of some expense than might be expected to occur after 20 years, anticipating that the rest would be accumulated in the second 10 year plan. Obviously in preparing the second plan you would check that the amounts being levied were still on track for an updated estimate of the cost of that 20 year expense.