What is it?
As Defined by Wikipedia: A Reserve Study is a long-term capital budget planning tool which identifies the current status of the reserve fund and a stable and equitable funding plan to offset ongoing deterioration, resulting in sufficient funds when those anticipated major common area expenditures actually occur.
The reserve study analysis report is also a tool that consists of two parts: the physical analysisand the financial analysis.
If you are a member of a Condominium Association, Co-op Association or Home Owners Association in the State of Florida your Association will benefit from a Professional Reserve Study Analysis being performed. Just the simple fact that your Board of Directors came to the decision to pursue this service says a lot about your Board and Management. This is an opening of all the Association’s Reserves, Expenses and timeframes for replacements and current conditions of the Association’s time sensitive facility components to an unbiased third-party professional for examination and analysis. This act shows the ethics and fiduciary concerns of your Management Company and Directors. Generally this will also highlight Budget and Reserve shortfalls that may need to be addressed.
The Board of Directors, who initially make the decision to have a Professional Reserve Study Analysis performed, are generally given a clean slate and are regarded as untarnished by the past and current condition of the reserves, financials, and common property elements. This being said, with this R.S.A. Report now in hand there are no excuses for an Association going astray from a sound physical and financial path.
For the Board, having this tool for reference and guidance enables them to make good decisions regarding budgets and projects going forward for the Association. This also brings to the surface a lot of minor expenses typically overseen or put to the side by previous Boards. Examples of this are the useful life of rain gutters and downspouts, fencing, dumpster gates, storm water systems, french drains and exterior lighting fixtures and poles. These items need to be budgeted for and are exposed by this analysis with costs.
The result of ordering a Reserve Study Analysis can only be enlightening to the Association. You will know exactly where your facility stands, physically and financially, and the direction its future success must take.