Reserve Studies and Funds, 3rd edition - Digital Book
How and Why Community Associations Invest Their Assets

ISBN: 978-1-59618-053-6
2024, 68 pages
3rd edition
Author(s): Mitchell H. Frumkin, PE, RS, and Nico March, CFM, RRP
Product Format: eBook
Item #: 0536-E
Members: USD $15.00
Non-Members: USD $25.00
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One of the primary duties of a community association board is to protect, maintain, and enhance the physical assets of the community.
 
To achieve this goal, the board must continuously evaluate the physical and financial condition of the common areas of their community. A reserve study is a multiyear plan that anticipates and responsibly provides for ongoing preventive maintenance, periodic structural inspections, and the timely repair and replacement of these common area components.
 
An association has several funding options for repairs and replacements of common area components, but the most equitable method — and the only lawful one in some states — is to make regular, budgeted reserve fund contributions.
 
Reserve Studies and Funds presents the theory behind the preparation of a reserve study, how to view the reserve study as part of the association’s overall budget, how to take advantage of the relationship between reserves, maintenance, and structural safety, the methods for developing a realistic funding plan, and a discussion of the various funding techniques. In addition, the reader will find strategies for investing the reserve funds and additional information on financial reporting and tax implications of reserves.
 
Reserve Studies and Funds is one of six components of the CMCA Study Kit.
 
Contents
Acknowledgments
Preface
Introduction — Background and Key Points
 
Chapter 1 — What Is a Reserve Study? Why Is It Important?
Educating Owners
 
Chapter 2 — Conducting a Reserve Study
The Physical Evaluation
The Financial Analysis
Levels of Service
Who Should Prepare the Reserve Study?
How Often Should the Reserve Study Be Updated?
 
Chapter 3 — Reserve Funds
What Are Reserve Funds?
Establishing a Formal Investment Policy
Investing Risks
Inflation Impacts
Investment Categories and Risks
Suitable Investments
Investments That May Not Be Suitable
 
Chapter 4 — Generally Accepted Investment Strategies
The Laddering Concept
The Barbell Concept
Structured Asset Management
Infrastructure Investing and the Future
Fiduciary Duties and Liabilities
USA Patriot Act
Opening Investment Accounts
Ensuring Trust
Where Should Community Associations Invest Their Reserves?
Comparative Analysis of Investment Advice Fees
Taxation aspects
 
Appendices
Appendix 1 — Reserve Study Standards
Appendix 2 — Summary of State Reserve Studies and Funding Laws
Appendix 3 — Questions & Answers About Community Association Reserves
 
Additional Resources
 
0536-E
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