DEVELOPING A COST-EFFECTIVE RESERVE STRATEGY

A 56-unit Homeowners Association

Reducing Replacement Costs. This Association=s largest reserve expenditure is the replacement of private roads. While the roads had already been refurbished once, they were quickly deteriorating again. After extensive analysis the deterioration was found to be caused by two factors: 1) Lack of annual preventive maintenance, and 2) Heavy rubbish trucks traveling the roadways.

In order to stop the deterioration, we immediately implemented a preventive maintenance program including patching, crack filling, and sealing. In addition, we designed rubbish drop-off areas, delineated by small shrubs, which virtually eliminated all rubbish truck traffic from the roadways.

The result has been little or no further road deterioration in the past two years.

Developing an Acceptable Reserve Funding Plan. Once the condition of the roads were stabilized, it was now time to develop a reserve funding plan that was acceptable to the homeowners.

Through a step-up program, monthly assessments will be increased $5.00 per month every other year for the next eight years. The additional reserve income will provide for all foreseeable road replacements while giving homeowners advance notice of monthly assessment increases for the next eight years.