November 5th, 2021
Dear Residents,
A resident asked:
1. How does the Board come up with a yearly budget figure goal for Reserves?
The board followed best practices and engaged the services of a professional reserve study firm, Falcon Engineering, to perform a complete evaluation of our community last winter. The study was received in early 2021 and included guidelines for funding the reserve account(s). In preparation for next year’s budget, we consulted with this firm, and they confirmed that we need a minimum of one million dollars in our reserve accounts in the next five years.
2. How is the pot funded? Is it a percentage of our dues income/all anticipated income that is set aside for Reserves?
Reserves accounts are funded in two primary ways. The first funding avenue is regular members’ annual contributions through a specific line item in the yearly budget or a special assessment. The second avenue is through the capital contribution made by every new owner at closing when a standard home sale takes place.
In the past, the primary funding source for the reserves had been capital contributions and transfer of surplus funds from the operating budget after year-end reconciliation. We also never had a professional reserve study done before. This reserve study, which is available to every member, gives actual guidance on the amount of funds needed year over year and provides us with a solid plan and budgeting tool to maintain our community assets.
We hope this answers your question and appreciate your engagement.
Sincerely,
Scott Matthews Jr.
Community Manager
