Bridge Pointe is a neighborhood managed by a Home Owner Association (HOA) like thousands and thousands of other neighborhoods in the US. Of course, HOA legal structures vary in size and myriad details but a common point in purpose and mission is to protect long-term property values and properly care for, maintain, and replace (when necessary) community owned property (assets).
Taking care of Bridge Pointe community property has been an issue recently brought into sharp focus by the realization that we have assets that could easily be valued at $350,000 to over $500,000 at market replacement cost. To bring heightened awareness to the matter is the fact that our most valuable assets (the pool, as an example) are 30 years old which puts them in the final third of their realizable life-span. Like an older car, age brings increased maintenance costs and the serious need to budget for the time when maintenance costs escalate or replacement would be required.
The standard methodology among “best practices” of HOA management is to reserve or save for future financial obligations to care for and replace assets as they deteriorate or reach end of life.
The subject has provoked lively conversation and debate in our neighborhood as it has across the country. This has been healthy for our neighborhood and has drawn opinion from many. While the details still bring much discussion, there is widespread agreement that our neighborhood is “under reserved” for the future. This is why dues have been going up and this is why our board leaders are paying attention to long-term financial planning.
There is much good news related to this topic of reserving. First and foremost we now have reserves! By year end, our reserves could be approaching $40,000! We also, by year-end 2016, had a plan in place that was the precursor to this entire reserving process.
Our board leadership has discovered that there is yet a better path forward and a way to improve upon what was started with Jason White’s election as board president. Several months ago Jason reached out to experts in the field of HOA management. Our board authorized payment to The Hignell Companies (Hignell.com) to review our foundation and operating documents as well as our reserving practice and system.
The resulting report encourages a much more detailed process for determining our reserves requirement and accruing the necessary cash. We encourage all neighbors to be familiar with the 30-year asset evaluation when available and that the board is working to perfect.
Article Submitted by Pat Rainey