Tag Archives: analysis

Reserve Funds

 

One of the primary business duties of community associations is maintaining and preserving property values of homes and the common property.  To do this properly, associations must develop funding plans for future repair or replacement of major common area components, such as roofs, boilers, elevators, swimming pools, balconies, asphalt surfaces and decks.

An association has several funding options, including periodic assessments over the life of assets, special assessments at the time of replacement, borrowing funds when needed, a combination of the above or the most common method – and in many states the only lawful alternative: setting aside funds in a special category commonly called reserve funds.

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Reserve Study Service Levels

It is just beginning to be that reserve study time of year. Why? It takes a little while to select a reserve professional and get the reserve study scheduled. And, you need to have the reserve study completed before you can complete your budget for next year.
Although state statutes generally permit anyone to perform the reserve study, asso-ciations should consider engaging a qualified, independent reserve professional. There are two professional designations available; the PRA (Professional Reserve Analyst) conferred by APRA, the Association of Professional Reserve Analysts, and the RS (Reserve Specialist) designation conferred by CAI (Community Associ-ations Institute). Both of these designations require the reserve professional to have completed at least 50 reserve studies and have at least one year of reserve study experience.

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Recognizing A Failed Reserve Funding Plan

We recently performed a reserve study for a 40-year old condominium association and discovered an all-too-familiar scenario we’ve seen in older projects.  The situation? Huge deferred maintenance obligations that should have been resolved long ago, and an assessment structure that is higher than comparable projects.  

How did this association get to this place? Forty years ago, reserve studies as we know them today were rare.  This association never prepared a complete reserve study.  In­stead, they prepared an annual budget that included reserve calculations for the major reserve categories; roofing, painting, and paving.  The association then created a fixed amount reserve funding plan that fit the “political” assessment climate within the asso­ciation. This was done in the very early years of the association’s existence, but that was not based on any comprehensive analysis of the actual major repair and replace­ment needs of the association.  There was considerable reluctance to raise the assess­ment because this “senior” community consisted primarily of fixed income retirees.

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Cost Analysis

Cost Analysis

By now you probably know that Community Association Management is different than other management companies in our approach to service. So the next logical question, how do we compare on cost? We're glad you asked.

Unlike our competitors, we do not inflate our invoices with additional monthly fees. We believe this type...

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