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Budgeting for Capital Repairs

Posted By Kevin Giles, Giles Flythe Engineers, Wednesday, May 20, 2020
Updated: Thursday, June 4, 2020

Is your association considering some capital repairs and needs guidance for planning? Kevin Giles (Giles Flythe Engineers) talks you through it in today's CAI-NC Minute.

 

Kevin Giles - CAI-Minute Giles Flythe Engineers from Amy Morrison on Vimeo.

Tags:  cai-nc  cai-nc minute  capital repairs  community association management  community associations  community associations institute  community managers  condominium associations  hoa  homeowners associations  reserve studies 

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Reserve Study, Technical Study: What's the Difference?

Posted By Peter Miller, Miller Dodson Associates Inc., Tuesday, March 24, 2020

Reserve Studies are not a substitute for more in-depth Technical Studies, but they work hand-in-hand!

Boards too often confuse the role of the Reserve Study with the role of other, more in-depth technical consultations. "We don't need to hire this or that engineer because the Reserve Study will cover that!" WRONG! They serve two distinct purposes and one does not provide the same benefits as the other, although it is somewhat understandable since each is done with elements of engineering, architecture and/or other technical knowledge.

A Reserve Study, while  based upon visual observations of physical conditions, is intended as a financial recommendation for budgeting purposes, i.e., a financial planning tool. Frequently, when physical conditions warrant, the Reserve Study may recommend further, more in-depth technical inspections. But the intent of these more in-depth technical studies is to help "inform" the Reserve Study and to increase the accuracy of its recommendations. Board members and management professionals should view their Reserve Specialist as being similar to their medical general practitioner. The Reserve Specialist will visually assess the physical condition of the Association's common- and limited-common elements. And if it is felt that further investigation is indicated, just like the GP, they will recommend the services of certain "specialists." Once those specialists, i.e., architects, engineers, roof or masonry or lake and pond consultants, etc., have completed their investigation, then those results will be used to confirm or modify the initial recommendations.

A seminar which several colleagues and I presented at another CAI Chapter's 2019 Annual Conference explored the topic "Why Aren't Reserve Studies More Accurate?" The main point was that, all too often, Boards would not spend the money to hire additional consultants; they expected the Reserve Specialist to "know it all"! It was the perfect opportunity to shine a light on what I consider the two biggest fallacies in the Reserve Study world. The first is that the Reserve Specialist in an all-knowing, prescient being who can tell you everything you need to know about your community association's common- and limited-common elements. The second fallacy is that you can actually hire this omniscient, all-knowing being simply based on the proposal's bottom line!

It will sometimes require a team of experts to determine all the issues necessary to provide an accurate and realistic Reserve Study.  This is true for all types of associations! The small association with a entrance sign and a storm water pond will often need these in-depth examinations just as much as the large-scale association, or the townhouse, mid-rise, or high-rise condo.

For instance, it is important to the accuracy of the Reserve Study funding recommendations to establish a baseline for the storm water ponds; and the earlier in the existence of an Association's pond(s) the better. The most effective way to do this is by conducting a bathymetric study of each pond.[1] This will note only help establish that bottom contour baseline, but it will identify areas where sedimentation can be mitigated to extend the time until dredging will be necessary. Otherwise, the estimated funding requirements are simply an educated guess. And when something as potentially expensive as pond dredging is at stake, accuracy is important.

So it is important to not only understand the vital role of the Reserve Study, it is also important to have realistic expectations as to what the Reserve Study does, and what role the other possible consultants play in the accuracy of the Reserve Study Funding Recommendations.

 

Peter B. Miller, RS, has been a member of the NC Chapter of CAI for more than 20 years. An Architect in his previous career, Peter has been conducting Reserve Studies for over 25 years. Peter currently serves on the Board of Trustees of CAI National, he is the 2020 Chair of the Business Partners' Council, and is a member of the Foundation for Community Association Research (FCAR).



[1] Because of the cost of the technology, Bathymetric Studies used to be the sole purview of Government Agencies like NOAA and the US Army Corps of Engineers for mapping bottom contours of our Nation's navigable waterways. The technology is now available and affordable enough to be done on an individual pond basis.

 

Tags:  cai-nc minute  community association management  community associations  community management  community managers  condominium associations  hoa  homeowners associations  NC HOA Law Blog  reserve studies 

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