2021 Capital Reserve Study
In 2021 the Board commissioned a study of our capital reserve fund to determine if the Cooperative was correctly budgeting for the future capital expenses for our common areas. This Capital Reserve Study was completed by BechtBT, an engineering firm with extensive expertise in Capital Reserve Studies.
You can download the 2021 Capital Reserve Study is posted here. To assist with your review, Board President Travis Epes has posted few important points below:
- The report was commissioned to have an outside party evaluate whether or not we are adequately funding our Capital Reserve Fund in anticipation of future capital expenditures. The Study includes the estimated remaining lifetime of each item as well as an estimated cost for repair or replacement. It is a guideline that will be adjusted in future years as lifetimes projections change and anticipated costs increase or decrease.
- I’m pleased to report that based on the Study, we are adequately funded for the future, save the four items that require a community discussion. We currently have approximately $250,000 in capital reserve and we are continuing to fund the reserve with a contribution of $2,000 per month. Our target remains to fund the reserve to approximately 25% of our annual budget, consistent with professional guidelines.
- That said, there are four areas that need to be discussed as these items approach the end of their useful lives: a) our pool complex, b) drainage systems, c) our privately-owned roadways and d) the eventual renovation or repurposing of the Tashama Farmhouse.
- It is the feeling of the Board that these four items and the associated large expenses should be funded, if approved by the Board and Homeowners, through bank financing or homeowner assessment (or a combination of the two), and not through the Capital Reserve Fund. As you review the report, you will note that these items are identified as "not funded by the Reserve Fund”. While these are very real future expenses that the Cooperative needs to address, the Board feels that funding outside of the quarterly dues process should be pursued, and Homeowner approval should be sought. To elaborate:
- The renovation of the pool is currently in the research/planning stage. Identifying an island contractor willing to work on a "semi-public” pool (the legal category into which our pool falls) has proven to be difficult, particularly in this exploding real estate market. We continue to search both on and off the island and hope to find an appropriate contractor shortly, with a goal of completing the work as soon as possible, but please understand it may take a year or two to schedule and complete all work over the winter months: our window for the 2022-23 winter period is closing quickly. The Remaining Life of the pool is estimated at 2 years so this is the highest priority. Cost could be in the $200,000-300,000 range based on the level of renovation involving decisions around rehabilitation versus re-design and new excavation.
- The Washaman/Netowa/Paupamo and Washaman/Yompasham drainage issues are becoming more acute as our system continues to deteriorate. Efforts at periodic vacuuming and cleaning the system have not been as effective as we would like. This has been an ongoing discussion among the Board and, indeed, within the community given the high costs involved. Preliminary estimates placed the cost at $400,000-500,000 in 2020. The Remaining Life of our existing catch basins is “zero" years although we continue to clean them annually to extend their limited life. A complicating factor is that the Yompasham drains are part of the private roadways of MB Farms (of which Nashaquisset is the majority, but not sole, parcel owner), and is not part of Nashaquisset’s roadways, but Homeowners and visitors encounter this flooding when entering or exiting to and from Surfside Road.
- The Community’s privately-owned streets will need substantial maintenance over time, including the streets in MB Farms with options that range from top dressing ($200,000) to excavation and resurfacing ($1,000,000). We estimate that 25% of these costs are for the MB Farms streets and those are the ones in the worst condition with a Remaining Life of 5 years. The Remaining Life for the streets in Nashaquisset is 15 years. We may want to coordinate the street surface issues with the drainage issues, for cost efficiency and recognizing that both will be disruptive to traffic whenever they are addressed.
- We will need to address the Farmhouse: should we continue to rent the two apartments and offer Nashaquisset rental-office space gratis to JPFCO, or should we repurpose the Farmhouse for other use? In either case there are future costs (and, potentially, differing revenue streams) involved, based on the decisions that are eventually made. For now, it is worth noting that we own and operate the Farmhouse at approximately “break-even” when balancing the rental revenue against the heating and electricity costs, water costs, trash removal, maintenance items and property taxes and the small mortgage payments we continue to make dating from the acquisition from the sponsor in the 1990’s.Finally, you will see some safety issues identified in the Reserve Study. These issues have been addressed and have been fixed or in the case of the pool, are scheduled to be fixed within the month.
- The four “extraordinary" items are worthy of greater community discussion and input, and to that end the Board is working with a Homeowner Survey Committee to collect your thoughts on these and other critical topics - you should see the Survey later this spring. A close reader of the Reserve Study will discern that we have actually funded the reserve in excess of the projected costs (outside the extraordinary items). That excess is intentional, and is intended to give us some flexibility to imagine minor amenity enhancements - in the past, it is what funded the recently-constructed mail shed, and this spring we will have new shade awnings and benches at the tennis courts, and new landscaping and corresponding irrigation at the Farmhouse along Washaman on the border separating the parking lot from the street.