What is a Reserve Study?
A Reserve Study is a review of a condominium complex for all repairs and future replacement needs for all “common elements” of a Condominium or Homeowners Association. It forecasts a timeline for these repairs and an estimated budget. It then analyzes whether the current association fees will cover these future expenditures or if an adjustment is necessary. The goal is to eliminate the practice of special assessments to cover property repairs.
Why do you need a Reserve Study?
- Ohio law mandates a reserve study on Condominium Association finances be completed.
- It provides for planned replacement of the “common elements” of a Community Association.
- It minimizes the need for special assessments by insuring adequate funds are allocated for major repairs.
- Allows for the equal distribution of repair and replacement costs.
- Increases resale values by lowering the risk of special assessments and ensuring adequate funds will be available for repair of replacement of “common elements”.
What can I expect from J. R. Johnson Engineering during a Reserve Study?
- A representative will conduct a walk-down of the entire facility. During the site visitation the quantity, type, size and estimated remaining useful life of all equipment discovered will be documented. Sketches may be produced that show the building layout, equipment systems, and configurations. Additionally, photographs will be taken to further identify and document the equipment, building and grounds.
- Following the site visit, a J.R. Johnson Engineering estimator prepares a cost estimate. The estimators perform a building and equipment inventory using the information, photographs and engineering notes gathered during the site visit. The estimators then determine the present costs to replace or repair the identified equipment. This is accomplished using standard cost estimating techniques. Additional resources used include nationally recognized cost data information and actual vendor price quotes.
- The analysis produces a thirty year repair and replacement schedule which shows all events by component and cost. A funding plan for the repairs and maintenance is then generated to advise the Condominium Association how much money needs to be raised each year to meet the projected costs. The plan includes the effects of inflation, return on invested funds and taxes.
- This analysis is assembled into an easy to understand Reserve Study Report summarizing the timeframe and costs for the repair and replacement of the building and grounds components. The report also identifies a funding plan that will allow the Condominium Association to budget for their future Reserve Funding needs.