Reserve Study

Why don't you agree? Are you an engineer or building contractor? Do you know when the components, such as the metal railings on the stairs were replaced? Anything can "look in good shape," but as you said, you're in a building at least 40 years old, and unless you've been there from the beginning and kept track of the maintenance, you have NO IDEA as to when the railings or anything else in that building will fall apart.

A reserve study is a guide to help the board prepare the budget in such a way that the reserves are funded properly so you don't get any weird surprises down the road when things fail - because they WILL need replacement eventually. That could be 10 years from now, according to the study, or you may get another five years beyond that. Or perhaps something will happen two months from now (like a fire) and you'll have to replace the components sooner than expected. The association board can accept some, none or all of the recommendations, but whatever they do, they need to make sure the reserves are funded properly to ensure the money's there, so you don't get caught shorthanded and the association needs a special assessment.

There are a number of discussions on this websites about special assessments and why they usually result because the board of directors and the homeowners were short-sighted because they wanted to keep assessments "low". In fact, if you look through the first five pages of this discussion section, you'll find the most recent one (no need to comment on the older ones, those discussions are over). This can be particularly important when you live in an older building - do you want to pay a special assessment on top of regular assessments? What if YOUR financial situation has changed and can't afford it, but have no choice but to pay (because you're legally obligated to do so)?

You don't say if you're on the board - whether you are or not, it's ok to read the study (all of it) and ask questions about some of the components. For communities who are doing studies, I recommend they hold a special homeowner's meeting where the reserve specialist can come and make a presentation on how the study was put together and what it means, so homeowners can ask questions. You may not agree with what you're hearing, but at least you'll have a better understanding.

For example, if the fitness area isn't being used for that purpose, fine, but you may want to ask what if anything will be done with it. Do you simply lock it up, or perhaps use it for storage? If so, you'll need to address flooring, lighting fixtures, shelving or whatever will be used to store whatever will be stored there. All of that stuff may become part of the reserve study.

The Board can determine what components should be included in the reserves.

That said, I think it would be wrong to remove handrails, etc. because these are safety items and if they fail can open the Association to legal action if someone is hurt.

See davis-stirling.com, a website by a CA HOA law firm. They have a very good section on reserves for you to review. Some of it are names of typical reserve components and much more info are info is included. Are you on the board?

Your Board can ask that certain components be removed from the study. We're a high rise, now almost 20years old. We had and our reserves analyst concur that the 4 interior iron stairwell railings that go from p-3 to 25th floor will never "wear out." They are very rarely used. They were removed from the study. We also removed a few other big ticket items that simply won't wear out.

The stair railings factory baked paint has never yet showed chipping or peeling. So we had it removed too with the understanding that our interior paint budget could be used for needed touch ups.

components must meet four criterion to be on a study. One is it must have an estimated useful life (RUL). If it's going to last longer than 30 years, usually it's not on the study. Similarly, though, components not on an original study might show up many years later, e.g., copper plumbing.

Our RA gives items extra years on his annual review if an item that's supposed to have no RUL still is in good shape. Our 20-year old high quality billiards table was given a 10 year life, but is in excellent shape at almost 20 years with simply new felt & pockets, so the RA tacked on 5 more years.

The. I'd have th Board get rid of the fitness area, whatever that means.

So, yes the Board can meet with the reserves analyst (certified, right?) and negotiate some of these compnents reaming useful life and whether they should be on the study at all. Remember, though, that the RA, like your CPA and HOA attorney is an expert and her/his advice should be seriously considered.

All thank you for your insightful responses. Gives me an idea of what options I have.

@ SheliaH ,: For context, yes I am on the board and I do have experience w/ engineering and contractors. That being said I am not refuting everything our Reserve Study says, but am questions certain items. I am aware software is used to generate most of the UL and RUL, and often little attention may be given to routine preventative maintenance records. I can look back and see where prior board membership was cheap and got us in the situation we are today. Then again they were hit with some unfortunate structural repair projects which is being paid of until this day.

What I am really looking for here, is the ability to remove components as required based on risk analysis to help contribute more to reserve items that are more critical like elevator, exterior painting , fire/safety , etc, rooof, ligthing etc. It seems here some of you have confirmed this can happen (albeit with legal implications) with a collaborative between Owner, RA, and board members (which is what we kinda did more recently).

@Kerry--I like that your RA was flexible enough to work with you guys and do an inspection and push the iron stairwell railings out.

@Cathy-thnx for clarifying additional steps required when considering removing a component. For those as common use, agree the governing docs would need updating (which I'm not sure how much of a process that is).

That being said, when say a reserve study is merely indicating replacing an entire elevator (aka elevator system modernization) based on 'recommended' UL of 40 years, when otherwise the elevator is being handled by a professional property management company and being serviced by their elevator sub and running in fair condition. In fact I came across this in the Operating Cost Manual for HomeOwners by CA DRE (pg 23) ..this may warrant it's own discussion , but I'll post here and curious what folks thoughts are.....

306. Elevators
An elevator replacement reserve is not required since
the elevator usually lasts as long as the structure itself.
There is need, however, for a major component reserve
as well as a budget item for a monthly service contract.
The cost of periodic servicing of the overhead traction
elevator is higher than that for the hydraulic lift type. The
mechanism to operate the hydraulic lift elevator is much
more extensive and complicated.
Hydraulic $1,050/year (see note)
Traction Full service only—no reserve
Note: Less than a full-service contract on a hydraulic-type
elevator will require a reserve as shown above. Less than
full service is normally referred to as “oil and grease contract
service.”

Sam,

I am still a bit stuck on the "grossly underfunded" part of your initial post.

My focus, in your circumstances, would be to get bucks into the reserves - which would provide flexibility to address a broad range of items.

I would kick the other bits to a reserve study review group of some sort - then, discuss with the reserve study company to determine whether you are outside industry norms.

We are getting bucks into the reserves. I think the % funded seems skewed when we have components that otherwise should be decommissioned or removed .

Hi,

As others have noted, the board can remove items from the reserve study, but it is not recommended. The purpose of having a study done is to identify those things that might look good or appear to be working well, but will really need upgrading soon.

If you want to remove an element from the building, that will require the support from owners.

The davis-stirling.com website makes specific remarks about removing items from a reserves study.

Our R.A. created new pages for each former component to show that it had been on the study; that the Board voted to remove i; and how the HOA intends to handle the component in the future. Given his credentials, I imagine that in part this was done to show he hadn't neglected any items. And it also shows the HOA is redouble for it. In some cases, a new line item in the operating budget was created.

In other cases, there might have been a line item to "replace," but that was changed to "repaint." Those stay in the study.