RESERVESTUDIES.COM

Where Can I Request A Bid?

To request a bid, please click HERE for an online form.

If you prefer, you may contact us directly by calling us at 858-638-9227, or you may email us at ptrower@reservestudies.com.

How Will A Reserve Study Help My Association?

A Reserve Study is a comprehensive report of any needed repairs, restoration, maintenance or replacement that are likely to occur within the next 30 years. Our study will follow local guidelines, for your state codes and/or statutes. A reserve study will evaluate the overall condition of the property and provide valuable information and useful recommendations.

What Is A Reserve Study?

A Reserve Study is made up of two parts:

1. The information about the physical status and repair/ replacement cost of the major common area components the association is obligated to maintain (Physical Analysis), and

2. the evaluation and analysis of the association’s Reserve balance, income, and expenses (Financial Analysis).

The Physical Analysis is comprised of the Component Inventory, Condition Assessment, and Life and Valuation Estimates. The Component Inventory should be relatively “stable” from year to year, while the Condition Assessment and Life and Valuation Estimates will necessarily change from year to year. The Financial Analysis is made up of a finding of the client’s current Reserve Fund Status (measured in cash or as Percent Funded) and a recommendation for an appropriate Reserve contribution rate (Funding Plan).

What Are The Three Levels Of Reserve Study Service?

1. Full: A Reserve Study in which the following five Reserve Study tasks are performed:  Component Inventory  Condition Assessment (based upon on-site visual observations)  Life and Valuation Estimates  Fund Status  Funding Plan

2. Update, With-Site-Visit/On-Site Review: A Reserve Study update in which the following five Reserve Study tasks are performed:  Component Inventory (verification only, not quantification)  Condition Assessment (based on on-site visual observations)  Life and Valuation Estimates  Fund Status  Funding Plan

3. Update, No-Site-Visit/Off Site Review: A Reserve Study update with no on-site visual observations in which the following three Reserve Study tasks are performed:  Life and Valuation Estimates  Fund Status  Funding Plan

What Is A Reserve Specialist?

A Reserve Specialist is a singular term which shall apply to all of the following persons or entities providing or offering some form of reserve studies, transition warranty inspections, construction defect reports and other facility inspection reports or consulting services to one or more clients:

a. A single practitioner functioning as a client employee

b. A single practitioner employed by a firm contracted by one or more clients

c. A principal or supervisory staff member for a firm which is contracted by one or more clients

d. A firm, which is contracted by one or more clients, whether it is organized as a corporation, partnership, or other entity

What’s Required In A Reserve Study?

Each Reserve Study prepared by a Reserve Specialist or Reserve Specialist applicant must contain all of the following elements:

A summary of the association’s number of units.

Association physical description (legal or physical narrative).

General statement or opinion describing the association’s current reserve fund status (good/fair/ poor, adequate or inadequate. Percent Funded, etc.)

General statement describing the methods and objectives utilized in computing or evaluating the association’s Reserve Fund status (Percent Funded or otherwise).

Fiscal Year (start and end) for which the Reserve study is prepared.

A projection of starting reserve cash balance (as-of above start date).

A general statement describing the development or computation of the association’s starting Reserve Fund balance

Recommended reserve contributions (minimum 20 years).

Projected reserve expenses (minimum 20 years).

Projected ending reserve fund balance (minimum of 20 years).

Continued Next Column . . . .

. . . . .What Is Required Cont

A tabular listing of the components in the Reserve Study.

A tabular listing of the component quantities or identifying descriptions.

A tabular listing showing each component’s Useful Life.

A tabular listing showing each component’s Remaining Useful Life, where RUL=0=initial year.

A general statement describing the Methods (cash flow, component, etc.) and Goals (Full Funding, Threshold Funding, Baseline Funding) of the Funding Plan, using National Standard terminology.

Identification of the source(s) utilized to obtain component repair or replacement cost estimates.

A clear description of which one of the three Reserve Study “Levels of Service” (ie: Full, Update With-Site-Visit, Update No-Site-Visit) was performed.

A clear statement of assumption used for Interest and inflation (whether zero or otherwise).

Reserve Study Required Disclosures

Each Reserve Study prepared by a Reserve Specialist or Reserve Specialist applicant must contain all of the following disclosures:

General: Description of other involvement(s) with the association, which could result in actual or perceived conflicts of interest.

Physical Analysis: Description of how thorough the on-site observations were performed: representative sampling vs. all common areas, destructive testing or not, field measurements vs. drawing take-offs, etc.

Personnel Credentials: State or organizational licenses or credentials carried by the individual responsible for Reserve Study preparation or oversight.

Completeness: Material issues which, if not disclosed, would cause a distortion of the association’s situation.

Reliance on Client Data: Information provided by the official representative of the association regarding financial, physical, quantity, or historical issues will be deemed reliable by the consultant.

Scope: The Reserve Study will be a reflection of information provided to the consultant and assembled for the association’s use, not for the purpose of performing an audit, quality/forensic analyses, or background checks of historical records.

Reserve Balance: The actual or projected total presented in the Reserve Study is based upon information provided and was not audited.

Reserve Projects: Information provided about reserve projects will be considered reliable. Any on-site inspection should not be considered a project audit or quality inspection.

Why Does An Association Need A Reserve Study?

An Association must perform a Reserve Study by law every third year. The board must review the Reserve Study annually. In California there is currently no requirement to fund the reserves only the need to disclose the financial standing of the reserves to current owners, potential buyers and lenders. A Reserve Study may:

Reduce property deterioration.

Enhance property values through pride of ownership.

Provide a basis for implementation of a preventative maintenance program.

Avoid special assessments.

The Directors have a fiduciary responsible of operating the Association in a reasonable and prudent manner. The Association may adjust replacement reserve assessments annually to take into account any changes. The Directors must attest to the adequacy of the reserve funds and declare if they anticipate a reserve increase or a special assessment.

A Reserve Study is a planning tool for any association which assists the Directors in complying with California Civil Code 1365 by providing reserve information needed in the annual budgeting process.

What Are The Four Types Of Funding?

1. Fully Funded Method (with deficit reduction) is typically the most conservative Funding Objective due to the Reserve Fund being “strong”, at or near the 100% Funded point.

2. Baseline Funding (cash flow method) means establishing a Funding Objective of keeping the Reserve cash balance above zero. Unfortunately, due to having little or no “margin for error” this is the Funding Objective exposing associations to the highest risk of special assessments.

3. Threshold Funding is the third most popular Funding objective. Threshold Funding means keeping the Reserve Fund above a pre-determined dollar or Percent Funded amount (a kind of “middle ground” objective).

4. Statutory Funding (setting the specific minimum amount of Reserves required by local statues) is one specific form of Threshold Funding, where the threshold is set to that required by a local statute.

How Often Should I Update My Reserve Study?

Different states (such as California and Hawaii) specifically require Reserve planning to be done often as part of the annual budget preparation process. California law even goes so far as to require a diligent on-site inspection at least every third year. In the State of Washington, Reserve planning is required to support disclosures which must be made prior to the sale of a unit. It is advisable to review and adjust each year and to perform a more exhaustive update at least every third year, as association physical and financial changes dictate.