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Preparing the annual budget and overseeing the association’s finances are perhaps the most important responsibilities of board members. The annual operating and reserve budgets reflect the planning and goals of the association and set the level and quality of service for all of the association’s activities.
What is a Reserve Study?
A reserve study is a 30 year plan that identifies a community association’s common elements (like roof, paint, fences, paving, etc.), assesses their current condition, remaining useful life and cost of repair or replacement. The reserve study provides a repair schedule and funding plan so the board can properly manage these assets. The Reserve Study is an important part of your association’s budgetary process. Following its recommendations will ensure the association’s smooth budgetary transitions from one fiscal year to the next, and either decrease or eliminate the need for “special assessments”.
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WHO WE WORK WITH
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Homeowners Associations Condominium Associations Country Clubs & Golf Courses Commercial Condominiums Time Shares |
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Reserve Study Components
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Detailed Component Inventory 30 Year Cash Flow Funding Plan Component Funding Plan Reserve Fund Status Statutory Requirements Where Required |
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All Reserve Studies Include 2 Optional Funding Plans:
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Component Funding Plan (Straight-Line)
The Component Funding Analysis (Straight-Line) calculates the annual contribution amount for each individual line item component by dividing the component’s remaining unfunded balance by its remaining useful life.
A component’s unfunded remaining balance is its replacement cost less the reserve balance for the component at the beginning of the analysis period. The annual contribution rate for each individual line item component is then summed to calculate the total annual contribution rate for this analysis. Straight-line accounting is based on current costs and neither interest or inflation are factored into the calculations. |
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30 Year Cash Flow Funding Plan (Pooled Reserves)
The 30 Year Pooled Cash Flow Funding Plan is a method of calculating reserve contributions where contributions to the reserve funds are designed to offset the variable annual expenditures from the reserve fund.
This analysis calculates the future replacement cost for reserve components when they are due for replacement, and recognizes increases in construction costs as well as interest income attributable to reserve accounts. Funds from the beginning balances are pooled together and a yearly contribution rate is calculated to arrive at a positive cash flow throughout the analysis period. |
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Let an APRA Reserve Study Provider Simplify Your Community's Future!Association of Professional Reserve Analysts (APRA) was founded in 1995 by principals of the nation's leading reserve study provider companies. The purpose of APRA is to provide a common base of knowledge, standards of care and professionalism within the reserve study provider industry.
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