Reserves or Not

Our Association put an addition on our clubhouse in 2016 to house two new pool bathrooms so those at the pool would not have to go into the clubhouse to use the inside bathrooms.

We had an update to our 2014 Reserves Study done in 2019. In the 2019 study, the company doing the study missed the two new pool bathrooms in their reserves analysis, thereby there is no line item in the reserves report for funding reserves against the new pool bathrooms.

The new pool bathrooms in 2023 were in need of remodeling. The remodeling was completed early this year.

There are two opinions on whether the remodeling can be funded from our reserves. One that it is not our fault the Reserves Company missed the new bathrooms and the remodeling should be funded from reserves.

The other opinion is that since there is no line item funding reserves for the new bathrooms, we cannot fund the remodel using reserves funds.

While this is certainly the type of project that would normally be funded with our reserves, I am looking for your input on which opinion should prevail. Yes, we are probably remiss in not checking the Reserve Study closely to be sure we has the new bathrooms covered. But, we didn't.

HELP!!

First, there is no "probably we were remiss in not checking the reserve study closely" - the draft SHOULD have been checked before the board signed off on it. And when they decided to work on this project, the funding question should have been discussed before the project even began. The money has to come from somewhere - if people don't want to take the money from reserves because it wasn't part of the 2019 study, where do they suggest the money come from???

Sometimes you have to chalk things up to lessons learned - you now know better so do better in the future. For now, I think the money should come from reserves because the bathroom additions are now part of the common area and those replacements are repairs are why you have reserves in the first place. I'd also talk to the reserve specialist about doing an update to add the bathrooms to the study. I would think it wouldn't affect the funding recommendations of the rest of the reserve items, but because this is being added, it will affect the amount of money you save towards the bathrooms' repairs and replacement (aka you'll have to save more money, which should be reflected in your assessments). Since the bathrooms are new, funding could start next year.

I entirely agree with Mark: "My take is this is definitely a reserve study item, and any other opinion would not be accurate. Reserves are meant to repair or replace existing common area elements. The bathrooms are existing." The reserve analyst's, Community Manager's AND the Board's error does not disqualify them.

Coincidentally, when I reviewed our study a few months ago, I noticed that a line item previously on it was missing. I was curious about how much our study showed to have our drive in entry circle drive pavers repaired, re-sanded, etc., which was in progress when I reviewed the study. I brought the error to the attention of the Board treasurer who contacted the RS to fix it. We certainly won't pay for it out of our operating budget just because all responsible parties didn't notice it'd fallen off the study.

An onsite visit by a reserve specialist is required in CA every three years , but apparently not at all in SC?? If an onsite visit had been done and the analyst was accompanied by the PM or board members, it doesn't seem that the bathrooms would've been missed. At minimum, the PM, as Mark notes, should start a list at the beginning of every year of changes to reserve components, the costs, etc., so that the analyst can reset certain components as needed.

(It appears a poster thought the bathrooms were added using reserve funds, but I don't think the OP stated that.)