THE RESERVE FUND
It is a legal requirement of all condominium corporations to establish and maintain a reserve fund. The reserve fund sets aside money for non-routine repairs and replacements of property of the corporation. Everything outside of our units including windows, doors, attics, roof, siding, decks, drives, railings, roadways, and landscaping is common property owned by the corporation that all owners own a part of. The replacement and non-routine repair of our common property is paid for by our reserve fund.
No one wants to see an increase in their monthly contribution. The board made lower reserve fund contributions for 2019 and 2020 to prevent a large increase in our monthly contribution. Our monthly contributions have not kept pace with the increases in the cost of insurance, administration costs, maintenance, and routine repairs. These increased costs have resulted in the reduction of contributions to the reserve fund. The board budgeted a larger reserve contribution in 2021 and that will keep up with the capital projects performed in 2021.
The value of our units is directly tied to the amount of money in the reserve fund and the monthly contribution. The money we put into the reserve fund increases the value of our units. If the reserve fund is underfunded, it negatively impacts the value of our units. The price point Ventana Woods units are at is a great value. If we keep the monthly contributions lower than other similar properties it increases the marketability of our investment. I feel it is more important to keep a lower monthly contribution than building the reserve fund. I don’t feel comfortable with my hard-earned money in a reserve fund managed by the current board.
The last 5 years have shown how fast reserves can be depleted by capital projects. The current reserve fund study is an excellent lesson. I am in no way implying that it is the fault of the study or fault in the decisions of the board. The current reserve fund study called for an expenditure of 245K on concrete driveways. The corporation has spent over 435K on driveways. The 190K difference is the largest portion of the underfunding of the reserve fund.
The low reserve fund is a result of significant reserve fund spending on driveways and other capital projects. The money from the reserve fund is invested in capital projects that needed to be done quicker than forecast. It is important that the property is kept up. Just as important as a reserve fund balance we must keep up with needed capital projects to preserve our property. The state of the property also impacts the resale value of our units and residents’ enjoyment of their units. It is important that the board listens to residents and keeps monthly contributions low and is patient building the reserve fund over time.
We are all in this together. There are many different options to restore the reserve fund to a healthier level. Ventana Woods is a beautiful property with great owners. We will work together to keep “Ventana Woods … A great place to live”.