Vertical City Toolkit - Reserve Fund Forecasting

Condo corporations in Ontario are required to complete a reserve fund study every three years. These studies estimate how much a corporation needs to contribute annually to maintain major components—like roofs, windows, elevators, and mechanical systems—over the long term.

But completing the study is just the beginning. Boards still need to interpret the results, adjust for changing conditions, and make confident decisions between study cycles. That’s where the Vertical City Toolkit comes in.

The Toolkit offers two key tools for supporting board members and property managers:

• The Report Card, which evaluates the strength of your current reserve fund plan

• The Forecast Calculator, which helps you test alternative strategies and simulate long-term outcomes

Together, these tools reduce the risk of surprises—like sudden special assessments—and support long-term financial sustainability. (If you're looking for more detail as to how these forecasts are generated, check out: Discovering the Simulated Forecast.)

The Report Card: Diagnosing the Current Plan

The Report Card helps you understand the health of your reserve fund strategy by running thousands of simulations based on the assumptions in your current reserve fund study. It assigns a score from 0 to 100—where higher scores indicate greater resilience, even in adverse future conditions.

If the current plan fails in many simulated futures, that’s a red flag. It might suggest over-reliance on high interest rate assumptions, insufficient owner contributions, or inadequate buffers for unexpected costs. These issues are often buried in long reports but can have serious long-term consequences.

What the Score Tells You

Each Report Card includes:

• A total score (0–100) based on stress-test simulations

• Subscores that highlight specific areas of strength or concern

• Flags for unrealistic assumptions (e.g. interest rates exceeding long-term norms)

• A chart showing the most common years of failure across simulations

Gaining Perspective with a Better Benchmark

Reserve fund studies often rely on optimistic assumptions about investment returns and inflation. That can give boards a false sense of security. Our Toolkit includes a conservative benchmark forecast based on:

• Realistic inflation and interest rate assumptions

• A balanced investment strategy based on your policy

• Stable contribution and expense patterns

Even if your reserve fund study differs from this benchmark, comparing the two helps you understand the tradeoffs in your current plan.

Stress Testing the Fund

The Report Card evaluates your reserve fund against a series of simulated challenges, including:

• Max Cash Holdback – Requires the fund to retain a higher-than-usual cash buffer

• Inflation Adjustment – Raises inflation from 3% to 7% to test sensitivity to rising costs

• Expense Variance – Randomly increases expenses by 5% to 15%

• Unexpected One-Time Expenses – Adds a $100K–$300K surprise cost in a random year

Thousands of trials are run, and your score reflects how often your fund remains solvent across all scenarios. This makes it easier to communicate risks to owners and advisors. A low score doesn’t necessarily mean disaster—but it signals the need to revisit your assumptions or contribution plan.

The Forecast Calculator: Explore, Simulate, Learn

While the Report Card evaluates your current strategy, the Forecast Calculator helps you experiment with new ones. It’s a sandbox for planning—letting you test assumptions and simulate long-term results before locking in decisions.

Boards often face complex questions:

• What if we shift contributions earlier or delay a project?

• Can we invest more aggressively while complying with our investment policy?

• How would rising inflation or declining returns affect our reserve fund?

The Forecast Calculator makes it easy to explore these “what-if” scenarios with real data.

Custom Scenarios, Clear Feedback

Users can customize any variable—interest rates, inflation, owner contributions, investment mix, minimum cash reserves, and more. Once you define your parameters, the engine:

• Simulates thousands of possible futures based on your assumptions

• Tests whether your plan remains viable across scenarios

• Compares your custom forecast against the conservative benchmark

You can see if your revised strategy performs better—or worse—and understand why.

Built for Exploration and Learning

Board members aren’t generally investment professionals—and they’re not expected to be. But they are expected to oversee the reserve fund. The Forecast Calculator gives them the tools to do that with confidence.

Rather than relying on spreadsheets or opaque financial reports, the sandbox environment lets users explore strategy changes safely. Whether adjusting a GIC ladder, testing the impact of higher inflation, or modelling a new contribution schedule, board members can simulate, discuss, and refine ideas transparently.

Better still, this leads to more informed discussions with external partners. When you bring concrete simulations and clearly defined assumptions to the table, you're better equipped to evaluate professional advice and make thoughtful decisions.

The Input Toolbox: Full Transparency

Every variable that drives our simulations is visible and editable—no black boxes. The Input Toolbox includes sliders and input fields for defining all key parameters, including:

• GIC to Market-Linked GIC Composition – Adjusts the proportion of market-linked GICs in your investment portfolio

• Minimum Cash Balance – Sets a required floor for liquid reserves

• Yield and Volatility for Standard GICs – Defined as a probability distribution

• Yield and Volatility for Market-Linked GICs – Also defined as a distribution

• Inflation Rate – Modelled with both a mean and a standard deviation

Want to test a high-volatility environment or simulate a stable one? Adjust the sliders and see what happens. The Toolkit is built to reflect real-world uncertainty—without overwhelming the user.

Transparent, Not Prescriptive

The Toolkit doesn’t give you rigid answers. It gives you clarity.

• Customizable forecast engine – Define your own constraints and explore your own ideas

• Transparent calculations – Know exactly how the forecast is computed

• Non-binding recommendations – The system can suggest actions, but all decisions stay with the board

By automating the math, the Toolkit frees up boards to focus on strategy—not spreadsheets. And because it operates consistently over time, it reduces the human errors and behavioural biases that can creep into manual cash management.

Final Thoughts

The Reserve Fund Toolkit won’t make decisions for you—but it helps ensure that the decisions you make are based on sound analysis. It enables boards and property managers to identify risks early, test new strategies with confidence, and build long-term sustainability into their reserve fund plans. Most importantly, it helps every board member understand the financial roadmap they’re responsible for. Whether you're a seasoned director or brand new to the board, the Toolkit gives you the clarity you need to lead with confidence.