The economics of Summit House are simple. First, it pays its monthly bills for power, water and payroll. Then it has about $4,000 per month left to maintain its larger infrastructure. For several years Summit House has spent an annual average of between $40,000 and $50,000 on infrastructure. I'll use the number $50,000 recognizing what to include is somewhat arbitrary. We can maintain this level of infrastructure spending at our current level of dues.

Someone might ask, "What about reserves? Aren't they the gold standard of condo associations?" Actually, reserves per se are not. Matching the proper flow of income to that of repairing infrastructure is the gold standard. The collapsed condo in Florida might have had lots of reserves. It collapsed because a building weakness was not repaired. Money sleeping in bank account does not maintain a building.

Another good question is, "What about inflation? Shouldn't we plan for that?" The inflation number released by government is about what consumers', not condo associations, buy. It is related to Summit House only indirectly. We can track inflation that affects Summit House directly by following our infrastructure costs over time and adjusting our dues accordingly. 

From history, we know an average of $50,000 per year is needed for our infrastructure. That's an average over 8-10 years. Some years it is more, some less. Reserves go up and down accordingly. The Board's job is to schedule a flow of infrastructure replacement to match this flow of $50,000 per year. How does it do this? I have suggested to Boards they put needs in categories:

Category A: These are needs that come along which either raise our costs or involve safety. These projects need to be done soon. They are paid for from current funds or borrowed from our bank where we have a line of credit. 

Category B: Some of our assets are in the last 1/2 of their lives but still function well. These need to be monitored and worked into the flow of coming years using our $50,000 per year we have for that purpose.

Category C: These are assets in the first 1/2 of their lives but need to be acknowledged as projects for the future.

In all of this is some uncertainty. Let's keep studying/learning to give our owners many more decades of enjoyment.