Page 34 - NY Cooperator Expo April 2019

34 THE COOPERATOR —APRIL 2019 COOPERATOR.COM A s community members, co-op and condo owners work together to maintain the greater struc- ture in which they live – not just their individual units. Major systems – things like boilers, roofs, and facades – are ex- pensive to maintain and repair, but each has a standard useful life. Thus, boards and managers should be diligent to keep track not only of the condition of those systems, but of the capital funds avail- able to repair or replace them, need be. Co-ops and condos should also have a second type of reserve fund, for unex- pected operating expenses. This reserve is usually smaller than the main capital fund, and is in place to protect the cor- poration’s or association’s ability to pay bills or meet at least initial payments on emergency situations. There isn’t any legal requirement for a minimum reserve fund amount per unit per se. However, most attorneys, accoun- tants, and lenders who make loans to co- ops and condos recommend that corpo- rations and associations follow Federal National Mortgage Association (FNMA, also known as ‘Fannie Mae’) guidelines, which require a 10 percent reserve as a line item in their annual budget. Useful Life For the purposes of real estate, the concept of ‘useful life’ is defined as the number of years an asset will likely re- main in service for the purpose of cost- effective revenue generation. In the con- text of co-op and condo properties, the concept can be applied to pretty much Capital Reserve Funds How Much Do You Really Need? BY A J SIDRANSKY BUDGET & FINANCE ISTOCKPHOTO.COM EMG INDUSTRIAL CHIMNEY INC. 230 Patton Avenue W. Babylon, New York 11704 Office: 212.779.1378 631.920.6630 Fax: 631.920.6625 elyse@emgindustrial.com Complete Chimney Installation and Maintenance Professionals Chimney Linings Chimney Extensions Chimney Replacements External Chimney Stacks Breeching Replacement Single/Double Wall Stacks Smoke & Pressure tests Interior Video Scans Code Violations Cleared Draft Fans Installed Certified Scaffold Installers Certified welders • OSHA & DOB Compliant NYC Lic.# 2021827DCA EMG Industrial Chimney Ad 5x6.25 FINAL_Layout 1 8/13/15 11:43 AM Page 1 See us at Booth 1116