By Dale Gifford, PRA, RS, PCAM, AMS, CMCA
Regional Project Manager, Complex Solutions, LTD – Silver Sponsor 2020
I was just elected to the board. I have read the reserve study and we are so far behind. How will
we ever catch up?
As a new board member you may have inherited the financial mess that others have created.
Unfortunately some associations are in a less than ideal financial situation. It is important for
you to properly perform your responsibilities as a board member, and to try and get the
association on the right track to an ideal financial position.
As a board you need to create and adopt a plan to properly fund your reserve account. In order
to create this plan you need to use your reserve analysis.
I always encourage a board to shoot for a fully funded financial position instead of a lesser
position. This will help your association to be in the strongest financial position. It will also allow
more room for negotiations if your association is resistant to this necessary change.
There are multiple ways for you to catch up. The three most commons ways I see being used to
are; raise your association dues, levy a special assessment, or obtain a bank loan.
Raise dues: some associations are fairly new, or are not far behind, so they can simply raise
their dues in order to correct their financial position. Other associations are far behind and their
dues need a large increase in order to stop falling farther behind, and to start catching up.
Special assessment: some associations that are not far behind decide to levy a special
assessment and have each owner pay their current reserve liability. Other associations are far
behind and they levy a special assessment to catch up, or to help them catch up.
Bank loans: some associations are far behind and they also may have a large project that must
be done, or they have multiple projects that must be done, so another option is the bank loan.
This allows an association to have the money they need for their immediate projects, and then
on the back end they raise their dues, and or levy a special assessment in order to pay back the
As a board you have decide which tools to use. Your professional reserve provider, and your
management company can help you with these decisions.