Inflation in the Reserve Table
The constant annual rate applied to long-term costs from the report year to each item's year due; 3 percent is the agency convention. Tables show uninflated.
By Nicolas Reimer, Founder, Baseline PCR · E2018-24 Appendix X1.2.5.1 · Published September 18, 2026
Long-term costs are opinions in current dollars. To show what a replacement will cost in the year it falls due, the reserve table applies an inflation factor, and E2018's long-term-cost appendix notes that the factor is typically applied at a constant rate. Fannie Mae's instructions fix the rate at 3 percent per year for capital items; most non-agency reports adopt the same figure and say so.
The table prints both totals. The uninflated total is the sum of current-dollar opinions; the inflated total applies the factor for each year (1.030 in year two, 1.061 in year three, and so on) from the report year. Year one carries a factor of 1.000, so the first-year inflated figure equals the uninflated one; a table whose year-one inflated total is lower than its uninflated total has a rounding error. The per-square-foot-per-year figure is given both ways.
Related: long-term costs, evaluation period.
Sources
- ASTM E2018-24, Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process (ASTM International)
- Fannie Mae, Form 4099 Instructions for Performing a Multifamily Property Condition Assessment
ASTM E2018-24 is copyrighted by ASTM International and is paraphrased here, never reproduced; buy the guide from ASTM to read the text. This page is general information for practitioners, not engineering, legal or lending advice.