One of the subjects discussed during the HOA Annual Meeting was the impact of a significant allocation of additional capital reserves to the budget for 2008. The complete study can be downloaded here: Raspberry Capital Reserve Fund Recommendations (1MB PDF).
II. SUMMARY: FUNDING RECOMMENDATION
After performing our cash flow analysis, we have determined the capital reserve account is significantly under funded. Per our conversation with Armstrong Management, the projected 2007 contribution to reserves is $4,134.00. Based upon a projected balance of $24,480.04 in the reserves as of 31 December 2007, we recommend contributing $45,200.00 to the reserve account in 2008. This large increase is mostly due the recent addition of the pool and tennis courts. Funding for these components constitutes approximately 50% of our 2008
Per Armstrong Management, we have calculated the portion of the 2008 recommended reserve funding associated with the common elements along Fox Creek Lane. These common elements include asphalt repair and repaving, entry signs, fencing, masonry point-up and vehicular guardrails. Based on their quantities and replacement costs, we have determined this portion to be approximately $5,150.00 of the $45,200.00 recommended for the 2008
contribution. Please refer to Appendix 1 “Reserve Replacement Table – Fox Creek Lane” for details.
The following table summarizes our reserve fund recommendations:
- Projected reserve balance (as of 12/31/07): $ 24,480.04 2007
- reserve funding (budgeted): $ 4,134.00
- 2008 recommended reserve funding: $ 45,200.00
- Fox Creek Lane portion: $ 5,150.00
This funding level is based upon our attached cash flow study which indicates if the community funds $4,134.00 in 2007, $45,200.00 in 2008 and increases the contribution 3% each year for the remaining 29 years of the study, the reserve account will reach a minimum balance of $35,606.26 in the year 2036. Please refer to Appendix 3 of this report for further details.
Per the Virginia Property Owners’ Association Act, a Capital Reserve
Study is required at least once every five years “to determine the
necessity and amount of reserves required to repair, replace and
restore the capital components.” The recommendations of this report may
need to be modified in subsequent studies. The annual contributions
should be regularly checked for adjustment due to actual performance,
inflation, etc. Please note this does not include any allowance for
emergencies, contingencies, or expenses for any other components.