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Association Reserves has provided our annual reserve study for the past 23 years. Since 2019, our reserve fund has increased slightly over several years. Beginning 2020, the percentage funded has been in a steep decline and will continue in 2025 if no action is taken.
In October, the ABM Board of Directors evaluated the condition of the ABM reserve fund. Our reserve analyst, Association Reserves, recommends that ABM consider a substantial increase in its reserve funding fee due when a property changes ownership.
The reserve fund account is funded by two sources; the reserve funding fee, due when a property changes ownership and a reserve fund allocation that comes from the operating account. The operating account is feeling the same cost squeeze as the reserve account. In 2024, we opted to paint 48th St walls from Cheyenne Dr to Warner Rd. and the walls along the FS-1 wash in-house, based on bids received. ABM will continue to take on reserve projects where we have the expertise to do so to keep repair costs and reserve expenses down, and to continue to enhance our community.
Approximately 75% of ABM’s operating budget line items have increased substantially. This is due to large increases in construction materials, water, fuel, oil, wood, metal, concrete, PVC, copper, brass, electrical parts, paint, etc. This, coupled with housing sales dropping over the last two years and continuing into 2025, the reserve fund account is in need of an overhaul. ABM routinely searches for better pricing on all items. We do not automatically replace items that hit their average useful life. Instead, we strive to keep our assets in good working order. Our maintenance vehicles are 29, 25 and 12 years old respectively.
Many factors go into purchasing a home, such as cleanliness, crime, schools and location. The amount of an HOA assessments and the risk of a loan or special assessment factor also go into the decision-making process.
Based on ABM’s low assessment and the maximum increase of 5% allowed, the operating budget is at its limit. The reserve funding is due upon the closing of a home in a real estate transaction or private sale. The fee is usually paid by the buyer or split between the seller and the buyer.
The ABM Board of Directors voted unanimously to increase the reserve funding fee from $400.00 to $1200.00 effective January 1, 2025, with a 3-year review. Our goal is to achieve an 80% fully funded balance. Once achieved, ABM should have very low risk of need for a special assessment.
*For more detailed information on the reserve study, please click the button below.
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