ReservesPPoint_web

What is a Replacement Reserve Account? : 

What is a Replacement Reserve Account? Replacement Reserve Account (RRA): savings account for anticipated repair and ultimate replacement of community owned assets Replaceable capital assets: $3,000 minimum value Expected useful life between 3 and 30 years A properly funded RRA: assures funds will be available to replace assets on schedule & cover unexpected major repairs

What is a reserve study? : 

What is a reserve study? Physical Analysis Component inventory (replaceable capital assets) Condition evaluation Age adjustment (useful life and remaining useful life) Costs to replace Financial Analysis Current reserve fund strength, measured in cash or percent funded Funding plan - recommendation for appropriate contribution rate Funding goal - amount of available cash in the account determined by the funding method: full, threshold or baseline funding

Importance of reserve study : 

Importance of reserve study Important in evaluating overall value of community Shows owners and potential buyers more accurate and complete picture of the association’s financial strength and market value Helps protect against declining property values due to deferred maintenance Associations with adequately funded replacement reserve accounts rarely experience deferred maintenance or special assessments

Funding Principles : 

Funding Principles Sufficient cash to perform reserve projects on time A stable contribution rate is the hallmark of a proactive plan Evenly distributed owner contributions enable each owner to pay their “fair share” over the course of many years Fiscally responsible and safe

Funding Goals : 

Funding Goals Full Funding (100%) Maintaining the Reserve Fund at a level equal to the physical deterioration of the asset that has occurred Threshold Funding Any objective randomly selected level between baseline and full funding Baseline Funding Allowing reserves to fall close to zero, but not below zero

Full or 100% Funding : 

Full or 100% Funding Cost of physical asset divided by number of years you expect to keep it + inflation factor. Example: $20,000 truck you expect to replace in 10 years $20,000/10 = $2,000 per year contribution When the truck is 5 years old you should have $10,000 in the reserve account for that asset. When it reaches its maximum life of 10 years, the full $20,000 will have been saved Formula repeated for every capital asset

The SROA Reserve Study : 

The SROA Reserve Study Now that we know all about reserve studies and reserve accounts, let’s examine our reserve specialist’s findings and recommendations…

Recommended Funding Goal : 

Recommended Funding Goal The Felix Reserve Group recommends: A multi-year funding plan to gradually bring our association to a 100% or fully funded level Maintaining reserve fund for that asset at a level equal to physical deterioration that has occurred Associations in the 100% range rarely experience special assessments or deferred maintenance!

Slide 10: 

Rating Percent Funded Less than 30% = “Poor” Special assessments and deferred maintenance are common 70% - 130% = “Strong” because in this range cash flow problems are rare IDEAL

2008 Reserve Study Executive Summary : 

2008 Reserve Study Executive Summary Projected starting reserve balance……. $1,000,000 Fully funded reserve balance…………...$6,000,000 Percent funded…………………………... 17.5% Current monthly reserve contribution…… $47,700 Recommended monthly reserve contribution…………………….… $176,500 Starting in 2010 - approximately $30 per month increase per unit

2008 Reserve Study conclusion : 

2008 Reserve Study conclusion Less than 30% means special assessments and deferred maintenance are common We are here IDEAL

Reserve Fund History and Projections : 

Reserve Fund History and Projections

SROA’s Replaceable Capital Assets : 

SROA’s Replaceable Capital Assets Over 400 Replaceable Capital Assets including, but not limited to: 65 miles of roads 34 miles of paved pathways 26 tennis courts 2 swimming pool facilities Cardinal Landing Bridge Estimated total value is $150,000,000 +/-

Deteriorating pathways : 

Deteriorating pathways

Slide 16: 

Cardinal Landing Bridge repair : 

Cardinal Landing Bridge repair

Tennis court cracking : 

Tennis court cracking

Road deterioration : 

Road deterioration

Slide 22: 

We can do better!

“Opportunity is missed by most people because it is dressed in overalls and it looks like work.” : 

“Opportunity is missed by most people because it is dressed in overalls and it looks like work.” Thomas Edison

Road reconstruction - summer 2008 : 

Road reconstruction - summer 2008

Slide 26: 

Results of the 2008 reconstruction effort

Slide 27: 

Your association reserves at work

Refurbished entry monument : 

Refurbished entry monument

Renewing the Pride : 

Renewing the Pride South Century Drive Roundabout

WE CAN DO IT : 

WE CAN DO IT But We NeedYour Help! Reinvest, Renew, Restore The Pride

2009 Ballot Measure : 

2009 Ballot Measure Shall the Sunriver Owners Association be authorized to increase the annual maintenance assessment by $30.00 per month to $87.94 per month effective January 1, 2010 to adequately fund its operations budget, and its Replacement Reserve Account in accordance with the Felix Reserve Group reserve study multi-year funding plan and financial policies adopted on February 14, 2009 by the board of directors?

Historic comparison of monthly fees : 

Historic comparison of monthly fees

Potential monthly maintenance fees : 

Potential monthly maintenance fees Current monthly maintenance fee = $58 Increase needed for reserves + $30 +/- = $88 +/-

Your board’s commitment to you : 

Your board’s commitment to you SROA’s Financial Policies and Reserve Funding Goals: Professional study required Full reserve study by reserve specialist every three years Board Oversight & Review Board workshop with GM, reserve specialist and finance committee to review reserve study upon completion Yearly Analysis Staff review and update under the direction of the GM Adoption of Multi-Year Funding Plan Follow reserve specialist’s multi-year funding plan with goal of achieving 70% to 100% funding level Adopted Funding Goal Once achieved, future boards will contribute assessments in an amount sufficient to maintain 70% to 100% funding level

2009 is the“YEAR OF CHOICE”and theChoice Is YOURS“It’s your community, it’s your decision.” Conclusion : 

2009 is the“YEAR OF CHOICE”and theChoice Is YOURS“It’s your community, it’s your decision.” Conclusion