Webinar: Reserve Studies

RESERVES STUDIES What you don’t know but should !

Mitchell H. Frumkin, P.E., C.G.P., R.S. President Kipcon Inc.

800-828-4118 Kipcon.com [email protected]

Who am I ? • Mitchell H. Frumkin, PE, RS, CGP

• Past President

> CAI National

> CAI National Research Foundation

> NJ Chapter CAI

• Chair CAI National Reserve Professionals Committee during…

> Development of “National Reserve Study Standards of the Community Associations Institute”

> Development of “Reserve Specialist (R.S.) Designation

• Author: Reserve Funds: How and Why Community Associations Invest Assets (CAI)

• Ongoing Contributor: Audit and Accounting Guide for Common Interest Realty Associations (AICPA)

• Ongoing Speaker on CA Issues

What I Will Be Talking About…

• What is a Reserve Study ?

• How do you decide if you are adequately funded ?

• How often should you update your study ?

• How to review your study when you get it .

What is a Reserve Study ?

• “A budget planning tool which identifies the current status of the Reserve Fund as well as a stable and equitable Funding Plan to offset the anticipated future major common area expenditures.”

What does a Reserve Study Include?

Reserve Study

Physical Analysis Financial

Analysis

Component Inventory

Condition Assessment

Life and Valuation Estimates

Fund Status

Funding Plan

The Physical Analysis

Component

Inventory

Condition

Assessment

Life and Valuation Estimate

The Component Inventory !

»This is the most critical part of the Study, the task of selecting and quantifying the Reserve components

Developing The Component Inventory Step One:

Review the Governing Documents and Statutes

Step Two: Is the Component Covered Under a Maintenance Contract?

Step Three: Is the Component Funded in Another Part of the Budget?

Step Four: Is the Component a Piece of Mechanical

Equipment ?

Step Five: Is the Useful Life of the Component within the

Selected Time Window ?

Step Six: Is the Cost below the Operating Budget Threshold?

The Financial Analysis

• Fund Status, Percent Funded

• Select the Funding Plan

The Funding Plan

• An association’s plan to provide income to a Reserve Fund to offset anticipated expenditures from that fund

What are the choices ?

• Periodic assessments over the life of the assets

• Special assessments at the time of replacement

• Borrowing

• Combinations

The Funding Plans are based on Periodic Uniform Assessments

over the life of the Asset

The Advantages of Periodic Assessments

• Helps assure that funds will be available.

• Reduces likelihood of special assessments.

• Charges current rather than future owners.

• Preserves market value.

What Are the Different Funding Plans ?

Funding Plans

Full/Proportional

Funding Baseline Funding

Threshold

Funding

Statutory

Funding

Full/Proportional Funding

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

Year

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

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Reserve Fund Balance: Full

Funding PlansProjected 30 Year Cash Flow Analysis

Baseline Funding

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

Year

$0.00

$1.00

$2.00

$3.00

$4.00

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Reserv Fund Balance

Baseline


Threshold Funding

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

Year

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

Th

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Reserve Fund Balance:

Threshold

Reserv Fund Balance Baseline


Funding Plans

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

Year

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

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Threshold



Full Funding

Threshold Funding

Baseline Funding

The Financial Analysis Fund Status

»The status of the Reserve fund as compared to an established benchmark such as percent funded

»Example ˃ $100,000 Replacement Cost, 20 Year Life, = $5,000 per year,

After 4 Years, $20,000

˃ After 4 Years, only Funded, $10,000, then 50% Funded

˃ Do not let this mislead you, more later !!

From Where Do the Requirements Arise?

• A Board’s fiduciary responsibility to maintain and preserve the common property

• Association’s governing documents

• Statutory Requirements (if they exist)

• Industry practice

What are the Standards ?

• National Reserve Study Standards of the Community Associations Institute


• Reserve Funds: How and Why Community Associations Invest Assets

• Published by CAI


• AICPA Audit and Accounting Guide for Common Interest Realty Associations

• Chapter 3, Future Major Repairs and Replacements

• Online only

Statutory Requirements • Vary By State

• Ref: Reserve Funds: How and Why Community Associations Invest Assets

• Appendix 2

How To Select the Reserve Provider ?

• Reserve Specialist Designation (RS© )

• Education

• Experience

• References

• Licensed Engineer (PE)

How Do You Decide If You Are Adequately

Funded?

Adequate Funding

• A Funding Plan in which a deficit does not occur within the cash flow projection period and a risk free threshold is provided

The Decision each Association Must Make: What is adequate funding ?

• Base upon

• Size of budget

• Cash Flow Projections

• Amount of risk

• Updating frequency

• Cost of most expensive component

Adequate Funding does NOT always mean Full/Proportional

Funding !!!

The Critical Decision For Adequate Funding

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

Year

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

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Threshold



What Threshold You Use !

How Do You Establish Your Threshold ?

• Size of your budget

• Cost of most expensive component

• Frequency of updates (more later)

• Risk Tolerance

And Remember Adequate Funding Is NOT Full Funding !

Full Funding

$607,658

Actual Funding

$280,212

How Often Should You Update Your Reserve Study ?

First, You Should Review “Reserve Study” Yearly ?

• What is anticipated in the next year?

• What happened in the past year ?

• Did actual funding match proposed funding ?

How Often Should you Update the “Reserve Study”?

• Dependent On

• Funding Plan You are Using and How close to Baseline Funding

• Whether or not a component has been replaced

• Whether a new component has been added

• Whether you have been funding to match plan

How Often Should you Update the “Reserve Study”?

• General Guidelines

• Associations up to 5 years old, every 3 years

• Associations up to 10 years old, every other year

• Associations over 10 years old, yearly

What Else Should You Do At Update Time ?

• After 5 years

• Review overall community

• Possibly add components to study

• Give an overall evaluation of existing conditions

• After 10 years

• Review overall community

• Possibly add components to study

• Give an overall evaluation of existing conditions

• Perform moisture probe testing

How Do You Review Your Reserve Study

When You Get It ?

Check the Component List

Component List

Check the Beginning Balance

Beginning Balance

a) effective date

b) amount

Check the Estimated Remaining Useful Life

Estimated Remaining Useful Lives

a) Planned replacements

b) Historical information

Check the Threshold and Funding Plan

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

Year

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

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Threshold

Meet With The Person Who Prepared the Study !!

Advanced Techniques

To Get You To Adequate Funding?

The Physical Analysis Year one Component Inventory

Deergone Estates

Component Quantity Unit Cost

R e s e rv e

R e q u ire m e n t

P re s e n t D o lla r s

B e g in n in g

B a la n c e

E s t im a t e d

U s e f u l L ife

E s t im a t e d

R e m a in in g

U s e f u l L ife

M o n th ly

R e s e rv e

F u n d in g

R e q u ire d

A n n u a l

R e s e rv e

F u n d in g

R e q u ire d

N o t e sF u ll F u n d in g

B a la n c e

Road Reconstruction 4,200 SY $12.40 $52,075 $4,700 20 10 $395 $4,737 $26,037

Road Sealcoating 4,200 SY $1.24 $5,219 $0 7 7 $62 $746 $0

Driveway Reconstruction 3,555 SF $19.50 $69,323 $6,256 20 10 $526 $6,307 $34,661

Driveway Sealcoating 3,555 SF $1.24 $4,417 $0 5 5 $74 $883 $0

Concrete Paver Entry Walks 3,020 SF $25.00 $75,500 $6,814 30 15 $382 $4,579 $37,750

Guard Rail 90 LF $50.00 $4,500 $325 25 15 $23 $278 $1,800

Street Lights 11 EA $2,762.43 $30,387 $914 30 25 $98 $1,179 $5,064

Irrigation Fund 1 LS $5,000.00 $5,000 $301 15 10 $39 $470 $1,667

Four Foot Chain Link Fence 120 LF $10.81 $1,298 $141 25 10 $10 $116 $779 5

Concrete Patios 3,300 SF $7.62 $25,143 $1,513 30 20 $98 $1,182 $8,381

Aluminum Gutters 2,366 LF $4.41 $10,445 $980 25 12 $66 $789 $5,431

Aluminum Downspouts 2,000 LF $3.14 $6,278 $589 25 12 $40 $474 $3,265

Asphalt Shingles 631 SQ $225.00 $141,975 $13,326 25 12 $893 $10,721 $73,827

EIFS Refinishing 30,000 SF $2.80 $84,000 $7,581 10 5 $1,274 $15,284 6 $42,000

Balconies 3,300 SF $18.36 $60,573 $6,560 25 10 $450 $5,401 $36,344

Totals $576,133 $50,000 $4,429 $53,145 $277,007

Component Inv entory

Financial Analysis E x a m p le S tu d y

R e s e rv e S tu d y F u n d in g P la n

P ro je c te d T h ir ty Y e a r C a s h F lo w

F U L L CURRENT BASELINE

F U N D I N G A N A L Y S I S F U N D I N G A N A L Y S I S F U N D I N G A N A L Y S I S

Y e a r

B e g in n in g

A n n u a l

C o n t rib u t io n

A n n u a l


A n n u a l

E x p e n d itu re

R e s e rv e F u n d

B a la n c e

A n n u a l



B a la n c e

A n n u a l



B a la n c e

P o o lin g F a c t o r 8 4 . 3 8 %

Beginning Balance $50,000 $ 5 0 , 0 0 0 $50,000

2007 $53,145 $53,145 $0 $103,145 $25,000 $75,000 $44,847 $94,847

2008 $45,352 $45,352 $0 $148,497 $25,000 $100,000 $38,270 $133,116

2009 $46,778 $46,778 $0 $195,275 $25,000 $125,000 $39,473 $172,590

2010 $49,466 $49,466 $0 $244,741 $25,000 $150,000 $41,742 $214,332

2011 $57,298 $57,298 $84,000 $218,039 $25,000 $ 9 1 , 0 0 0 $48,351 $178,682

2012 $35,677 $35,677 $0 $253,715 $25,000 $116,000 $30,106 $208,788

2013 $36,067 $36,067 $5,219 $284,563 $25,000 $135,781 $30,435 $234,003

2014 $35,739 $35,739 $0 $320,302 $25,000 $160,781 $30,158 $264,162

2015 $36,250 $36,250 $0 $356,552 $25,000 $185,781 $30,590 $294,751

2016 $38,049 $38,049 $118,946 $275,656 $25,000 $ 9 1 , 8 3 5 $32,108 $207,913

2017 $30,518 $30,518 $0 $306,174 $25,000 $116,835 $25,753 $233,666

2018 $31,278 $31,278 $163,917 $173,535 $25,000 ($22,082) $26,394 $96,143

2019 $26,737 $26,737 $0 $200,272 $25,000 $2,918 $22,562 $118,705

2020 $26,759 $26,759 $0 $227,031 $25,000 $27,918 $22,581 $141,285

2021 $26,918 $26,918 $164,000 $89,949 $ 2 5 , 0 0 0 ($ 1 1 1 , 0 8 2 ) $22,715 $0

2022 $25,808 $25,808 $0 $115,757 $25,000 ($86,082) $21,778 $21,778

2023 $25,813 $25,813 $5,219 $136,351 $25,000 ($66,301) $21,782 $38,341

2024 $25,798 $25,798 $0 $162,149 $25,000 ($41,301) $21,769 $60,111

2025 $25,801 $25,801 $0 $187,950 $25,000 ($16,301) $21,772 $81,883

2026 $25,813 $25,813 $25,143 $188,620 $ 2 5 , 0 0 0 ($ 1 6 , 4 4 4 ) $21,783 $78,523

2027 $25,779 $25,779 $0 $214,399 $25,000 $8,556 $21,753 $100,276

2028 $25,781 $25,781 $5,219 $234,961 $25,000 $28,337 $21,756 $116,812

2029 $25,780 $25,780 $0 $260,741 $25,000 $53,337 $21,754 $138,566

2030 $25,784 $25,784 $0 $286,525 $25,000 $78,337 $21,758 $160,324

2031 $25,796 $25,796 $119,387 $192,934 $ 2 5 , 0 0 0 ($ 1 6 , 0 4 9 ) $21,768 $62,705

2032 $25,758 $25,758 $0 $218,692 $25,000 $8,951 $21,735 $84,440

2033 $25,758 $25,758 $5,219 $239,231 $25,000 $28,732 $21,736 $100,957

2034 $25,757 $25,757 $0 $264,988 $25,000 $53,732 $21,735 $122,693

2035 $25,758 $25,758 $0 $290,746 $25,000 $78,732 $21,736 $144,428

2036 $25,762 $25,762 $52,075 $264,434 $25,000 $51,657 $21,740 $114,093

TOTAL $962,777 $962,777 $750,000 $812,436

Copyright Kipcon 2008

Funding Plans

20 07

20 09

20 11

20 13

20 15

20 17

20 19

20 21

20 23

20 25

20 27

20 29

20 31

20 33

20 35

Y ear

($ 200 )

($ 100 )

$0

$1 00

$2 00

$3 00

$4 00

Thou

sand

s

Dol

lars

R ese rve Fu nd Ba lanc e : Fu ll

R ese rve Fu nd Ba lanc e : Current

R ese rve Fu nd Ba lanc e : Base lin e

Deergone EstatesP roje c te d 3 0 Y ea r Cash Flo w Ana lysis

What Does The Association Do ?

»Current Annual Contribution $25,000

»Full Funding Recommendation ˃ Year One $53,145

˃ Minimum Balance $89,949 (2021)

»Baseline Finding Recommendation ˃ Year One $44,847

˃ Minimum Balance $0 (2021)

IT IS AGREED THAT A JUMP TO $53,145 IS TOO MUCH AND BASELINE IS TOO RISKY…..


Try Averaging ? E x a m p le S tu d y

R e s e rv e S tu d y F u n d in g P la n


F U L L CURRENT BASELINE

F U N D I N G A N A L Y S I S F U N D I N G A N A L Y S I S F U N D I N G A N A L Y S I S

Y e a r

B e g in n in g

A n n u a l


A v e r a g e d


A n n u a l

E x p e n d itu re


B a la n c e

A n n u a l



B a la n c e

A n n u a l



B a la n c e

P o o lin g F a c t o r 9 7 . 1 4 %

Beginning Balance $50,000 $ 5 0 , 0 0 0 $50,000

2007 $53,145 $33,359 $0 $83,359 $25,000 $75,000 $32,405 $82,405

2008 $45,352 $33,359 $0 $116,719 $25,000 $100,000 $32,405 $114,811

2009 $46,778 $33,359 $0 $150,078 $25,000 $125,000 $32,405 $147,216

2010 $49,466 $33,359 $0 $183,438 $25,000 $150,000 $32,405 $179,622

2011 $57,298 $33,359 $84,000 $132,797 $25,000 $ 9 1 , 0 0 0 $32,405 $128,027

2012 $35,677 $33,359 $0 $166,156 $25,000 $116,000 $32,405 $160,433

2013 $36,067 $33,359 $5,219 $194,297 $25,000 $135,781 $32,405 $187,619

2014 $35,739 $33,359 $0 $227,656 $25,000 $160,781 $32,405 $220,025

2015 $36,250 $33,359 $0 $261,016 $25,000 $185,781 $32,405 $252,430

2016 $38,049 $33,359 $118,946 $175,429 $25,000 $ 9 1 , 8 3 5 $32,405 $165,890

2017 $30,518 $33,359 $0 $208,789 $25,000 $116,835 $32,405 $198,295

2018 $31,278 $33,359 $163,917 $78,231 $25,000 ($22,082) $32,405 $66,784

2019 $26,737 $33,359 $0 $111,590 $25,000 $2,918 $32,405 $99,189

2020 $26,759 $33,359 $0 $144,950 $25,000 $27,918 $32,405 $131,595

2021 $26,918 $33,359 $164,000 $14,309 $ 2 5 , 0 0 0 ($ 1 1 1 , 0 8 2 ) $32,405 $0

2022 $25,808 $33,359 $0 $47,669 $25,000 ($86,082) $32,405 $32,406

2023 $25,813 $33,359 $5,219 $75,809 $25,000 ($66,301) $32,405 $59,592

2024 $25,798 $33,359 $0 $109,169 $25,000 ($41,301) $32,405 $91,998

2025 $25,801 $33,359 $0 $142,528 $25,000 ($16,301) $32,405 $124,403

2026 $25,813 $33,359 $25,143 $150,744 $ 2 5 , 0 0 0 ($ 1 6 , 4 4 4 ) $32,405 $131,665

2027 $25,779 $33,359 $0 $184,104 $25,000 $8,556 $32,405 $164,071

2028 $25,781 $33,359 $5,219 $212,244 $25,000 $28,337 $32,405 $191,257

2029 $25,780 $33,359 $0 $245,604 $25,000 $53,337 $32,405 $223,663

2030 $25,784 $33,359 $0 $278,963 $25,000 $78,337 $32,405 $256,068

2031 $25,796 $33,359 $119,387 $192,936 $ 2 5 , 0 0 0 ($ 1 6 , 0 4 9 ) $32,405 $169,087

2032 $25,758 $25,758 $0 $218,693 $25,000 $8,951 $25,021 $194,108

2033 $25,758 $25,758 $5,219 $239,232 $25,000 $28,732 $25,022 $213,911

2034 $25,757 $25,757 $0 $264,990 $25,000 $53,732 $25,021 $238,931

2035 $25,758 $25,758 $0 $290,748 $25,000 $78,732 $25,021 $263,953

2036 $25,762 $25,762 $52,075 $264,435 $25,000 $51,657 $25,026 $236,904

TOTAL $962,777 $962,778 $750,000 $935,247

Annual

Contributions

Have Been

Averaged

For Years

2007 through

2031

What Did Averaging Do ?

» Current Annual Contribution $25,000 » Full Funding Recommendation

˃ Year One through Twenty Five $33,359 ˃ Minimum Balance $14,309

» Baseline Finding Recommendation ˃ Year One through Twenty Five $ 32,405 ˃ Minimum Balance $0

Still too big a jump from $25,000 to $33,359 ?

Too Small of a Threshold of $14,309

NOW WHAT ??

What Was Agreed Upon ?

• Final Goal

• Establish Threshold Amount of $50,000 Increase Annual Contributions by minimum % per year starting at $25,000 to achieve Threshold

• After Threshold Reached, Average the remaining years


E x a m p le S tu d y

R e s e rv e S tu d y F u n d i n g P la n


F U L L CURRENT

F U N D I N G A N A L Y S I S F U N D I N G A N A L Y S I S

Y e a r

B e g in n in g

A n n u a l


A n n u a l


A n n u a l

E x p e n d itu re


B a la n c e

A n n u a l



B a la n c e

Beginning Balance $50,000 $ 5 0 , 0 0 0

2007 $53,145 $26,087 $0 $76,087 $25,000 $75,000

2008 $45,352 $27,221 $0 $103,308 $25,000 $100,000

2009 $46,778 $28,405 $0 $131,713 $25,000 $125,000

2010 $49,466 $29,640 $0 $161,354 $25,000 $150,000

2011 $57,298 $30,929 $84,000 $108,283 $25,000 $ 9 1 , 0 0 0

2012 $35,677 $32,274 $0 $140,556 $25,000 $116,000

2013 $36,067 $33,677 $5,219 $169,015 $25,000 $135,781

2014 $35,739 $35,142 $0 $204,156 $25,000 $160,781

2015 $36,250 $36,670 $0 $240,826 $25,000 $185,781

2016 $38,049 $38,264 $118,946 $160,144 $25,000 $ 9 1 , 8 3 5

2017 $30,518 $39,928 $0 $200,072 $25,000 $116,835

2018 $31,278 $41,664 $163,917 $77,819 $25,000 ($22,082)

2019 $26,737 $43,476 $0 $121,295 $25,000 $2,918

2020 $26,759 $45,366 $0 $166,661 $25,000 $27,918

2021 $26,918 $47,339 $164,000 $50,000 $ 2 5 , 0 0 0 ($ 1 1 1 , 0 8 2 )

2022 $25,808 $28,446 $0 $78,446 $25,000 ($86,082)

2023 $25,813 $28,446 $5,219 $101,674 $25,000 ($66,301)

2024 $25,798 $28,446 $0 $130,120 $25,000 ($41,301)

2025 $25,801 $28,446 $0 $158,566 $25,000 ($16,301)

2026 $25,813 $28,446 $25,143 $161,870 $ 2 5 , 0 0 0 ($ 1 6 , 4 4 4 )

2027 $25,779 $28,446 $0 $190,316 $25,000 $8,556

2028 $25,781 $28,446 $5,219 $213,543 $25,000 $28,337

2029 $25,780 $28,446 $0 $241,990 $25,000 $53,337

2030 $25,784 $28,446 $0 $270,436 $25,000 $78,337

2031 $25,796 $28,446 $119,387 $179,496 $ 2 5 , 0 0 0 ($ 1 6 , 0 4 9 )

2032 $25,758 $28,446 $0 $207,942 $25,000 $8,951

2033 $25,758 $28,446 $5,219 $231,170 $25,000 $28,732

2034 $25,757 $28,446 $0 $259,616 $25,000 $53,732

2035 $25,758 $28,446 $0 $288,062 $25,000 $78,732

2036 $25,762 $28,446 $52,075 $264,434 $25,000 $51,657

TOTAL $962,777 $962,777 $750,000

For Year 2007

Through 2021,

Annual

Contributions

Increase by

Approximately

4% per year

Resulting in

Threshold of

$50,000 in 2021

20 07

20 09

20 11

20 13

20 15

20 17

20 19

20 21

20 23

20 25

20 27

20 29

20 31

20 33

20 35

Y ear

($ 200 )

($ 100 )

$0

$1 00

$2 00

$3 00

$4 00

Th

ou

san

ds

Do

llars

R ese rve Fu nd Ba lanc e : Acce pte d

R ese rve Fu nd Ba lanc e : Current

Deergone EstatesP roje c te d 3 0 Y ea r Cash Flo w Ana lysis

Final Funding Plan

Using Your Reserve Study as a Starting

Point to Reduce Your Energy and Maintenance Costs (and go Green)

• It lists the physical components of the community which are the responsibility of the Association to maintain and replace.

• It helps identify all components which require maintenance

• It helps identify all components which consume energy

But, First We Need To Understand What Makes Up The Associations Budget

Operating Expenses

(Including Energy

Costs), 31%

Administrative

Expenses, 16%Fixed Expenses,

11%

Repair/Reserves,

40%

Other, 2%

And The Relationships Between The Parts

Energy

Replacements

Maintenance

The Basis of the Analysis is Your Reserve Study…

And Cash Flow Projection

Which Looks Like This…

A Note on Your Reserve Funding Plan Funding Plan

Comparison

Annual

Contribution

Averaged

Over 30

Years

Full Funding

(over

funding)

$190,649

Baseline

Funding

(under

funding)

$157,545

30 Year

Savings

$33,104 per

year

($993,305

over 30

years)

Now Lets Begin Looking at the Entire Picture …

Replacements

Cost of Maintenance and Energy

The “Real” Cost….

So, What Do You Do ?

Replacements

Reduced Cost of Maintenance and Energy

Maintenance and Reserves

With a Cumulative Affect of..

To Summarize…

Total Contributions Over 30 Years

Replacement Only $5,719,459

Replacement, Maintenance and Energy with Original Components

$6,318,553

Replacement, Maintenance and Energy with Alternative Components

$5,609,821

30 Year Savings !! Which does not include looking at the various funding plans!

$708,732

Which Leads to a New Way of Bidding Replacement Projects

• The Classic “First Cost” Approach Option One Option Two

Material Cost

Labor Cost ________ ________

Total Cost

Which Leads to a New Way of Bidding Replacement Projects

» The Evaluated Cost Approach

Option One Option Two

Material Cost Labor Cost ________ ________ First Cost 30 Yr. Maint. Cost 30 Yr. Energy Cost ________ _________ Total 30 Year Cost Also must consider any rebates, tax credits etc.

Analyzing The Information

• Wait Until Replacement is Scheduled ?

• Perform Replacement Now ?

Analyzing the Information

Existing HVAC System

Replacement Cost $175,000

Useful Life 20 Years

Annualized Cost $8750

Annual Energy Cost $70,000

Total Annualized Cost $78,750

Analyzing the Information

Proposed High Efficiency

HVAC System

Replacement Cost $250,000

Useful Life 20 Years

Annualized Cost $12,500

Annual Energy Cost $50,000

Total Annualized Cost $62,500

The Results

Increase in Installation Cost ($250,000-

$175,000)

$75,000

Rebate at 50% of incremental Cost $37,500

Incremental Cost

($75,000 - $37,500)

$37,500

Annual Energy Cost Savings

($70,000 – $50,000)

$20,000

Years to Breakeven ($37,500/$20,000) 1.9 years

Cumulative 20 Year Savings

($20,000 x 18.1 years )

$362,000

A Little Commercial

When it comes time to replace the components on your Reserve Study, Kipcon is a full service engineering firm

specializing in Community Associations

Roofs Roads Decks

Balconies Facades Drainage

Water infiltration Expert support

Transition Studies

Upcoming Webinars

Roofing Facades

Pavement Decks

Construction Defects Contract Administration

Details to follow :

Thank You…..Questions ?

Mitch Frumkin, PE, RS, CGP President [email protected] Brandon Femia, RS Manager of Reserve Studies [email protected] Kipcon.com 732-220-0200

mailto:[email protected]

mailto:[email protected]