Identifying Reserve Needs for Today and Tomorrow

0

When you make your assessment payment each quarter, you are not only funding current operating expenses for the Association, but also setting aside a savings account to offset future funding needs.

It is up to the Association to determine and compile adequate reserves to fund necessary repair and replacements costs. This can be done by conducting a reserve study. There are two components to a reserve study, a financial and a physical analysis. The physical analysis consists of an asset inventory, determining the current condition of assets and a useful life estimate. A financial analysis assesses the Association’s fund balance to determine an appropriate reserve funding plan.

By year-end 2015, the value of the General Reserve Fund was $797,850. General Reserves include lakes and dams, marina equipment and docks, entry signs, street signs, pedestrian paths, cluster mailboxes, office building and equipment, maintenance garage, truck and tree replacements. There are also various reserve accounts for each cluster.

In 2015 the Association began working on a reserve study, with the goal for completion in 2016. This is being headed under Dan Slattery’s leadership, as our previous Association treasurer and now current vice president, along with the Finance Committee, staff and outside contractors. The end result is to set reasonable reserve funding goals that will allow minimal additional funding when the replacement or repair comes due.

This large group assigned with this task will be reviewing all assets within the Association that are included in the General Reserve Fund as well as Cluster Reserve Funds. Over the remainder of the year you may see some of these individuals out and about conducting the physical analysis. If you notice someone in your cluster and have a concern, please contact the Association office at 812-342-8522.

Share.

Comments are closed.