Proposals
Have some questions looking over your reserve study proposal? Here is some extra information.
Levels of Service
(As defined by the
National Reserve Study Standards of CAI)
Level 1
Full,
With-Site-Visit
A Reserve Study in which the following five tasks are performed:
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Component Inventory (quantification and verification)
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Condition Assessment
(based upon on-site visual observations) -
Life and Valuation Estimates
-
Fund Status
-
Funding Plan
Level 2
Update,
With-Site-Visit
A Reserve Study in which the following five tasks are performed:
-
Component Inventory
(no quantification,
verification only) -
Condition Assessment
(based upon on-site visual observations) -
Life and Valuation Estimates
-
Fund Status
-
Funding Plan
Level 3
Update,
No-Site-Visit
A Reserve Study in which the following three tasks are performed:
-
Life and Valuation Estimates
-
Fund Status
-
Funding Plan
Qualifications
Mike Graves, RS
Mr. Graves has performed numerous Level I, Level II, and Level III reserve studies throughout Southern California. These studies range from full evaluations with site inspection to financial updates. He is very familiar with common area components that make up the component identification report of a reserve study and is able to advise the Board which level of report is best for the association. SCT Reserve Consultants, Inc. has performed studies ranging from small six-unit condominium complexes to large 6,000+ unit master associations. Mr. Graves has received the distinguished Reserve Specialist (RS) designation from the Community Association Institute (CAI). Additionally, his involvement in the industry includes Board of Director and Committee positions with several chapters of CAI and CACM.
Reserve Study
SCOPE OF SERVICES
SCT Reserve Consultants, Inc. will provide a report to your Association that meets or exceeds the Davis-Stirling Common Interest Development Act requirements. We will work with the Association's representative(s) to gather the documents necessary to identify the association’s components. Documents likely to be reviewed include Original DRE Budget and Site Plan, CC&R's, Original Construction Contract Documents (plans and specifications), Major Component Maintenance Records and Warranties, and a Previous Reserve Study.
An accurate assessment of the condition of the components is a critical aspect of the site inspection. Often phasing the repair or replacement of components can reduce the strain on the cash flow and more precisely portray the future expenditures of those components.
All components of a development have an anticipated service life defined as the time in which the major components will need replacement or major restoration. All replacement costs will include the anticipated labor and materials to replace the component in kind. We may contact contractors and reference trade publications to determine the costs of major component replacement. We may also consult manufacturers' guidelines and warranties, as well as appropriate construction manuals to evaluate anticipated service lives.
INSURANCE
PRA SYSTEM SOFTWARE
The calculations, projections and reports in our reserve studies are generated using the PRA System (PRA). PRA has received a Quality Assurance Evaluation from a Certified Public Accounting firm verifying the system for accuracy and compliance with the AICPA's Audit and Accounting Guide for Common Interest Reality Associations, cash flow projections, and tax calculations consistent with IRS guidelines for 1120c and 1120h corporations. PRA provides for complete, flexible reserve study assumptions while allowing for either current cost or future cost projections while calculating interest and projecting cash flows on a monthly and annual basis.
(Included, All Levels)
We are a fully insured corporation. We carry auto, workers’ comp, general liability, and error and omission policies.
Level 1 & 2
SITE INSPECTION
Once a Level I or a Level II site inspection is chosen the site will be surveyed to determine the quantity (if a Level I is chosen), the full and remaining lives, and the cost of all major components. This survey will be limited to the Association’s common area components.
Undisclosed components may result in additional fees. A major component is defined as an item that the Association is responsible for maintaining and has an estimated life of between 2 and 30 years. We can also take the following into consideration: irrigation renovation, landscape renewal, lighting upgrades, remodeling work, termite treatments, and tree trimming. We recommend the Association take advantage of annual updates between the site inspections for a nominal fee.
A Level I site inspection includes QUANTIFICATION (or counting and measuring) of all components, whereas a Level II site inspection does not include quantification of all components. In order to conduct a Level II reserve study, it is necessary for the Association to provide accurate component quantities.
A Level II satisfies the CA Civil Code requirement for an on-site inspection once every three years.
RESERVE FUNDING PLAN
Initially we will provide a report to the Board of Directors and Community Association Manager after which we can tailor a funding plan that suits the needs of the association. In the event the Association is underfunded we will suggest some options to help overcome the deficit. We can offer various options to achieve the funding level desired within the Association. There are three primary methodologies for funding reserves:
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Baseline Funding – establishing a reserve-funding goal of keeping the reserve cash balance above zero.
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Full Funding – setting a reserve-funding goal of attaining and maintaining reserves at or near 100% funded.
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Threshold Funding – establishing a reserve-funding goal of keeping the reserve balance above a specified dollar or percent funded amount.
A good funding plan may incorporate more than just one type of goal. We can phase expensive components. This technique when applied sensibly will lower the spikes in expenditures and will therefore ease the burden of the Association’s components on the cash flow. It can be an effective tool for both short- and long-term planning. Inflation, return on investment, special assessments, litigation proceeds, and reserve account payback can all be factored into the financial analysis. SCT Reserve Consultants, Inc.’s Reserve Study is designed to enable the Association to be in compliance with the Codes and puts the Association back in control of their reserves.
DISCLOSURE FORM
The passage of Assembly Bill 2718 which took effect July 1, 2005 requires reserve studies to disclose to the membership how the association will fund their reserves, addresses the need to special assess or not, and changes the window of disclosure notice. See California Civil Code Section 5570 for more information. The “Assessment and Reserve Funding Disclosure Summary” will also require distribution to the membership. Our report will (as always) comply with all Civil Code requirements. This form cannot be provided without the completion of a reserve study (any level).
Optional Professional Services
MEETING ATTENDANCE
It may be helpful to attend a board meeting with the Board of Directors and Community Association Manager to review the final or draft report and to make any necessary modifications or revisions. We are available by Zoom or conference call. There is often no charge for this service.
PHOTOGRAPHIC DOCUMENTATION
These services are available, and fees vary by the number of components. Some of the major items that may be included are outlined in your proposal.
Extra Consulting
It may be beneficial to request additional time beyond the reserve study scope. We offer extra consulting, if needed, for an hourly charge.
RESERVE STUDY LIMITATIONS
It should be noted that the estimated useful lives of reserve components are significantly affected by regular maintenance and that all estimates provided by SCT Reserve Consultants, Inc. reflect regular maintenance and average weather conditions. Acts of God, vandalism, labor and material price fluctuations, unusual weather conditions, or premature failure of a component will be given minimal consideration in the estimation of the useful lives of the components.
SCT Reserve Consultants, Inc. shall not be held responsible for any incorrect advice, judgment or decisions based on any inaccurate information furnished by the Homeowners Association. SCT Reserve Consultants, Inc. is offering no opinion regarding construction defects, hazardous materials, or the actual cost or actual lives of any component. Electrical, sewer, plumbing, telephone, or any component considered having the same useful life of the complex are not considered a part of the Reserve Study. SCT Reserve Consultants, Inc.’s liability for damages due to professional negligence will be limited to an amount not to exceed the cost of the report