reserve studies - how often...

The first item in our budget is the reserve contribution specified in the reserve study for the upcoming year -- and we chose the value to maintain fully-funded reserves (of several options provided by our study).

So far, this is the one non-disputed budget item!

Jim,

It will depend on the conditions of the area, if the study built in inflation and what the applicable laws say.

In VA, the law says a study needs to be done every 5 years and reviewed every year. Review would be to see if the expenses are as expected and, if not, the Board should adjust them.

Here is a link to a thread on Reserve studies. The posts have links to forms to do a self study and webinars (seminars on the internet) that can help educate:

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/103517/view/topic/Default.aspx

Jim,

I stated that thread when I had to do research on Reserve Studies for my own association.

At the time, I couldn't get the board to approve having a professional study done. Therefore, since our State statutes required one to be completed, I researched on how to do one ourselves. I missed a few things and the study wasn't as accurate as a professional one would have been. However, having one that may not be complete is better then having none at all. After it was done, we needed to raise assessments by 20% (which required membership approval) to fully fund the reserves. Fortunately, with education and providing the study itself, we were able to obtain that approval.

I think this paragraph of yours, Jim, is important: "When we had our reserve study done, we found out the our monthly fees were very low - in terms of what we needed for future capital needs (especially in terms of roof replacements when they were gonna be needed). We had reserves; however, we found that the $$'s weren't enough."

We see some posters here who say their reserves are 100% funded. But most reserves analysts say that 78% funded is very good.

So, Jim, to replace 100% of your roofs, what % funded are you now?? To replace 50% of your roofs, what is your % funded?

The reason I ask is because it seems to me that your HOA would be taking a big chance by estimating that insurance would cover about 50% of your roofs because they'd somehow be damaged beyond repair, and that damage would be covered by insurance. Does, for example, your insurance cover tornado damage?

In our high rises, we only have a couple of big roofs and 17 or so roofs on two story town homes. Our Board would never assume that we should only put enough into reserves to reroof half of these. I'm now thinking that I misunderstand you???

So...sounds like the estimated lives of the roofs on the four phases are different, e.g., one phase might have 20 years remaining life, another 18 year and so on. man, I'd try to reserve for 100% of eau phase. But, your reserves analyst says otherwise and she's the expert.

We aren't as well-funded as you, though we're in a lot better place than a few years ago (A previous irresponsible Board blew a big hole in our reserves by spending a huge amount on interior decor several years before its est. life was over.) Our reserves will take quite a hit this year, so we may need to increase owners' contributions to keep us about 56% funded. And that's what we'll work on this fall for our '15 budget.

Thanks for the link, it will come in handy. My 18yo HOA has never had a formal reserve study. As required by our docs and county law, we have an engineer inspect and report on our infrastructure every 3 years, and they include an estimate for road repaving (~ $66k). This is probably the main large expense we would expect. Past boards have been pretty aggressive about funding the reserves, and over the years have built up about $200k in the reserve fund. My concern is that someone will see that, wonder why we have so much, and push for some of it to be returned to HOs. As best I can tell, part of the reason we have so much is that the engineering report gave an inflation factor to use for planning future reserve requirements, and someone in the past misinterpreted and used a much higher inflation figure than they should have. I also think there has been a mindset that they would rather have a cushion for any large unexpected expense than have to do a special assessment.

In addition to the roads, we have a storm drainage system, pond, brick wall, gate, and common areas. No pool, clubhouse, playgrouns, or other amenities. The common area consists of our "park" (grassy area with some trees the size of two lots), stormwater management area (also called dry pond), and some conservation area that varies from mucky to swampy depending on season.

Since the board is very tight, I'm not going to convince them to get a professional reserve study, but I'll take a stab at a do-it-yourself one and get a better idea of what our reserve requirements actually are. Who knows, we might still have too much, but it would be good to justify more of the reserve amount than $66k.