Reserve Studies

Establishing and properly maintaining a reserve fund is essential to the longevity of a community association. Not only does a reserve fund protect homeowners’ property value, it enhances resale values, as many states require the submission of current reserve fund balances to potential homebuyers. Reserve funds protect property values by providing the means to replace deteriorated capital assets before they become problematic, ultimately lowering property values. In addition, maintaining a reserve fund will decrease the need for a special assessment, which can result in a heavy financial burden for the community members.

Facility Engineering Associates (FEA) observes and documents the common property elements, and assesses the condition of the elements and when replacement should be scheduled. FEA estimates replacement costs by taking into account reliability of systems currently in place, our experience with potential alternative systems, constructability of replacement systems, and the need to budget for special circumstances. Using the replacement cost data developed for the study, we analyze the reserve fund requirements for the community. Our analysis method for reserve studies is a combination of the component method and cash flow method. Our recommendations are based on cash flow projections for a 20-year study period. We recognize that every community association is unique. With our reserve software, we can analyze a variety of funding scenarios to suit the needs and goals of the community. A draft report is submitted for each reserve study, for review by the Board of Directors. By doing this, we can incorporate the priorities of each association into the final reserve study report.

Due to changing financial conditions and varying aging patterns of components, reserve study updates should be conducted every three to five years. Updates insure the integrity of the reserve fund and the financial well-being of any community.

FEA’s reserve studies are performed or supervised by certified Reserve Specialists. This designation is awarded by the Community Associations Institute (CAI), based on demonstrated experience and knowledge of reserve funding principles, as well as client recommendations.

Our Clients

  • CFM Management Services
  • Legum & Norman, Inc.
  • Kingstowne Residential Owners Corporation
  • Ashburn Village Community Association

Project Profiles

Resource Links

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