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Crown Harbor Homeowner Association

Reserve Study from 2017

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

reserve study
Reserve
Study
Update
of
2017

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 2017, the amount transferred from the operating account to the reserve account is $166,914 ($13,909.50 per month for 12 months).

  • Based on this reserve study update, for 2018, the revision 1 of the reserve study recommends that the amount transferred from the operating account to the reserve account be increased to $183,605 ($15,300.42 per month for 12 months). This is a 10% 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 2018 budget is approved; however, increasing the contribution to the reserve account from $166,914 to $183,605 (as recommended by the reserve study from Associa) has the following impact on dues:

    Unit
    Type
    FIXED
    Change
    VARIABLE
    Change
    Net
    Increase
    A+$TBD+$TBD+$TBD
    B+$TBD+$TBD+$TBD
    C+$TBD+$TBD+$TBD
    D+$TBD+$TBD+$TBD
    E+$TBD+$TBD+$TBD

    This is a work in progress. It was computed by keeping the operating budget for 2018 the same as 2017 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_analysis2017v2.xlsx.

balance

How much to fund?

  • This latest reverse study forecasts 30 years of expenses.

  • This reserve study calculates that the reserve account is only 40% 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 63% by 2043. 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: Does the Reserve Fund Cash Balance on page 7 include the amounts from the regular reserve and the special roofing assessment reserve accounts?

    A: TBD.

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