2023-24 Capital Projects

This 2024 letter to owners outlining the recommended 2024 reserve funding was approved at the Owners Annual Meeting on October 7, 2023.

WTYC Owners,

One of the responsibilities as treasurer is to recommend to owners the level of reserves for the next calendar year.  The amount of reserves will become a part of the overall monthly dues in 2024.  Reserves are enough to cover expected large repairs or replacements (typically more than $10,000).  The
other part of the dues is the Operational Budget, which the Board will  approve in December.

The GOOD NEWS is that in 2022, a Structural Integrity Study showed our buildings, foundations, and overall structures are sound and satisfy the new Florida law requiring such a study.  The report provided a roadmap for maintaining and improving the buildings.  Establishing and maintaining proper reserves is key to having the funds for making those improvements.

Let me give you the 2024 reserve recommendation and some information on the changing Florida laws, regulations, and legitimate opinions suggested by other Board members.

Recommendation: As treasurer, I recommend we keep the same 2023 annual reserve addition of $346,740 for 2024.  This conservative proposal may allow for unknown structural issues that may arise, covering any cost overruns and/or making some property improvements before otherwise scheduled dates.

My reserve models indicate that the level of reserves may be the same for 2025 and 2026 before a reduction may be possible.  However, as Florida statute requires, the recommendation is only for 2024.

The recommendation is for the 2024 reserve addition to be $346,740 (same as 2023), which can fairly be characterized as 100% of the current Florida requirement.   Except for emergencies, the existing reserves and the 2024 additions can be used by the Board only for specific projects listed in the Sedgewick report for 2024. In addition, funds can be used for projects approved in 2023 that have not been completed (i.e., tennis court and fence replacement).  Also allowed are structural integrity studies/work to assure
compliance with state law.  In addition, the reserves may be used to begin projects otherwise planned for 2026.  If additional work or projects are more than $50,000, the Board must get owner approval before committing funds unavailable for those projects.     

The Florida law does not require an owner's vote unless an alternative is raised to the 100% reserving standard.

Explanation:  Currently, Florida law allows for two (2) different formulas to establish a legally acceptable 100% funding of reserves for a given year, I will refer to those formulas as "Low" and "High."  A new Florida law effective for calendar year 2026 creates a new formula that mandates condominiums establish reserves on a different basis but is closer to the "High" formula.  I will call that option "D-4." That is the actual reference code for the new law.   Historically, WTYC owners voted to establish reserves at less than the "Low" formula.  Under the new law, that option is no longer allowed.  In 2026, we must establish 100% reserves under "D-4."

At last year's annual meeting, the ownership accepted the recommendation to move towards the 2026 requirement (D-4) with a 2023 reserve addition of $346,740 based on 100% of the "Low" formula.   

Uncertainties:  In 2023, the Florida legislature changed the D-4 formulas and definitions.  Regardless of the reserve formula used, past WTYC Boards have alerted owners of major expenses scheduled for 2026.  To plan for those expenses, we use Sedgewick, an outside service, to project timing and costs

as the basis of reserve estimates. That report is done every three years. The last report was in 2021.  We are scheduled to do an update in 2024 that will recognize the new D-4 law.  

The significant expenditures by WTYC in recent years may lessen the potential impact of D-4.  For example, we have new elevators, modernized the fire alarm system, added new building HV/ACs, laid new parking lot pavers, and fixed our roofs.  However, WTYC has more major projects listed for 2026.

Major cost projects include balcony tile removal, waterproofing of balconies, and painting/waterproofing of the buildings.  Balcony railing replacement has been a point of Board debate. We recently repaired some

balcony railings and received a three (3) year safety certification.   

Considering the uncertainties of legal requirements, replacement costs, and timing/implementation options, the reserve recommendation of $346,740 is the best effort to set the 2024 reserve addition at 100% of what the current Florida law allows and to advance us toward funding projects while meeting

the D-4 law in 2026.

Transparency.  The Board has had many debates on the cost and timing of major projects otherwise scheduled to be done by 2026.  O'Connell, an outside engineering firm, provided estimates on some work starting at the end of 2023.     The Board has been split on the cost and scope of the recommendations.  The Board has vigorously debated whether lower-cost alternatives should be pursued rather than some of the O'Connell recommendations.  The next Board will likely continue grappling with major projects' scope, timing, and potential costs.  Their decisions would impact the funds needed and could require a special assessment.

Ron Bachman

Treasurer, WTYC