Estate Living Magazine The Slow Movement - Issue 39 March 2019 | Page 40

C O M M U N I T Y
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a description of the methods and
objectives utilised in computing the
fund status and in the development
of the funding plan
source(s) utilised to obtain
component repair or replacement
cost estimates
a description of the level of service
by which the reserve study was
prepared and the fiscal year for
which the reserve study was
prepared.
In the interests of transparency and
disclosure, experts recommend that a
comprehensive reserve also includes:
• a statement disclosing other
involvement(s) with the association
that could result in actual or
perceived conflicts of interest
• a narrative description of the
physical analysis that details how
the on-site observations were
performed
• a description of the assumptions
utilised for interest and inflation, tax
and other outside factors for the
financial analysis
• a written explanation of the
credentials held by the individual
who prepared the reserve study
• a report on how the current work is
reliant on the validity of prior reserve
studies
• discussion of material issues which,
if not disclosed, would cause a
distortion of the association’s
situation
• reliable information provided by the
association’s official representative
regarding financial, physical,
quantity or historical issues.
The reserve study process consists of
four stages, namely:
• determining a reserve schedule
• establishing a preventative
maintenance schedule
• selecting a funding plan
• developing an investment policy
L I V I N G
Determining a reserve schedule
A reserve schedule is the financial summary of the reserve study. Its format depends on the
funding method used, but its development will usually follow the steps detailed in the figure
below.
SELECTING RESERVE SCHEDULE COMPONENTS
Yes Step 1 - Review community documents to
determine: Is the component part of the
common elements? No
No Step 2 - Is the component covered under a
maintenance contract? Yes
No Step 3 - Is the component included in another
part of the budget? Yes
Yes Step 4 - Is the component a piece of
mechanical equipment? No
Yes Step 5 - Is the useful life of the component
within the selected time window? No
No Step 6 - Is the replacement cost below the
operating budget threshold? Yes
This item is a reserve item
Simbithi Eco Estate
This item is not a reserve item