reserve accounts

The suggestion has been made to us to "freeze" our reserve accounts for the remainder of the year- to not make any more deposits in order to lower dues and help out our community members struggling in this economy... any thoughts?
We are a large, fairly new condominium association. We recently raised our dues substantially to cover our operating expenses as we were having to dip into our reserves.

You may want to move with considerable caution, since lenders are now under the gun to make sure that a homeowners association has an adequate reserve fund before commiting to a loan. If your reserve fund falls short of what the reserve study recommends, you may be making it difficult, if not impossible, for sellers and purchasers.

IF YOUR BUILDINGS ARE YOUNG, (1-15 YEARS), rule of thumb is a minimum of 20-25% of your annual budget, with a maximum of 40%. Forcing Homeowners to bank too much idle cash is an unreasonable burden.
Buildings 15-25 years,-Consider 30 to 50% of annual budget.

I think what Mike was alluding to is that if all you need to include reserve funds in addition to the actual operating expenses. HOAs should have a reserve fund to take care of the future big ticket expenses. The basic idea is that if you have a roof that is expected to last for 30 years you should put 1/30 of the cost of replacement back each year. That way when the roof needs replaced you have the money and don't have to hit the owners with a special assessment.

To be honest, I wouldn't presume to say if it is a good or bad idea to suspend putting money into reserve for a short period. If that would make a difference in the rate of people losing their unit, then it could be a good thing. The thing is that you don't want to end up in a situation that some HOAs are in. The dues are causing people to fall behind and that causes an even larger increase in dues. It is a vicious circle you don't want to be in.

The obvious downside is that what you don't put in reserve now will cost even more later.