Here Is Your 2016 Reserve Study Update

The 2016 Reserve Study Update from Reserve Associates is available for download - Reserve Study 2016.pdf (6.6mb).

Download links for additional reference materials—including the previous 2011 Reserve Study—were posted in a news article on this site on May 19, 2016.

Please review these documents and use the information they contain to cast an informed vote on fully funding of the reserves. Ballots will be sent to all unit owners later this year.



Reserve Study information Documents

One of the important topics discussed at this year's annual meeting was the 2016 update to the previous 2011 Reserve Study. We had hoped it would arrive in time for the meeting, but it did not.

The update will be published online as soon as it arrives.

Meanwhile, we are posting several background documents about reserve funds. Just click the download links to open each portable document file in a new window. You can then download and store any or all of them to your local mobile device or computer.

Document One: What Is the Reserve Study.pdf This brief overview explains why Associations like ours pay professionals to conduct a Reserve Study at regular intervals.

Document Two: Reserve Fund 2011.pdf This is a brief slide show that shows the funding estimates from the last study, and reserve fund balances from 2014-15 for comparison purposes. It also discusses Ohio Condo law in this matter, and explains the concepts of fully funding versus fully funded.

Document Three: Reserve 2016 Slides. pdf This pdf document details the recent capital asset repairs that have taken place over the last 30 months, here at SVCA.

Document Four: Reserve Cover Letter.pdf This cover letter was attached to the slide show sent to Reserve Associates earlier this year when the 2016 study was officially requested. It asks them to include our recent improvements, and weigh them against future repair costs specific to our local market. It is our hope that the new study will offer us more realistic—and manageable—funding estimates.

All future news items about the Reserve Study will also be stored here in this new category, for ease of access.


Mandated Association Reserves

Excerpted from an article on Reserve funds from Kaman & Cusimano, our attorneys.

The most significant provision of Ohio’s new condominium legislation is mandated reserves.

5311.081(A)(1) specifies that “unless otherwise provided in the declaration or bylaws,” the board must adopt and amend budgets for revenues, expenditures, and reserves in an amount adequate to repair and replace major capital items in the normal course of operations, without the necessity of special assessments, unless the reserve requirement is waived annually by the unit owners exercising not less than a majority of the voting power of the unit owners’ association.

Special assessments cause financial hardships, increase foreclosures, and decrease an association’s reputation. Ohio legislators obviously heard the complaints of owners on the receiving end of special assessments. As a result, we have a state mandated standard of budgeting, which, at a minimum, requires communication and a vote by ownership if the standard is not going to be met. In reality, the new law is more about mandating communication with the owners about reserves than it is about mandating reserves.

It is unrealistic to expect currently existing associations to operate without special assessments. However, ten or fifteen years from now, a special assessment in a currently existing association could very well be met with a lawsuit by an owner claiming the board breached a duty. As a result, a wise board should consider implementing the following procedure:

  • authorize the completion of a reserve study so as to detail the association’s component parts, life expectancy and replacement costs. Share the results of the reserve study with the owners and budget in accordance with the reserve study.

For many associations, fully funded reserves in accordance with a reserve study are going to cause a drastic, but necessary, increase in fees. If a board believes that fully funding the reserves will cause too drastic of an increase, it must send a letter and a ballot to each owner. The letter must disclose the amount necessary for fully funded reserves. In addition to disclosing the amount necessary to fully fund reserves, the board should indicate the lower amount the board proposes be put into reserves, and request ownership approval of the alternative, lower amount. A ballot should be included for the owner to sign and return. In the event the board fails to obtain majority approval for the lower reserve amount, the fully funded reserve must be implemented. Current bylaws dictate the date by which the board must have an approved budget for the following year. All balloting must be completed in time for the board to meet the required budget approval date.