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Talk:Reserve study

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I am presenting the section below for review and updating. The nature for funding strategies should reflect the valuation of the common properties. I think the description of the straight line method is in error.

Funding methods and objectives[edit]

There are several reserve study funding methods and goals. These methods may be used to develop a funding strategy that corresponds with the risk tolerance of the community. In National reserve study Standards terminology,[1] there are two basic funding Methods: "Cash Flow" or "Straight Line". Straight Line Funding models utilize a methodology in which funds are allocated to specific components, often not modeling the real world function of the reserve fund (where all Reserve Funds are available to be spent on all legitimate Reserve projects).

Dan (talk) 19:26, 16 July 2014 (UTC) (This is really what straight line is about) "Full funding" describes the objective to have reserves on hand equivalent to the value of the deterioration of the each reserve component. For example, for a $10,000 (current cost) pool resurface project with a useful life of ten years, after two years, when the pool's surface has deteriorated 2/10 of $10,000, to be fully funded the association should have $2000 set aside for this component (and on and on again for each component). "Full funding" describes an objective where ongoing deterioration is offset by the proportional accumulation of cash.

All funding objectives are designed to meet exactly the same expenses outlined in the reserve component list. Thus the expenditures are identical, only the size of the reserve fund through the years is different. This means the size of reserve contributions between different reserve funding objectives is relatively small (typically only 10–15%).

They are in fact identical once the 'base line' is reached. More information is available here: [2]

Thanks, Dan.

References