And yet, that is exactly what they are expected to do as a board member of their community association.


It’s no wonder that when confronted with major decisions that will directly impact the members of the association, many boards are hesitant to make the big decisions. But if that decision can be supported by data that clearly shows why a decision must be made and the consequences of not making it, boards become more confident.


A living reserve study allows your community to track and extend the remaining useful life of common area components in real-time.


Preventing Hidden Surprises and Potential Liability A reserve study addresses current conditions, historical projects, near-future projects, current financial details, current evaluations from professionals, etc., and then models the snapshot over a period of 20 or 30 years. Multiple unforeseen factors can quickly impact this information positively or negatively thereafter.


When components break down before your association is prepared to replace them, the surprise can be costly. Add to that the challenges communities face today with rising labor costs; supply chain shortages and ballooning inflation and you have a recipe for financial disaster. Only proper planning, with real- time project updates can prevent hidden surprises that often lead to unpopular actions such as high-interest loans, special assessments, loss of insurance coverage, and unexpected assessment increases.


Your community’s aging infrastructure will not go away, and ignoring the breakdown of components is not a viable option. To protect your community association from liability as a result of deferred maintenance or mismanaged funds, directors must perform their fiduciary duty and prepare for component replacements in a timely manner that does not negatively impact the association or its membership.


Sharing that data builds trust with community members who are better able to understand the association’s financial position and planning strategy. Increased transparency will take some of the mystery out of how the Board arrived at the contribution amount and the importance of sufficiently funding their reserves.


To get homeowner buy-in on budgeting decisions, boards need to be able to clearly demonstrate through data why decisions are being made, and the consequences of not making those decisions.


Getting the Most from Your Reserve Study While Surfside gave us all a wake-up call into the consequences of doing nothing, the consequences of aging infrastructure and a lack of proper planning are still being felt. Already, several states, including Florida, Hawaii, and Maryland have passed new and stricter laws to combat aging infrastructure and extreme deferred maintenance through reserve planning. Similar laws are being considered in other states across the country, including California. Insurance agencies are reconsidering policies, and Federal agencies like Fannie Mae and Freddie Mac have issued new guidelines for loan approval based on the state of the community’s infrastructure.


These changes reflect the critical need for community association boards to do more, become more conscientious and diligent about planning, and fund their reserves to adequately meet future maintenance requirements.


A living reserve study allows boards to create funding plans that are responsive to changes like assessment increases, extending the useful life of components, or accelerating capital improvement projects.


Making Better Decisions Backed by Data Board members are made up of everyday people — plumbers, school teachers, office workers, nurses. These are not typically people with experience running multimillion-dollar corporations.


Typically, you will need help to put your reserve study to work for you. While there are tools available to perform the functions of tracking inventory, financial planning, and project tracking individually, there is an advantage where integration with your reserve study is possible. Real-time access to data is helpful in identifying trends or possible deficiencies thereby forewarning the board that a course correction may be necessary sooner rather than later. Associations tend to benefit most from systems that support active inventory management, capital planning flexibility, and project management tracking helping you establish a plan and stick to it.


—Pam Winslow, CMCA, AMS, PCAM, RS, is the CEO of Management Expertise for Community Associations LLC.


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