Condo Media - March 2018 - 42

THE RESERVE STUDY
Reserve studies are
typically prepared
by a Professional
Engineer (P.E.) or
Reserve Specialist
(R.S.). The process
entails a site visit to
examine/evaluate
common components
and a financial plan
to repair/replace
components as they
wear. The study report
is typically lengthy
and detailed.

I

t needs to be detailed enough to
provide information to the trustee
boards, accountants, property managers, and attorneys. However, it must
also be understandable for homeowners.
RESERVE STUDY KEY ATTRIBUTES
A comprehensive reserve study should
provide four key attributes:

1

Reserve Fund Budget
The reserve budget, also described
as a funding plan, is a list of the
recommended annual contributions
to the association reserve fund and
annual expenditures to cover reserve
components over the course of the 30year study. Typically, the recommended
contribution increases at a rate approximately equal to the anticipated rate
of inflation over the course of the study.
More than one funding plan option may
be presented. Option differences should

be clearly understood by the various
association constituencies before being
implemented. Funding goals can vary
from fully funded (most conservative) to
baseline (minimum cash flow to keep the
fund above zero) funding. Associations
typically target funding somewhere in
between these extremes. Currently, there
are no specific statutory funding requirements in New England states.

2

Reserve Fund Percent Funded
The reserve fund percent funded is
a measure of the health of the association's reserve fund. Expressed as a percentage, it is calculated at the beginning
of the fiscal year and is the ratio of the
actual reserve balance to the calculated
theoretical fully-funded reserve balance.
One-hundred-percent funded means the
association has a proportionally correct
balance to date for common components
maintained.

FIGURE 1:
Sample
Community
Association
Projections

42

CONDOMEDIA



Condo Media - March 2018

Table of Contents for the Digital Edition of Condo Media - March 2018

Contents
Condo Media - March 2018 - Cover1
Condo Media - March 2018 - Cover2
Condo Media - March 2018 - Contents
Condo Media - March 2018 - 2
Condo Media - March 2018 - 3
Condo Media - March 2018 - 4
Condo Media - March 2018 - 5
Condo Media - March 2018 - 6
Condo Media - March 2018 - 7
Condo Media - March 2018 - 8
Condo Media - March 2018 - 9
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Condo Media - March 2018 - 28
Condo Media - March 2018 - 29
Condo Media - March 2018 - 30
Condo Media - March 2018 - 31
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Condo Media - March 2018 - 33
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Condo Media - March 2018 - 35
Condo Media - March 2018 - 36
Condo Media - March 2018 - 37
Condo Media - March 2018 - 38
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Condo Media - March 2018 - 40
Condo Media - March 2018 - 41
Condo Media - March 2018 - 42
Condo Media - March 2018 - 43
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Condo Media - March 2018 - 72
Condo Media - March 2018 - Cover3
Condo Media - March 2018 - Cover4
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