It all started out so innocently, with a phone call asking if we knew about reserves at condominium Associations. It was the attorney of a Developer. They were being sued by the Association for an outrageous sum, for failure to set aside appropriate Reserves.
Boardmembers and Managers often get themselves into a situation where they need to “sell” the value of regular Reserve contributions to their homeowners. It’s often a simple matter of fighting for budget dollars… Reserve contributions don’t keep the lights on, they don’t keep the Association properly insured, and they don’t pay the Management company’s bill.
I recently conducted a site inspection at a property with a large air conditioning chiller unit on the roof. The property was about 15 years old, and the chiller was original. A replacement chiller of this type should cost about $50,000 (installed) and last about 20 years.
I recently read an article critical of using “% Funded” to measure the financial strength of an Association’s Reserve Fund. The author argued that since
Hawaii state law (Section 514A-83.6) requires associations to update their Reserve computations each year as part of their annual budget, and include a specific statement about whether the budgeted Reserve contributions were developed using a “Percent Funded” or “Cash Flow” funding plan.
Various individuals in California have asked if our company, or other California-based Reserve Study providers, are in the business of creating “Funding Plans” to help associations comply with the January 1, 2009 Reserve Study Funding Plan requirement
