Midboro Management: Capital Planning

THE BIG PICTURE

You may not know this, but as a new board member one of your roles is to ensure that the board acts in a fiscally responsible manner – for all shareholders. This means that your board will plan for infrastructure as well as aesthetic projects so that your owners will not have frequent maintenance increases or assessments to address a capital campaign.

BE SMART

The question is, how to do that? Your board needs to approve a capital plan that includes both infrastructure and aesthetics – maybe over a three- to five-year period – and decide how you would fund any projects that you’d like to address.
Without such a plan, owners will be subject to frequent maintenance increases or frequent assessments, which could have an adverse effect on your apartment sales. But with a good capital plan, you will certainly uphold the value of your apartments as well as making buyers want to buy into your building.

Prospective buyers want to know that the board is fulfilling its fiduciary obligation to properly manage the money and have reserves to address infrastructure and aesthetic needs. A well-conceived capital plan will go a long way toward achieving that goal.