Our Latest seminar, titled, The Risk of Failing to Reserve was held on Tuesday, August 20. Fifteen Board Members were in attendance and the comments collected were very encouraging. If you were unable to attend, I have pulled out some of the highlights and we have also posted the power point presentation from this Seminar for your review.
Seminar Highlights:
Reserves are a function of developing a budget. As an association, we need to ask ourselves,
do we want to budget for the amount of fees we assess or do we want to
budget based upon the needs of our communities. The needs of our communities include
replacing general common elements (GCE) once their effective life is over. To determine what those GCE’s are and their
current replacement cost is a major component to developing a reserve study. The rest of the study is a mathematical
exercise that is easily attained.
We are at the budget time of year for most communities. Approximately 70—80% of your budget should be
easily determined based on fixed expenses outlined in your governing
documents. The cost of sewer and water,
electricity and insurance can easily be determined by examining your budget
worksheet provided by your site manager or at one of our budget workshops. The balance of your budget needs can be
completed by talking with your Board about maintenance needs routinely provided
by your community. The reserve
allocation must be addressed based upon the current status of your GCE and the
current cost for construction labor and materials. Your managing representative can provide the
name of reputable companies who can produce a professional reserve study for
your communities’ use.
Funding reserves takes nerves of steel, a resolve to address
tomorrows concern and a choice to raise today’s fees a minor amount to avoid large
additional assessments in the future.
The choice is yours and the implications impact your entire community.
