Paying for Plants
Including Landscaping Components in Your Reserve Study
By Karen McDonald, CMCA, AMS, PCAM, RS of Accurate Reserve Professionals, LLC I
n order for a component to be funded within a reserve study it typically needs to pass a four-part test in accordance with Community
Associations Institute (CAI) National Reserve Study Standards. The item must have a useful life, a predictable remaining useful life, must be the association’s responsibility to maintain, repair or replace, and the cost must fall above a certain cost threshold (typically 1% or more of the annual operating budget). In addition to this four-part test, if the expense occurs annually (even if it is significant in cost) it is generally best handled through the annual operating budget. Many components, such as asphalt, roofs and siding, easily pass the four-part test and are included in an association’s reserve study; however landscaping can be a bit more of a gray area because the need for reserve funding is not as easily predictable and varies by community.
18 Community Associations Journal | April 2023
It makes sense for many associations, especially those with extensive landscaped common areas, to include landscape or landscape related funding in their reserve study as large expenses can arise. While their exact timing may be difficult to predict, it is generally safe to assume that the expense will eventually occur at some point. Here are the landscape related components that associations commonly opt to include in their reserve study:
General Landscaping Components
Funding here is typically included on a rotating basis at anywhere from 2 to 10 year cycles, depending on the association. It is intended to be used for any larger landscape expenses that may arise that cannot be comfortably handled within the annual operating budget and that are not otherwise funded for within the reserve
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