Whether you are a member of a condominium association or a homeowner’s association, your organization needs a reliable capital reserves plan. In essence, the reserve plan prepares you for the big expenditures which buildings and complexes require. Whether it’s new roofing for 30 buildings, or re-plastering the common area swimming pool, these large expenditures must be planned for.
Communities that don’t plan effectively may have to resort to special assessments, or excessive reserve contributions. Either of these can be costly to members, and even worse, affect the resale value of your home or condominium.
FH&A provides highly detailed and effective reserve planning. We do this for both condominium associations as well as homeowner associations. Here is an overview of what you can expect from an FH&A Reserve Study:
FH&A will project the Reserve Expenses for your Property, and provide an analysis of repair and replacement cost projections for Reserve Component items in the Reserve Study. Reserve Expenses are typically defined as follows: Expenses used for a Common Area maintenance responsibility, for components that have a predictable limited life, where the expense exceeds a threshold amount (usually $1,000.00).
Though there may be an extensive list of common items requiring maintenance, typically the items meeting Reserve Component classification include items similar to those listed below.
- Roofing (condominiums only)
- Siding and exterior finishes (condominiums only)
- Asphalt paving
- Site lighting fixed elements and site mail facilities
- Common use structures such as pool houses & clubrooms
- Swimming pool and related equipment and common use outdoor furniture
- Our evaluation phase usually begins with an inspection of all reserve component items. This can be as extensive as examining every individual building and component, or in some cases we inspect a representative sample (typically 30%) of the common components. When the inspection is complete, we will compile a thorough inspection report of our findings.
Our evaluation process will also commonly include a thorough review of the following documents if they are available:
- The governing documents for the association.
- Financial statements reflecting current reserve balance, and reserve expenditures.
- All previous Reserve Studies including previously recommended funding plans.
- Current Reserve Component list.
- Reserve component repair and replacement history records.
- Other documents perceived as relevant to the study.
- After our evaluation phase, we will begin the financial forecasting portion of the study.
First, an updated Reserve Component Table will be compiled, including useful life, remaining useful life, replacement cycle projection, and estimated replacement cost . Information for this table will be developed through the physical inspection, and from our databases on life expectancies and replacement cycles.
Next we will generate a projection of annual expenses for the next 30 years based upon the Reserve Component Table. A Recommended Funding Plan will then be developed, based on the Projected Annual Expenses. The funding plan will take into account, inflation, interest, and taxes, rates of which will be agreed upon beforehand by the Client and FH&A.
Finally, a recommendation for revising monthly Reserve Contributions will be calculated based on the findings of the Funding Plan. We will then write and present you with a preliminary report for you to review. This will allow for any minor changes or adjustments prior to release of the final written document. Once any changes and adjustments are incorporated, we will provide you with your completed reserve study.
If your association is in need of a reserve plan, give us a call today at 513.683.9076 and we can give you a proposal to meet your specific needs.