January 2025 CT

reserve studies were nice to have, but rarely implemented. Ordering one was generally the result of a bank loan requirement or ongoing audit disclosure. After the loan checkbox was marked complete, the study was shelved (yes, in old filing cabinets) for years, or in some cases, decades to come. Sure, many communities looked at the recommended funding plans and tried to implement them, but the overwhelming sentiment and reac tion of most board members was “I won’t be here in 15 years, so we don’t have to worry about this now”. And for those Boards that did agree to follow the plan, the Reserve Funding budget line item was the first to get slashed during the next budget season. While some of these same mindsets still exist today, the tide is changing. The updat ed CAI Reserve Study Standards, State Legislation, Fannie Mae/ Freddie Mac lending requirements, Insurance under writing requirements, and board mem ber/manager education have forced the discussion of reserve studies to be front and center over the last two years. A reserve study is not an “engineer ing study”, a construction review doc ument, an invasive test of the building, or a safety inspection. According to the Reserve Study Standards, “A reserve study is a budget planning tool that identifies the components a community association is responsible for maintaining or replacing, the sta tus of the reserve fund, and a stable and equitable funding plan to offset the anticipated future major common expenditures”. A reserve study is a budget planning tool. It is a living document that accounts for inflation, investment returns, the useful life and CONTINUES ON PAGE 40

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JANUARY 2025