Reserve Study for Replacement

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The declarant, on behalf of a homeowners association, shall conduct an initial reserve study, prepare an initial maintenance plan and establish a reserve account. 

A reserve account shall be established to fund major maintenance, repair or replacement of all items of common property which will normally require major maintenance, repair or replacement, in whole or in part, in more than one and less than 30 years. 

The board of directors of the association annually shall conduct a reserve study or review and update an existing study to determine the reserve account requirements. After review of the reserve study or reserve study update, the board of directors may, without any action by owners adjust the amount of payments as indicated by the study or update and provide for other reserve items that the board of directors, in its discretion, may deem appropriate. Section 94.595 and 100.175. 

Following a turnover of power from the declarant to the association, the board of directors at least annually shall adopt a budget for the planned community and include moneys to be allocated to the reserve account. Section 94.645 and 100.483. 

A Reserve Study is a long term budgeting tool utilized by common interest communities which provides a long term timeline of costs and dates for replacement of common area components.  Common areas such as roofing, fencing, paint, asphalt and siding all have limited useful life experiences and a Reserve Study provides a community the necessary information to adequately save for the expected replacement of these items over time. 

Reserve study professionals utilize National Reserve Study Standards published in 1998 by the Community Associations  Institute as a guide to creating a reserve study that is standardized to the industry with respects to terminology, concepts and funding models.  Also, our Reserve Study report comply with USPAP (Uniform Standards of Professional Appraisal Practice) and the Professional Code of Ethics of the American Society of Appraisers (ASA) that our principal Reserve Study Professional is an Oregon State Certified General Real Estate Appraiser and a Certified Commercial Investment Member (CCIM).

A Reserve Study is completed in several steps:

1. Physical Component Analysis - Common area components are inventoried, assigned a condition assessment and researched for cost & useful life expectancy.  The reserve specialist will conduct interviews of the vendors, research historical replacement/repair data and utilize cost manuals during this process.

The Reserve Analyst will determine component condition assessments and research associated cost for the common area assets to be included in the study based on a limited scope visual inspection (Level I). The reader of this report will find current condition levels, anticipated remaining useful life and projected repair and/or replacement costs for common area assets.

Reserve Component: A reserve component is a commonly owned asset which will require a reserve balance for maintenance and replacement. A reserve study estimates the needed cash reserves to repair and replace association’s reserve components over their useful life expectancies. Examples can include roofing, siding, fencing and swimming pools.

2. The Financial Analysis - The amount being allocated to the reserve account is then reviewed and compared to an ideal allocation rate which, with an understanding of the concepts, provides a "percent funded" figure which is the most reliable indicator of the financial health of an Association with respects to reserve account balance at a particular point in time. The reserve Analyst with then utilize all the information obtained and analyzed to develop one or more financial strategies for an Association which is in line with National Reserve Study Standards, Statutory Requirements and the long term goals of the Association.

The Reserve Study Professional will provide recommendations for current and future reserve contribution rates to the reserve account based on current and expected financial data provided by the Client as well as take into account the timeline of expected expenditures over the 30 years covered in this study. 

The Reserve Analyst’s recommended financial strategy will guide the association on a path to becoming “Fully Funded” in a manner which is predictable, fair to the membership and in line with statutory requirements.

Fully Funded:  When the actual or projected Reserve Balance is equal to the Fully Funded Balance. This occurs when the funds in the reserve account are equal to the depreciated amount of the components after taking into inflation of costs and interest earned in any given year. 

3. Long Term Budgeting Plan - The Reserve Analyst will then compile all of this information into a Reserve Study for review and incorporation by the Association into their long term budgeting plan. 

With your choice of reserve budget consultants we aim to remain a step ahead of the others. Our services are catered to those customers seeking a comprehensive and catered study which provide long term strategic funding goals that are flexible and in line with our customer's long term goals.  

Full Study Level 1

Our Full Level 1 Studies are excellent for Clients that have very dated or non-existant reserve studies, have had significant changes from past professionally completed studies (e.g., remodels, buildings/site additions) or would like a fresh look at things from a different perspective.  

Full Update Study Level 2

Level 2 Studies are updates to prior studies and are for Clients who have had a professional study completed within the last five years, which we can utilize for the component list, and measurements, but who would like us to complete a site inspection to determine if component are deteriorating at a rate that was projected in the past.  

Update Study Level 3

Level 3 Studies are updates to prior studies and are for Clients who have had a professional study completed within the last five years, which we can utilize for the component list, measurements, useful lives and remaining useful lives. Project costs and the financials are updated and there is no site inspection completed. 

Common Interest

Common interest communities:

• Homeowner's Associations
• Condominium Reserve Study
• Retirement Communities, Senior, Co-ops
• Mid & High-Rise Building
• Water & Sewer Systems

Non-profit organizations can utilize our reserve capital replacement plans to save on project costs, raise funds and project management. Commonly prepared for: 

• Athletic Club
• Swim Club
• Community Center
• Churches and other Religious Buildings
• Private Schools
• Government Properties
• Non-profit Organization
• Non-profits
• Museums
• Camps & Retreat Facilities

 After years of experience working with resort communities our reserve & replacement study professionals are the best in the business. Common resorts include: 

• Country Club
• Golf Courses
• Ski Resorts
• Waterfront Resorts
• Timeshare Resorts

Commercial

Owners of investment properties utilize our studies for their long term financial goals related to their investments. These can include: 

• Commercial Buildings
• Apartments/ Hotels
• Medical Complexes, Skilled Nursing, Assisted Living
• Marinas
• Commercial Office Retail Condominiums