|Re: Reserve Studies||<– Date –> <– Thread –>|
|From: Sharon Villines (sharonsharonvillines.com)|
|Date: Thu, 29 Dec 2011 21:20:05 -0800 (PST)|
On 29 Dec 2011, at 12:03 PM, Douglas G. Larson wrote: An excellent post on reserves. Just some additions. > Reserves are funds set aside by a Homeowner's Association to be prepared for > the eventual replacement of assets. Those assets are very broad and can be > big ticket items like roofs, driveways or painting (both interior and > exterior) but can also be smaller items like fences, landscaping, decks, > common house dishwashers, ovens or refrigerators. Our specialist says that painting specifically cannot be included. The IRS goes nuts over it. They call it maintenance. So we have a maintenance reserve as well. Anything that is done every year is in the operating budget — every two years or more, in the maintenance reserve. I have a spreadsheet of these items, constructed from the Reserve Study. > There generally is a lower > dollar limit below which an asset is NOT included in the reserve study. > Hence things like toasters, coffee makers, food processors are generally not > included. The professional Reserve Study organization can guide you on where > that dollar limit is. Ours is $500 because anything below that we can find money for in the operating budget. > A Reserve Study, is a study done by professional organization that has > experience with and knowledge of Homeowner's Associations financial standing > as well as experience with the expected life of common capital assets, like > those I mentioned above. It is important that this person be an architect or construction engineer who knows facilities, not just a financial person who uses the Means reports to get average prices. The person needs to know your facilities and how you maintain them to make judgements about how long they will last or if intermediate replacements or repairs will extend the life of the asset. If repairs will extend the life of the asset, they can still be included in the Reserves. Many things will never be replaced all at the same time. Walk around with this person and ask questions. Take notes. Put the video camera away — when you want to find out what he told you to use to seal the fence, you don't want to watch a two hour video to find out. People who love construction, love to talk about it. They will give you tons of information about your facility and materials and mistakes and remedies that will never get written into the Reserve Study. The Reserve Study is the best thing you can do for managing your facilities. It's worth every penny if you have a knowledgable person doing it. > sure if follow-up studies require a site visit since our community hasn't > had its first follow-up yet. The 3 year study should. Annual financial calculations don't. > The purpose of the Reserve Study is so that you have some sound basis for > a) The expected life-span of each asset > b) That you are collecting adequate funds to cover each asset replacement > in the year expected. > C) A schedule of how much to collect each year overall and from each > owner. These are the traditional uses of the reserve study. I would add one more — a tool for managing your facilities. Just the estimates of replacement costs and useful life, and the consultation with the person doing the study would be worth the cost. When our sewage ejector pump went out and we had to have it fixed before some units could use any water, we could consult our study to see that the cost the company was going to charge us for new pumps was standard and predictable. It allowed us to make a quick decision without anxiety. Get a study done if you haven't already. If you have one, look at it. Get it into a format you can consult easily. Sharon ---- Sharon Villines Takoma Village Cohousing, Washington DC http://www.takomavillage.org
- Re: Reserve Studies, (continued)
- Re: Reserve Studies Diana Carroll, December 29 2011
- Re: Reserve Studies Sharon Villines, December 29 2011
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