March | 2012 | Reserve Studies for Community Associations
Dear Bill,
Even after 25 years, the Community Association industry continues to fascinate me. There is something new around every corner. Read about a complicated situation a developer created for three associations in our Story of the Month. There are still some fundamental Reserve Study questions we're regularly asked, so our lead article answers the question: Why is accounting for interest and inflation (especially inflation!) important?
We've had some fun with our ongoing “Davis-Stirling CID Act” quiz. We've posted the answers to last month's three quiz question so you can keep track of how well informed you are about California's Reserve Study laws.
A continued emphasis on some basic principles led us to the new content of the free webinars we offer each month. Please know that if you miss the “live” version of the webinar, you can always watch a recorded (YouTube) version on demand.
All this is just part of our continued efforts to set you up for long-term success and financial stability at your Association!
Sincerely,
Robert Nordlund, PE, RS
Founder/CEO Association Reserves, Inc.
Why Is Accounting For Interest And Inflation (Especially Inflation!) Important?
Interest earnings bring income to the association, and inflation takes it away. Interest earnings are good, as they provide income to the association, supplementing owner contributions. Inflation means that your projected Reserve expenses get more and more expensive in future years. But do interest and inflation offset each other? No. Not even close!
We just finished working on a Reserve Study project involving three different Associations, built at different times along the growing edge of a major metropolitan area. Originally (40-50 years ago) the area was considered “horse country”, featuring rustic homes, stables, horse trailers, and plenty of open space. Anticipating the construction of a new freeway in that area, a resourceful Developer purchased large lots of land, imagining gorgeous planned neighborhoods of sprawling new homes.
Think you know a lot about CA Civil Code Sections 1350 through 1378? Here's your chance to prove it! We'll pose 3 questions this month and provide the answers next month… along with more questions. To keep it interesting, there's a prize for Boardmembers or Managers who score 100%.
Here are the answers to last month's questions. Click on the link to see the percentage of our clients who answered correctly.
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