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An Overview of
Reserve Studies
Reserve Data Analysis
est. 1983
www.rdanorthwest.com
About Reserve Data Analysis
Since 1983 we have provided thousands of thorough and well thought
out catered reserve studies.
Reserve Study Topics
2
3
Brief History of Reserve Studies in WA1
What is a Reserve Study?
The Reserve Study Process
Brief History
Vocabulary
Funding Concepts
Disclosures
Report Contents
In 1998 the Community Association Institute (CAI) de...
Washington State Statutes - 2012
Washington State Condominium and Homeowner’s
Associations with significant assets, define...
Reserve Study – A Multi Purpose Tool
Management
• Timeline
• Prepare
Community
• Obtain Bids
Bid Verification
• Accurate
M...
Process - The Reserve Study
Step 1 Step 2 Step
4
Step
3
Component
Analysis
Financial
Analysis
Develop
Funding
Strategy
Com...
Step 1 - Component Analysis
Association
Responsibility
Limited
Useful Life
Predictable
Remaining
Life
Above
Minimum
Cost
D...
Step 1 - Component Analysis
Quantify
Useful
Life
Remaining
Useful Life
Current
Replacement
Cost
Component List
Fully
Devel...
Step 1 - Sample Component List
Step 2 - Financial Analysis
Forecasting
• Determine Future Costs
• Determine Future Replacement Cycles
Review
Accounts
• R...
Step 2 – Financial Analysis – Future Costs
Step 3 – Funding Strategy
Sufficient
Cash
Stable
Contribution
Rate
Evenly
Distributed
Fiscally
Responsible
Does the financ...
Step 3 – Funding Strategy
Fairness to current & future members
Reserve allocation is to offset current deterioration of co...
Step 3 – Funding Strategy
There are many funding strategies to consider but typically only
a couple will be appropriate fo...
The Completed Reserve Study
1. Recommendations 2. Expense Timelines
Condition Assessments4. Thorough Inventory
Step 4 – Completed Reserve Study
Recap – The Process
• Current cost
• Condition
assessments
Component
List
• Determine
future cost &
future
replacement
cyc...
Do you have
any questions?
??
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Reserve Study Basics

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A brief overview of what a reserve study is and the process that professional reserve study providers follow.

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Reserve Study Basics

  1. 1. An Overview of Reserve Studies Reserve Data Analysis est. 1983 www.rdanorthwest.com
  2. 2. About Reserve Data Analysis Since 1983 we have provided thousands of thorough and well thought out catered reserve studies.
  3. 3. Reserve Study Topics 2 3 Brief History of Reserve Studies in WA1 What is a Reserve Study? The Reserve Study Process
  4. 4. Brief History Vocabulary Funding Concepts Disclosures Report Contents In 1998 the Community Association Institute (CAI) developed National Reserve Study Standards. These were developed to standardize:
  5. 5. Washington State Statutes - 2012 Washington State Condominium and Homeowner’s Associations with significant assets, defined within RCW 64.34.020(38) and RCW 64.38.010 (19), are required to conduct and disclose Reserve Study results annually. At minimum every three years, the Reserve Study update must be based upon a visual site inspection by an independent Reserve Study Professional. Washington RCW also clearly state what the minimum requirements are for reserve study contents including several required funding strategies.
  6. 6. Reserve Study – A Multi Purpose Tool Management • Timeline • Prepare Community • Obtain Bids Bid Verification • Accurate Measurements • Verify Costs • Negotiations Marketing • Buyer Confidence • Financial Strategy • Values Up Budgeting • Be Prepared • Fairly Assess • Minimize Dues Financial • Association Loan • FHA, Fannie / Freddie Mac • Buyer Loans Disclosure • WA RCW • Community Goals • No Surprises
  7. 7. Process - The Reserve Study Step 1 Step 2 Step 4 Step 3 Component Analysis Financial Analysis Develop Funding Strategy Completed Reserve Study Developing a reserve study report requires numerous important steps.
  8. 8. Step 1 - Component Analysis Association Responsibility Limited Useful Life Predictable Remaining Life Above Minimum Cost Does the component meets the four part test outlined in National Reserve Study Standards (CAI).
  9. 9. Step 1 - Component Analysis Quantify Useful Life Remaining Useful Life Current Replacement Cost Component List Fully Developed
  10. 10. Step 1 - Sample Component List
  11. 11. Step 2 - Financial Analysis Forecasting • Determine Future Costs • Determine Future Replacement Cycles Review Accounts • Review Reserve Account Balance(s) • Review Reserve Account Allocation Rates • Assessments, Loans, High Rate of Delinquent Dues, Etc. Financial Strength • Determine Current & Future Reserve Fund Strength (Percent Funded) • Is it adequate? Is it in line with the Association’s risk tolerance?
  12. 12. Step 2 – Financial Analysis – Future Costs
  13. 13. Step 3 – Funding Strategy Sufficient Cash Stable Contribution Rate Evenly Distributed Fiscally Responsible Does the financial strategy follow the four basic principles outlined in National Reserve Study Standards (CAI).
  14. 14. Step 3 – Funding Strategy Fairness to current & future members Reserve allocation is to offset current deterioration of components, it’s not for future expenses. Liability – we cannot leave out items that clearly should be included. The Board can decide to not fund for them but we need to include. We need to follow Washington State RCW requirements for Reserve Studies There are important concepts that a reserve study professional must take into consideration when developing a funding strategy.
  15. 15. Step 3 – Funding Strategy There are many funding strategies to consider but typically only a couple will be appropriate for any particular Association.
  16. 16. The Completed Reserve Study 1. Recommendations 2. Expense Timelines Condition Assessments4. Thorough Inventory
  17. 17. Step 4 – Completed Reserve Study
  18. 18. Recap – The Process • Current cost • Condition assessments Component List • Determine future cost & future replacement cycles. • Determine financial strength. Financial Analysis • What funding method best matches the goals of the Association? • What is the most fair and in the best interest of the community membership? Funding Strategy
  19. 19. Do you have any questions? ??

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