MRR reserves updates
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- MRR spending projections are based on the useful life and estimated repair and replacement costs of the components of the Association’s assets and common property. See Asset Classes below for asset / common property component classes.
- An independent engineering consultant is utilized to estimate the useful lives and provide estimated current repair or replacement costs based on a defined scope and industry data. On a periodic basis as determined by the Board (normally on a three- or four-year basis) this study (the Reserve Study) is updated to incorporate changes in maintenance scope and timing requirements as well as review and update cost/revenue assumptions.
- In addition to the cost projections developed by the engineering consultant, independent cost estimates from project specific engineering firms or other sources are incorporated into the Reserve Study (and interim updates) for high-cost repair / replacement items (e.g., road paving and Marina dock replacement).
- It is the responsibility of the PM, Board members and applicable committee members to review and update the Reserve Study annually, normally during the budget preparation process, and ensure that the study reflects the actual repair and replacement plans for the budget planning period. During the budget process the Board will approve changes to the Reserve Study. It is the responsibility of the PM to track all repair / replacement changes against the Reserve Study and to ensure that this information is incorporated into the next study update. The Finance Committee provides oversight for this process.
- During the budget planning process:
- MRR spending and revenue forecasts are established for: the budget year and the remaining period required to cover the maximum lifetime of the asset pool based on long range MRR projections (developed from the updated Reserve Study).
- The revenue and spending plans for each of the periods above will be evaluated to confirm compliance with Association and statutory requirements.
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