Reserve Study

Started by Jadedone4 • 7 replies • 1256 views

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Jadedone4 (Virginia)
Posts: 495

Posted:

In reviewing the previous Reserve Study for my community it was noted that it was done with plans/drawings and not an actually "walk-around" of the community.

Is this the normal way to do a Reserve study? The previous post concerning paving has really made me nervous about this particular "study" because the numbers are quite low.

I understand that there are "assumptions" factored into a Reserve Study, however, in transitioning from Developer to Owner control, it concerns me that our current study is more "academic," than based on a real inspection.

PaulM (Pennsylvania)
Posts: 1,347

Posted:

Jadedone4: There is much that is taken into account for a reserve study; many considerations one of which is, are the roads public or private implying the amount of use the roads will have, plus, were the roads done according to standard/code at the start?

I do not see how an accurate reserve study can be done without viewing the capital assets themselves, with roads being just one of them.

One thought for you, since you are transitioning....
Check out your state's Community Act and refer to what is required by the Developer--it may be that he has to present a completed study to you at transition. There is an entire list of requirements for the Developer to complete.

PatrickH (California)
Posts: 204

Posted:

Jadedone,

You should get the Reserve Study off to a good start by having a physical inspection of the property done. More often than not, an analyst will find something that should be in the Reserves but isn't included, especially if the items on the Reserves list was made by the developer.

Once you have an accurate list of items for the Reserves, then the analyst can come by every other year to inspect the property. Durning the "off" year, they can go over your financials to see if any items have been replaced or new items purchased that should be added to the list and adjust the Reserve Study accordingly.

JoeW1 (New York)
Posts: 728

Posted:

Jadedone4 - A Capital Reserve Replacement Analysis (CRRA) should be performed for each common element the Association is to maintain and replace. Each common element should have a unit measurement, unit cost of replacement, expected life span/cycle, date of construction, remaining years in expected life span/cycle. A CRRA should have a total estimated replacement cost (ERC). The Board should then develop a funding goal with a minimum amount that should always be in the reserve account. A physical inspection of the property should be performed as well. This inspection should not be invasive but can include tests such as compaction and core testing of roadways to see ability to withstand weight and sectional thickness and layer consistency. A Deficiency Report should be provided by the engineer. Since the Developer usually provides the original estimated budget, the Board may be in a position to seek reimbursement from the Developer if the original budget was low-balled to attract buyers. This can be a legal and lengthy process but can be well worth the expense of the studies. Armed with this information the Board can interact with their local planning board to not release the remaining portions of the construction and maintenance bonds the developer has to post or to put pressure on the developer to make good on construction. Some Associations sue the Developer for millions of dollars and win or settle. This can help offset assessments to the residents to cover costs to repair the deficiencies and fund the reserve accounts. Though an Association Board would be wise not to count on recouping anything for a while and seek to repair the deficiencies and fund the reserves as if they will get nothing from the developer. Without these goals in mind and studies, yes, what you have is more academic, and quite frankly a waste of time and money.

BradP (Kansas)
Posts: 2,640

Posted:

Jade:

I have been on several big projects and it is rare that drawings and plans are 100% accurate. Things get changed at the last second that sometimes get overlooked in blueprints. As others have said a physical examination is needed.

Jadedone4 (Virginia)
Posts: 495

Posted:

Big THANKS to all that responded....

I suspected that we needed to have the "TESCRA" (transition engineering study, capital reserves analysis) done very soon.

Needed the "gut-check" of the responses here to see what other factors were present (many), and also what was "normal" for other properties/communities, etc.

again thanks for the responses... any volunteers to convince the board and community how important this is..(smile)?

JimM10 (Arizona)
Posts: 48

Posted:

Interesting.. Now when you talk about a CCRA, does that.... would that... include not only capital projects but the repair/replacement of the gas grill at the pool? Perhaps that is not asked right but.. are the.... could they.. be lumped together in order to get a good feel for projected expenditures down the line or are capital projects separated from the other "more minor" aspects of condo upkeep??

JoeW1 (New York)
Posts: 728

Posted:

JimM10 - Once a capital improvement (such as a stone wall, new signage) is a added, the CCRA must be updated to include the replacement cost for it.

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