RESERVE FUNDING
Case Study: Building a Foundation for Long-Term Asset Management in a Small Association
COMMUNITY PROFILE • Property Type: Townhome community • Location: Big Sky, Mont. • Size: 32 units • Age: Over 20 years • Reserve Study History: No reserve study prior to 2024
CHALLENGE: MAJOR CAPITAL NEEDS WITHOUT A PLANNING FRAMEWORK This small townhome association operated for more than two decades without ever completing a reserve study. During that time, the community relied heavily on special assessments and reac- tive decision-making to address major repair needs. Immediately prior to commissioning its first reserve study, the association completed a $2 mil- lion deck and balcony replacement funded through special assessments. Despite this significant investment, the community continued to experience unresolved roof issues even though the roofs were replaced between 2018 and 2020.
Without a reserve study or long-term capital plan, the board faced several foundational chal- lenges common to associations lacking structured reserve planning:
• No established reserve fund or understanding of reserve principles. • No formal maintenance schedule. • Unclear distinction between operating expenses and reserve expenditures. • Deferred maintenance affecting critical components. • Ongoing reliance on emergency funding to address major repairs.
These conditions left the board vulnerable to financial shocks and limited its ability to plan pro- actively.
EVALUATION: ESTABLISHING BASELINE KNOWLEDGE AND ASSET AWARENESS When the reserve study process began in 2024, it was clear the association needed more than a funding model. It required foundational education about reserves, asset lifecycles, and long- term planning.
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