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CapEx Mix
There are three scenarios for a mix of capital expenditures (CapEx), as follows:

A.  CapEx from Reserve Account
This is the traditional means by which capital expenses are intended to be funded. The owners make annual contributions to a long range reserve account that accumulates over time and earns interest income.Unfortunately, most building owners are unable to accumulate sufficient funds and their unfunded liability is addressed through other supplemental means of financing, such as demand loans.

B.  CapEx from Operating Budet
Listed below are some examples of capital expenses that may sometimes be funded from the operating budget rather than the reserve account:
  • Relatively small items, such as batteries in fire panels and emergency generators.
  • Replacement of sealed insulated glazing units.
  • Caretaker salary being used to paint fences.

C.  CapEx Transfer to 3rd Parties
one common example is when the corporation makes individual owners responsible for certain capital projects, such as:
  • Replacement of insulated glazing units.
  • Replacement of garage doors.

See also:

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