Life of Property

For reserve planning .... in a new community of single family homes, how many years would generally be considered "life of the property" ... we are trying to decide on if some items should be included in the study or not.

Dee,

Two good resources for doing reserve studies:

Foundation for Community Association Research - Reserve Studies Good overall concept info.

Reserve Study Guidelines Published by the State of CA. Goes into much more detail as well as specific steps.

Nevada Reserve Study Guidelines Similar to CA guidelines

Note: In a search on the web, everyone seems to be referencing the CA guidelines.

Life of the Property:

When we did out study we used historical data within our own records, consultations with vendors (general question "how long should this last" type of thing) and catalogs.

Per the CA Report they say:

Determining the Useful and Remaining Life of Each Component
“Useful life” is typically defined as the number of years the component is expected to serve its intended purpose if given regular and proper maintenance. If the association fails to provide proper maintenance, such as dealing effectively with the presence of wood-destroying pests or organisms as provided in Civil Code Section 1364, then it may become difficult to anticipate the “useful life” of components.

One estimate of useful life is the material manufacturer’s warranty. This estimate presumes (usually in writing, in the fine print of the warranty) that the product was actually installed with the purported quality of materials and according to the manufacturer’s specifications. (Some associations have found that their alleged “twenty-year roofs” were in fact installed with other materials or with inferior workmanship, making the effective useful life shorter.) When no knowledgeable inspection is made of the materials and installation, the manufacturer’s warranty may not be an accurate description of the useful life of the component.

The Department of Real Estate publishes an Operating Cost Manual for Homeowner Associations which includes the average useful life for a number of major components. Some commercially available manuals also have estimates of useful life.4 Published data may not be consistent with the location, exposure, or type of a particular component. The estimated life of a street as predicted from national data may well be lower than that of a street in the comparatively mild climate of California, but the estimated life of exterior paint as predicted from national averages may be higher than that of paint on buildings in windy or coastal areas. Similarly, paint on western or southern exposures weathers faster in sunny climates, reducing the useful life of a paint job in California and particularly reducing it for certain walls. In using published estimates, it is necessary to consider how the specific case in question may differ from the average case considered by the manual’s author.

Useful life estimates vary considerably from manual to manual, so consulting more than one manual may minimize the risk of under- or over-estimating the life of a major component. In any case, the source(s) of component estimates should be identified specifically.

The remaining life is generally defined as the expected number of years the component will continue to serve its intended purpose prior to repair or replacement. If the development is new and the developer-prepared estimates are correct, the remaining life might be estimated simply by subtracting the age of the development from the useful life of each component. The older the components, the less accurate this method will be.
Some of the factors that affect the estimate of remaining life of a component are its current age, apparent physical condition, and past maintenance record (or absence of maintenance). The current age of the component may be determined from association records. The apparent current condition must be determined through physical inspection, preferably by someone familiar with the component. Records of past maintenance must be compared with recommended maintenance in order to determine whether the item has been properly maintained or may wear out sooner than expected due to inadequate care.

In determining the remaining life of a component, a certain level of continued preventive maintenance is assumed. These maintenance assumptions should be stated explicitly so that proper maintenance can be continued throughout the component’s remaining life.

The remaining life of a component implicitly specifies the year in which it must be repaired or replaced. A budget timeline can be used to show the year of replacement for each component. This timeline can serve as a schedule for expected component replacements and can be updated or changed when the Physical Analysis is updated or as components last for shorter or longer periods than expected.

Hope this helps,

Tim

Wow Tim. This will all be very useful. Thanks.

I was specifically wondering about what people are considering the "life of the property," for purposes of determining what items need to be in included. For example, items are expected to no need repairs/replacement for the life of the property and are not included in the many studies: storm sewers, detention ponds, etc.

What is life of the property (i.e., community) considered to be? Is it 25 years, 40 years, etc.?

I would make a 25 year projection, but update/review it every 3 years.

Could you get a consultation from the County or local municpality's Water/sewer Dept.?
They may give you some ideas.