A Reserve Study allows the association to offset the ongoing deterioration of the common areas with Funds to ensure the timely repair or replacement of those common area components. When properly done, irregular Reserve expenses are offset by ongoing, regular Reserve contributions. Special assessments are then left for true emergencies, not expenses which could have been anticipated. The reserve study consists of two parts:  Financial analysis: Involves a review of the current state of the reserve fund. Then, using the information from the site visit, a funding plan is laid out that if followed will allow your community to reach it's funding goal. Funding Goals: Baseline Funding means establishing a Funding Objective of keeping the Reserve cash balance above zero. This funding goal is the least disruptive but it also involves the most risk. Full Funding means establishing a funding objective of keeping the cash balance at 100% meaning the fund has the cash for each item based on it's remaining life and current cost. This plan is the safest and the most difficult to achieve. Threshold Funding means keeping the Reserve Fund above a pre-determined dollar or Percent Funded amount (a kind of "middle ground" objective). |