RESERVING FOR THE FUTURE
As Board Treasurer of the Desert Ridge Community Association, I am sometimes asked about the reserves on the association’s balance sheet and what they are based on. Balance sheet reserves are funds set aside to pay for future maintenance, repairs, and replacement of common area components in the community.
The DRCA reserves are based on annual reserve studies done by a third-party company that specializes in estimating the usable life of each common area component. These estimates are typically very accurate, but there are some instances where a component may last a little longer than predicted. There are also times where a component may not reach the predicted lifespan due to changes in technology or vandalism.
These reserves pay for a wide range of things such as the repair of irrigation systems, painting walls, wash repair/fortification, replenishment of the decomposed granite throughout the community, and much more. This month we began a project to refresh a large portion of decomposed granite throughout the community. The $615,000 cost of this project is something for which we have been reserving over eight years.
The DRCA Board of Directors is continuously keeping an eye on the reserves to ensure that the association does not fall behind on its maintenance obligations. We understand that when Community and/or Homeowner Associations don’t properly reserve funds, they really start to show their age. Once a community starts to fall behind on maintenance, property values can drop rapidly. Therefore, we will continue to rely on our reserve analysts and experience to keep our reserves at the correct levels.
HOUSEHOLD RESERVES
Reserves aren’t something that are restricted to the DRCA and its sub associations, they are also a great practice for an individual household budget. I have heard different financial experts talk about putting a percentage of your income aside for retirement, and another percentage aside for emergency use. However, homeowners should also put money aside to replace components which have very established usable life expectancies. Here are just a few examples:
• Painting your home (Exterior)–7 to 10 years
• Painting your home (Interior)–10 years
• Water heater–8 to 10 years
• Air conditioner–7 to 15 years
• Tile roof underlayment–Every 20 years
The numbers are general estimates. The life expectancy of any component varies with usage, weather, quality of materials, proper installation and maintenance.
GET PERMISSION FIRST
Prior to beginning any exterior work on your home and/or yard an Architectural Approval Request Form must be completed and submitted for approval by the Design Review Committee. This form can be found on the community website, https://desertridgelifestyles.org under the tab titled “Forms & Docs”
By planning in advance and reserving for the bigger components you can avoid both the surprise and stress that people who don’t prepare experience.
If you have any questions or concerns, please contact the Community Association office at 480-551-4553 8am – 5pm, Monday-Friday or Email: desertridge.az@fsresidential.com
