The Annual Reserve Study Update in Oregon

What the statutes require

ORS 100.175(3) for condominiums and ORS 94.595(3) for planned communities use almost the same words: the board shall annually determine the reserve account requirements by conducting a reserve study or by reviewing and updating an existing study. The update must consider the starting balance, the remaining useful life and end-of-life cost of each item, the year's inflation rate and the returns on invested reserves.

Nothing in either section says the yearly review needs a site visit, a particular credential or an outside firm. The board can do it. Whether it should is a judgment about the property and about who on the board or in the management office has the time.

A cycle that fits most associations

CAI's national Reserve Study Standards describe three kinds of study: a full study with a site visit, an update with a site visit, and an update without one. Many boards build their Oregon year around those, along these lines:

Fees are national figures drawn from what firms publish, a guide and not a quote. The estimator recalculates them for your size and building type. Some firms offer a multi-year agreement that covers the full study and the following updates at a set price, which saves the board from re-tendering every year.

When a desk update is not enough

Bring a firm back on site sooner if any of these happen:

• a major component failed early, such as a roof, a garage membrane or a section of siding;
• the association finished a big project and the inventory no longer matches what is there;
• a special assessment is on the table and owners will want to see the evidence;
• construction costs moved sharply, or the current study is built on prices several years old;
• the community added phases, buildings or amenities.

What to have ready each year

Whoever does the review, firm or treasurer, will need the same things. Collect them before the budget meeting is scheduled:

1. the reserve balance at the start of the fiscal year, and the year's planned contributions;
2. a list of reserve work done since the last update, with what it cost;
3. new bids or proposals for upcoming work;
4. the interest or returns earned on reserve investments;
5. the current maintenance plan and any changes the board made to it.

Firms ask for these in their engagement letters, and a manager who keeps them in one folder through the year can usually turn a desk update around in a few weeks.

Timing it with the budget

After the review the board may adjust reserve payments without a vote of the owners. That makes the yearly update most useful a month or two before the operating budget is drafted, so its recommended contribution goes straight into the new assessment. Build the request into the management calendar the same way as the insurance renewal.