HOAs and community associations have a responsibility to
establish and maintain a Replacement Reserve Fund to provide for the
maintenance or replacement of the association's depreciable components.
Some governing bodies require that the HOA conduct a regular review of their
reserve components funding plan as a requirement of their fiduciary
responsibility to manage the association's funds and property.
As an officer on my local HOA Board, it was my responsibility to review a recently completed reserve study. I found that the report as delivered by the company that performed the reserve study was severely flawed:
As a consultant with a large Fortune 500 company, I developed a good
background in financial capital planning. I took it upon myself to
completely re-do the reserve study using a Microsoft Excel financial
analysis tool that I developed specifically for this purpose.
Over the next many months, I enhanced the tool and added several functions, eventually making the application available to others. During the development of this application, the key design factor was to make the application one that could be used by anyone ... whether you are an association board member, an accountant or a reserve study professional. This tool is ideal for the HOA or community association that wishes to perform a reserve study themselves.
The RFA application is ideal for performing an update as the reserve component inventory is typically unchanged. These updates can easily be performed by the HOA or the association themselves. Especially true for smaller HOAs. Besides an update of the actual component inventory, the purpose of regular updates is to review the financial information and funding plan. The Reserve Funding Analyzer was developed as a tool for HOAs and community associations to perform the analysis and develop sound funding plans.
It can be used as the financial tool for a full reserve study or to create financial analysis and develop funding strategies when updating an existing reserve study.