Condo Media - January 2021 - 19

NOW THAT YOU HAVE
THE RESULTS, WHERE DO
YOU GO FROM HERE?
In the first half of this article, we discussed reserve studies and selling the
results of the report to your association
(without a revolt!). Now that you have
the association on board with the report, how do you go about implementing the actual findings?
Tom Landry, the legendary head
coach for the Dallas Cowboys, said,
" Setting a goal is not the main thing; it is
how you will go about achieving it and
staying within that plan. " This applies
to associations as well: implementing a
reserve study properly is as important as
obtaining a quality study to begin with.
A reserve fund plan will outline
where your association currently stands
financially and the next steps to maintain
adequate funding. By providing your association with comprehensive inventory
of all common elements and an in-depth
analysis to dictate your community's
maintenance standards, the final report
will greatly assist your association in
reaching maintaining financial stability.
ELEMENTS OF THE STUDY
A reserve study consists of two elements: physical analysis (condition
assessment) and financial analysis
(fund status and funding plan). The
physical analysis, which should always
result from a minimum of one site
visit and meeting with the board of
directors, produces a detailed reserve
component (or asset) list for your
community. This component list will
inventory the association's common
elements and the remaining useful
life (RUL) of each one.
The financial analysis documents
the current reserve fund balance, rate
of contributions, and projects annual
balances based on projected expenses.
The objective is to be sure the balance
remains positive (or at a board-determined threshold) as monies are spent.
We recommend the cash flow method
for funding projections - it's practical
and easy to understand. Some consultants will offer component funding.

money relatively quickly, particularly
FUNDING PLAN
in the case of an emergency, and don't
CONSIDERATIONS
want to go through a bank to obtain a
The funding plan serves a measure of
loan (and therefore, pay interest).
your current condition and as a road
This can be an unpopular choice with
map for the future. While you may be
the residents of your community.
tempted to look only at the bottom line
A special assessment can be a one-time
and determine what your association's
payment or installments, depending
monthly reserve dues will be, individual
on the need and urgency. A wellfeatures such as the inflation factor and
managed association with reasonable
replacement cost cannot be ignored.
reserve planning should work to avoid
To ensure a sound budget throughout
a special assessment.
the years, each piece of the reserve fund
puzzle must work together.
ONGOING
The funding plan will recommend a
MAINTENANCE & UPDATES
monthly reserve contribution, which is
Based on your starting reserve balance,
the amount each homeowner will pay in
the final step is to establish a prevenmonthly dues (or quarterly, depending
tive maintenance program, which is
on your particular association) to the
different than a reserve funding plan.
reserve fund only. The assessments are
If your association does not maintain
based on the funding plan developed to
the components as detailed in the
take your current reserve account to the
report, you run the risk of putting your
funding objective. If your association
association much farther behind in both
currently has a weak account (or none
maintenance and reserve funding.
at all) the reserve dues will naturally
be higher than
those associaA quality reserve study performed by a
tions with wellfunded reserve
professional engineer is the ideal way to continue
accounts. Using
the cash flow
planning for future repairs and improvements.
method, owners
Additionally, updates to the reserve
will pay dues to the reserve fund, destudy should be performed every three
signed to offset the annual expenditures
to four years. Changes to the association
from the reserve fund.
inventory, inflation, significant weather
If your community doesn't have a
events, and updating the RUL are just
reserve fund in place and you have
a few of the factors that can change the
cash needs, you should start the fund
original reserve projections.
immediately and defer expenses where
Reserve studies contain an evaluation
you can. A modest first payment in
of property condition, and most imporexcess of the normal monthly payment
tantly, serve as an indispensable tool in
will help get you started.
projecting costs and managing reserve
Along the same lines, securing a loan
accounts. Major expenses are inevifrom a bank that specializes in comtable; these can often be headed off with
munity associations is another option
advance preparation. Reserve studies
that is growing in use. This can be a
have the unique effect of allowing you to
good alternative for associations who
peek into the future to ensure you plan
are drastically under-funded but don't
appropriately today.
want to impose a special assessment
on the homeowners. Planning ahead
and making regular contributions to
n H. ALAN MOONEY IS THE
the reserve fund will reduce the risk of
FOUNDING PRESIDENT OF
such a loan.
CRITERIUM ENGINEERS.
A special assessment may be necessary for associations that need the
January 2021 CONDOMEDIA

19



Condo Media - January 2021

Table of Contents for the Digital Edition of Condo Media - January 2021

Contents
Condo Media - January 2021 - Cover1
Condo Media - January 2021 - Cover2
Condo Media - January 2021 - Contents
Condo Media - January 2021 - 2
Condo Media - January 2021 - 3
Condo Media - January 2021 - 4
Condo Media - January 2021 - 5
Condo Media - January 2021 - 6
Condo Media - January 2021 - 7
Condo Media - January 2021 - 8
Condo Media - January 2021 - 9
Condo Media - January 2021 - 10
Condo Media - January 2021 - 11
Condo Media - January 2021 - 12
Condo Media - January 2021 - 13
Condo Media - January 2021 - 14
Condo Media - January 2021 - 15
Condo Media - January 2021 - 16
Condo Media - January 2021 - 17
Condo Media - January 2021 - 18
Condo Media - January 2021 - 19
Condo Media - January 2021 - 20
Condo Media - January 2021 - 21
Condo Media - January 2021 - 22
Condo Media - January 2021 - 23
Condo Media - January 2021 - 24
Condo Media - January 2021 - 25
Condo Media - January 2021 - 26
Condo Media - January 2021 - 27
Condo Media - January 2021 - 28
Condo Media - January 2021 - 29
Condo Media - January 2021 - 30
Condo Media - January 2021 - 31
Condo Media - January 2021 - 32
Condo Media - January 2021 - 33
Condo Media - January 2021 - 34
Condo Media - January 2021 - 35
Condo Media - January 2021 - 36
Condo Media - January 2021 - 37
Condo Media - January 2021 - 38
Condo Media - January 2021 - 39
Condo Media - January 2021 - 40
Condo Media - January 2021 - 41
Condo Media - January 2021 - 42
Condo Media - January 2021 - 43
Condo Media - January 2021 - 44
Condo Media - January 2021 - 45
Condo Media - January 2021 - 46
Condo Media - January 2021 - 47
Condo Media - January 2021 - 48
Condo Media - January 2021 - Cover3
Condo Media - January 2021 - Cover4
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202110
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202109
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202108
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202107
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202106
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202105
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202104
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202103
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202102
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202101
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202012
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202011
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202010
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202009
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202008
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202007
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202006
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202005
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202004
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202003
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202002
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_202001
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201912
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201911
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201911_v2
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201910
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201909
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201908
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201907
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201906
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201905
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201904
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201903
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201902
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201901
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201812
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201811
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201810
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201809
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201808
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201807
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201806
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201805
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201804
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201803
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201802
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201801
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201712
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201711
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201710
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201709
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201708
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201707
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201706
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201705
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201704
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201703
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201702
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201701
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201612
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201611
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201610
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201609
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201608
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201607
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201606
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201605
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201604
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201603
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201602
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201601
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201512
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201511
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201510
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201509
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201508
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201507
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201506
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201505
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201504
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201503
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201502
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201501
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201412
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201411
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201410
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201409
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201408
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201407
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201406
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201405
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201404
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201403
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201402
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201401
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201312
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201311
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201310
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201309
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201308
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201307
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201306
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201305
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201304
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201303
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201302
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201301
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201212
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201211
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201210
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201209
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201208
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201207
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201206
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201205
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201204
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201203
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201202
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201201
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201112
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201111
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201110
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201109
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201108
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201107
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201106
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201105
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201104
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201103
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201102
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201101
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201012
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201011
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201010
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201009
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201008
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201007
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201006
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201005
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200904
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201003
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201002
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_201001
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200912
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200911
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200910
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200909
https://www.nxtbook.com/nxtbooks/mcneill/condomedia_200908
https://www.nxtbookmedia.com