Waterford Lakes Homeowners Association
Notice of Special Finance Meeting Thursday, September 24th
In 2017, the Board approved a monthly assessment increase from $125/month to $150/month to help fund the $750,000 roof replacement project. In addition, $72,000/annually was to be moved from the operating budget to the Roofing Reserve Fund. By the end of 2020, we will have completed 28 roofs with 25 buildings and the clubhouse remaining. However, due to increases in material costs over the past four years, the association’s original timeline for the completion of the roofing project has been extended. As promised, this project will be completed without the need for a Special Assessment.
This year the Board appointed a Finance Committee to undertake a General Reserve Study and present a detailed 10 year Reserve Plan with a Phase #1 and Phase #2. This Reserve Study included:
· an infrastructure assessment estimating the remaining useful life of the major physical components of the Waterford Lakes property;
· obtaining price quotes from contractors;
· putting together capital repair & replacement timelines and schedules; and to
· determine how much money is necessary for the Association to adequately fund the General Reserves to meet both our immediate and future capital maintenance, repair and replacement needs as set forth in our governing documents.
The Board and Finance Committee are set to present the 10 year General Reserve Plan and fee schedule on Thursday, September 24th. We will have two sessions so we can better socially distance.
6pm-7pm Waterford Court, Lakewood Court, Lake View Court Residents
7:30pm – 8:30pm Crystal Court & Waterford Lane Residents
Respectfully,
Board of Directors and Finance Committee
Finance Background Information
Roofing Reserve Project
· The amount spent on roof replacement between 2015-2020: $384,628
· Average cost per roof: $13,736.72
· Equivalent to 46 months @ $150/month HOA assessment to pay for your unit’s new roof
Scheduled General Reserve Fund Capital Costs between 2021 and 2030
· Complete roof replacement project: $376,000 (2024)
· Power wash, seal, caulk & paint exteriors: $154,285 (over 10 yrs.)
· Privacy fence repair: $10,400 (phase 1)
· Replace gutters: $66,000 (phase 2)
· Replace clubhouse windows: $4,000 (phase 2)
· Replace clubhouse flooring & upgrades: $12,000 (phase 2)
· Replace two fountains: $10,000 (phase 2)
· Repair concrete driveways, sidewalks: $150,000 (phase 2)
· Replace lost common area trees (Dan Jones Rd) $10,000 (phase 2)
· Master Insurance Policy Deductible in reserves ($25,000)
· Future roof replacement in 30 years/approx. $1.5 M. (+$30,000/yr. set aside beginning 2025)
Projected Ten Year Capital Expense: $792,685 + Reserves
The Board has approved the implementation of the 10 year Reserve Plan and the following assessment increases to be put toward the General Reserve Fund:
2021 $150/month + $10/month = $160/mo. (+$12,720 General Reserve Fund)
2022 $150/month + $20/month = $170/mo. (+$25,400 General Reserve Fund)
2023 $150/month + $30/month = $180/mo. (+$38,160 General Reserve Fund)
In addition, 38% of the operating budget ($72,000) will continue to be transferred to the General Reserves annually to fund capital expenses.
What our documents state about the replacement Reserve Fund:
Article X: Assessments “The annual budget may include the establishment and maintenance of a replacement reserve fund for capital expenditures and replacement and repair of the Common Area and such exterior portion of the Dwelling Units as designated in this Declaration, which replacement Reserve Fund shall be used for such purposes and not for usual and ordinary repair expenses. Such replacement reserve fund for capital expenditures and replacement and repair of the Common Area and Dwelling Units shall be maintained in an interest bearing account or accounts in a bank or savings & loan association that does business in Hendricks County selected from time to time by the Board.”
Article IV: Common Area “Common Area includes all the uses designated as such on the recorded final Plat of Waterford Lakes including but not limited to the lakes, yards, gardens, driveways, sidewalks, parking areas, nature paths, and recreational area, if any, but excluding all Lots and dedicated streets.”
Article VII: Maintenance, Repairs & Replacements “In addition to maintenance of the Common Area, the Association should provide exterior maintenance upon each Lot, which is subject to assessment hereunder as follows: paint, repair, replacement and care of roofs, gutters, downspouts and exterior building surfaces. Such exterior maintenance shall not include glass surfaces, screens and screen doors, window fixtures and other hardware, patios, and such items as the Board of Directors may designate as long as items of exception apply equally to all units.”
The Purpose of a General Reserve Fund
Annual budgets must include an amount set aside into a General Reserve Fund. Calculated properly, this will provide the necessary funding for the Association’s long term capital repairs and replacements. The purpose of the General Reserve Fund is to project and plan for the major expenses ahead of time, so when the useful life of the infrastructure item is gone, the funds are available for capital repair and/or replacement. This is also a mechanism for owners to pay for the use of items while they are owners. For instance, if an owner lives in a home 15 years, and the useful life of the roof is 25 years they will have paid for fifteen years’ worth of the use toward replacement. Without sufficient General Reserves, an association can face financial circumstances which ultimately result in greater expense to the owners and negatively impact the appearance of the community and property values. An underfunded reserve fund leads to deferred replacement/repairs; maintenance issues grow more expensive; further straining an already inadequate reserve fund. Buyers may shy away from a home in an older community that does not have a meaningful Reserve Fund.
The Bottom Line… Adding money to our HOA Reserves will not be popular for many of our Association members, however, everyone will benefit immediately. The Board has the fiduciary duty to maintain the infrastructure, adequately fund the Reserves, and continue to make this a desired Community.
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