Community Insider Fall 2018 - Page 38

1 “Reserve Specialist® (RS®) Designation NATIONAL RESERVE STUDY STANDARDS” Community Associations Institute March 2018 https://www.caionline. org/LearningCenter/credentials/Documents/ RS%20Designation%20National%20 Reserve%20Study%20Standards.pdf Pound Foolish HOA B started to tire over the years. The buildings began to take on a worn and weathered appearance after not having been repainted in a couple of decades. Spots of recent touch-up were obvious as the color was much brighter than other areas. In an effort to keep dues from increasing, the Reserve contribution established by the developer was cut down bit by bit. Reserve Studies conducted occasionally by Pound Foolish HOA were scoffed at as being “unrealistic” and “out of touch with reality.” Owners struggled to sell their units for asking price, often having to concede thousands of dollars to finalize the sale. Nordlund, Robert “10 Ways to Improve Property Values” Association Reserves April 2017 improve-property- values/ 2 To better understand Reserve Studies and how they can either set the right course from day one or chart a new course to calmer waters, it’s important to grasp why Reserve Studies are prepared. Most professionals in the industry as well as volunteers understand the general idea behind Reserve Studies. Managers & board members are often well- aware of the concept of Reserve Studies helping them to plan for “big expenses” and “future costs.” Take this concept a step farther and know that by planning for big, future expenses, Reserve Studies help associations split the cost of deterioration of all the major, predictable common area components (think roofing, painting, and asphalt among others) across all owners only for the years of their ownership. Unlike typical operating expenses such as a water bill, reserve expenses, like replacement of a roof, 38 | SAN DIEGO COMMUNITY INSIDER FALL 2018 Providing Practical Approaches in: CC&R Interpretation, Drafting and Enforcement While many decisions by a host of board members over multiple decades resulted in stark differences in these two once-comparable communities, one common tool is available to each that has the potential to set the association on the right path to a successful financial future no matter their current situation. That tool is a Reserve Study. Reserve Studies are often misunderstood and under-utilized by community associations. The most common use of a Reserve Study is, of course, as a budget-planning tool. Communities have a Reserve Study prepared in advance of budget season (ideally), review the results (hopefully), and establish adequate funding (many do, contrary to popular belief!) in the upcoming budget. A FULL SERVICE LAW FIRM Opinion Letters Contract Drafting and Negotiation Civil Litigation Matthew Swain, CAI- credentialed Reserve Specialist (RS #134) is President of Association Reserves – San Diego, LLC. He has been preparing Reserve Studies for communities throughout San Diego County for over a decade. Assessment Recovery San Diego County, Orange County, Coachella Valley – For inquiries or call 866-342-3529. Pacific Backflow Company, Inc. ph: (760) 639-4000  fax: (760) 639-4005 occur with much less frequency. Since Reserves are for big projects that don’t occur every year, a Reserve Study helps communities identify the annual rate of deterioration to Reserve components so that associations can “realize” this bill by allocating the appropriate amount in a Reserve account. When adequate Reserves are established, the future simply takes care of itself! Serving San Diego County South Riverside County South Orange County Backflow Testing Repairs Installations Replacements Theft Deterrents Pressure Regulators Cross Connection Surveys Industry standards have been carefully & diligently crafted by consensus among industry practitioners & were first codified by CAI in 1998 1 . These standards are the guardrails by which our industry operates & can readily be reviewed in detail by visiting CAI’s website. Boards that value the information contained within the Reserve Study often use it in tandem with a sound preventative maintenance plan. This prudent fiscal discipl R6VBW7&V6rvB2gFVFV"V&W.( 2&vW7Bf676WB( 2FRfVR`FV"R vRRBV74Ɩ2cssP66@66FVvuur44B$p3