Implementing the Reserve Study Y Your reserve professional will create the common component inventory and set expected remaining life for each component. The reserve study should include an annual listing of expected expenditures in the coming years. While actual experience may deviate from this listing, it will serve as a financial roadmap/timeline for the association reserve spending over the long term. An example of annual expenditure detail is shown in Figure 1. Using this detailed plan, the association can plan spending over the near and long term to maintain the community. The reserve study should be updated periodically to account for component replacements, review financial assumptions, and evaluate components as they age. The reserve professional will likely propose a plan to fund the reserve replacement schedule created. The initial funding plan typically begins the discussion with the association. Answering "what if" funding questions will allow the association to choose a suitable option to achieve its funding goals. The final funding plan creates a schedule of reserve contributions to achieve the goals of the association and provide the capital needed to perform the needed replacements. FUNDING GOALS The basic goals of a reserve funding plan are stability and sustainability. Association fees should be predictable so owners and boards can plan effectively. There are four basic funding goals/ objectives, described below, which may be used to develop a reserve funding plan. The goals balance the risk tolerance of the association, fiduciary responsibility, and legal requirements. 1 Full Funding ■ Goal to have reserves on hand equivalent to the value of the deterioration of each reserve component to date ■ Long-term objective to achieve and/or maintain 100 percent funded reserves ■ Most conservative funding goal FIGURE 1: Example of Annual Expenditure Detail 22 CONDOMEDIA July 2018