What Time of Year do you do a Reserve Study?

By: Robert M. Nordlund, P.E.

Fundamentally, Reserve planning is a budget plan that allows the Board to balance physical deterioration with financial assets. As such, the results are a statement of current status (measured in cash and Percent Funded) and a recommended course of action (an ongoing Reserve Funding Plan).

Most associations, therefore, have a Reserve Study prepared a few months in advance of their Fiscal Year End, to provide information for the year-end budget preparation process. California is the only State with a specific budget filing deadline: currently stating that associations must distribute their budgets to the owners between 45 and 60 days prior to the end of the Fiscal Year. While this guidance is very rigid and narrow, the principle of informing the membership that the Board has reviewed the events of the current year and developed a plan for the following year(s) is sound.

Most Reserve Study providers advise obtaining a Reserve Study bid approximately six months in advance of the Fiscal Year End. This gives the Board a month or two to select an appropriate Reserve Study Professional (or a volunteer committee to perform the work) and the appropriate Level of Service (Full, Update-With-Site-Visit, Update-No-Site-Visit, or Kit/Workbook), a month or two to get the Reserve Study done (avoiding "Rush" prices or last minute unsubstantiated assumptions), a month or so to review the completed document, and sufficient time to use the resulting information in the budget preparation process prior to Fiscal Year End. Yes, it does take a few months.

The bottom line is to get the process started at the appropriate time (approximately six months prior to your Fiscal Year End), and you will get reliable information when you need it most.


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