Reserve Study Cost

Does anyone know how much the reserve study will cost and is there a inexpensive way to go? My husband and I just ran the numbers for the MC and with the add on charges for basic services we are up to $6200 a year, they could not give me a price for the study as it was 3rd party.

The HOA has the 5 drive ways, 3 small side walks to front doors, landscaping (seeded grass), 4 sewer lines, 7 water lines, the sidewalk around the property (city gave it to us)and a gravel utility access road (alley). This is a PUD so that's it.

Thanks Tim,

I clicked on the CA link, is't dead, money going elsewhere as usual. Going through the rest of the suggestions now. It shouldn't be that hard to do , but is it legal?

Hi Tammy,

We paid about $5k for ours here in Virginia. We are required by law to do one every 5 years but every 3 makes more sense to me. Anyway, it's true that you can do the study yourself unless state law specifies that it has to be done by a professional, say a certified engineer or something. And I can understand the concern about cost given how small your HOA is. Having said that, I agree with Tim that you might want to get a legal opinion and/or something in writing from the other members of the HOA stating that they are ok with a self (ie non-professional) study. Or maybe a recorded HOA vote on the subject. Don't know how difficult that might be but it's worth exploring. Otherwise, some current or future homeowner can ding you if something goes wrong down the road because whoever did the study wasn't a "certified professional" and missed something.

Make sure you define what a Reserve study is in your opinion. It isn't necessarily the cost of maintaining what you have. It is the cost of REPLACEMENT of the things you have. Your dues/assessments should pay for your daily/routine costs of those items. However, a RESERVE comes into play when 10 years from now all the "driveways" need replacing due to heaving/wearing/tear.

You want to know how much money to set aside for the capital improvement/replacement of future items. I just want to make sure to make that distinction. It seemed that you may have wanted an audit to cover a few other things to find out wrong doing. That is a different animal than a reserve study. Both are good to do but just realize one is more of an option than requirement.

Tammy, as with many questions about CA HOAs, davis-stirling.com has good info and also sends you to other sites for details about what elements typically are in a reserves study. Some of their info is valuable for HOAs anywhere in the USA.

Some reserve elements have two categories--one is replacement. Another can, indeed, be maintenance/repair/restoration (as Tim points out). We, for instance, have poolside furniture with a replacement schedule, but also a "restrapping" schedule. We used funds from that to restrap a couple of years ago. Our elevators are a very expensive component, but the reserves category is major repairs, not replacement because with proper monthly maintenance via a contractor, paid for out of our operating budget, and major repairs, which would be funded from reserves, the elevators themselves should last as long as our buildings do.

Your dues, then, include contributions for everyday expenses--your operating budget-- AND a separate contribution for the total of your reserves items. If you do hire a reserves analyst, the PM should accompany her/him on a tour of your premises. Also, since your PM is new, at least one board member.

As an aside, items that need constant maintenance, like your landscaping, are not reserved for as they predictably contain things that do not last longer than one year. So seeding, aerating, etc., is generally in your operating budget, not your reserves budget. Some HOAs do have a line item in their reserves schedules for tree replacement. My HOA doesn't, but now that our HOA is 12 years old, we probably should include them.

Do your sewers belong to your HOA, Tammy, or to your municipality? If your HOA is responsible for replacing roofs, they should be reserved for.

If your have a block of mailboxes, reserve for it; if your have an entry monument or signage, reserve for it. It's hard for me to think of what else might be in your small community with no recreational amenities.

Right, Tim, I read Tammy's previous mention of some items; I was trying to think of additional ones.

We don't reserve for curb painting (we're one city block-two of the frontages are entirely red) as we paint them every year so it's part of our operating budget. Unless there needs to be a major re-sodding every few years, I wouldn't reserve for grass areas.

I am in GA. Where do I find whether a reserve study is mandated for our HOA?

I see from your other post, KL4, that you have some expensive recreational amenities.

Whether or not GA requires HOAs to have reserve accounts, the augment for having them is so that all of owners don't get hit with an expensive special assessment when one or more of your costlier components needs major repair work or wear out.

Thanks , that's good to know. I did forget, the lights, 8 cheap flood lights in the alley and 12 lights on 6' poles (1 light Home Depot type) on the 3 sides facing the street. Also the side walks do still belong to the city, its the area between the sidewalk and street that belongs to us, this area is filled with about 4 inches of very tiny round rocks (the kind that sticks in the treads of your shoes and kids love to throw).

I found a reserve accounting on a Budget to Actual Report from 2003. (I have been asking all members for any records they have).
It listed driveways $960, fences $600, landscaping $600, lighting $600, and plumbing $600. Is there a easy formula to add 10 years to this?

Yes, Tammy, Roger's observation seems on target. If an item needs to be attended to once a year of more often it generally is part of your operating budget, e.g., light bulbs, gravel for the strips between the street and sidewalk. And, as I mentioned previously grass seed. Your landscaping contract is in your operating budget. Reserves are for physical elements or components not for contracts.

On the other hand, your lighting systems should be contributed to in reserves and your overall sprinkler system. If sprinkler heads need to be replaced frequently, they should be in your operating budget.

I'm starting to think, Tammy, that I've misread the latest posts by you & by Roger.

I think that you're saying there's $600 being contributed by homeowners a year to reserves for fences, $960 per year for driveways, etc. Is that right? Or are you saying that each amount is the annual operating budget for each item?

But in reading Roger's reply, I now believe he's saying that he thinks that the $600, for example, is the entire cost to replace the fences. An that's why it seems so low to him. Please clarify.

For reserves, you want to estimate the whole, entire cost to replace the entire fence. Let's say it would be $12,000. And you estimate it will last 12 years. This mean your HOA needs to set aside $1,000 a year for 12 years to replace the fence.

I'm sorry for being confused here!

Tammy,

Weather conditions over the years can change the actual life expectancy from the estimated life expectancy of capital components. This is one of the reasons why many State laws require a new study every few years. Per Davis-Stirling, California requires this every 3 years.

Since it has been 10 years since your last study, you should have a new study done.

Tammy, I believe that the material that you refer to as "Actual to Budget," refers to your operating budget. We get one every month, which states how much is in the budget for item X for that month and how much we actually spent that month for item X.

Your reserves budget would could state that too. I'm still confused about the reserves item, for example, $600 to replace fencing. Were you setting aside $600 a year for X number of years? Or was that the estimated cost to replace the entire fence (which doesn't sound right)?

Your PM should be able to straighten out the reserves budget fundamental categories vs your operating budget fundamental categories even if you don't have an set. cost of replacement and est. lifespan for each reserve item (of which you only have a few).