Challenges of TodayChallenges of Today

• We are all required to do more We are all required to do more with lesswith less

• Community Managers have less Community Managers have less time to get more accomplishedtime to get more accomplished

• HOAs are facing more and more HOAs are facing more and more deferred maintenance issuesdeferred maintenance issues

How to succeed in todayHow to succeed in today’’s s worldworld

• A well designed your reserve A well designed your reserve plan will save you money and plan will save you money and make your life easiermake your life easier

• Collaboration is critical for Collaboration is critical for successsuccess

• Set up a checks and balances Set up a checks and balances system utilizing 3system utilizing 3rdrd party party professionalsprofessionals

Step 1: Assess completely Step 1: Assess completely Fact: Everything in your property is inter-related. Fact: Everything in your property is inter-related.

MaintenanceMaintenanceImprovementsImprovements

Water UseWater Use

Step 1: Assessing Cause and Step 1: Assessing Cause and EffectEffectFact: Water Intrusion can have damaging results Fact: Water Intrusion can have damaging results

IntrusionIntrusion

MoldMold

Step 1: Assessing Cause and Step 1: Assessing Cause and EffectEffectFact: Over watering can cause poor drainage and Fact: Over watering can cause poor drainage and dry rotdry rot

Poor Drainage and Dry RotPoor Drainage and Dry Rot

Over WateringOver Watering

Step 1: Assessing property in two Step 1: Assessing property in two sectionssections

Building EnvelopeBuilding Envelope

Site ImprovementsSite Improvements

Step 1: Assess Building Envelope Step 1: Assess Building Envelope SystemsSystems

Siding, Windows, Decks (Side)Siding, Windows, Decks (Side)

Roofing (Top)Roofing (Top)

Foundation (Bottom)Foundation (Bottom)

Step 1: Assess Site Improvement Step 1: Assess Site Improvement SystemsSystems

CurbsCurbs

Brow ditchesBrow ditches

StreetsStreetsStorm drainsStorm drains

SlopesSlopes

Step 1: Assessing Life of Project Step 1: Assessing Life of Project

ChangingChanging Proximity to CoastProximity to Coast

DynamicDynamicHillsidesHillsides

Soils Soils EnvironmentEnvironment

Step 1: Assess whatStep 1: Assess what’’s missing?s missing?Concrete RepairsConcrete RepairsDeck RepairsDeck Repairs

Replacing PipesReplacing Pipes Termite TreatmentTermite Treatment

Step 2: Design an Improvement Step 2: Design an Improvement Schedule based upon priorities rather Schedule based upon priorities rather than serviceability than serviceability

Failing BeamsFailing BeamsNew Tile RoofNew Tile Roof

Termite DamageTermite Damage

Dry RotDry Rot

New SidingNew Siding

Fact: Component Approach is a band-aid fix. The Fact: Component Approach is a band-aid fix. The systems approach addresses underling issues and systems approach addresses underling issues and will save you money. will save you money.

Re-paintRe-paint

Step 2: Design a systematic Step 2: Design a systematic approach to funding repairs vs. approach to funding repairs vs. component drivencomponent driven

Step 2: Adopt a Step 2: Adopt a ““decade designeddecade designed”” approachapproach

SidingSiding

RoofingRoofingPavingPaving

Step 2: New Design ConsiderationsStep 2: New Design ConsiderationsDoes your community have a conservation program Does your community have a conservation program integrated in its reserve funding plan?integrated in its reserve funding plan?

VBG Pool/Spa VBG Pool/Spa RequirementsRequirements

Water Efficient Water Efficient LandscapeLandscape

Termite Termite TreatmenTreatmentt

New Fire CodesNew Fire Codes

Step 2: Design a funding plan to Step 2: Design a funding plan to maximize serviceabilitymaximize serviceabilityFact: Annual Maintenance Programs can extend Fact: Annual Maintenance Programs can extend useful lives of components and save your HOAs useful lives of components and save your HOAs money. money. For Example, if a property reduces its depreciation For Example, if a property reduces its depreciation by 10%, it can utilize that money to extend by 10%, it can utilize that money to extend serviceability of components.serviceability of components.

Step 2: Design feed back loop – Step 2: Design feed back loop – measurability toolmeasurability tool

ComplaintsComplaints

InputInput

Feedback LoopFeedback Loop

TrendsTrends

Step 2: Design a Funding Plan: How Step 2: Design a Funding Plan: How much do we need?much do we need?

Step 2: Design a Funding Plan: Step 2: Design a Funding Plan: Percent Funded How much is Percent Funded How much is enough?enough?

Boca Del Vista Phase IV; 50 Boca Del Vista Phase IV; 50 Irrigation timersIrrigation timersSpecific Specific ReplacementReplacement

Step 2: Design a Funding Plan: Step 2: Design a Funding Plan: Percent Funded How much is Percent Funded How much is enough?enough?

Boca Del Vista Phase IV; 50 Boca Del Vista Phase IV; 50 Irrigation timersIrrigation timers

Annual AllowanceAnnual Allowance

Step 2: Design a Funding Plan: Step 2: Design a Funding Plan: Percent Funded How much is Percent Funded How much is enough?enough?

Boca Del Vista Phase IV; 50 Boca Del Vista Phase IV; 50 Irrigation timersIrrigation timers

Annual Expenditures Annual Expenditures Projection Projection

Step 2: Design a Funding Plan: Step 2: Design a Funding Plan: Percent Funded How much is Percent Funded How much is enough?enough?

Boca Del Vista Phase IV; 50 Boca Del Vista Phase IV; 50 Irrigation timersIrrigation timers

Annual Expenditures Projection Annual Expenditures Projection

Step 2: Design a Funding Plan: Step 2: Design a Funding Plan: Percent Funded How much is Percent Funded How much is enough?enough?

Boca Del Vista Phase IV; 50 Boca Del Vista Phase IV; 50 Irrigation timersIrrigation timers

WeWe’’re talk' in money here, pay re talk' in money here, pay attention! attention!

Contribution Impact Inconsequential Contribution Impact Inconsequential

Step 2: Design a Funding Plan: Step 2: Design a Funding Plan: Percent Funded How much is Percent Funded How much is enough?enough?

Boca Del Vista Phase IV; 50 Boca Del Vista Phase IV; 50 Irrigation timersIrrigation timers

Reduces Current Liability by $20,000…………Reduces Current Liability by $20,000…………and increases percent funded by .25 of a and increases percent funded by .25 of a percentage point! percentage point!

Step 2: Design a Funding Plan: Step 2: Design a Funding Plan: Percent Funded How much is Percent Funded How much is enough?enough?

Regular Regular AssessmentsAssessments

Special Special AssessmentsAssessments

75-100%75-100%

50-74%50-74%

25-25-49%49%

0-24%0-24%

Step 2: Design a Funding PlanStep 2: Design a Funding Plan

California Civil Code § 1365.5 (e) (5) A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (4) to meet the association's obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired. The plan shall include a schedule of the date and amount of any change in regular or special assessments that would be needed to sufficiently fund the reserve funding plan. The plan shall be adopted by the board of directors at an open meeting before the membership of the association as described in Section 1363.05. If the board of directors determines that an assessment increase is necessary to fund the reserve funding plan, any increase shall be approved in a separate action of the board that is consistent with the procedure described in Section 1366.

Step 2: Design a Funding PlanStep 2: Design a Funding Plan

§1366. (a) Except as provided in this section, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this title. However, annual increases in regular assessments for any fiscal year, as authorized by subdivision (b), shall not be imposed unless the board has complied with subdivision (a) of Section 1365 with respect to that fiscal year, or has obtained the approval of owners…..

Step 2: Design a Funding PlanStep 2: Design a Funding Plan

FUNDING PLANSFUNDING PLANSWhen Do We Need it?When Do We Need it?

FUNDING PLAN - CONTRIBUTION FUNDING PLAN - CONTRIBUTION RATES RATES

Step 2: Design a Funding PlanStep 2: Design a Funding Plan

FUNDING PLANSFUNDING PLANS• Which To Which To Choose?Choose?

Current Current OwnersOwners

Future Future OwnersOwners

1.1.Stay the SameStay the Same2.2.Same, Adjust as Same, Adjust as

NeededNeeded3.3. Incremental IncreasesIncremental Increases4.4.100% Threshold100% Threshold

Step 2: Design a Funding PlanStep 2: Design a Funding Plan

Step 3: Implement Your Funding PlanStep 3: Implement Your Funding PlanFact: Your reserve plan Fact: Your reserve plan will make your life easierwill make your life easier and will save your HOA money if its properly and will save your HOA money if its properly designeddesigned

End Result: Greatest American HeroEnd Result: Greatest American Hero

Step 3: But Implementation is where Step 3: But Implementation is where most HOAs failmost HOAs fail

No SpecificationsNo SpecificationsNo DetailsNo Details

No AccountabilityNo Accountability

Step 3: Quality Control is critical to Step 3: Quality Control is critical to successful implementationsuccessful implementation

Fact: If you specifications and details are Fact: If you specifications and details are constructed per plan you increase your risk of constructed per plan you increase your risk of higher long term costs.higher long term costs.

Step 3: Collaboration is critical for Step 3: Collaboration is critical for successful implementationsuccessful implementation

Step 3: Implement checks and Step 3: Implement checks and balancesbalancesFact: Utilize 3Fact: Utilize 3rdrd party professionals to verify your party professionals to verify your funding plans are properly implemented funding plans are properly implemented

Step 3: Implement Annual Step 3: Implement Annual Maintenance ChecklistsMaintenance ChecklistsFact: Maintenance extends serviceabilityFact: Maintenance extends serviceability

If you cannot measure it, you can improve itIf you cannot measure it, you can improve it

1.1.Assessment and Reserve Funding Assessment and Reserve Funding Disclosure SummaryDisclosure Summary

2.2.Reserve Study Summary Reserve Study Summary 3.3.Funding Plan SummaryFunding Plan Summary

WhatWhat’’s Required By Laws Required By Law

• Current Market Value and Current Market Value and InflationInflation

Importance of Annual UpdatesImportance of Annual UpdatesWhatWhat’’s Required By Laws Required By Law

Fiscal Year

Date Prepared

Period Date Prepared

Period

2008 Prior to 12/1/2007

2008 Prior to 12/1/2007

2008-2038

2009 Prior to 12/1/2008

2009 Prior to 12/1/2007

2008-2038

2010 Prior to 12/1/2009

2010 Prior to 12/1/2007

2008-2038

2011 Prior to 12/1/2010

2011 Prior to 12/1/2010

2011-2041

2012 Prior to 12/1/2011

2012 Prior to 12/1/2010

2011-2041

2013 Prior to 12/1/2012

2013 Prior to 12/1/2010

2011-2041

Operating Budget Reserve Study

Importance of Annual UpdatesImportance of Annual Updates

Outdated Outdated InformationInformation

WhatWhat’’s Required By Laws Required By Law

• Reserve Study can make your life easier• Holistic Assessment• What’s missing?• Systems approach saves money • New design considerations• Collaboration is critical• Checks and balances and 3rd party

SummarySummary