What’s better – $50/mo Reserve contributions (as part of your condo’s total monthly assessment) or $70/mo? All other things being equal, I’d rather pay a $50 monthly bill than a $70 monthly bill. But… not all other things are equal.
At Association Reserves we understand board members face a big challenge to budget for the maintenance and replacement of their association’s major common area assets. Boards typically have little knowledge of project costs and when those costs are expected to occur.
It is true that accuracy of Reserve projections increases as the projected expense approaches. An expense expected in the next five years (Remaining Useful Life of 0-4 yrs) is much more certain in timing and cost than an expense projected 25 or so years away.
Life is full of risks. You may be stuck with your current circumstances, but you have surprising power to influence many future risks.
A California client asked a very interesting question. California law (Civil Code 1366.1) specifically limits associations from collecting assessments in excess of the actual costs for which the funds are being collected.