Every month when owners pay their AOAO dues, a portion of each payment is allocated to reserves. Reserves are the funds the Board is required by law to collect for the repair and replacement of areas of the property that the association is obligated to maintain (a.k.a. the common elements). The amount of reserves collected is determined by the Reserve Study. A healthy reserve can not only provide the funds for large repair and replacement items such as building painting, roofing, and parking lot surfacing, but it can reduce the occurrence of special assessments to the owners of the association.
A quality Reserve Study is one that incorporates a number of elements:
-Site visit and visual inspection of the property and its features by a Reserve Study Specialist. The visual inspection helps determine the viable useful life of the common elements based on current condition, and last repair or replacement.
-The repair or replacement cost of each component, estimated based on current bids or reliable construction cost sources, as well as projection of inflation rates of labor and materials projected forward 30 years.
-A knowledgeable and experienced Reserve Study Specialist is a key element of a Reserve Study. They should be familiar with regional and environmental aspects that can affect the life usefulness of the common elements. They should also be able to balance the need of a healthy reserve budget without financially overburdening owners.
You can view our most recent study on the AOAO Meeting Minutes page.