RESERVE STUDIES

Why are Reserve Studies Needed?

State Regulations
Many states have passed regulations which require reserve studies due to the rising problem of underfunded associations.

Washington State RCW Link – RCW 64.34

Fiduciary Responsibility
The reserve study will guide the association towards a level of adequate funding for anticipated component repair/replacement expenses. Associations have a responsibility to its members to plan for these projected expenses. A reserve study is beneficial to its members by creating a plan that offsets the depreciation of capital components and which can be understood and and followed by current and future members.

Marketability & Value
An adequately funded reserve balance allows the association to maintain and increase the aesthetic appeal of the project, prevents deferred maintenance and reassures a potential buyer that the association is adequate funded. Values in projects that are adequately funded typically fare better than those that are underfunded as buyers will take into consideration future assessments and rate increases.

STEPS TO FOLLOW

Recognize Your Goal
Is your association adequately funded for future obligations? We have found that many associations are not adequately funded or prepared for large expenses. This can lead to special assessments which may be a financial burden to members and troublesome to potential buyers. An association which recognizes the goal of becoming financially prepared is an association which has taken the first step towards fiduciary responsibility.

Anticipate Your Costs
Anticipated component expenses can be difficult to determine as they are constantly changing. Crescent Reserve Studies utilizes our experience in the industry, vendor contacts and localized cost handbooks which will provide a range of expected cost. This allows us to compose a thorough reserve study that provides our clients with a understanding of the costs that can be expected.

Execute Your Plan
Each of our reports is catered to our clients so that a plan is created that minimizes financially burdensome special assessments and contribution rates while still guiding the association towards a financial sound position. All the planning and preparation of a financial plan will do no good unless the plan is followed.