Reserves – A Savings Plan for the Association

Piggy BankReserve obligations are the most significant expenditures an Association faces. How does an Association know what these obligations are? A diligent Association will commission a reserve study. A reserve study is based upon the science of anticipating and preparing for an Association’s major common areas’ repair and replacement expenses. Projections are being made about the future through the processes of research and analysis using well defined methodologies.

The good news is that White Mountain Vacation Village has a reserve study which was completed in 2006 and updated in 2012. The board relies on the reserve study to properly budget reserve amounts.

The reserve is intended to cover major common area repair and replacement items.  These items are typically a one-time expense versus an ongoing expense, such as regular maintenance.  An example of a one-time expense is pond repair. The 2016 reserve budget has $12,566 under that category. The ponds do not require major repairs every year, hence, they are not an ongoing yearly expense item. However, they do fail from time-to-time and call for a substantial repair expense. The reserve is intended to properly anticipate these expenses and assure that the homeowners are prepared to deal with them.

A poorly funded reserve can result in special assessments and deferred maintenance. As the physical assets age and deteriorate, it is important to accumulate financial assets to keep the two “in balance”.  A stable reserve funding plan ensures that all owners pay their own “fair share” of ongoing common area deterioration.

3 thoughts on “Reserves – A Savings Plan for the Association

  1. Good explanation of how Reserves work, I’m sure that this will educate some who do not have a business background. Earlier I posted a question regarding the Ponds: If they were drained allowing the former natural water flow and turn the area into a fenced Doggie Park the Association would reduce the size of reserves required and create an area that would be used by far more owners than the maybe handful at the Ponds today. No Ponds would also eliminate mosquito breading grounds. This seems to me that it is an idea that should be put up to vote and studied depending on the out come of the vote. The vote should be open to all, not just the Annual Meeting as the timing of the meeting is not the best for all Owners.

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    1. Don, the “ponds” seem to be a needed drainage catch basin for the lodges area. The festival area is a wonderful underutilized area of WMVV. Per many previous discussions the main concern for the Festival area is Mosquito Abatement. In my research it seems the best answer would be to circulate the existing water catchment areas and improve the flow thru and out of MWVV. Next would be how to use the Festival area for fitness and other fun family events. I think before any Votes there is quite a bit of research that needs to be completed on water flow thru the community. Plus, other homeowners may have ideas to better improve the use of this natural area left by the developer to enhance the forest feel of WMVV.

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  2. Please be advised that the Advisory Committee has this topic and area being shepherded by owner Donna Holick who represents the Festival area. She is working on many items to resolve Mosquito concerns and abatement.
    This is a special area that has special needs. Please be aware that 4 existing owners and several unsold Lots in the lodges feature the Ponds and many like this feature. Please discuss your thoughts and those of your area with Donna.
    On the subject of voting. This is exactly the kind of issue that should be discussed at the annual meeting. If the annual meeting time is not best for all owners I suggest you make this a topic for the committee member’s to poll there areas and see if this can be changed. The annual meeting will become much more important and significant as we move toward hand off from developer to HOA control. ALL SHOULD MAKE THE ANNUAL MEETING A PRIORITY EVENT EVERY YEAR!

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