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Crown Harbor Homeowner Association

Reserve Study from 2016

The reserve study update from 2016 will be used to set the dues for 2017 and 2018.

reserve study
Reserve
Study
Update
of
2016

Findings from the Reserve Study Review

The Reserve Study Committee started with a report that depicts income, expenses, and their effects on the reserve account.
  • For 2016, the amount transferred from the operating account to the reserve account is $162,052 ($13,504.35 per month for 12 months).

  • Based on this reserve study update, for 2017, the revision 6 of the reserve study recommends that the amount transferred from the operating account to the reserve account be increased to $166,914 ($13,909.50 per month for 12 months). This is a 3% increase.

  • The annual dues are set based on funding the operating account and replenishing the reserve account. So the new dues amount cannot be known until the 2017 budget is approved; however, increasing the contribution to the reserve account from $162,052 to $166,914 (as recommended by the reserve study from Associa) has the following impact on dues:

    Unit
    Type
    FIXED
    Change
    VARIABLE
    Change
    Net
    Increase
    A+$15.22-$7.09+$8.13
    B+$15.22-$10.84+$4.38
    C+$15.22-$11.38+$3.84
    D+$15.22-$11.43+$3.79
    E+$15.22-$7.28+$7.94

    This is a work in progress. It was computed by keeping the operating budget for 2017 the same as 2016 and only changing the reserve amounts. This had the effect of changing the annual contribution from the operating account to the reserve account and the ratio of money that is FIXED and VARIABLE (based on unit type). This is captured in reserve_study_analysis2016v3.xlsx.

    Revision 6 of the study has the costs for the irrigation/landscaping project as $97,750 in 2017, $100,194 in 2018, and $102,699 in 2019 on pages 8 and 22. These numbers were used in the dues recalculations instead of the $97,750 for 2017/2018/2019 that appears on page 14. This is this way on purpose to account for inflation in the subsequent years. This approach is in line with Davis-Stirling practices.

balance

How much to fund?

  • This latest reverse study forecasts 30 years of expenses.

  • This reserve study calculates that the reserve account is only 35% funded.

  • If a reserve account if 100% funded, there would never be a future need for a special assessment because all of the necessary money is collected over the years.

  • Banks look at reserve account balances. If a reserve account is too under-funded, they turn down loan applicants because they fear the applicant will be hit with a large special assessment and not be able to pay both the special assessment and the loan payment. This can affect property values.

  • Even though banks look at reserve account balances, potential buyers rarely do. Instead, potential buyers look at how much the dues are. So the goal is to set the dues high enough to collect enough money to fund the reserve account to satisfy banks, yet not so high that potential buyers are scared off by overly high monthly dues. The task is to find the right balance. Funding the reserve account sufficiently minimizes the sizes of special assessments for all Owners.

  • The current plan increases the funding level to a peak of 73% by 2044. It is not a drastic plan to make the account 100% funded.

questions

Questions and Answers

Here are some questions that arose during the evaluation of reserve study. The answers were provided by John E. Ceragioli, Director of Community Solutions, Associa Reserve Studies.
  • Q: One of the big differences is that we replaced all of our exterior light fixtures this year. We wound up replacing all of the fixtures, even the owner responsible ones, so that we would have a uniform look throughout the association. In addition, since the old fixtures had photocells, and photocells don't work well with LED bulbs, we installed timer switches inside the units as well as the garages. The implications of this project are that:

    • We have dipped into our reserve funds to fund the lights and timers now. This gross amount needs to be deducted from our reserves.
    • Going forward, we need to collect funds to replace one timer per unit, in the garage, and one fixture closest to the street. Board member, Aaron Quaresma, noted: "The total cost for the exterior fixtures (260), LED lights (280), timer switches and installations (+120), addressing some non-compliant issues, etc. was $94,820.

    A: This was factored into revision 3 of the reserve study. The study is now up to revision 6.

  • Q: The other thing we have done is some repairs to walk-out roofs that has come from the special assessment reserve account for roofs. We have also done some siding repairs that have come from the general reserve account. Sheri Carmichael should be able to get you these numbers so you can factor them in.

    A: John Ceragioli: This is accounted for in component #98.

  • Q: Revision 3 does not show that the exterior house number lights were replaced this year.

    A: John Ceragioli: See component #41.

  • Q: Revision 3 doesn't show we've replaced the vehicle gate motor and opening mechanism.

    A: John Ceragioli: This was factored into revision 4. The study is now at revision 6.

  • Q: Revision 3 shows a new 30 year lifetime for the path light bollards when, in fact, we only replaced the light bulbs. We really did nothing for the life of the fixture or structure. We may have bought some life extension, but I doubt those aluminum boxes will last another 30 years. We probably need to consider replacing the fixtures somewhere in the next 5-10 years. For the bollards, Sheri Carmichael can tell us what we spent to replace the 3 outside the front gate. Using that for a basis, you could estimate replacement of the remaining 28 fixtures.

    A: John Ceragioli: 3 Bollard Lights were replaced outside the gates, the remainder (28) are shown to be replaced in 2016.

  • Q: I found a few items on page 15 of the Reserve Study update that I believe to be owner's responsibility. In the screen shot below items 70, 71, 89, & 90 are the owner's maintenance responsibility per CC&Rs.

    A: The list of owner versus association responsibilities is spelled out on the maintenance page.

    • Item 70, Chimney Caps: Although, each owner is responsible, the association replaced these as part of the 2016 roof project. Rather than separate it out and collect the same amount from each owner, the costs were simply bundled into the roof project. This approach can be applied about 30 years from now with the next reroofing, so it is appropriate to collect for this $650 item over the next 30 years.
    • Item 71, Spark Arrestors: The same approach for the Chimney Caps applies to the Spark Arrestors, so it is appropriate to collect for this $150 item over the next 30 years
    • Item 89, Paint 16'x7' Garage Doors: The owner is only responsible for painting the garage door if he replaces the door. The owner has 30 days to do so. When the association does its complex-wide painting of the siding, the painting of the garage doors is included.
    • Item 90, Paint 8'x7' Garage Doors: The same rules for the 16'x7' Garage Doors applies to the 8'x7' Garage Doors.
  • Q: The study shows the need to paint the flag pole and the street light poles. The painting done in 2014 included all paintable surfaces. These were listed as "powder coated" and not a paintable surface. If that is true, why are we budgeting to paint them? If they are paintable, maybe we should get A-One back to finish the job?

    A: John Ceragioli: Changed date to 2014 in revision 4. The study is now at revision 6.

  • Q: When we last repaired and sealed the asphalt, we did all of it. Why now does our plan say we seal the streets in 2019 and the paths in 2020? It is obviously more cost effective to do the whole job at the same time. Why are they split? This issue reappears in the Component Detail Report.

    A: John Ceragioli: Our records show that the roads were done in 2014 and the paths in 2015, hence the difference in dates.

  • Q: We replaced the opener or the motor in the opener of the auto entry gate just recently. There's no indication of any update to the gate in the detailed report. It still shows as "new" in 2011.

    A: John Ceragioli: This was revised in revision 4. The study is now at revision 6.

  • Q: Only the bulbs were replaced in the path bollards in 2015, not the physical bollard itself. That should not constitute a "new install" for bollards in 2015 and should not have a new 40 year life

    A: John Ceragioli: This was shown for replacement in 2016 in revision 4. The study is now at revision 6.

  • Q: With the solar LED light on the flagpole, we no longer have spotlights on the flag. (line 39)

    A: John Ceragioli: This was revised in revision 4. The study is now at revision 6.

  • Q: What are the timers listed in #42? Are these the ones for the address number lights? A 20 year life may be a stretch.

    A: John Ceragioli: They are the ones that you asked me to put in the study. They are going to be or are located in the unit garages.

  • Q: We ended up replacing both sewage ejection pumps very close to each other in 2012. We've already had to replace one of these again in 2016. The 2012 pump only lasted 4 years. The new 2016 pump is listed for a 5 year life, which is reasonable. However, the second pump, replaced in 2012 (line 63) is listed for a 10 year life. What makes us think this 5 year old pump will last another 5 years when it's twin only lasted 4? Just FYI, it's not really "secondary." The way the pumps and controllers are set up, they switch back and forth and should both see roughly the same time in use. If the first one already died, the second can't be far behind, especially not an added 5 years.

    A: John Ceragioli: The life was changed to 5 years in revision 4. The study is now at revision 6.

  • Q: We did the flat roofs in 2011/2012, I'm fairly sure these were advertised as 10 year roofs. We should be re-doing them in 2021/22. They should not have a 20 year life. This should also apply to the "walk-out" surfaces and the landings. These are not specifically listed. Also, did we put on a 20 year shingle or 30 in 2016? The life expectancy should agree.

    A: John Ceragioli: Flat roofs are single ply roofs that have a life of 20+ years. Your comp shingle roofs are 30 year (or more) guarantee.

  • Q: We have a 30 year old irrigation system. There is a state-based mandate to reduce our water use by 20% by the year 2020. Rather than pour money into upgrading our existing system, we would replace it with a drip system. We have a bid of $6,509 to do this for an area between 556 / 548 Kings. If the association were to do that all over (37 more times), the total cost would be $247,342 ($6,509 times 38). Can we factor this into the reserve study since California will require this anyway?

    A: John Ceragioli: Revision 6 of the study includes $300,643 of landscaping/sprinkler system conversion to drip spread out across 2017/2018/2019 so that it is completed in time for the California Model Water Efficient Landscape Ordinance (WELO) that requires a 20% water use reduction by the year 2020. This amount is greater than the $247,342 requested so that it covers inflation and unforeseen expenses. These things always turn out to be more expensive than originally forecast.


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