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In our last newsletter we shared a memorable board meeting story of an extremely unsettling experience with a man who relied on an aggressive act to show his displeasure with the Board.

Every Reserve Study gives you three key pieces of information, useful for annual budget planning and owners disclosure purposes. Knowing what to look for will save you time and allow you to more effectively communicate those results to others. The three results are:

We know a few things about the future: that it will come, and that it will probably not be exactly what we expect. In order to minimize the number of these future “surprises”, we counsel associations to prepare for the expenses that are predictable. Expenses that can be anticipated fall into two categories: the Operating Budget (for daily/weekly/monthly expenses), and the Reserve Budget (for large expenses that occur annually or less frequently). The larger expenditures, and thus the larger opportunities for failure, fall into the realm of the Reserve budget.

How often is “proper” or “prudent” Reserve planning? With Reserve contributions making up 15% to 40% of the typical Community Association’s budget, this is an important question. So let’s look at the issues… Reserve contributions allow you to offset ongoing deterioration with appropriately sized Reserve contributions. The more deterioration there has been, the larger the association’s financial assets should be.