Every
Association, regardless of how simple or complex, should do
appropriate financial planning.Typically,
a "Reserve Study" is used to ensure the financial
resources needed, at a particular time, will be available at
that time. For a reserve study to be effective and meaningful,
it is vital that accurate information be used as the foundation
of the study. If you have decided to use an outside vender
to provide such a study, start by sending out a simple "letter
of interest" (with an overview of your community association)
asking potential venders to provide you with their reserve
study pricing information and two or three references from
associations in your area, similar to the age, size and complexity
of your community. Make it clear in your letter that
the older the reference, the better, as the value and accuracy
of reserve studies are measured by the "test of time".
Once
you have narrowed the field to a couple of potential bidders,
interview them. Include in your interview process questions
about what they will need to know in order to provide an
accurate reserve study (and corresponding reserve analysis
and recommendations).Although
there may be more to ask, here are some sample questions
to ask your reserve study provider.
Are
they familiar with your list of governing documents?
Is
there an understanding on their part about who
is responsible for what properties as depicted
on the plat, maps, recent repairs, as builds, etc.
Does
the vendor have an understanding of the rules related
to ADA and other codes that may apply based on
any sunset variances.
Is
the reserve company going to use local prices for
future repairs, or some sort of national averages?
Can
the vendor provide the reserve study in hard copy
and electronic format.
Are
photos included so that everyone understands what
is meant by "view fencing", pool fencing,
nature trail, etc.
When
you are satisfied with the qualifications of the vendor, ask
about a multi-year package so that the same company can update
your numbers each year, at a minimal cost. Typically
a reserve study update is done annually with a complete review
every 3-5 years (assuming the community was completed and no
major changes occurred with amenities, repairs, etc.).
To
get a fair, consistent response on your request for proposal,
include information such as the following:
General
Information
Community
location
Assessment
rates
Current
status of reserve funds
Any
special assessments
Any
prior reserve studies
Estimated
annual reserve funding
General
Type
Condominiums
#
units today__________
#
units at build out _____
master planned development
#
units today __________
#
units at build out _____
cooperative
#
units today __________
#
units at build out ______
townhomes/townhouses
#
units today ___________
#
units at build out ______
The association is responsible for maintaining the following common area items:
Clubhouse
basic (1 or 2 rooms)
moderate size
elaborate (multi-rooms)
balcony deck
building exterior
boilers
cooling towers/chiller
pool area
cabana/gazebo/ramada
fences
central electric system
terrace
central gas system
balcony
central water system
walkways
parking lot
phone system
gate operators
lighting
facility alarm system
tennis court(s)
kitchen facility equip
volleyball court
playground, tot lot
basketball court
restroom facilities
office
laundry facilities
office furniture
Golf Course
# of holes
golf carts
cart paths
pro shop
restroom buildings
maint bldg
irrigation system/controls
ponds/lakes
maintenance equipment
Other Recreation
dock/marina
lakes
lagoon/waterway
ponds
streams
boat storage
Other
lift stations
trails, washes
gate-house
drainage channels
street lighting
additional parks
shared common walls/fences
wells
landscaping treatments
private streets
entryway features/ monumentation
gate only
Individual
Unit Owner
landscaping
roofs
exterior maint
interior maint
A/C equipment
water heater
Mark Lewis, CMCA®, AMS®, PCAM® President / CEO
Community Archives
Tucson, AZ
Reserve Study:
