Do you “get” the capital works fund? No, me neither and neither do all those committee members around the state who think a spreadsheet is something you put over the furniture when you are painting the ceiling.
I know that it used to be called the sinking fund and you have to have a 10-year plan but renew it every five years (which sounds like a five-year plan to me).
And it’s for things like lift repairs … but not maintenance (or is it?). Confused? Let’s see what Fair Trading says:
The owners corporation is required to prepare a plan of expected major expenditure to be met from the capital works fund. The plan is for a 10-year period commencing on the first AGM of the owners corporation, and must be reviewed at least every 5 years.
So what’s it for?
Items of major expenditure could include, for example, to replace the roof on a building.
Replace the ROOF? This is serious stuff. How much is it going to cost?
The amount required for the 10-year plan may vary between schemes, for instance, newer schemes may require relatively less money than the plans for older schemes with more repair work due. Each capital fund 10-year plan should reflect the individual needs of its scheme.
OK, who decides on whether it a good plan or not?
The 10-year plan must be approved by owners at an annual general meeting (AGM).
Right. And does this require teams of engineers and accountants? Or can we just recycle the figures that Mr Papadopoulos in number 23 used to write on a sheet of butcher’s paper?
Owners corporations can put the 10-year plan together themselves or engage independent experts to prepare the plan.
Hmmm. There are two things we do know about Capital Works Funds. One, you can do all the fancy accounting and forward planning you want but you are not legally obliged to fund it. I know … I know!
Secondly, our friends at the Owners Corporation Network are having a Capital Works Fund Fiesta (OK, a seminar) on Saturday, August 19 in Jacksons Landing.