Community Insider Fall 2018 - Page 36

RESERVE PLANNING: PENNY WISE VS POUND FOOLISH By: Matthew Swain, RS C onsider two separate common-interest developments across the street from each other. Both communities were built at approximately the same time. Both builders installed asphalt streets, stucco walls and name-brand 30-year composition shingle roofs. The two builders even hired the same sub-contractors for many of the trades. From day one, Penny Wise HOA decided to hire a firm staffed with credentialed Reserve Specialists to conduct their Reserve Study annually. The board diligently followed recommendations within the Study to ensure the Reserve Fund stayed at or near 100% funded. When major projects were approaching, Penny Wise HOA responsibly: • Conducted a close analysis to ensure accurate timing • Obtained three bids from qualified vendors • Crafted a message for notice to be given to ownership that the project was schedul ed • Completed and paid for the project through Reserves On the other side of the street, Pound Foolish HOA was more lax with their governance. As time wore on, Pound Foolish HOA’s Board was proud of the fact that they hadn’t raised assessments in almost a decade! In an effort to “save” money, the board would forgo painting projects & simply opt for touch- ups when residents complained about damaged areas. The asphalt was left to wear on its’ own because “it’s still drivable.” At the association’s 15th annual meeting, multiple members asked why their community still wasn’t getting a fresh coat of paint. Pound Foolish HOA’s Board hyped the idea that they were 36 | SAN DIEGO COMMUNITY INSIDER FALL 2018 saving the association money by addressing issues as-needed rather than spending six figures to paint the entire community when much of it was “looking fine.” The Right Kind of Law Firm for Your Communit y • Community Association Law As the years progressed, one could see the differences in the two communities. Penny Wise HOA was consistently maintained, looked inviting & experienced relatively modest annual increases to their assessments. Units never sat long on the market and multiple offers on individual units kept buyers coming in droves for open houses. Potential buyers were confident unit values in Penny Wise HOA would be strengthened by both the physical & financial condition of the community. – General Counsel – Inspector of Elections • Real Estate Disputes • Insurance Disputes • Construction Law • Personal Injury Law 858.756.2233 We have the answers to your legal questions…when you need them. / /in/caisandiego WWW.CAI-SD.ORG | 37