Reserve study questions

Hello all, I've read various threads and other resources regarding reserve studies and wanted to get some opinions from the board.

First of all, some background: The association is almost 20 years old, about 16 since turnover. We've never had a reserve study done, since our board is very "frugal", we won't pay to have one done but I'm making a DIY attempt. Our CCRs and county law require periodic engineering inspections of our infrastructure, which we have been doing every three years. The only identified reserve component on the report is roads, which are nearing the point of needing resurfacing, with an estimated cost of around $65k. Although past boards have always been fairly frugal, they have aggressively funded the reserve account, and we have over 2.5 times the amount needed to pay that road estimate in the reserves. Some of the long term board members are still pushing to keep building up the reserves even though we have no identified requirements to support that. My goal in doing a reserve study is either to justify why we have some much, or if needed, identify how much more we really need rather than just adding a random amount each year.

I've identified the infrastructure we're responsible for, and determined ballpark replacement costs using online resources. The toughest part seems to be identifying expected lifespans. We have a pretty good idea on the roads, but a couple of other potentially very expensive items are a bit harder to pin down. They are the storm drainage system and the brick exterior wall facing the main road outside the subdivision. Numbers I've seen vary with some estimates saying 100 years or more. My guess is that the storm sewers will never need wholesale replacement, although even repair for a single failed section could be pretty expensive. My plan is to allocate some reserve amount for both, but since I expect repairs rather than replacement, I'm unsure how much to allocate or at what timeframe.

Beyond that, how far out should we plan? For example, we have oak trees 60-70 years old that have an expected lifespan of 200-300 years. It's hard to predict what things will look like in 200 years, but I could easily see our subdivision being long gone by then. Around here anything over 100 years old is ancient. In nearby cities, many 70-100 year old homes are being torn down because the land is worth more than the home. Should we even plan for anything 75 years or further out? How long do others here expect their developments or buildings to last or how far out do you plan in your reserve studies?

A general rule of thumb is to not reserve at all for components that will last longer than your community. We reserve for nothing that our reserves analyst predicts will last longer than 30 years (our high rises are 14 y.o.)

The bricks in your exterior wall, for instance, will last forever But the mortor holding them together might need to be replaced in XX years.

Davis-stirling.com is a website put together by CA HOA attorneys. But it has a very nice index about "Reserves," including a booklet that gives estimated lives for some components that're generalizable to all states. Take a look.

Anyone else use variable reserve periods for different components?


Thanks, that was one of the resources I've been using. Their lifespans don't include much site infrastructure such as storm sewers. I'm trying to avoid including components that will last longer than the community, but trying to figure out a good number for that is difficult. Limiting the reserves to 20 to 40 years simplifies the process a bit, I can exclude the real long term stuff. Limiting like that also tends to show us as over-reserved but I can WAG some repair amounts for the next 20 years to account for most of that.

Tim,

I understand that different components have different lifespans. My question per John's email is whether your reserve study would include some things that have a 30 year remaining expected life and exclude others with the same remaining life.

We are young enough where we don't have past history on most components, since most things haven't needed repair, we don't have a lot of vendor relationships that would help with this either.

Kerry's Davis-Stirling link suggested that reserve studies should look at least 20 years into the future, a couple of other sites I've found suggest 30. Now that I realize I don't need to worry about things that are still expected to last another 50 years or more, that simplifies the picture quite a bit.

The detail and life expectancy questions are best answered by assessing your community's conservatism on capital projects aka "How 'safe' do you wish to play it?"

30 years is an excellent cut-off point for listing reserve items but your board could do everything on the property, regardless of age.

Not counting the bricks, but assessing a life span on the mortar within the brick wall, is a very conservative play and is good thinking.

tuck pointing is actually the correct term

one chisels out any loose or eroded mortar from between the bricks as necessary (a fine art form in and of itself)

one may actually need to re-lay some bricks if deterioration is severe enough

then, using a specialty curved POINTED trowel one TUCKS in the new mortar leaving the characteristic concave shape

very very very labor intensive - in addition to the scaffolding and sidewalk protection

the necessity for 'pointing' is why many condo conversions occur in the first place

if sales price good - good deal

if not - the buyer has been twisted along an inclined plane into a 2 X 4

Not sure when the work was done, JohnB, mid-late 80s, I think I also think it was "well over" $1mill and I'm sure I'd remember if I'd been an owner. The other thing is that the bldg is all studios & 1-bdrm. units. So, I have no idea what the s.f. of the brick is.