Understanding Reserve Funding

Robert Nordlund 00:00

Paige. Well, thank you, Paige, and hello everyone. Thank you for taking some time out of your day today to join us for this webinar on understanding reserve funding. We don’t want there to be any mysteries involved, and we see there’s plenty of board members here. So we want to make sure you understand that we understand your role seriously, that you are there to lead the association, and we want to show you what we’re doing to help you lead the association well. So we’re going to start out, as Paige has indicated, with an outline of background to make sure we’re all standing on the same ground, and then we’re going to walk you through a couple of examples today to show you some of those decision points, how we are adjusting the funding, how we are adjusting the parameters to design something that is just right for your association. This is the outline that we’re going to follow today, and it’ll start with the situation that we face ourselves with, with the way associations are organized and the roles of boards have so it starts out by understanding that owning real estate is expensive. Community Association living has been described as care free, but it is anything but free. Those common areas don’t take care of themselves, and they’re in a constant state of deterioration Mother Nature and father times see to that. So everything is continually deteriorating. If you think that just as we finish a roof project, we’re going to start working on the asphalt project and then the painting project and something else, that’s the truth, because everything is in a constant state of deterioration and regularly in need of repair. So important to understand that the deterioration defines a cost. We’re not here to say, Oh, you need this, and that’s a new thing. The repair and replacement projects are driven by ongoing deterioration. So that’s a baseline here for reserve study evaluation, and that was kind of a trick question in the introduction to ask, does underfunding lower the cost? And I’ll get to that later, but the cost is driven by mother nature and Father Time. It’s up to the board in community associations to set a budget that keeps up. And with the asterisk, I’m suggesting that there are some associations that, due to their governing documents or state laws, the homeowners have either a veto power or approval power over that budget. Primarily, it’s the board that sets the budget, and then it’s up to the owners to pay their share. And when you have that combination working together, then the association is set up to have a long term future. And in the field of reserve studies, it’s not just the wild west out here, with everyone doing their own thing. There is order Cai is National Reserve. State standards were first published in 1998 and on any slide that you see the blue ribbon badge. That’s indication of that’s a national reserve study. Such as the idea of what these components are, what the expenses are that we’re going to fund through reserves. There are things that are the associations obligation. They’re reasonably anticipated, meaning we can budget for them, they’re not just guesses, and they’re a significant cost too large to be absorbed in the ongoing operational budget. And there are indeed three different outcomes, three different goals defined in national standards. The first that I’ll describe is full funding, and that a safe and conservative goal where your objective is to have the cash that you have in the reserve fund equal the amount of deterioration. So that’s an ongoing goal, if you think of it, if a roof is halfway used up, this is the goal that at that point in time you should have half the cash of the reserve, excuse me, of the roof project set aside towards a reserve. So that’s a goal that keeps you continually moving towards having enough and being on track. At the other end, we’re talking about baseline funding. That is what we consider a risky goal, and that’s where the association is planning to just barely stay cash positive. In other words, if they anticipate $100,000

Robert Nordlund 04:27

roof project, they want to make sure that they have at least 100,000 in reserves, then that expense may take it down close to zero. That’s, as you can imagine, risky, because the future is somewhat unpredictable. What happens if that project occurs a year early or a little bit over budget, association will be out of money. And so there’s this concept of the threshold funding, where you don’t go quite as far as full funding, but you decide that you want to maintain maybe a minimum balance or a minimum percent funded. Or something like that, but those are the building blocks of the funding goals, and when it comes to choices, as we’re pursuing those goals, we have these four funding principles. Number one is that there’s always sufficient cash to do the projects. If you don’t have the cash, you can’t do the project, that’s a failure, and we’re trying to design it so it’s a stable funding rate. The association is fundamentally built on a budget where the owners are billed a certain amount on a regular basis, monthly, quarterly, annually. And we’re trying to design a funding rate that fits in with that stable, budgeted amount, so everyone pays their fair share over time, and we want to be evenly distributed, so the people in one year are paying effectively the same amount as the people in the next year. There’s no unfairness from year to year, and that someone who’s been there 10 years will have a 10 times more into the reserve fund than the person who’s only been at the association one year. Want everyone paying their fair share, evenly distributed over the amount of people that have been there, over as long as they’ve been there, and something that’s fundamentally fiscally responsible, so the homeowners and the board the management company can all alike, arrest peacefully. They’re doing the right thing, and they’ve been acting responsibly, in line with financial principles governing documents and state laws. And then there’s some other rules that we have put together in the industry. And I show this just to show how we have order again. And this is very simple. The expenses are inevitable. There’s nothing you can do about them. The roof is going to deteriorate again. Mother Nature and Father Time are to blame. The board is responsible. That’s per the governing documents and state law. That’s their job to sustain this entity. And delays usually get expensive, meaning that the cost to replace a roof is going to increase if you start getting interior water leaks, things like that, and then fourth, the homeowners always get stuck paying the bills. There’s no other entity to be able to come in and swoop in and help out the homeowners to get stuck paying the bills. So we want to run the place smoothly and efficiently. But I want to make clear here near the beginning is that when it comes to reserves, your only choice is how you’re going to pay. And we want to do it. We want to guide you to do it in a effective and fruitful way where you’re doing it a long time, over time and offsetting ongoing deterioration. And that’s very different way of managing it than just waiting till it happens at the last minute and then rocking your homeowners with special assessments and loans. And that’s very uneven. And again, if you remember the four funding principles, special assessments and loans go against the principles of budget stability, and at equal distribution. So we’re going to lean towards budgeted funding. Now. We understand that you come in here, yesterday, today, tomorrow, with a tight budget, our community association clients that are not for profits, they have, almost by definition, no margin. So we understand this, and we’re not designing anything that is overwhelming or overly conservative, we’re just trying to get you safely and successfully to the future. We will be going through a number of concepts as we get into the examples today. And in case you feel a little bit overwhelmed, want you to know that we have four webinar series standards that we present each year. If you miss these, we presented them earlier this year. You can find them on our website and on YouTube. It’s reserve city basics. 101 is about the component list. 102 is the financial analysis in general, and 103 talks about the funding plan, and specifically, our promo materials for this webinar went out saying we’re going to talk about cash flow versus straight line, or in other words, pooling versus component method. And we’re not going to be able to get to that, so I’m going to have to direct you to our resources for reserve size 103, to have time to go into the reasoning behind choices there. But for what we’re doing today, it’s going to be built primarily on reserve studies, 102 and 103 because, per the title of today’s webinar, this is understanding reserve funding. If you want more detail again, go on YouTube or reserve say.com you’ll find additional resources there, all for free if we turn on the page. And we’re going to talk now about some examples. How do we apply these principles? How do we apply National Reserve safe standards? What kind of decisions are we making? So example number one is what we call ocean front HOA. So an actual client, we’ve changed the name. It’s a plan the community, where everyone maintains their own home. Home, over 200 homes. It’s a well established community built in 1962 it’s our early entry to Community Association living. But fortunately, they got it right. It’s a nice, well balanced Association near the ocean. They have Ocean Beach frontage, so people are able to have their homes, enjoy a private roadway and ocean foot ocean front clubhouse. It’s a great place to live without paying the very, very high cost of your home being actually on the sand. Clubhouse is busy on weekends. It’s a regular destination wedding rental place. It’s frankly a nice place, and they have done a good job over the years of taking care of this place. So we’ve talked about the expenses being foundational to a reserve plan, and so that’s where I want to start. These are the reserve expenses laid out for this oceanfront HOA. Notice that they’ve got a couple of bump high years and the medium years, and they are literally the asphalt and the clubhouse. And a no surprise, this is often how an HOA river study looked like. Often the common area infrastructure, again, because you don’t have the residential big peak for roofing or painting or boilers or other major mechanical type thing. Well, it’s very typical, very plain, vanilla HOA. And want to go through some examples with it to show you some of the things we think about. One is the deterioration rate. How much are things deteriorating per year on ongoing basis, influence of funding goals, influence of starting reserve balance, how much a difference it makes in your funding plan to have cash or not cash, the influence of when major projects occur. And it’s kind of fun to show how interest earnings make a difference. And for this, I’ll be able to jump right into our uPlanit tool. It’s our online reserve calculator. Our clients have free access to this after we complete a reserve study for them, because we want them to be able to touch and feel and get their fingers into their reserve plan. It’s not just a report document, PDF, so right into oceanfront Hoa, they they are a client that we’ve been doing research for them for many, many, many years, and kind of nice, because they get it, they’re taking great care of their property, and we are regularly tweaking and tuning their reserve phase. So like, look at what their reserve face does. I’m launching uPlanIt, and you’ll see that it has a page for components. This comes straight from their reserve study. And the control panel, where they show their starting balance, interest in inflation, things like that. The recommendations page where we are actually working on, I want to say, the dials, adjusting the parameters, how we’re developing the reserve funding, customized override, and then tables in short. But Brian, join me on this. We’ve told everyone what their vent scenario looks like with the asphalt and the clubhouse, and I’m going to pull up this component significance table and join me here. We have some small line items. But does this surprise you that asphalt The parking lot is about 3% asphalt is about 31% that ceiling is about 9% surprise you for AQa,

Brian Farley, RS 13:43

no, not at all. In fact, this is very common for, I would say the majority of communities that we work with, they’re asphalt, which is something that I find, that I personally kind of take for granted. I just drive on it and assume it’s always going to be there. But that is one of the more important and expensive components at the majority of our communities that we work with is going to be whatever their drives are, whether that be a concrete drive or an asphalt drive. They can be quite expensive and quite important.

Robert Nordlund 14:13

And then behind asphalt, we have a number of components for the clubhouse, number of smaller components, but they’re cycled. So they happen when modeling cycles similarly. So you don’t see another big number jump out. But bottom line is, this place is deteriorating at the rate of you may or may not be able to hit. So I’ll call it out. $177,253 per year. And you may ask, well, what is that? And I’ll show you an easy line item here, this vehicle gate, the $28,000 gate system. But it has a 28 year life, so it’s deteriorating at the rate of, on average, $1,000 a year and things like that. So how? How big is the project? And you can look at this one, the actual project. It’s about a million dollars divided by 20 years, about 50 grand a year. So this is deterioration. So this is the rate at which things are deteriorating. But when we come to the recommendation page, Brian, are you comprised that we’re not far from 177,000 when we’re making a recommendation. No, I’m not surprised at all. Yeah, okay. And then again, deeper people with homes with beach access, beach clubhouse, and their reserve funding is $818 per home. And that’s really not too surprising if we go down to 177 hit right on the nose, and we see what happens when we do that, it dropped a bit very noticeable drop, actually. But because of inflation effects, we want to stay a little bit ahead of the deterioration rate. I could go down and then a rabbit hole on that one, but I’ll leave it as this. And I introduced the idea of a baseline funding plan. And keep this in mind, the full funding was 194,000 the kind of threshold plan that keeps you about in the 50, 6070, 80% range over the years. That’s 177,000 if we go to baseline, that’s going to take us down to maybe you can see it here, 159,000 and wait for the display to catch up on our webinar. There we go. It gets down close to zero. And of course, you may remember that the big asphalt here, and if they’re not exactly right on that projection, they’ll have a special assessment. Now, remember, or you expect to update this many, many, many times before we get to that next asphalt cycle. But we don’t want to put too much of a pin on these last few years of homeowners. They’ll want to design for effective, strong reserve funding. And that’s pretty much what this association has been doing over the years. They are like 90 some 89 Yeah, 90% funded at that point in time. One thing I want to show is that, okay, the difference between baseline funding, which is Ricky, and full funding the 194,000 that’s about 18% difference. And so it’s not a night or day difference between full funding or baseline funding. All we’re talking about is just a little bit of margin. The vast majority of reserve funding goes straight to good care of the property. Okay? Well, talked a little bit about deterioration rate, talked a little bit about the funding goal influence. Play around a little bit with the starting balance. Let’s say instead of 1.7 million that they only have $1 million in reserves, a lot of money. Brian, wouldn’t it be nice if your checking account has a million dollars? Okay, yeah, but again, we’re talking about a few 100 thumb home association with roadway, with a clubhouse on the beach. So we have to be careful that. Wow, a million dollars sounds like a lot, but let’s see what happens when they Okay. Only have a million dollars. Look what happens. They crash and burn. So they’re going to need some special assessment. I’ve done some advanced work on this, and the asphalt project is two years out. What I found is they’re going to need about two years of $200,000 per year special investment, and that will still on baseline funding, get them back up. 294,000

Robert Nordlund 19:09

There we go. Okay. Now they are head above the band. They’re not at the full funding that they were previously, but they are doing okay, they got a little bit of a hit because they’re they lost a little bit of momentum because they have to have the special equipment. Brian, what are other things that you are seeing here?

Brian Farley, RS 19:35

Yes, I see that really, as we had been noticing before, that the biggest driver is coming up soon. So when, because one of their larger projects is so so it’s upcoming so quickly, if they’re in a position where they don’t have adequate funding already set aside, they’re going to have to get the money somehow right, and as we have shown already with this particular property. So they have been doing the right thing and doing the right thing consistently, right? So consistency compounds in the situation. So because BDS owners were taking care of the property, we’re now seeing that the current owners are benefiting from that, right?

Robert Nordlund 20:14

It’s a smooth situation because we look at this and kind of coincidentally, their full reserve funding is about $800 per home, and the special investment is about another $800 per home for the next year. So they’re getting these people are getting hit double because the prior owners weren’t setting a little bit more dollars aside. Now I want to play around with the timing of the project. Let’s imagine a a different reality, where the asphalt is four years away. They’re two years away, and I’m just very easily going to make that a statement here. I change that to four years away and staying with the now, I’ll leave that deal where it is, and let’s see what happens when I push that asphalt to four years away. You can see how it’s further out into the future now and the cost are the same. They’re just a little bit different shifting. And what I might want to do in this case is take advantage of those four years and make four years of 100,000 RP, sorry, too big, because we want to have as much stability as possible. We don’t want to have a big special assessment this year for something four years into the future. So we’re trying to spread things out, even things out, and you can see that it’s four years of special assessment gets us through this big asphalt project and get us through about the same result. So that’s what we’re trying to be careful of. Is not punishing the current owners too much. We’re trying to as much as possible spread things out. And then one other thing I want to show you is the influence of interest earnings. Now notice that we’ve got it somewhat balanced here, where it’s stabilizing at about that 80% level. Let’s go to the Control Panel, and they’ve got a million dollars. Let’s say that rather than 2% after tax increase, they’re getting 3% after tax interest you may be in the market on television or whatever, hearing that there’s a lot of financial institutions offering 4% on savings, and that’s a great thing. Save this, if you take away the tax that you’ll be paying on your 4% or so, it’ll end up being about 3% let’s see what happens to and this is that’s then what you can hold on to. You’re not paying it to the government. Look how big of a difference that makes. That gets it up above 100% funded. So when the bank or your financial institution is paying more money, you can pay less, which is a really cool thing, Brian. Are you able to see people with that much of an influence, or even more influence, when they are able to optimize their reserve interest earnings?

Brian Farley, RS 23:34

Yes, yeah, we actually found out after some numbers that I ran that theoretically you could decrease your reserve transfer by 7% for every one point of interest increase that you see. So it is like getting more people contributing into your reserve account just by getting an extra point. So it may not seem like a big deal, but anything can really help, and that’s what we would say. It’s like you’re just saying. It’s not going to save the association, but it can help, and that’s always a great place to start. How can we save money? How can we help our association?

Robert Nordlund 24:10

Right? This is some of the parameters, some of the controls that we have to say, hey, you’ve got a million dollars. You can be earning a lot of interest on that. It’s worth a phone call. It’s worth a half day of paperwork to get that it’s good for your association, it’ll improve your funding and reduce the funding burden on your homeowner. So I’m going to take just a moment here and then reset this all to its original condition, and then Brian will get over to your project, and that’s really as the easiest is to work with uPlanIt working on the controls. There we go, the things that we’re able to learn all right. Now let’s go to example number two. This is a property that Brian has worked with. He has a lot of experience with this place, and we call mountain get away, very different type of association. This is a condo under. 50 homes. It’s one building built in 1992 so again, a mature place, not brand new. We’re not going to hoist it up as brand new, fresh and clean. No problems. It’s been around few elevators and the brand, as we were talking about this previously, it’s old enough to have experience with some of their major projects.

Brian Farley, RS 25:19

Right? Correct, correct. We see that 20 to 30 year mark is when most of the large, expensive projects will fail, roofing, asphalt, elevators, those sorts of items.

Robert Nordlund 25:30

Yeah. So they’ve, you could say, been around the block. So they’ve got a couple elevators. They have some nice amenities there, fitness, game room, pool and fall and location is fantastic, just like the oceanfront property. This is adjacent to ski resorts, so it’s really a great, great place to have a home. Okay, we look at the annual reserve expenses and kind of a different map. It has a big initial year, about a million dollars, and then big expense, year 510, 15, little over 20 years downstream, and some other that’s scattered through the years. When we look at them, they are actually initial year is the boilers building exterior. And you’re gonna see boilers again out here. So the second cycle of the boilers, the roof brand. Did they just do the roof just a couple years ago.

Brian Farley, RS 26:22

Correct, yeah, it was a relatively recent project, and

Robert Nordlund 26:25

elevators too, I would imagine. Correct, okay, good. So we’re seeing second cycles of these types of projects, and with this example, we’re going to show the influence of starting reserve balance again, how much money you come to the table with and the value of doing reserve planning, Brian, as you said, consistently over a long period of time, and then the deterioration rate. What that number is, what it means, and the influence of interest earnings hop over to uPlanit, and let’s go to mountain getaway. Activate uPlanIt here, and you can see the components same kind of display the ability to hit them and again, they come loaded straight from your reserve study Control Panel, starting year, starting balance, interest and inflation recommendation. Now Brian, what’s fundamentally different about this place is they are starting out at 14% funded, not 90% funded. So what first thing does this show you?

Brian Farley, RS 27:36

It shows me that really what’s influencing the special assessment that you can see there, as well as the percent funded is just a lack of monies in their reserve account already, whereas the previous example had the adequate funding already put in place. Again, it started in 1963 consistently, they’ve been taking care of the property. This property, again, is 3030, years old, but it sounds like, or maybe given some of the recent projects, that starting reserve account balance has not been properly built up. And therefore you can see their starting level is at 14% so they’re kind of starting from behind for this reserve study.

Robert Nordlund 28:17

Let me parse that out. You said, Well, it seems to me, they are taking good care of the place. They’re Re Roofing, they are getting new elevators, they are replacing their boilers. They’re doing it. They’re just not planning for it. Is that kind of the difference?

Brian Farley, RS 28:33

Potentially, that could be it? And it’s one of those things where maybe there’s a temptation to say, we’ve completed the project. Will it be a problem again? Well, it’s not my problem now. I won’t be here next time it occurs, but I always want to, as you say, steadily beat the drum that the deterioration occurring at a property is ongoing every single year.

Robert Nordlund 28:56

Yeah, you’re not dodging discrete projects because the roof doesn’t deteriorate at one point in time. The roof for the boiler or whatever you have at your association is deteriorating a little bit every day, every week, every month. Well, one thing I see on nipple India is they have about a million dollars worth of projects to do, and it’s going to cost them about a million dollars of actual assessment, because they fundamentally aren’t ready, and so it’s going to cost the homeowners. They they still have to cough up the money. It’s just they’re going to look at this going to be about $31,000 special investment that big time, and that I’m glad I’m not the board member going into that meeting saying, Okay, everyone, get your checkbooks out, we need $31,000 from everyone that’s they might that. Yeah, it’s gonna be a challenging meeting. Okay. Well, let’s do some other things here. Let’s look at what their deterioration rate is. So we’ll go to that same page. The ball component significant. And we scroll down to the bottom, and we see that everything there is deteriorating at the rate of 221,000 480-722-1487, per year. So just to keep up with what deteriorating, that’s what they need to be setting aside. So considering catch up mode, they need be going a little bit faster than that. So that’s why you’ve got the 177,000 that must be so again, what we’re trying to do is see a hit at that rate of deterioration by building the reserve fund. That means putting more into it than is leaking out here. And are there other things going on? Why don’t I? What else can I illustrate? Let’s look at starting balance. Let’s say the same thing we did in the open front plate. Let’s play with million dollars at a time. So let’s give them a million dollars so they’re starting out at 1.3 million, and we’ll see what that does for them. And very quickly, I can see that we can make that sparkle assessment absolutely go away. There we are, a million dollars more in reserves when you came in, means that you don’t have to cough it up the ear and let the toy around with baseline there at 77 for a full funding plan. Baseline is Brian, do we have you back? Yes, can you not hear me? Yeah, I couldn’t hear you the last time. We’re 25 so it’s going to take 25,000 just keep from running out of money. So this association needs to be somewhere between. What was it 277, and 225, again, the lesson here is that you just fundamentally have the deterioration to deal with. It’s not like you can really fiddle or know what you might different than that. Our automatic tool got it to 80 something so, or in that kind of range. Now let’s, let’s do something different. How about we play with the after tax increase rate? What’s a good number to hear?

Brian Farley, RS 32:31

I think that 3% number was a great example. As far as what we’re starting to see if they’re getting 4% is generally they’re getting around 3% after tax.

Robert Nordlund 32:39

Got it. Okay, let’s give them 3% and let’s see what that does for them. We had them full funding at 283 or about 280 and now look how much their reserve funding overshoot. We can tell them back on that full funding solver again. And and spending an hour or a few hours, getting more interest on your reserve dropped it down from 208,000 per year, down to 250 6000 per year. 256 earlier out 256, divided by 280 is 91% so about 9% difference. So it’s not again, night or day between full and baseline funding. All we’re talking about is the margin, because most of the dollars in reserves go straight to reserve projects. It is nice to have a little bit of margin, though, and is really great. Oh, wait, I’m sorry that wasn’t funding goal. We’re talking about interest change. That was the due to interest change. So that was a 9% drop in what they need to set aside due to a one and a half percent increase in their interest. And Weren’t you finding, quite commonly that about a seven to one ratio?

Brian Farley, RS 34:09

That’s right, right? Interestingly, too, if you wouldn’t mind, Robert, going to the the 30 year plan, where we can actually see their actual interest earned. There we go. Compelling to me, as you look there, remember you talked about that $30,000 special assessment. I mean, right, they’re in they’re earning that interest back by just moving their money over there. So it’s just shows you the power of that compounding interest,

Robert Nordlund 34:35

yeah, and you look at it here, it’s 28,020 2632 and then they start earning interest on interest on interest on interest. And it’s just a wonderful thing. A lot of good things going on when you are able to leverage interest earnings for the good of your association. I guess that’s one thing we want to i. Encourage you today in that as we’re looking at what adjustments can we make, we often will be able to come back to you and say, you know, if you do this, it can be in your best interest. It’s the same kind of thing we say about doing your preventive maintenance projects, getting your projects done on time. There’s so many things that we are we feel like we’re working together as a team with you our Brian. Do you get that feeling? Yes, yes, I do. Okay. Well, through the same thing here, but reset to the original data. Unfortunately, I’m taking a million dollars away from these people. Started at $300.6 1000 and that sounds like a lot of money, but not enough to do all the projects they need to do. Components. We’re going to reset again, another example of how simple it is to use uPlanIt and get your fingers into your reserve a so for example number two, we talked about starting reserve balance, the deterioration rate, having you need to stay ahead of that if you want to not fall behind and have a special assessment, and the wonderful influence of interest earnings. And that brings us to time to wrap up this program and go through what we feel are some including remark, and that means, as you’re talking about the reserve sharing, you’ve been talking about some technical things. Now let’s talk about how you’re communicating. Need to be regularly communicating. The owning real estate is expensive. What we’re talking about is the cost of ownership here at deterioration rate. It just is what it is for that ocean front HOA and for that mountainside, nice community next, familiar ski slopes, you are not setting aside charity for the future. You’re not setting aside funds for emergencies. You are indeed paying that ongoing cost of deterioration. It’s just part of the cost of owning a watershed real estate is expensive, and please call them the funding needs, reserve transfers. Don’t describe them as contributions, because I make them sound like they’re voluntary and mother nature and Father Time. Really, we can’t beat them. They’re going to have their way, and they make expenses that are not optional. So as you think about reserve expenses, please start to think of them more like the grains of sand flying from an hourglass a little bit every day, week, month and year, and to have accept what’s going to take as a budget to off, cut the ongoing cost of deterioration, collect those funds, the costs are the cost you need to set up a good battle plan to off up those costs. He’s going to need cash and do those projects in a timely manner before they get to a deteriorated state and become more clunker. And what’s that going to look like? What we find typically is that reserve funding needs to be in the range of 15 to 40% of your total budget. About a quarter of your total budget is really no surprise to us. Brian talked about not surprising to see asphalt be a major component at a HOA reserve study. Well, we don’t find it surprising among our clients that their reserve funding needs to be somewhere in the range of 25% the way it is. And we encourage you to budget to pay your bill. Do you reserve funding? Have a bill that you pay on a regular basis, because in doing so, the money’s there, so you don’t have to pass special assessments. The money’s there so you can avoid deferred maintenance, which means that you avoid those extra costs that come in with scope creep, carpentry work that you need to do instead of just repainting when you have to fix the wood. Also you get to maximize owner enjoyment, and you get to maximize property values. Those are great things. Yes, they come at a cost, but that’s kind of your job as a board member anyway, and you plan it. A reminder. Online reserve calculator is user friendly. It allows you to get your fingers into your reserve study and see what kind of tweak you can make without unsettling it you might and an encouragement. It may take a few years to get to an improved future for that mountain resort, it’s going to take a few years for them to build a stronger reserve fund so they won’t be hit with future special assessment. But that’s an attractive feature. It’s worth the journey, and a reserve is going to guide you there. At Association reserve we at Reservestudy.com We’ve been doing this now for almost 40 years. We have clients in every fate and internationally, you’re going to find additional resources on our website and on YouTube. They’re all free videos, written resources, plenty of things. To help you have success at your association. And we have the book. I’ve got a conference here on my desk that I’ll be giving out to someone who asks an interesting question. That’s a great resource, desktop resource that goes to a lot of what we spoke about here today. And for our board members, there’s the majority of you in attendance today, we’ve got a weekly 30 minute podcast for you, easy to digest. It’s there to encourage and equip you for the hard work you do running your association. It’s called HOA insights, common sense, for common areas, you can subscribe from all major podcast platforms, where you can listen from Hoa insights.org Or again, on our YouTube channel. And with that, I’m going to turn the microphone over to Paige, who will coordinate our Q and A time together. You.