Reserve Studies
&
Capital Reserve Planning
Do you live in an HOA?
Are you a developer?
Run an organization or municipality?
Odds are you will need to produce a Reserve Study or Capital Reserve Plan to help prepare adequate budgets for these liabilities.
While residential based Reserve Studies are often demanded by state legislation, we see lenders and investors leaning more and more on the valuable insight these reports provide.
If you are in need of a fresh Reserve Study or Capital Plan, you've come to the right place!
Three Elements to Reserve/Capital Reserve Analysis
1) The Component List
Your component list identifies all of your organization's major assets which require regular observation, maintenance and eventually - replacement. Knowing what you are responsible for, as well as the current condition, age and ongoing costs for handling these assets is the first key ingredient to a valuable and valid Study. The criteria for determining which assets should be included is based on National Reserve Study Standards - an industry-wide, frequently reviewed and accepted standard for fiscal responsibility relative to Reservable Components.
2) Snapshot of Current Financial Condition
Once we know which assets are appropriate for Reserves and what their current condition and related costs are, we compare the total deteriorated value of those assets against the actual Reserve Balances your organization has saved. This ratio is known as your current "percent funded" and is the first of a few factors painting a picture of how financially prepared your organization is to cover the inevitable costs of maintenance.
3) Recommendations for Future Funding
After your current financial condition is understood, the final piece of your Reserve Study/Capital Reserve Plan is your recommended funding plan(s). This will usually be given in two ways: 1) A plan to show you how to reach 100% funded levels by a target date and 2) A plan to show you how to maintain a specific percent funded range your board of directors has requested. This might be, for example, how to fund to keep the percent funded between 70% and 80%. While we're happy to show both plans, as Reserve Specialists, we do always officially recommend funding for 100% funded goals.
Do I Need a Reserve Study or a Capital Reserve Plan?
Reserve Studies Best Fit…
Common Interest Developments
Townhomes & Condos
Planned Unit Developments
Mobile Home Parks
Business Parks
Portfolio Landlords
Capital Plans Best Fit...
Large Corp Campuses w/ Extensive Facilities
Worship Facilities
Country Clubs, Resorts & Time Shares
Schools (Public or Private)
Municipalities
Concert or Entertainment Venues/Halls
Four Levels of Professional Service
Level 1
FULL Reserve Study
Conducted for clients who have never had a Reserve Study completed previously, or where the prior Reserve Study failed to meet critical National Standards, especially relative to proper identification and quantification of all appropriate components. This level of service includes the following 5 elements.
Creation of Component Inventory
Conditional assessment of all components
Useful life/Remaining Useful Life and Cost Estimations
Valuation of CURRENT Reserve Fund Status
30-Yr Reserve Funding Strategy
Level 2
Update With-Site-Visit
This service updates a Reserve Study that has met and continues to meet National Reserve Study Standards. A key element of this level of service is the site inspection. While all 5 elements found in Level 1 studies remain, this update also identifies any additions or changes to the prior Component Inventory (including adding any “Long-Life” components that are expected to now fall within the 30-year scope of the Reserve Study) and a physical evaluation of all qualified components is performed again. Our Full and With-Site-Visit Updates always include a detailed photographic appendix for all Components.
Numerous states now require these Level 2 Updates be performed at standard intervals for Common Interest Developments.
Level 4
Pre-Construction Preliminary Study
These Reserve Studies are prepared before or during construction of new communities and are generally used for budget estimates and/or planning initial developer initiated Reserve Funding that is often later transferred to the HOA after construction is completed.
The information in these Reserve Studies is usually compiled using design documents such as architectural and engineering plans.
Much like a Level 3 Study, the same 3 elements are included in this Level 4 Study. Again they include creating…
Useful life/Remaining Useful Life and Cost Estimations
Valuation of CURRENT Reserve Fund Status
30-Yr Reserve Funding Strategy
Level 3
No-Site-Visit / Offsite Plan Update
Performed between the mandated With-Site-Visit Updates, these Reserve Studies include the following 3 elements.
Useful life/Remaining Useful Life and Cost Estimations
Valuation of CURRENT Reserve Fund Status
30-Yr Reserve Funding Strategy
The first two elements here rely on information shared by representatives from the community and, at times, by their service providers. This ensures all fully or partially completed projects are accounted for and that current financial information is accurate and complete. While not currently mandated by any state laws, this level of Reserve Study is often requested by Lenders looking to safely underwrite incoming buyers’ new mortgages when a prior study is considered too outdated.
Reserve Consulting
As specialists in the arena of Reserve Studies and Capital Reserve Planning we also recognize that there may be times you don't need a new report, but simply need help understanding what the information in your last report is really indicating. Our consulting services are designed to help guide you through a proper analysis of results as third-party experts.
HOA Boards
If you've had a Reserve Study prepared but have not gotten satisfactory insight into how to understand and work with it, let us know and we'll help guide your next steps.
Facilities Managers
Whether you manage many municipal assets, a private school, church, retreat or worship facility, timeshare or other commercial property, there can be massive cost saving benefit in outsourcing periodic Capital Planning functions. We have experience in high-rises, resorts, municipal properties, universities and schools, concert and sporting venues and more. Let us help you design and plan a roadmap you can use continually for your planning needs.
Real Estate Agents
If you're a buyer's agent and want to bring significant added value for your clients who are considering buying into an HOA, hiring us to review and advise on the stability of that HOA's financial condition relative to Reserves can be invaluable. Special Assessments can be devastating to new buyers and we can help you, help them, avoid that disaster!
Lenders
Unforeseen Special Assessments are a leading cause of foreclosure proceedings. Having an expert help you determine the risks involved relative to the HOA's financial position can help you make wiser lending decisions and help guide your buying client away from fiscal danger. We'd be happy to give expert insight into that stability or lack thereof during your next financing process.
Expert Testimony Services
Whether you have a Reserve Study or Capital Reserve Planning case or a Construction & Engineering case, members of our team are happy to provide expert testimony to assist in any just proceeding.